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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


THE   LAW 


RELATING   TO 


BUILDING  AND  LOAN 
ASSOCIATIONS 

WITH   FORMS  AND   SUGGESTIONS 


BY 

WM.  W.  THOENTON 

AUTHOR    OF    "GIFTS    AND    ADVANCEMENTS,"     "LOST    WILLS,"     "RAIL- 
ROAD FENCES  AND  PRIVATE  CROSSINGS,"  ETC. 

AND 

FRANK  H.  BLACKLEDGE 

OF  THE    INDIANAPOLIS   BAR 


ALBANY,  N.  Y. 

MATTHEW    BENDER 

1898 


T3974  b 


COPYEIGHT.  1898, 

By  MATTHEW  BENDER. 


ft 


PREFACE. 


The  rapid  growth  of  building  and  loan  associations 
throughout  the  country  has  been  attended  with  numerous 
and  important  decisions  of  the  courts  affecting  them.  It  is 
the  purpose  of  this  work  to  record,  as  far  as  possible,  the 
most  recent  information  upon  the  subject,  and  to  give  a 
succinct  and  fairly  comprehensive  statement  of  the  princi- 
ples settled  by  the  decisions,  as  they  may  affect  the 
methods  and  management  of  such  associations,  as  well  as 
their  powers  and  duties,  rights  and  remedies,  not  only  with 
reference  to  members,  but  as  to  all  persons  interested 
therein. 

The  many  cases  in  this  country  and  England  have  been 
critically  examined,  and  all  sources  of  information  sought. 
The  authors  have  made  use,  in  the  appendix,  of  much  of  Mr. 
Scratchley's  work  on  building  societies,  a  work  but  little 
known  in  this  country.  It  is  believed  that  a  practical 
building  association  worker  will  find  many  useful  hints  and 
aids  in  this  appendix.  The  authors  have  also  thought  it  best 
to  add  the  descriptions  of  the  many  plans  in  use  in  this 
country  as  embodied  in  the  annual  Report  of  the  U.  S. 
Commissioner  of  Labor  for  1893. 

Wm.  W.  Thornton, 
Frank  W.  Blackledge. 

Indianapolis,  August  1,  1898. 


&678ZQ 


TABLE  OF  CONTENTS. 


Preface 

Table  op  Cases. 


CHAPTER  I. 

HISTORICAL.  REVIEW. 

SEC.       1.  Chinese  Building  Associations 1 

2.  Early  English,  Scottish  and  American  Building  Associa- 
tions   3 

CHAPTER  II. 

GENERAL  DESCRIPTION    OF  BUILDING  ASSOCIATIONS. 

2.  Definition 5 

4.  Favorably  received  by  the  Courts 6 

5.  General  Scope  and  Methods  of  Association 6 

6.  Benefits  Derived   from  the   Plan  of  Building  Associa- 

tions . . . , 7 

7.  Terminating  Plan 8 

8.  Serial  Plan •    •  •  9 

9.  Permanent  Plan 10 

10.  Paid  up  and  Prepaid  Stock 11 

11.  Bowkett  Societies 12 

12.  Starr-Bowkett  Societies 16 

12.a.  Dayton  or  Ohio  Plan 17 

13.  Concerning  Methods  of  Business 18 

CHAPTER  III. 

INCORPORATION. 

14.  Legislature  Must  Create 20 

15.  Special  Legislative  Act 20 

16.  Validity  of  Special  Charter 22 

17.  Amendments  of  Special  Charter 23 

18.  Incorporation  by  Court 25 

19.  Incorporation  by  Articles  of  Association,  Validity  of 

Stat  ute 25 

20.  The  Charter 20 

iii 


IV  TABLE   OF   CONTENTS. 

PAGE 

Sec.     21.  When  Life  of  Corporation  Begins 20 

22.  Substantial  Compliance  with  Statutes  necessary 27 

23.  Claiming  More  than  Allowed  by  Statute 27 

24.  Specifying  Powers 28 

25.  Place  of  Business 28 

26.  Amendments  of  Articles 28 

27.  Recording  Articles 29 

28.  Name 30 

29.  Banking  Powers 30 

30.  Irregular  and  De  facto  Corporations 31 

31.  Estoppel  to  Deny  Corporate  Existence 33 

32.  Foreign  Building  Associations 35 

CHAPTER  IV. 

MEMBERSHIP. 

33.  Acquisition 36 

34.  Who  may  acquire  Membership 38 

35.  Infants 38 

36.  Married  Woman 39 

37.  Status  of  Husband 39 

38.  Personal     Representatives     continuing     Membership — 

Will 41 

39.  Heirs  Succeeding  to  Member's  Rights 43 

40.  Corporations  as  Stockholders 43 

41.  Subscription  for  the  Purpose  of  Securing  Loan 43 

42.  Depositors  as  Members 44 

43.  Society  may  be  Estopped  to  Deny  Membership 44 

44.  Person  Estopped  to  Deny  Membership 45 

45.  Evidence  of  Membership 45 

46.  Inspections  of  Books 46 

CHAPTER  V. 

GOVERNMENT  OF  BUILDING  ASSOCIATIONS. 

47.  Repository  of  Supreme  Power 49 

48.  Place  of  Holding  Meetings  and  Doing  Business 49 

49.  Assembling  for  a  Corporate  Election — Notice 51 

50.  The  Quorum 53 

51.  Right  to  Vote 54 

52.  CondUcI  of  an  Election 55 

.  Number  of  Votesa  Stockholder  may  Cast 57 

CHAPTER  VI. 

II I  III;    POWERS   AM)  LIABILITIES. 

54.    Usual  Officers  59 


TABLE   OF   CONTENTS.  V 
PRESIDENT. 

PACE 

SEC.     55.  President's  Election — Resignation 60 

56.  Proving  President's  Official  Character 60 

57.  Power  to  Bind  Association 61 

58.  Acts  in  Manifests  Violation  of  his  Duty 61 

59.  Acting  for  Another  or  for  Himself 62 

60.  Implied  Powers — Two  Theories 62 

61.  Proof  of  Power  to  Act 66 

62.  Custom,    Usage    or    Habit    of    Acting    Enlarging    his 

Powers 67 

63.  How  he  should  Execute  Contracts 67 

64.  Discharging  Duties  of  Other  Officers 68 

65.  Declarations  and  Admission 68 

66.  Notice  to  President  on  Effecting  Corporation 69 

67.  Liability        69 

68.  Compensation 70 

VICE-PRESIDENT. 

69.  Nature  of  Office 71 

SECRETARY. 

70.  Status 72 

71.  Length  of  Office 72 

72.  Custodian  of  Seal 72 

73.  Keeper  of  Corporate  Records 72 

74.  Medium  of  Communication  with  the  Public 73 

75.  Power  to  Bind  Corporation 73 

76.  Notice  to.     When  not  Binding  on  Corporation 75 

77.  Transfers  of  Stock. 76 

78.  Liability  on  Bond 76 

79.  Compensation 78 

TREASURER. 

80.  Elections — Status— Duties , 79 

81.  Power  to  Contract  for  Association 80 

82.  Settlement  of  Debts — Release  of  Claims 81 

83.  Power  to  Bring  Suit  or  Confess  Judgment 81 

84.  Liability  on  Bond 81 

ATTORNEY. 

85.  Appearance  of  Association  by  Attorney 83 

86.  Who  may  Employ 84 

S7.  Retainer  and  Authority 84 

ACTUARY   OR  SURVEYOR. 

88.  Officers 86 


yi  TABLE   OF   CONTENTS. 

DIRECTORS. 

PAGE 

Sec.     89.  Essential  to  Association— Tenure  of  Office 86 

90.  Election 88 

91.  Right  to  Vote  at  an  Election 90 

92.  Proof  of  Acceptance  of  Office — Resignation 91 

93.  De  Facto  Directors,  and  the  Validity  of  their  Acts 92 

94.  Must  Act  Together 93 

93.  Individual  Director's  Powers 94 

96.  Voting  by  Proxy 94 

97.  Majority  Rule— Quorum 95 

98.  Presumptions  Concerning  Acts  of  Board 96 

99.  Ratification  of  Act  Performed  by  Less  than  Majority. . .  97 

100.  Board  Contracting  with  One  of  its  own  Number 98 

101.  President  Counts  or  a  Director 98 

102.  Accidental  Meetings 98 

103.  Meetings  Outside  of  State 99 

104.  Board  Must  be  Duly  Assembled— Notice 99 

105.  Directors  Cannot  Delegate  Powers 100 

106.  Directors'  General  Powers. ...    101 

107.  General  Obligations  of  Directors — Liability 104 

108.  Contracts  with  Corporation 105 

109.  Liability  of  Directors 107 

110.  Liability  in  Particular  Instances  of  Building  Associa- 

tions   109 

111.  Association  may  Sue  its  Director  for  Losses  Incurred. . .  114 

112.  Liability  of  Directors  to  Creditors 114 

113.  Director's  Compensation 117 

TRUSTEES 

114.  Nature  of  Office 119 

CHAPTER  VII. 

BY-LAWS.    HULKS  AND  REGULATIONS. 

115.  Definition  of  a  By-law 120 

110.  Differs  from  a  Resolution 121 

117.  Differs  from  a  Regulation  or  Rule 121 

118.  A  Law  for  the  Members  of  the  Association 122 

119.  By-laws  are  a  Contract  between  a  Building  Association 

and  its  Members 122 

120.  Members  Conclusively  Presumed  to  Know  By-laws L23 

121.  Formalities  bV<|uire<l   in  Enactment 1." 

•    Waiver  of  By-laws 123 

123.  Retroactive  By-laws 12! 

I.M.  Construction  or  Interpretation 124 

Proof  of  By-laws 125 

126.  Cnherenl  Powers  to  Enact  By-laws 125 


TABLE   OF    CONTENTS.  Vli 

PAGE 

Sec.  137.  Who  Adopt 126 

128.  Must  Conform  to  the  Charter 127 

129.  Must  not  be  Contrary  to  the  Common  Law,  a  Statute  or 

the  Constitution 128 

130.  Must  Operate  Equally 128 

131.  Cannot  Disturb  Vested  Rights — Amendments 129 

132.  Signing  By-laws — Amendment. 131 

133.  Notice  to  Members  of  Amendments  made 132 

134.  Mode  of  Amendment — Who  may  Make 132 

135.  Unreasonable — Oppressive — Extortionate. 133 

136.  Transfer  of  Shares  of  Stock 134 

137.  Releasing  Shareholder  from  Liability 135 

138.  Restricting  Right  to  Sue 135 

139.  Arbitration 135 

140.  Forfeiture  of  Property— Fines 136 

141.  Fine  Must  be  Certain 136 

142.  Courts  Seldom  Interfere  with  By-laws 137 

143.  Void  in  Part— Valid  in  Part 137 

144.  Regulating  Corporate  Elections 138 

CHAPTER  VIII. 

STOCK   OP  BUILDING   ASSOCIATIONS. 

145.  Definition  and  Description  of  Stock 140 

146.  Building  Association's  Peculiar  Stock 140 

147.  Advanced  Payments  on  Stock , 142 

148.  Prepaid  Stock  143 

149.  Preferred  Stock  144 

150.  Preferred  Stock  Applicable  to  Building  Association 145 

151.  Acquisition  of  Stock 150 

152.  All  Stock  must  be  taken  before  Business  can  be  Trans- 

acted— Waiver 151 

153.  Effect  of  Fraud  on  Subscription 152 

154.  Increasing  Stock  154 

155.  Transfer  of  Stock 157 

156.  Lien  of  Corporation  on  Shares 158 

157.  Effects  Upon  Rights  of  Owners  by  Creation  of  Lien 160 

158.  Nature  of  Certificate  of  Shares  of  Stock 161 

159.  Formalities  of  Transfer  and  Registration 162 

160.  Action  to  Compel  a  Transfer 164 

161.  Action  of  Law  for  Refusal  to  Transfer 165 

162.  Measure  of  Damages  for  Refusing  to  Transfer 166 

163.  Lost  Certificate 1(513 

164.  Liability  of  Company  for  Transferring  on  Forged  Power 

of  Attorney 167 

165.  Liability   of    Company   to    Innocent    Purchaser   under 

Forged  Power  of  Attorney 168 

166.  Pledge  of  Shares 168 


Vlll  TABLE   OF    CONTENTS. 

PAGE 

Sec.  167.  Enforcing  Stock  Payments  by  Suit 169 

168.  Payment  of  Dues  on  Stock  not  a  Payment  on  Owner's 

Debts  to  Building  Association 169 

169.  Application  of  Stock  Payments  to  Extinguishment  of 

Borrower's  Debt 173 

170.  Borrower  Having  Assigned  his  Stock 175 

171.  Stranger  cannot  Compel  Application  of  Stock  Payments 

to  Debt 173 

17-2.   Surety's  Right  to  Stock 177 

173.  Attachment  on  Levy  upon  Building  Association  Stock. .  178 

174.  Value  of  Stock  when  Applied  to  Borrower's  Debt 179 

173.  Right  to  Membership  after  Foreclosure  and  Sale  of  Mort- 
gaged Security 185 

176.  Forfeiture  of  Stock— Notice— Waiver 188 

177.  Cancelling  Stock,  Association  Cannot 189 

178.  Building  Association  Purchasing  its  own  Shares 189 

179.  Number  of  Shares  a  Member  may  Hold 190 

180.  Fee  for  Transferring  Stock 190 

181.  Dividends 191 

182.  Maturity  of  Stock  Cancels  Loan — Return  of  Securities. .  193 

183.  Loan  of  Pass-book 194 

184.  Rebate  of  Interest .    195 

CHAPTER  IX. 

DUES  ON  STOCK-PAYMENTS. 

.  Definition 196 

186.  Duty  of  Member  to  Pay 196 

is?.   How  and  When  Paid 197 

188.  When  Liability  to  Pay  Begins 198 

1 89.  Assumpsit  for  Dues — Not  ice 1  its 

190.  Bringing  of  Suit  ;  Effect  on  Payment  of  Dues 199 

191.  Dues  Secured  by  Mortgage  Given  on  Securing  an  Ad- 

vance or  Loan 199 

L92.   Lien  on  Stock  for  Dues 200 

193.   Forfeiture  of  Stock  for  Non-Payment  of  Dues 'Jill 

l-.il.  When  Liability  for  Dues  Cease 

195.  Purchaser  of  Mortgaged  Premiums 203 

196.  Number  of  Shares  upon  which  Member  Liable  for  Dues.  203 
L97.   Proof  of  Payments  on  Stock 203 

.  Applical  ion  of  Payments  made  by  a  Borrower 204 

CHAPTER  X. 

FINES. 

199.  Definition 206 

200.  Pari  of  General  Plan 206 

301.  Not  Recorded  as  a  Penalty  of  Forfeiture 207 


TABLE   OF   CONTENTS.  IX 

. 

Sec.  202.  Court  Enforcing 207 

'JO:}.  Charter  or  Statute  Authorizing. 209 

204.  Fixed  by  By-laws 210 

205.  Must  be  Certain 210 

206.  Must  be  Reasonable 213 

207.  Amount  of  Fine 214 

208.  Only  Member  Liable  to  Fine 215 

209.  Additional  Fine  for  Continued  Neglect 215 

210.  In  Arithmetical  Progression 217 

211.  Fines  on  Delinquent  Interest 218 

212.  Interest  on  Fines 220 

213.  Fines  on  Premiums 220 

214.  Married  Women  Liable  to  Pay  Fines 221 

215.  Mortgage  Secure 221 

216.  Illegal  Fines  Reduce  Debt 222 

217.  When  Fines  Cease 223 

218.  Lien  on  Stock 224 

219.  Condonation  or  Remission  of  Fines 224 

220.  How  Collected 225 

221.  Insolvency — Appointment  of  Receiver 225 

CHAPTER  XI. 

PREMIUMS  OR  BONUS. 

222.  Definition 220 

223.  Different  Plans 228 

224.  Nature  of  Premium 

225.  Net  Earnings 229 

226.  Interest  upon  Premiums 230 

227.  Adding  Bonus  to  Amount  Loaned 232 

228.  Deducting  Amount  of  Bid  from  Sum  Loaned 233 

229.  Minimum  Bid  Fixed  by  By-Laws 234 

230.  Association  Cannot  Refuse  a  Bid 235 

231.  Change  in  By-laws 23:; 

232.  Collecting  Premiums  after  Maturity  of  Loan 237 

233.  More  than  One  Premium 237 

234.  Return  of  Premium  on  Withdrawal 237 

235.  Provable  in  Bankruptcy 239 

CHAPTER  XII. 

LOANS  TO   MEMBERS. 

236.  Two  Kinds  of  Members 240 

237.  Amount  of  Loan  Never  Returned 24 1 

238.  When  Loan  Falls  Due 242 

239.  Relationship  of  a  Borrowing  Member  of  an  Incorporated 

Association  to  it 243 

240.  Loans  not  a  Usurious  Transaction— Unincorporated  As- 

sociation— English  Cases 244 


X  TABLE   OF    CONTENTS. 

PAGE 

Sec.  241.  Loans  not  a  Usurious  Transaction — Incorporated  Associa- 
tion— English  Cases 245 

242.  American  Cases — Usury 246 

243.  Arkansas — Louisiana — Alabama 250 

244.  New  Jersey — New  Hampshire 251 

245.  Illinois — Minnesota 251 

246.  New  York— Georgia 252 

247.  Virginia — District  of  Columbia 254 

248.  Mississippi — Michigan 25  1 

249.  Nebraska 255 

250.  North  Carolina — South  Carolina 256 

251.  Kentucky— Texas 257 

252.  Pennsylvania 258 

253.  Indiana. 259 

254.  Connecticut — Iowa — Missouri — Ohio — West  Virginia 260 

255.  Canada — New  Brunswick 261 

CHAPTER  XIII. 

LOANS  TO   MEMBERS,   CONTINUED — INCIDENTS. 

256.  Presumption  as  to  Usurious  Contract 263 

257.  Effect  of  Usurious  Contract 263 

258.  Who  may  Defend  against  a  Usurious  Claim 2G4 

259.  Borrower  Recovering  Back  Usurious  Interest  Paid  by 

Him 265 

260.  Charges  Incident  to  a  Loan  not  Usurious 206 

261.  Right  to  add  Amount  of  Interest 267 

262.  When  Interest  Ceases  to  Run 268 

263.  Amount  Due  on  a  Loan 268 

264.  A  mount  Due— Ohio  Rule 270 

205.  A  mount  Due — Canadian  Rule 273 

200.  Amount  Due — A  Georgia  ( !ase 275 

.    A  mount  Due— English  Rule 277 

endency  of  Suit 279 

269.  Kind  of!  280 

270.  Straight  Loans 280 

271.  Loi  aber's  and  Outsider's  Security 281 

bo  Loan 281 

.   Loan  to  Non-Members 282 

27 1.  Taking  Several  Securities 283 

275.  Puri  Notes  of  Persons  nol  Members 283 

276.  Subscribing  A  rl  Lcles  of  Associal  ion 283 

. .   I. ( »:in  1 o  One  in  A  rrears 

ng  Contracl  of  Loan 284 

ive  Contract,  Borrower  not  Released  From 284 

.   L      Loci     Effect  on  Foreign  Contracts 286 

281,   Validity  of  Statutes  Empowering  Building  Association 

what  would  Otherw  Lse  be  Usurious  Enteresi 287 


TABLE   OF   CONTENTS.  XI 

CHAPTER  XIV. 

MORTGAGES. 

PAGE 

Sec.  282.  Power  to  Take  Security  for  a  Loan 290 

283.  Kind  of  Security 291 

284.  First  or  Second  Mortgage 292 

285.  Validity  of  Mortgage 293 

286.  Reformation  of  Mortgage 295 

287.  By-laws  a  Part  of  the  Mortgage 295 

288.  What  Mortgage  Covers 296 

289.  Amount  one  Shareholder  can  Borrow 299 

290.  Assignment  of  Mortgage 300 

291.  Not  Assets  for  Purposes  of  Withdrawals 301 

292.  Tender  of  Amount  Due 301 

293.  Marshalling  Assets— Lien  on  Stock— Second  Mortgagee.  302 

294.  Marshalling  Assets — Pennsylvania  Cases 304 

295.  Marshalling  Assets — Judgment  Creditors 308 

296.  Marshalling  Assets— Rights  of  Third  Persons  cannot  be 

Prejudiced 308 

297.  Marshalling  Assets— Notification  of  Prior  Mortgagee  of 

Subsequent  Mortgagee's  Rights 310 

298.  Pursuing  Two  or  More  Remedies 310 

299.  Action  to  Foreclose 311 

300.  Defences 312 

301.  Abandonment  of  Plan  of  Association 314 

302.  Fraudulent  Representations  of  Officers  of  Association. . .  315 

303.  Set-Off B16 

304.  Evidence  on  Foreclosure  Suit 316 

305.  Decree— Sale 317 

306.  Decree  Stands  as  Security  for  Future  Payments 318 

307.  Foreclosure  and  Sale  under  Mortgage  does  not  neces- 

sarily Terminate  Mortgagee's  Membership 318 

308.  Rights  of  Purchaser  of  Land  Mortgaged 318 

309.  Discharge  of  Debt  by  Sale  of  Land— Assumpsit  for  Re- 

mainder Due 319 

310.  Cancellation    of    Mortgages— May  Show    Maturity    of 

Claim 319 

311.  Revocation  of  Cancellation  Improperly  Made 322 

312.  Foreign  Corporation 322 

CHAPTER  XV. 

WITHDRAWALS. 

313.  Right  to  Withdrawals 323 

314.  Members  Cannot  be  Deprived  of  the  Privilege  of  With- 

drawing   326 

315.  Notice  of  Withdrawal 327 

316.  Cancelling  Notice  of  Withdrawal 329 


xii  TABLE   OF    CONTENTS. 

PAGE 

Sec.  317.  Order  of  Withdrawals 330 

318.  No  Funds  to  Pay  Withdrawal  Members  331 

319.  Suit  by  Withdrawing  Member— Lack  of  Funds  332 

320.  Status  of  Member  Giving  Notice 334 

321.  Effect  of  Withdrawal 336 

322.  Suit  to  Recover  Amount  Due — Defence 337 

323.  Amount  to  be  Withdrawn 338 

321.  Amount  Standing  to  Member's  Credit 340 

325.  Interest  on  Withdrawal  Amount 342 

326.  Payment  of  Amount  Due 343 

327.  Withholding  Right  to  an  Execvition  to  Enforce  Judg- 

ment   344 

328.  Pledged  Stock 345 

329.  Insolvency  of  Association 345 

330.  Matured  Stock 351 

331.  Foreign  Associations 353 

CHAPTER  XVI. 

REDEMPTION   AND   THE    RIGHT   TO  EXERCISE  IT. 

332.  Right  to  Redeem  a  Valuable  One 354 

333.  Terminating  and  Permanent  Societies 354 

334.  The  Right  of  Redemption — English  Cases 355 

335.  Right  to  Property  Released 363 

336.  Rules  as  to  Redemption 363 

337.  Equitable  Scheme  for  Redemption 364 

338.  American  Scheme 366 

339.  Redemption  Discouraged 366 

340.  Permanent  Societies  367 

341.  Whole  Premium  Charged  with  Interest 371 

342.  Provision  for  Losses 371 

343.  Cost  of  Redemption  Action 371 

CHAPTER  XVII. 

LIABILITY  OP   MEMBERS  TO   CONTRIUPTK    WHEN   LOSSES   AND  INSOLVENCY 

INTERVENES. 

348.  Different  hvinl  ions  of  Members  to  Association 373 

849.  Members  Must  Contribute  to  Losses — Amount 374 

850.  Compromise  wit!  i  Members  and  Release  from  Liability. .   :!7(> 

851.  Cannot   Evade  Liability   by  Transfer  of  Stock ....   377 

852.  Insolvency    Intervening  after   Notice    of    Withdrawal 

Given 378 

::"..:.  Members  Who  Eave  Withdrawn 380 

854.    Withdrawal  Members  Preferred  to  Those  Remaining  by 

RllleS  of  Society 382 


TABLE   OF   CONTENTS.  xiii 

PAGE 

SEC.  355.  Borrowing  Members  Equally  Liable  with  Unadvanced 

Members 386 

356.  Borrowing  Member   Equally  Liable  with  Unadvanced 

Members,  Continued 389 

357.  Advanced  Shareholder  Ceasing  to  be  Member  of  Society — 

Paid-up  Stock 394 

358.  Preference  Shareholder 398 

359.  Amended  Rules  Imposing  Liability 398 

360.  Liability  of  Borrower  on  his  Note  and  Mortgage 399 

361.  Liability  of  a  Minor  or  Married  Woman  to  Contribute  to 

Losses 403 

362.  Liability  of  Deceased  Member's  Estate  to  Contribute  to 

Losses ...  403 

363.  Outside  Creditors  Paid  First 404 

364.  Director  Postponed  to  Stockholders 405 

365.  Subrogation  of  Shareholder  having  Advanced  Shares. . .  406 

CHAPTER  XVIII. 

POWER  TO  BORROW"  MONEY. 

366.  Original  Plan  of  Building  Associations 407 

367.  English  Cases  Prior  to  1874 407 

368.  No  Rule  of  the  Society  Empowering  Trustees  to  Borrow 

Money 409 

369.  Rule  Placing  no  Limit  on  Amount  to  he  Borrowed 410 

370.  Subrogation  when  Loan  Illegal 413 

371.  Society  Cannot  Exceed  its  Rules  in  Borrowing 413 

372.  English  Statutes  of  1874 414 

373.  Personal  Liability  of  Directors 415 

374.  Power  of  Directors  to  Bind  Individual  Members  of  the 

Society 416 

375.  American  Cases 416 

376.  Overdrafts — Deposits 421 

377.  Rights  of  Borrowers  on  Distribution  of  Assets 423 

378.  Lenders  Liable  to  Refund  Society's  Moneys  Received  in 

Reduction  of  Debt 423 

379.  Postponement  of  Depositor's  Right  of  Action — Available 

Balance 424 

CHAPTER  XIX. 

TAXATION. 

380.  Mortgages 426 

381.  Tax  on  Stock 427 

382.  Payment  into  State  Treasury — Inter-State  Commerce. . .  428 

383.  Exemptions 428 

384.  Covenant  to  Pay  Taxes 430 


XIV  TABLE    OF    CONTENTS. 

CHAPTER  XX. 
DISSOLUTION — RECEIVER. 

PAGE 

Sec.  385.  Insolvency  as  a  Ground  for  the  Appointment  of  a  Re- 
ceiver     431 

386.  Who  may  Demand  a  Receiver  for  an  Insolvent  Building 

Association 433 

387.  Right  of  Member  to  Ask  for  Receiver  when  Shares  Reach 

Par  Value 434 

388.  Mortgages  not  Assets  for  the  Purpose  of  Determining  the 

Solvency  of  the  Association 435 

389.  Effect  of  Society  Reaching  Limits  of  its  Corporate  Ex- 

istence    436 

390.  Dissolution  by  Agreement 436 

391.  When  Abandonment  of  Corporate  Existence  may  be  In- 

ferred   438 

392.  Forfeiture  of  Franchise 438 

393.  Suit  to  Wind  Up 439 

394.  Liability  of  Member  for  Payment  of  Dues  and  the  Like 

after  Association  Suspends  Operations 440 

395.  Apportioning  Profits  in  Serial  Association — Estoppel 442 

396.  Distribution  of  Assets 443 

397.  Effect  upon  Mortgages  or  Loans 448 

CHAPTER  XXI. 

MISCELLANEOUS. 

398.  Introduction 449 

399.  General  Powers 449 

400.  Power  to  Hold  Real  Estate — Leasing 450 

401.  Power  to  Build  Houses 452 

402.  Mechanic's  Lien 452 

403.  Seal 453 

404.  Suits 453 

405.  Expense  Fund — Withdrawals 454 

406.  Unincorporated  Associations 455 

407.  Miscellaneous 455 

408.  Assignment  for  Benefit  of  Creditor 456 

409.  Bankruptcy  Law  of  1898 458 

410.  War  KVvenue  Law — Stamps 458 

411.  To  what  Companies  Revenue  Law  Applies 459 

II.'.  W'liai  [n  vestments  Exempt  from  War  Tax 459 

LIS.  Power  to  Purchase  Real  Estate 459 

APPENDIX  I. 
I'AK'l   I.     On  Benefit  Societies 461 

Chapter      [.— 462-470 

CHAPTER    II.— On    the  Nature  of  the  Operation  of  Com- 

pound  [nteresl 471-487 


TABLE    OF   CONTENTS.  XV 

PAGE 

Chapter  III. — On  Benefit  Building  Societies  as  Originally 

Constituted 488-506 

Chapter  IV. — On  Permanent  Benefit  Building  Societies. .  507-518 
Chapter    V. — The   Practical    Management  of  a   Benefit 

Building  Society 519-528 

Chapter  VI.— The   Balance   Sheets  of  Benefit   Building 

Societies 529-540 

Rules  for  a  Permanent  Benefit  Building  Society 541-575 

Scratchley's  Form  of  Account  Books 576-586 

APPENDIX  II. 

Premium  Plans 589-610 

Plans  for  Distributing  Profits 611-636 

Withdrawal  Plans 636-651 

APPENDIX  III. 
By  daws  of  a  Permanent  Association 653-664 

APPENDIX  IV. 

General  Legislation  Relating  Especially  to  Building  and  Loan 

Associations 665-914 

Index 915-950 


TABLE  OF  OASES. 


PAGE 

Abbott  v.  Building  Association, 
IDel.  (Pa.)  397 428 

Abbott  v  International  Build- 
ing and  Loan  Association, 
23  S.  W.  Hep.  629  ;  86  Tex. 
467  ;  46  Amer.  &  Eng.  Corp. 
Cas.  508 268 

Abbott  v.  International  Build- 
ing and  Loan  Association 
(Tex.),  25  S.  YV.  Rep.  620. .  .     258 

Abbott  v.  Omaha  Smelting, 
etc.,  Co..  4  Neb.  414 26 

Aberdeen  R.  R.  Co.  v.  Blaikie, 
1  Macq.  H.  L.  (Sc.)  461  ;  s.  c. 
1  Pat,    App.  (Sc.)  119 105 

Adams  v.  Crosswood  Printing 
Co.,  27  111.  App.  313 65 

Addison  v.  Lewis.  75  Va.  701..   106 

Agricultural  Bank  v.  Burr,  24 
Me.  256 162,  163 

Albany,  etc.,  R.R.Co.v.  McCor- 
mick,  10  Ind.  499;  s.  c.  71 
Am,  Dee.  337. 37 

Albion  Mutual  Permanent  Ben- 
efit Building  Society,  In  re, 
L.  R.  43  Oh.  Div.  410,  note.  .   391 

Albright  v.  Lafayette  Building 
and  Saving  Association.  102 
Pa.  St.  411 25,  27,  33,  235 

Alexander  v.  Worman,  3  L.  T. 
(N.  S.)  477;  s.  c.  6  H.  &  N. 
100  ;  30  L.  J.  Exch.  198 113 

Allen  v.  American  Building 
and  Loan  Association,  49 
Minn.  544;  s.  c.  52  N.  W. 
Rep.  144  ;  40  Amer.  &  Eng. 
Corp.  Cas.  144 201 

Allen  v.  Hill,  16  Cal.  113 ..... .     54 

Allen  v.  Pegram,  16  la.  163 140 

Allemania  Loan  and  Building 
Association  v.  Mueller,  8 
Wkly.  L.  Bull.  97. .  .261,  270,  272 

Allemong  v  Simmons,  124  Ind. 
199  ;  s.  c.  23  N.  E.  Rep.  768. .     94 

All  Saints  Church  v.  Lovett,  1 
HallN.  Y.  191    31 

Almon  v.  Busch,  R.  E.  D. 
(N.S.),362 75 


PAGE 

Almon   v.    Fairbanks,  10  N.  S. 

407 33,  261,  322 

Alpena  National  Bank  v.Green- 

baum,  80  Mich.  1;  s.-  c.    44 

N.  W.  Rep.  1123 61,  62 

Ambition  Building  Society.  In 

re,  (1896)   1  Cli.  89  ;  s.  c.  65 

L.  J.  Ch.   113;  73  L.  T.  508; 

44  W.  R.  141 350 

Amer  National  Bank  v.  Orient- 
al Mills,  17  R.  I.  74;  s.  c.  23 

Atl.  Rep.  795 163 

Amer    v.  Union  Building    and 

Loan  Association,  50  N.  J.  Cb. 

170  ;    s.    c.     24     Atl.      Rep. 

552 321,  434 

American  Building  and  Loan 

Association   v.    Mordock,  39 

Neb.    413;   s.   c.   58    N.    W. 

Rep.  107 325 

American  Building  and  Loan 

Association   v.    Rainbolt,  48 

Neb.  434.  476  ;  s.  c.  67  N.  W. 

Rep.  493 152.  153,  323 

American,  etc.,  R.   R.   Co.  v. 

Miles,  52  111.  174 117 

American    Homestead    Co.  v. 

Linigan,  46   La.  Ann.  1118  ; 

s.  c.  15  So.  Rep.  369 250,  455 

American  Insurance  Co. v. Oak- 
ley, 9  Paige,  496  ;  s.  c.  36  Am. 

Dec.  561 64,  84 

American  Railway  Frog  Co.  v. 

Haven.   101    Mass.  398;  s.  c. 

Am.  Rep.  377 51 

Amesburv   v.   Bowditeh,    etc., 

Insurance  Co.,  6  Gray,  596. .   135 

137 
Anderson  v.  Cleburne  Building 

and  Loan  Association  (Tex. ) . 

16  S.  W.  Rep.  -JOs 282 

Anderson  v.  Nicholas.  28  N.  Y. 

600 165 

Anderson,  etc..  Association   v. 

Thompson,  88  Ind.  405   200 

Anthracite    Saving     Fund     v. 

Cake.  2  Leg.  Rec.  Rep.  172. .  174 
Anthracite  Building  and  Loan 
xvii 


XV111 


TABLE   OF   CASES. 


PAGE 

Association  v.  Lyons,  2Kulp, 

(Pa.)  409 284 

Anson,  In  re,  L.  R.  30  Ch.  Div. 

434 ;  s.  c.  34  W.  R.   143  ;  af- 
firming L.    R.   29  Ch.   Div. 

182;  s.  c.  54  L.  J.  Ch.  493; 

52  L.  J.  (N.  S.)406;  33  W.  R. 

575 416 

Appeal  of  Callahan,  124  Pa.  St. 

138  ;  s.  c.   16  Atl.  Rep.  638 ; 

46  Leg.  Int.  200  :  23  W.  N. 

Cas.    233;    19  Pitts.    L.   Jr. 

411 322 

Appeal  of  Hammond,  123  Pa. 

St.  503;   s.    c.   16  Atl.    Rep. 

419....: 105 

Appeal  of  Mechanics  and  Work- 

ingmen's    Building  Associa- 
tion (Pa.),  7  Atl.  Rep.  728;  6 

Cent.  Rep.  580 351 

Arapahoe    Cattle,  etc.,  Co.  v. 

Stevens.    1 3  Colo.  354 ;  s.  c. 

22  Pac.  Rep.  823 104,  123 

Archer  v.  Am.  Water  Works, 

50  N.  J.   Eq.  ;  s.  c.  24  Atl. 

508 164 

Archer    v.      Baltimore,     etc., 

Ass'n  (AY.  Ya.),30S.E.  Rep. 

241 - 288 

Archer  v.  Harrison,   7  De  G. 

Mac.  &  G.  404  ;  s.  c.  3  Jur. 

(N.  S.)  194  ;  21  J.  P.  515 192 

194.  360.  381 
Ardesco  Oil  Co.  v.  N.  A.  Oil, 

etc.,  Co.,  66  Pa.  St.  375 457 

Argus   Printing  Co.,    In   re.    I 

X.   I).  434  :  s.  c.  12  L.  R.  A. 

781  ;  9   Rail.  &  Corp.  L.   J. 

347;  26  Am.  St.  Rep.  6:;:;:  18 

X.  \Y.  Rep.  347... 89,  90,  157,  169 
Arkens  \ .  Rouse,  26  Ohio  L.  J. 

221  62 

Armitage  v.  Walker,  2  Jur.  (X. 

S.)13;  26  L.T.  182;  '2  Kay  & 

J.  211  ;  20  .1.  P.  53 335,  362 

Arm.  v.  Conant,  36  Yt.  744...     99 
rong     v.     Karshner,     I  i 

oi,i.,  si.   276  ;  s.  c.   24  N.  E. 

Rep.  897 153 

A  rnison  v.  Smith.  L.  R.  II  <  !h. 

Div.  348  L15 

Arnold  v.  Ruggles,  I  R.  I.  165.    IK) 
Am. i hi    v.    Suffolk    Bank,    :, 

Barb.  124 158 

\  bui  v  R.  W.  Co.  v.  Richie,  7 

E.  «S   I.    \pi'-  653 450 

Ashton  \.   Dashaway  Associa- 
tion, -I  Cal.  61  :  s.  c.  22  Pac. 

Rep.  660;   7  L.  R.    \.  809  ...    L17 
uelol  R.  K.  Co.  v.  Eliot,  51 
I.  897  51 


PAGE 

Ashurst   Appeal,   60  Pa.     St. 

290 107 

Association  v.    Kribs,   7  Leg. 

and  Ins.  Rep.  (Pa.)  21.. 169,  198 
Association  v.  Reid,    3  Phila. 

345  ;  s.  c.  16  Leg.  Int.  157. . .  259 
Association  v.  Wall,    7  Phila. 

189 203,  307 

Atkins  v.  Gamble,  42  Cal.  86  ; 

s.  c.  10  Am.  Rep.  2S2.  . .  .162,  165 
Atkinson  v.  Atkinson,  8  Allen, 

15 163 

Atkinson  v.  Bradford  3d  Equit- 
able Building  Society,  25  Q. 

B.  Div.  377  ;  s.  c.  59  L.  J.  Q. 

B.  360 ;  62  L.  T.  857  ;  38  W. 

R.  630 325,  425 

Atlantic  Mutual  Fire  Insurance 

Co.    v.    Sanders,    36   N.    H. 

252 52,     97 

Atlantic,  etc.,  R.  R.Co.v.  John- 
son, 70  N.  C.  348 31,     92 

Atlantic  Delaine  Co.  v.  Mason, 

5R.  I.  463 53 

Atlas  Bank  v.  Gardner,  8  Biss. 

537 92 

Attaway    v.     Third     National 

Bank,  93  Mo.  485  ;  reversing 

15  Mo.  App.  578 104 

Attorney-General  v.    Abbott, 

154  Mass.  323;  s.  c.  28  X.  E. 

Rep.  346;  13  L.  R.  S.  251....     95 
Attorney-General  v. Clarendon, 

17  Ver.  491 90 

Attorney-General      v.      Great 

Eastern  Ry.  Co.,  5  App.  Cas. 

481 ! 450 

Attorney-General  v.  Houchett. 

42  Mich.  436 27 

Attorney-General   v.    Lormer, 

59  Mich.  157 28 

Attorney-General  v.   Oakland 

(',..  Bank,  1  Walk.  Ch.  Mich. 

90 50 

At  wood  v.   Dumas,    149  Mass. 

167;  s.  c.  21  X.  E.  Rep.  236..  328 
337,  345,  445 
At  wood  v.  West  Roxbury,  etc., 

Bank,  156  Mass.  166  ;  s.  c.  30 

X.  E.  hep.  558 328,  345 

AuM      v.     Clasgow      Working 

Men's    B.  S.,   12    App.   Cas. 
lit;  :  s.  c.  56  L.  J.    P.  C.  57  ; 

56  L.  T.  756;  35  W.   R.  632..   130 
296,  330,  341,  380 
Aurora.  etC.R.R.  Co.  v.   I.aw- 

renceburg,  56  End.  80 32 

Austin  Case,  L.  R.  3  Eq.  135..     92 
A  w  a  It  v.   Eutaw   I  luilding  As- 
sociation, :;i  Rid.  435 265 

Ayre's  Case,  25  Beav.  513 153 


TABLE   OF   CASES. 


XIX 


PAGE 

Avres    v.    French,    41     Conn. 

142 165 

Babcock  v.  Middlesex,  etc.,  Co., 

28  Conn.  302 180,  184 

Bacon  v.  Mississippi  Insur- 
ance Co.,  31  Miss.  116 63 

Baer  v.  Hudson,  etc.,  Associa- 
tion.   75  Hun,   419;  s.  c.  56 

N.  Y.  St.  Rep.  760  ;  27  N.  Y. 

Supp.  102 337 

Baliia.  etc.,  R.  R.  Co.,  In  re,  L. 

R.  3  Q.  B.  584 168 

Bailey,  Ex  Parte,  5  D.  G.  Mac. 

&G.,   380;    s.c.  18  Jur.  988; 

23  L.  Bank  36 83 

Bailey  v.  Champlain,  etc.,  Co., 

7?  Wis.  453;    s.c.    46  N.  W. 

Rep.  539 156 

Baird  v.  Bank  of  Washington, 

US.  &R.  411 92 

Baker's  Appeal,  108  Pa.  St.  510  ; 

s.  c.  56  Am.  Rep.  231 157 

Baker,  Ex  Parte,  6  Wend.  509.  54 
Baker  v.  Harpster,  42  Can.  511  ; 

s.  c.  22  Pac.  Rep.  415 106 

Baker  v.  Leighton  Lea  Ass'n, 

46  N.  Y.  Supp.  35 52 

Baker  v.  Marshall.  15  Minn.  177  165 
Baker  v,  Neff,  73  Ind.  68. . . .  30,  32 
Baldwin  v.  Canfield,  26  Minn. 

43 94 

Ballon  v.  Manhattan,  etc..  Co., 

19   Misc.    Rep.    698  ;    s.  c.  45 

N.  Y.  Supp.  109 157,  337 

Baltimore  Permanent  Building 

and  Land  Society   v.  Taylor 

(In  Md.),  41  Md.  409 231,  247 

Baltimore   B.    &   L.    Ass'n    v. 

Titlow,  19  Pa.  C.  C.  518. . .  35,  286 
Baltimore,   etc.,  R.  R.  Co.  v. 

Wilkinson.  30  Md.  224 121 

Baltimore  City    Passenger    R. 

R.  Co.,  v.  Sewall.  35  Md.  238  ; 

s.  c.  6  Am.  Rep.  402 166 

Bambrich  v.  Campbell,  37  Mo. 

App.  4fi0 63 

Banet  v.  Alton,  etc.,R.  R.  Co., 

13  111.  504 25 

Bank  v.  Cook,  38  Ohio  St.  412.  67 
Bank  v.  Hill,  56  Me.  385  ;    s.  c. 

96  Am.  Dec.  470 108 

Bank  v.  Lannier,  11  Wall.  369  134 
Bank    v.    Rutland,    etc.,  R.  R. 

Co.,  30  Vt.  159 101 

Bank  of  Alabama  v.  Martin,  4 

Ala.  615 84 

Bank  of  Commerce's  Appeal,  73 

Pa.  St.  59 169 

Bank   Commissioners  v.  Bank 

of    Brest,    Har.  Ch.    (Mich.) 

106 103 


Bank     Commissioners    v.    St . 

Lawrence  Bank.  8  Barb.  436.     70 
Bank  of  Hearldsburg  v.  Bail- 

liache,  65  Cal.  327 94 

Bank  of  Holly  Springs  v.  Pin- 
son,    58  Miss.    421  ;    s.  c.    38 

Am.  Rep.   830 126,  159 

Bank  of  Ireland  v.  Evans'  Char- 
ities, 5  H.  L.  Cas.  389 167 

Bank  of  Little  Rock  v.  McCar- 
thy,   55  Ark.  473;     IS  S.  W. 

Rep.  759;  29  Am.  Rep.   00..     99 
Bank   of  Maryland   v.  Ruff,  7 

Gil.  &  J.  448. 98 

Bank  of  Metropolis  v.  Jones,  8 

Pet.  12 62 

Bank  of  Middlebury  v.    Rut- 
land,  etc.,  R.  R.  Co.,30Vt. 

159 94 

Bank  of  St.  Mary's  v.  St.  John, 

25  Ala.  566 116 

Bank  of  United  States  v.  Dan- 

dridge,  12  Wheat.  64 66 

Bank  of  the  United  States  v. 

Dunn,  6  Pet.  51 62,  66 

Barcus  v.  Hannibal,  etc.,  Plank 

Road  Co.,  26  Mo.  102 94 

Bargate  v.  Shortridge,  5  H.  L. 

Cas.  297  ;     s.  c.   24  L.  J.   Ch. 

457 107,109 

Barker   v.    Bigelow,    15  Cray, 

130 179,  221,  222.  223,  242,  249 

Barnard   v.   Pilsworth,  6  C.  B. 

692  ;  s.  c.   14   L.  T.  Rep.  132  ; 

18  L.  J.  C.  P.  330.  note 430 

Barnard  v.   Thomson, [1894]    1 

Ch.  374  ;  s.  c.  8  Rep.  585  :  63 

L.J.  Ch.  488;  70  L.  T.  306; 

43  W.  R.  2 334,  346.  347,  386 

Barndt  v.  Greul,   4  Leg.  Gaz. 

(Pa.)  388 ;  s.  c.  1  Leg.  L.  Reg. 

737 205 

Barnes  v.  Brown,  80  N.  Y.  527.   105 
Barnes   v.    Trenton  Gas  Light 

Co.,  27  N.  J.  Eq.  33 69 

Barr  v.  Pittsburgh  Plate  Glass 

Co.,  51  Fed.  Rep.    33 105 

Bartholomew    v.     Bentlev.    1 

Ohio  St.  37 92.  114 

Bartlett  v.  The  Mystic   River 

Corporation,    151  Mass.  433 ; 

s.c.  24  N.  E.  Rep.  780 71 

Barton  v.  Enterprise  Loan  and 

Building  Association.  1 14  Ind. 
:  s.c.  16  N.  E.   Rep. 

13  West  Rep.  816;    22  Amer. 

and   Eng.    Corp.  Cas.  612  :  5 

Amer.  St.  Rep.  608.. .29,  301,  435, 
437,  440 
Barton  v.  Pioneer  S.  &  L.  Co. 

(Minn.),71N.W.Rep.  906  252  456 


XX 


TABLE   OF   CASES. 


PAGE 

Barwick  v.  Clement,  U.  C.  Q. 

B.  549 454 

Bassett  v.    Monte  Cristo,  etc., 

15Nev.  293 105 

Basshor  v.  Dassel,  34  Md.  503    32 
Batelle  v.  N.  W.  Cement,  etc., 

Co.,  3?  Minn.  89  ;  s.  c.  33  N. 

W.Rep.  327 106 

Bates   v.    Equitable,  etc.,  Co., 

65  111.  App.  529 37,43 

Bates  v.  People's  Saving  and 

Loan    Association,    42   Ohio 

St.  655  ;  14  Wkly.  L.  Bull.  396    31 
33,44,227.234,261.267,422,  430 
Bath,  Ex  Parte,   L.  R.  27  Ch. 

Div.  509  ;  s.  c.  51  L.  T.  (N.  S.) 

520  ;  32  W.  R.  808 228,  239 

Batz.v.Equitable,  etc.,  Society, 

65  111.  App.  529 33 

Bauer  v.    Samson   Lodge,  102 

Ind.  262  ;   s.  c.  1    N.  E.  Rep. 

571 ;   13    Am.  &  Eng.    Corp. 

Cas.  618 ,...123,  135 

Bauman  v.  Manistee  Salt,  etc., 

Co..  94  Mich.  363;  s.  c.  53  S. 

W.Rep.  1113 62 

Baxter  v.    Mclntire,    13   Gray, 

168  249,  455 

Beach  v.  Co-operative  S.  &  L. 

Co.  (S.  D.),74S.W.  Rep.  889  406 
Beach  v.  Miller,  130  111.  162;  s. 

c.  32  N.  E.  Rep.  464 ;  17  Am. 

St.  Rep.  291 106 

Beach  v.  Muller  23  111.  App.  151  106 
Beadle  v.  Chenango  Insurance 

Co.,  3  Hill,  161 136 

Beardsley  v.  Johnson,  121  N.  Y. 

224  ;  s.  c.  24  N.  E.  Rep.  380: 
.  Y.  St.  Rep.  691  jaffirm- 

ing  1  N.  Y.  Supp.    608;  s.  c. 

16  N.  Y.  St.  Rep.  773  89 

Bechtold  v.  Brehm,  26  Pa.  St. 

1 189,   259 

Becker  v.  Berlin  Benefit  Socie- 

iv.  Ill    Pa.  St.  232  ;  s.  c.  22 

At!.  Rep.  699 129 

.  CJniontowg  Buildii 
.:ui    Association,   88   Pa. 

St.   211 22,  33,  439 

m  v.  Bouston,  32Ind.393.    37 
•  !  !:.  R.  Co.  v.  Bowser, 48 

Pa.  St.  29 103 

■  Loven     Building    Associa- 
tion v.  Weber, 5  Atl. 235 (Pa.); 

.;  Cent.  Rep.  916 331 

Behler  v.   ( German,  etc..  [nsur- 

.,68Ind.  347 I  '! 

Belanger  v.  Gauthier,  5   1 1 

no 

Bell' .    Appeal,  115  Pa. 

.  2  Am.  si.  Rep.  582 158 


PAGE 

Bell's  Gap  R.  R.  Co.  v.  Christy, 
79  Pa.  St.  54 ;  s.  c.  21  Am. 
Rep.  39 118 

Bennett  v.  Eastern  B.  &  L. 
Ass'n,  177  Pa.  St.  233  ;  s.  c.  35 
Atl.  L.  684  ;  34  L.  R.  A.  595.   286 

Bennett  v.  St.  Louis  Car  Roof- 
ing Co.,  23  Mo.  App.  587 78 

Bent  v.  Lewis,  15  Mo.  App.  40, 
578 105 

Bent  v.  Priest,  86  Mo.  475  ;  af- 
firming 10  Mo.  App.  557..  105,  114 

Bergman  v.  St.  Paul,  etc.,  As- 
sociation, 29  Minn.  275;  s.  c. 
13   N.    W.    Rep.  120...  26.29,  124 
127,  129,  189,  236,  244 

Berks,  etc.,  Turnpike  Road  v. 
Myers,  6  S.  &  R.  12  ;  s.  c.  9 
Am.  Dec.  402 98.    101 

Bermingham  v.  Maryland  Land 
and  Permanent  Homestead 
Association.  45  Md.  541 247 

Bethany  v.  Sperry,  10  Conn. 
200 51 

Bettelev  v.  Reed,  4  Q.  B.  511 ;  s. 
c.  3G.  &  D.  561 264 

Betz  v.  Fulton  Building  and 
Saving  Association,  1  Ohio 
Dec.  42 129,  284 

Bexar,  etc. .  Association  v.  Rob- 
inson, 78  Tex.  163  ;  s.  c.  14  S. 
W.  Rep.  227 258,  265 

Bexar  B.  &  L.  Ass'n  v.  Seebe 
(Tex.) ,  40  S.  W.  Rep.  875. ...  258 

Bibb    County    Loan    Assn.    v.       3 
Richards,  21  Ga.  592. .    22.  37,  253 

Bigelow    v.    Gregory,  73    111. 
197 27,     29 

Birmingham  Co.  v.  White,  1 
Ad.  &.E1.  (N.  S.)  282 48 

Birmingham  v.  Maryland  Land, 
etc.,  Association,  45  Md.  541.  233 

288 

Bismarck  Building  and  Loan 
Association  v.  Bolster,  92  Pa. 
St.  123 291 

Bjorngaard  v.  Goodhue  Coun- 
ty Bank,  49  Minn.  483;  s.  c. 
5-2  X.  W.  Rep.  48 91 

Black  v.  Tompkins,  63Ark.  502  ; 
39  S.  W.  Rep.  553 250 

Blackburn's  Appeal,  39  Pa.  St. 
160 237,  259 

Blackburn  and  District  Benefit 
Building  Society,  In  re,  48 
L.  T.  (N.    S.)   134 337 

Blackburn  Benefit  Building 
Society  v.  Cunliffe,  L.  R.  22 
Ch.  Div.c.l  ;  s.  c.  81.  W.  R. 
98 ;  on  appeal,  9  App.  Cas. 
865;    s.    o.     54    L.    J.    Ch. 


TABLE   OF    CASES. 


XXI 


PAGE 

376  ;  50  L.  T.  225  ;  33  W.   R. 

20<J 410,    422 

Blackburn  and  District  Build- 

ing Society  v.  Cunlitt'e,  29  Ch. 

Div.  602  ;  s.  c.  54  L.  J.  Ch. 

1091  ;  53  L.  T.  741 424 

Blackburn    Building    Society, 

In  re,  L.  R.  24  Ch.  Div.  421  : 

52  L.  J.  Ch.  894 ;  49  L.  T.  730 ; 

32  W.  R.   159... 329,  330,  346,  385 
Blackburn  Building  Society  v. 

Cunlifte,  L.  R.  9  App.  Cas. 
857  ;  s.  c.  54  L.  J.  Ch.  376  ; 
52  L.  T.  (N.  S.)225;  33W.R. 
309;  affirming  L.  R.  22  Ch. 
Div.  01  ;  s.  c.  31  W.  R.  98;  52 
L.  J.  Ch.  92 ;  48  L.  T.  (N.  S.) 

33  ;  and  reversing L.  R.  29  Ch. 
Div.  902 ;  s.  c.  54  L,  J.  Ch. 
1091 412 

Blackman  v.  Branch  Bank,  8 
Ala.    103 60 

Blatchford  v.  Ross,  54  Barb.  42; 
s.  c.  37  How.  Pr.  110  ;  5  Abb. 
Pr.  (N.  S.)  434 118 

Blake  v.  Bayley,  16  ( Iray,  531 . .    91 

Blakeley  v.  El.  Paso  Building 
and  Loan  Association  (Tex. 
Civ.  App.),  26  S.  W.  Rep. 
292 173,  440 

Blanchard  v.  Dow,  33  Me.  557     97 

Blanchard  v.  Kraull,  44  Cal. 
440 21 

Bliss  v.  Matteson,   45  N.  Y.  22  104 

Boardman  v.  Keystone  Stand- 
ard Watch  Co.,  8  Lane.  L. 
Rev.   23 93 

Boisdere  v.  Citizens'  Bank, 
9  La.  506  ;  s.  c.  29  Am.  Dec. 
453 103 

Bolton  Benefit  Loan  Society 
v.  Booth,  In  re,  12  Ch.  Div. 
679  ;  s.  c.  49  L.  J.  Ch.  39  ;  28 
W.  R.    164 42 

Bonel lis  Telegraph  Co.,  In  re, 
12  Eq.  246  ;  s.  c.  40  L.  J.  Ch. 
567  ;  19  W.  R.   1022 93 

Booker  v.  Young,  12  Gratt.  303     95 

Boone  v.  Homestead  Loan  As- 
sociation, 23  N.  Y.  Supp.  203  ; 

54  N.  Y.  St.  Rep.  63 191,   226 

227,  228,230,  233 

Booz's  Appeal,  109  Pa.  St.   592  ; 
s.  c.  16  W.  N.  Cas.   365  ;  42 
Leg.  Int.  501  ;  33  Pitts.  L.  Jr. 
389.... 27,  127,   128,  324,  327,  339 
376,  387,  406 

Borchus  v.  Huntington  Build- 
ing Loan  and  Savings  Asso- 
ciation^ Ind.  ISO... 311,  454 

Border   State   Perpetual,  etc., 


PAGE 

Association  v.  Hayes,  61  Md. 
597 180,  248,  265 

Border  State,  etc.,  Associal  ion 
v.  Hillary,  68  Md.  52  ;  11  Atl. 
Rep.    505 248  265 

Border  State,  etc.,  Associal  ion 
v.  McCarthy,  57 Md. 555.. 247,  267 

Borgards  v.  Farmers'  Mutual 
Insurance  Co.,  79  Mich.  440; 
s.  c.  44  N.  W.  Rep.  856.. 130,  131 

Borough  Commerce  and  Build- 
ing Society,  In  re,  (1893)  2 
Ch.  242 378 

Bosang  v.  Iron  Belt,  etc.,  Asso- 
ciation (Va.),30S.  E.  Rep. 
440 254 

Boston,  etc.,  Mf.  Co.  v.  Moring, 
15  Gray,  211 51 

Bosworth  v.  Burgen,  7  Mod. 
459  ;  s.  c.  Lutu,  1324 136 

Bosworth  v.  Sumter,  lOOGa.60  ; 
s.  c.  28  S.  E.  Rep.  154 254 

Botten  v.  City  and  Suburban 
Building  Society,  13  R.  591  ; 
(1895)  2Ch.441  ;  64  L.  J.  Ch. 
609  ;  72  L.  T.  722  ;  44  W.  R. 
12 130,  335,  448 

Botten  v.  City  and  Suburban 
Benefit  Building  Society,  98 
L.  T.  326  ;  s.  c.  on  appeal,  98 
L.  T.  349 330 

Bottomlev's  Case,  L.  R.  16  Ch. 
Diy.  681   95 

Bourignon  Building  Associa- 
tion v.  Commonwealth,  98 
Pa.  St.  54 ;  s.  c.  38  Leg.  Int. 
324;  10  W.  N.  Cas.  161;  15 
Phila.   623 428 

Bowen  v.  Lincoln  Building- and 
Loan  Association,  51  N.  J.  L. 
272  ;  s.  c.  28  Atl.  Rep.  07  ;  40 
Amer.  &  Eng.  Corp.  Cas.  503  200 
220,  221,  222.  231.  233,  251 

Bowker  v.  Mill  River  Loan 
Fund  Association.  7  Allen, 
100. . .  .202.  249,  250,  380,  434,  435 

Bowlby  v.  Bell,  3  C.  B.  284. ...  140 

Bowling  &  Welby's  Contract, 
In  re,  12  Rep.  218;  s.  c.  (1895) 
1  Ch.  663  ;  Oil  L.  J.  Ch.  427  ; 
72  L.  T.411  ;  43  W.  R.  417  ;  2 
Monson,  257 42 

Boyd  v.  Johnson,  89  Tenn.  28 1  : 
s.  c.  14  S.  W.  Rep.  804 67 

Bradbury  v.  Wild,  3R.   195:  s. 
c.  (1893)  1  Ch.  377  :  62  L.  J. 
Ch.  503;  OS  L.  T.   50;  41    W. 
R.  361 ;  57  J.  P.  68. .129, 131,  244 
327,  399 

Bradley  v.  Williams,  3  Hughes, 
20..: 70 


XX11 


TABLE   OF   CASES. 


PAGE 

Brady  v.  Coachman's  Benevo- 
lent   Association,   14    N.  Y.      3 

Supp.  272 13 

Branch  v.  Roberts,  50  Bab.433. .  115 
Branch  Bank  v.  Collins,  7  Ala. 

95 104,  118 

Brett  v.  Monarch  Investment 

Building  Society,  9  Rep.  141  ; 

s.  c.  (1894)  1  Q.  B.  3G7  ;  G3  L. 

J.  Q.   B.  237  ;  70  L.  T.   146  ; 

42  W.   R.  209  ;    58  J.  P.   367  330 
334,  425 
Brewster  v.  Hartley,  37  Cal.  15  ; 

s.  c.  99  Amer.  Dec.  237.  .  .55,  127 

169 
Brewster  v.   Hatch,  122  N.   Y. 

349 ;    25  N.    E.    Rep.    505 ;  9 

Rail.   &  Corp.  L.  Jr.    5  ;    33 

N.  Y.  St.  Repr.  527  ;  19  Am. 

St.  Rep.  498 116 

Brewster    v.    Stratman,  4   Mo. 

App.  41 104,  107 

Bridgewater   Navigation    Co., 

In  re,  L.  R.  39  Ch.  Div.  1 . . . .  144 
Bridgton    v.    Bennett,  23    Me. 

L22 84 

Brigg,  Ex  Parte,  L.  R.   1   Eq. 

483 153 

Briggs  v.  Cape  Cod  Ship  Canal 

Co.,  137  Mass.  71 22 

Briggs  v.  Spaulding,  141  U.  S. 

132 .......69,  92,  104,  108 

Britannia  Permanent  Benefit  B. 

S.,  In   re,  65  L.    T.  196;  s.  c. 

W.  X.    (1891)   123;  39  W.  It.     71 
381,  396 
British    Mutual  Banking  Co.  v. 

Charnwood  Forest  R.   R.  Co.. 

L.  R.  18  Q.  B.  Div.  714  ;  s.  c. 

56  L.  J.  q.  B.  449;  35  W.  R. 

590 73 

Bristol  v.   Chicago,  etc..  R.    R. 

..  15  111.  436 50 

bol  ( !oun1  v    Sa vinus   Bank 

Mass.  98 81 

Broadwell  v.  Interocean  I  tome- 

i  and  Loan  Association, 
161  III.  327.  ;  s.  c.  43  N.  E. 
Rep.    1067 55,  434 

I  Ironwer  v.  <  !o1  heal,  10  Barb. 
216  :  B.  o.  5  X.  ¥.562 47 

I  trooldvn  ( i ravel  \ Ur.nl  Co.  v. 
Slau  .    :  I  Ind.  185 63 

Brooks  v.  Blackburn,  etc.,  Soci- 
L.  I.\  9  Lpp.  Cas.857.... 
.;  iCo.  v.  Rec- 
ord     •          '  t.   170 84 

I  er  v.  A  ppleby,  1  Sandf. 
158 ' 61,64 

Brouwer  v.  Hill,  I  Sandf.  629..    61 

Brown,   [n   re,  (1891)  2   Q.   B. 


PAGE 

574 ;  s.  c.  61  L.  J.  Q.  B.  15  ;  65 

L.  T.  485  ;  40  W.  R.  71 239 

Brown's  Estate,  12  W.  N.  (as. 

207 327,330 

Brown  v.  Archer,  62  Mo.  App. 

277;  s.  c.  1  Mo.   App.  Repr. 

465.. 232,  233,  234,  260,  267,  347 
391,  441 
Brown  v.  Donnell.  49  Me.  421  ; 

s.  c.  77  Am.  Dec.  266 67 

Brown  v.  Electric  Mining,  etc., 

Co.,  22    Pitts.   L.  Jr.  (N.  S.) 

343 89 

Brown   v.    Howard    Insurance 

Co.,  42  Md.  384  ;  s.  c.  20  Am. 

Rep.  90 168 

Brown  v.  Mechanics',  etc.,  Na- 
tional Bank.  58  Hun,  610  ;  s. 

c.  13  N.  Y.  Supp.  861  ;  35  N. 

Y.  St.  Rep.  665 64 

Brown  v.  Pacific  Mail  Steam- 
ship Co.,  5  Blatchf .  525 53 

Brown  v.   Republic   Mountain 

Silver  Mines,  17  Col.  421  ;  s. 

c.  30  Pac.  Rep.  66 ;  16  L.  R. 

A.  426 117,  118 

Brown    v.    Royal    Permanent 

Building  Society.  L.  R.  Eq. 

18  Vict."  (Australia)  397  ...  344 
Brown  v.  Weymouth,  36  Me. 

414 81 

Browne  v.  La  Trinidad,  L.  N. 

37  Ch.  Div.   1  ;  s.  c.  57  L.  J. 

Ch.  292  ;  58  L.  T.  (N.  S.)  137  89 
Browne  v.   Sanders,   20   D.    C. 

455;  s.  c.  20  Wash.   L.  Rep. 

277 74,  197,  336,  346,  374 

Browningv.  British  American 

Friendly    Society,     3    Low. 

Can.  Jur.  306 75.  281,  421 

Browning  v.  Hinkle,  48  Minn. 

544;    s.   c.   31     Am.  St.  Rep. 

691  :  51  N.W.  Rep.  605 94 

Brownell  v.  Hawkins,  4  Barb. 

491 168 

Brownlie  v.    Russell,  8    App. 

('as.  235;  s.  c.    is   L.  T.  881  ; 

47  J.  P.  757;   10  Rettiell.  J,. 

19;  30  Scots  L.  R.  481.... 88,  207 
241,  242,  315,  3(57.  :'.7.r..  376,  384 
Brownlie  v.    h'nssell,    8   Rettie, 

917 369,  917 

Brunswick-Balke-C  o  1  lender 

Co.  v.  Boutell,  45  Minn.  21  ; 

s.  c.  17  N.  W.  Rep.  261 67 

Bruce  v.  Smith,  4  1  [nd.  5 164 

Buckle  v.    Lordonny,  56  L.J. 

Ch.  137:  56  L.  T.  273;  35  W. 

R.  860;  51  J.  P.  422 397 

Budd  v.  Multnomah  St.  R.   R. 

Co.,  15  Ore.  413;  s.  c.  15  Pac. 


TABLE   OF    CASES. 


XX1U 


PAGE 

Rep.  655  ;  3  Am.  St.  Rep.  169..  121 

128 

Budd  v.  Walla-Walla  Print- 
ing, etc.,  Co.,  2  Wash.  Ty. 
347 68 

Buehlman  v.  Atlantic,  etc.,  As- 
sociation. 6  Ohio  C.  C.  285. . .  443 

Buell  v.  Buckingham,   16  la. 
284  ;  s.  c.  85  Am.  Dec.    516..     98 
106,  448 

Buffalo,  etc..  R.  R.  Co.  v.  Dud- 
ley. 14  N.  Y.  336 24 

Buffalo  v.  Webster,  10  Wend. 
99 123 

Buist  v.  Bryan,  44  S.  C.  121 ;  s.  c. 
21  S.  E.  Rep.  S37..25,  172,  174,  320 

441 

Buist  v.    Fitzsimons,   48  S.  C. 
130  ;  s.  c.  21  S.  E.  Rep.  610   .  257 
311.  320,  441 

Building  Association's  Appeal, 
33  Pitts.  L.  Jr.  324 194 

Building  Association  Banking 
Fees,  17  Pa.  C.  C.  62 428 

Building  Association  v.  Bever, 
17  Phila.  314 ;  s.  c.  41  Leg. 
Int.  280 436 

Building  Association  v.  Dob- 
bins, 15  Leg.  Int.  35 171 

Building  Association  v.  Egger, 
5  Wkly.  L.  Bull.  752 294 

Building  Association  v.  Esch- 
lebach,  7  Phil.  189  ;  s.  c.  Leg. 
Int.  1870,  p.  13 171,  177,  307 

Building  Association  v.  Galla- 
gher. 3  L.  T.  Pa.  (N.S.)  101,  184 

Building  Association  v.George, 
3  W.  N.  C.  239 .215,  231 

Building  and  Loan  Association 
v.  Griffin  (Tex.),  39  S.  W. 
Rep.  655 35,  287 

Building  Association  v.  Groes- 
beck,  41  Leg.  Int.  16  ;  s.  c.  17 
Phil.  242 169,  221 

Building  Association  v.  Han- 
len,  7  Luz.  L.  Reg.  165 218 

Building  Association  v.  Hop- 
ple, 12  W.  N.  Cas.  222..  .169,  199 

201 

Building  Association  v.  Jones, 
2  Law  Times  N.  S.  (Pa.)  17. .   129 
228,  330 

Building  and  Loan  Association 
v.  Leonard,  74  Miss.  810  ;  s. 
c.  21  So.  Rep.  53 263 

Building  and  Loan  Association 
of   Dakota   v.    Logan    (Tex. 
.  Civ.  App.),   33  S.   W.    Rep. 
1088..  159,  161,  171,  202,  203,  258 

Building  Association  v.  Lyons, 
2Kulp.  409 312 


Building  Association  v.  Mc- 
Dermott,  2  Kulp.  (Pa.)  203..  281 

Building  Association  v.  Min- 
nick,  1  Kulp,  513 122 

Building  Association  v.  Neu- 
rath,  2  W.  N.  ('as.  95 231 

Building  Association  v.  O'Con- 
nor. 3  Phila.  453 264 

Building  Association  v.  Reed, 
3  Phila,  345 171 

Building  Association  v.  Rice, 
8  W.  N.  Cas.  12 403 

Building  Association  v.  Robin- 
son. 19  Phila.  358;  s.  c.  46 
Leg.  Int.  5 32,  36,  L32,  294 

Building  Association  v.  Rowe, 
15  Leg.  Int.  45.  .171.  210.  214,  259 

Building  Association  v.  See- 
miller,  35  Pa.  St.  225.  note  ;  s. 
c.  15  Leg.  Int.  132:  3  Phila. 
115.  .  .  .209,  210,  213,  214.  217,  294 

Building  Association  v.  Ti Hi- 
ndus, 3  Phila.  209;  s.  c.  15 
Leg.  Int.  318 171,  259 

Building  Association  v.  Wall, 
7  Phila.  240 171 

Buker  v.  Leighton  Lea  Asso- 
ciation, 46  N.  Y.  Supp.  35  :  s. 

c.  18  App.  Div.  548 154.  198 

202,  316 

Bullard  v.  Bank,  18  Wall.  589..   128 

Bullock  v.  Consumers'  Lumber 
Co.,  32  Pac.  Rep.  (Cal.)  367..     68 

Bunker  v.  Steel,  43  N.  Y.  Supp. 
346 38 

Burbridge  v.  Colton,  5  De  G. 
&Sm.  17;  15  Jur.  1070;  21  L. 
J.  Ch.  201  ;  8E.  L.  Eq.  57.  .   243 

245 

Burke  v.  Home  Building  Asso- 
ciation, 7  Wldy.  L.  Bull.  114..  237 

284 

Burlingame  v.  Brewster.  79 
111.  515;  s.  c.  22  Am.  Rep. 
177 67 

Burlington  v.  Burlington  St. 
R.  R.  Co.,  49 la.  144 129 

Burlington  Mutual  Loan  Asso- 
ciation v.  Heider,  55  la.  424..  231 

260 

Burlinson's  Case,  3  De  Gex  & 
Sin.  is 40 

Bun-all  v.  Bushwick  R.  R.  Co., 
75  N.  Y.  211 140 

Burrill  v.  Nahant  Bank.  2  Met. 
163  ;  s.  c.  35  Am.  Dec.  395. .  .   100 

101 

Burnes  v.  Penned,  2  H.  L.  Cas. 
497 85 

Burns  v.  Beck,  83  Ga.  471  :  s. 
c.  10  S.  E.  Rep.  121 116,  117 


XXIV 


TABLE   OF    CASES. 


47 
37 

70 

55 

201 

94 


298 


37 

114 


15G 


Burns  v.   Metropolitan   Build- 
ing   Association,  2   Mackey 

CD.  C.)  7 436,  251 

Burr  v.  McDonald,  3  Gratt.  .215  100 

102 
Burton,  etc.,  Co.,  In  Ee,  31  L. 

J.  Ch.  62 

Burr  v.  Wilcox,  22  N.  Y.  551.. 
Bush  v.  Wadsworth,  60  Mich. 

255 

Bushev  v.  Hooper,  35  Md.  15  ; 

s.  c.  6  Am.  Rep.  350.    .....37, 

Butchers'  Benefit  Association, 

lure.  38  Pa.  St.  298 

Butler  v.  Cornwall,  22  Conn. 

335 

Butler  v.  Mutual   Aid,   Loan, 

and    Investment    Company, 

94  Ga.  062  ;  s.  c.  20  S.  E.  Rep. 

101 

Butler    University    v.    Seoon- 

over,  114  Ind.  381  ;  s.  c.  16  N. 

E.  Rep.  642  ;  5  Am.  St.  Rep. 

627 

Butterworth     v.    O'Brien,     24 

How.  Pr.  438 

Butts  v.  Wood.  37  N.  Y.   317; 

s.  c.  38  Barb.  181 71.  117,  119 

Byers  v.   Rollins.  13  Colo.  22; 

s.  c.  21  Pac.  Rep.  894 

Cabot,  etc..  Bridge  v.  Chapin, 

6Cush.  50 151 

Cahall  v.  ( 'itizens'  Association, 

61  Ala.  232 26,  33,  461 

Cahill    v.    Kalamazoo    Mutual 

Insnraiiri'i  !o.,  2  i  >oug.  Mich. 

124  ;    s.    c.    43    Amer.    Dec. 

457 60,  67,  92,  126,  136 

Cain    v.    Piillen,    31    La.    Ann. 

511 48 

Callender  v.  Painesville,  etc., 

I.'.  R.  Co.,  11  Ohio  St.  516...     34 
Callahan's  Appeal.  121   Pa.  St. 
.   c.    16   Ml.    h'ep.    638; 

19  Pitts.  L.Jr.  Ill  :  2:;  W.N. 

233 

( !amel  v.  Poull  ney,  6  Gill  &  J. 

94   ' 

ion   v.    I  [unter,  L.   I.'.    1 7 

Vict.   (  Vustr.)  '.'i; 

<  'aiiiiin\  it  v.  I  nit  ill  <  rerman 

l.ut hcrian  <  Ihurches, 2Sandf. 
Ch.  186 

<  :i  mpbell's  <  '■■!-'■.   I  -.    I.'.    I  ( 'li. 

Div.  470 

( !ampbell  v.  A  tnerican  Zylonite 

122    X.  Y.  455;  s.  c.  25 

:  :  reversini    13 

.   c.    3    N     Y. 

Snpp.  822 Ill 

( !ampbell  « .  Mercha  ats1  I  nsur- 


403 
55 


12 


93 

107 


PAGE 

ance  Co.,  37  N.  H.  41  ;  s.  c. 

72  Am.  Dec.  324 102 

Canada  Mutual  Building  So- 
ciety. In  re,  3  Leg.  News,  58  292 

Canada  Permanent  Building 
Society  v.  Bank,  10  Grant 
Ch.  203 454 

Canada  Permanent  Building 
and  Saving  Society  v.  Lewis, 
8  U.  C.  C.  P.  352. 282,  292 

Canada  Permanent  Building 
and  Saving  Society  v.  Harris 
(In  Can.),  16  U.  C.  C.  P. 
54 231,  261,  268,  281 

Canada  Permaiient  Building 
and  Saving  Society  v.  Ro- 
wed, 19  U.  C.  Q.  B.  124.  .261,  263 

Cann  v.  Eakins,  23  N.  S.  475. . .   102 

Cannon  River  Manf.  Associa- 
tion v.  Rogers,  51  Minn.  388 ; 
s.  c.  53  N.  W .  Rep.  759 94 

Cape  May,  etc.,  Co.,  In  re.  51 
N.  J.  L.  78;  s.  c.  16  Alt.  Rep. 
191 24.     55 

Capitol  Hill  Building  Associa- 
tion v.  Hilton.  1  Mackey, 
107    203,  319 

Carr  v.  Carr,  1  C.  B.  (N.  S.)  197  : 
s.  c.  26  L.  J.  C.  P.  113.  .45, 113,  201 

Carlisle  Banking  Co.  v.  Thomp- 
son, L.  R.  28  Ch.  Div.  398; 
s.  c.  53L.T.(N.S.)115;33W. 
R.  119 321 

Carpenter  v.  Richardson 
(Term.),  46  S.  W.  Rep.  452. .  447 

Carr  v.  Chartiers,  25  Pa.  St. 
337 78 

Carr  v.  City  of  St.  Louis,  9  Mo. 
l'.il 127 

Carrick  v.  North  British  Build- 
in  g  Society,  12  Rettie,  1271  ; 
s.  c.  22  Scot.  L.  1!.  837 349 

Carrick  v.Wills,  L2  Rettie,  1271  ; 
s.  <•.  22  Scot.  L.  R.  833 331 

Carroll  v.  Cone,  40  Barb.  220..     (;:; 

( larroll  v.  Mullanphy  Savings 
Bank,8Mo.  A.pp.249.  .49,  126,  158 

('arson  v.  Iowa  City  Gaslight 
Co..  si)  [a.  638;  s.  C.45N.  W. 
Rep.  iocs 157 

Carson   v.  Seldner.   77  Va.   293  381 

<  barter  v.  .  El  na  Loan  Co.,  1 
Mm.  A  pp.  Repr.  3.")."i ;  s.  c.  61 
Mo.  A  pp.  218 324,  337 

Carver  Co.  v.  Mi.  Insurance 
Co.,6Gray,21  1 81 

Caryl  v.  McElrath,  3  Sandf. 
176 61 

Cascade,  etc..  [nsurance  Co. 
\ .  Journal  Pub.  Co.,  I  Wash. 
152;  s.  <•.  25  Pac.  h'ep.  331..     94 


TABLE   OF   CASES. 


XXV 


Cason  v.  Seldner,  77  Va.  293  ; 

s.  c.  6   Amer.  &  Eng.  Corp. 

Cas.  630 142,  254,  284,  378  434 

440 
Casswell  v.  Oberly,  17  Bradw. 

281 29 

Catlin  v.  Eagle  Bank,  6  Conn. 

2:;:! 151 

Cattron  v.    First    Universalist 

Society,  4(5  la.  106 66 

Cavendish-Bentinck  v.   Fenn, 

L.  R.  12  App.  Cas.  652 104 

Cawley,    En   re,    L.    R.  42  Ch. 

Div.  209  ;s.  c.  31  Am.&Eng. 

Corp.  Cas.  425 157,   158 

Cecil.    In  re.   36  How  Pr.    477     56 
Ceeder  v.  Load  A"  Sons  Lumber 

Co.,  86  Mich.  .",41  ;  s.  c.  24  Am. 

St.  Rep.  134 63,     67 

Cefor  Cilcen  Mining,  In  re,  L. 

R.  7  Eq.  88  ;   s.   c.   19  L.  T. 

593;  38  L.  J.  Ch.  78 421 

Central   Building   Association 

v.  O'Connor,  5  Wkly.  L.  Bull. 

853  ;     s.    c.    9    Amer.     Rec. 

486 273,  274 

Central  Building  Association  v. 

Schmitt,  12  W.  N.  Cas. 239.  .   308 
Central,  etc.,  R.  Co.  v.  Twenty- 
third  St.R.,  53  How.  Pr.  (N. 

Y.)  45 48 

Central  Building  Association  v. 

Witzell,  13  Phila.  54  ;  s.  c.  36 

Leg.  Int.  174 437 

Central  Building.and  Loan  As- 
sociation    v.    Lampson,     60 

Minn.    422  ;  s.    c.   62   N.  W. 

Rep.  544 252,  280 

Central  R.  R.  Co.  v.  Collins,  40 

Ga.  617 24 

Centre,  etc.,  Co.  v.McConaby, 

16  S.  &R.  140 152 

Chadwell,  Ex  Parte,  59  Tenn. 

98 25 

Chaffin   v.  Cummings,   37  Me. 

76 37,     46 

Chambersburg  Woollen  Co.  v. 

Chambers! >urg    Manufactur- 
ing and  B.  A.,  31   Leg.   Int. 

357 404 

Chamberlain  v.  Painsville,  etc., 

R.  R.  Co.,  15  Ohio  St.  225. ...     51 
Champoux  v.  Lapierie,  31  Leg. 

News,  302 446 

Chandler  v.   Hoag,  5  T.  &   C. 

197;  a.  c.  2  Hun.  613 93 

Chapman  v.  Young.  65  111.  App. 

131 191,  344,  350,  432,  446 

Chapleo    v.    Brunswick     Per- 
manent Building  Soci°tv.  L. 

R.   6  Q.  B.  Div.  696  ;  s.  c.  50 


PAGE 

L.  J.  Q.  B.  Div.  372  ;  44  L.  T. 
(N.S.)  449;  29  W.  R.  529  ; 
reversing  L.  R.  5  C.  P.  Div. 
331  ;  49  L.  J.  C.  P.  Div.  796: 
42  L.  T.  (N.  S.)  741  ;  29  W. 
R.  153 410 

Charles  River  Bridge  v.  War- 
ren Bridge,  7  Pick.  371 34 

Charles  Tyrell  Loan  and  Build- 
ing Association  v.  Ealey,  139 
Pa.  St.  476;  s.c.  20  AtLRep. 
1063;  48  Leo-.  int.  345:  re- 
versing 27  \V.  N.  Cas.  244  187 
193,  317,  320,  434 

Charles  Tyrell  Loan  and  Build- 
ing   Association    v.    Haley, 
163  Pa.  St.    30]  :  35    W.    N. 
Cas.    269;  30  Atl.    Rep.   154  184 
193,  442 

Charlotte  Building,  etc.,  As- 
sociation v.  Commissioners, 
115  N.  C.  410:  s.  ■  oS.  E. 
Rep.  526 428 

Charter  Philadelphia  Artisana 
Institute,  In  re,  8  Phil.  229.  .     25 

Chase  v.  Merrimac  Bank.  19 
Pick.  564 37 

Chase  v.  Tuttle,  55  Conn.  455  : 
s.  c.  3  Am.  St.  Rep.  64;  12 
Atl.  Rep.  874 97,  10(1.  158 

Charlestovrn  Boot.  etc..  Co.  v. 
Dunsmore.  60  N.  11.  85 102 

Cheeney  v.  Lafayette,  etc.,  R. 
R.  Co.,  6S  111.  570;  s.  c.  18 
Am.  Rep.  584 117,  118 

Chemical  National  Bank  v.  Col- 
well,  132  N.  Y.  250;  s.  c.  30 
N.  E.  Rep.  644  :  43  N.  Y.  St. 
Rep.  876  :  reversing  29  N.  Y. 
St.  Rep.  726  ;  9  X.  Y.  Supp. 
288 87,     92 

Chenango  Mutual  Insurance 
Co.,  In  re.  19  Wend.  635 89 

Chesapeake,  etc.,  Co.  v.  Rob- 
ertson, 4  Cranch  C.  C.  291 . .     25 

Chester  Glass  Co.  v.  Dewey,  16 
Mass.  94;  s.c.  8  Am.  Dec. 
128 31.     37 

Chicago  Building  Society  v. 
Crowell,  65  111.  453 .'.74,  308 

Chicago,  etc.,  R.  R.  Co.  v. 
Boone  County.  44  111.  240.  .  .     63 

Chicago,  etc.,  11.  R.  Co.  v. 
Coleman,  is  111.  297;  s.  c  68 
Am.  1  tec.  514 63 

Chicago,  etc.  R.  R.  Co.  v. 
James.  22  Wis.  1 94 94 

Child  v.  Hudson  Bay  Co..  2  P. 
Wins.  207 126 

Childs  v.  Hard.  3,2  W.  Ya.  66  ; 
s.  c.  9  So.  Rep.  362 29 


XXVI 


TABLE    OF    CASES. 


PAGE 

Childs  v.  Smith,  55  Barb.  45. . .     26 
Chillicotte    Savings    Associa- 
tion v.  Ruegger.  60  Mo.  218..  453 
Choir  Insurance  Co.  v.  Cram, 

43  X.  H.  641 27 

Clioisser  v.  Young,  69  111.  App. 

252 446,  447 

Choteau  v.  Allen,  70 Mo.  290. . .  104 

105 
Choteau  v.  Dean,  7  Mo.  App. 

210 162 

Choteau      Insurance     Co.     v. 

Holmes,  68  Mo.  601 ;  s.  c.  30 

Am.  Rep.  807 97 

Choteau  Springs  Co.  v.  Harris, 

20  Mo.  382 163 

Christian's  Appeal,  102  Pa.  St. 

184  :  s.  c.  13  W.  N.  Cas.  181 ; 

30  Pitts.  L.  J.  435 ;  40  Leg. 

Int.  261 80,  337.  344,  345,  346 

379,  380,  383,  395,  420,  432,  444 
Christensen  v.  Eno,  106  N.  Y. 

97  :  s.  c.   12  N.  E.  Rep.  648 ; 

60  Am.  Rep.  429 140 

Christie    v.    Northern     Coun- 
tries, etc.,   Society,   L.  R.  43 

Cli.    Div.    62  :   59   L.   J.  Ch. 

210  ;  61  L.  T.  796  ;  38  W.  R. 

280 130,  284 

Chriswell's  Appeal,  100  Pa.  St. 

188 ;  s.  c.  12  W.  N.  Cas.  483; 

40  Leg.  Int.  132 395,  422.  423 

b  v.  Upton,  95  TJ.  S.  665..     24 
Cincinnati    German    Building 
iciation  v.  Flack.  1  I 

Supr.  Ct.  Rep.  4GS..  261,270,  272 

as'  Bank  v.  Elliot,  55  la. 
101  :  s.  c.  39  Am.  Rep.167...     71 
Building,  Loan,  and 
rial  ion   v.  Cor- 

riel,  34  X.  .1.  Eq.  383 Ii  !. 

284, 
Citizens'  Loan    Association  v. 

Logan,  29  X.  J.  Eq.  110 109 

( ,'ii  izens'  1  n                 'o.  v.  Sort- 
well  i,  217 51 

« 'ii  Lzens1  Mul  ual  Loan  and  Ac- 
cumulating   Fund     Associa- 
.  25  Barb.  263.  .  .133,  180,  215 
.      J67,  2  6 
Citizens'    Saving    and     Loan 
.    v.    Ruhl,  55    III.   A  pp. 

62,  r5,  80,93,  L32,    121 

3ecuril  v.  etc.,  <  !o.  \ . 

Uhler,  i  i  246 

City  Bank  v.  Allen,  I  X.  s.  W. 

L.  R.  170 33 

■  lank  v.   Bavtletl .  1 1   Ga. 

1 52 

1         Building  and   Loan  <  !om- 


PAGB 

pany  v.  Fatty,  1  Abb.  Dec. 

347 230,  231,  252,  267 

City    Building-,  etc.,    Associa- 
tion v.  Jones,  32  S.  C.  308; 

s.  c.  10  S.  E.  Rep.  1079 39 

City  Council  of  Montgomery 
v.  National  Building  and 
Loan  Ass'n,  108  Ala.  336; 

s.  c.  17  So.  Rep.  816 430 

City  of  St.  Louis  v.  Alexander, 

23  Mo.  483 98 

City  Loan  Co.  v.   Cheney,  61 

Minn.  83  ;  s.  c.  63  N.  W.  Rep. 

250 252 

City  Loan,  etc.,  Association  v. 

Goodrich,  48  Ga.  445 436  437 

Claflin  v.  Farmers',  etc.,  Bank, 

25  N.  Y.  293 61 

Clagg  v.   Hamilton,  etc.,  Co., 

61  la.  121 27 

Clark  v.  Barnard,  108 U.  S.  436  50 
Clark  v.  Central,  etc.,  Co.,  R0 

Fed.  Rep,  338  ;  s.  c.  15  L.  R. 

A.  683 91 

Clark  v.  Dunham  Lumber  Co., 

86  Ala.  220  ;  5  So.  Pep.  560. .     69 
Clark  v.  Edgar,  84  Mo.  106  ;  s. 

c.   54  Am.  Rep.  84;  12  Mo. 

App.  345 115 

Clark  v.  N.  E.  Mutual  Fire  In- 
surance   Co.,   6   Cush.    342  : 

s.  c.  53  Am.  Dec.  44 124 

Clarke  v.  Pratt.  4?  Me.  55 66 

Clarke   v.   Brooklyn    Bank,    1 

Edw.  Ch.  361 22 

Clarke  v.  Thomas,  34  Ohio  St. 

46 156 

Clarksville  Building  and  Loan 

Association  v.  Stephens,  26 

N.  J.  Eq.  351.. 173, '104.  204.  220 
222.  251,  298 
I  !1  a  rwater  v.  Meredith,  1  Wall. 

25 24 

Clem  v.  New<  lastle,  etc.,  R.  R. 

Co.,  9  hid.  488  ;  s.  c.  68  Am. 

Dec.  653 150 

< lleveland,  etc.,   R.   R.   Co.  v. 

Robbins,  -'>r>  Ohio  St.  483 166 

Close  v.   Glenwood  Cemetery, 

10?  U.  S.  466 23 

Cochran  \.  Arnold,  58  Pa.   St. 

399 34 

Cockburn    v.    Union  Bank,  13 

La.  Ann.  289 46,47 

( loel  tnor   Benefit  Building  So- 

ciety,  51  L.  T.  'r>:\ 410 

Collin    v.    Reynolds.   37  N.    Y. 

640 ' 72 

Cole  v.  Ryan,  52  Barb.  168. . .       37 
( loles  \ .   Bank  of  England,  10 

Ad.  &    El.    137 L67 


TABLE   OF  CASES. 


XXVU 


PAGE 

Collins  v.  Collins,  L.  R.  12  Eq. 

455 140 

Colonial  Bank  of  Australia  v. 

Curtain,    L.    R.  4  Vict.    L. 

(Austr.)  38 415 

Colonial  Bank  of  Australia  v. 

Draper,    L.    R.    4    Vict.    L. 

(Austr.)  527 415 

Columbia  Bottom  Levee  Co.  v. 

Meier,  39  Mo.  53 26,  53 

Columbia  Building  Association 

of  East  Baltimore  v.  Crumb, 

42Md.l92 279,  302 

Columbia  Building  and   Loan 

Association  v.  Bollinger,  12 

Rich.  Eq.  124;  s.  c.  78  Amer. 

Dec.  463 257 

Columbia  Buildiug  Association 

v.    Dobleims,     15    Leg.    Int. 

45  259 

Columbia  Insurance  Co.  v.  Ma- 
son Hiemer,  76  Pa.  St.  13..     73 
Coleman  v.  West  Va.  Oil,  etc., 

Co.,  25  W.  Va.  148 71 

Colt  v.  Woolaston,  2  P.  Wins. 

154 107 

Combination  Trust  Co. v. Weed, 

2  Fed.  Rep.  24 105 

Commercial  B.  &  L.  Associa- 
tion  v.   Mackenzie.    85    Md. 

132;  s.  c.  36  Atl.  Rep.  754...  241 
Commissioners  v.   Gas  Co..   12 

Pa.  St.  318 133 

Commissioners    v.    Lemly,    85 

N.  C.  341 ....     48 

Commonmealth   v.  Crompton, 

I    -    Pa.    138  ;    s.    c.    20  Atl. 

Rep.  417 164 

Commonwealth   v.    Cnllen,    13 

Pa.  St.  133  ;  s.  c.  53  Am.  Dec. 

450  99 

Commonwealth  v.  Dalzell,  152 

Pa.  St.  217;  s.  c.  25  Atl.  Rep. 

535  ;  34   Am.    St.    Rep.   640  ; 

reversing  1   Pa.    Dist.    Rep. 

657  ;  s.  c.  23  Pitts.  L.  J.  (N.  S.) 

67 90 

Commonwealth   v.    Detwilter, 

131  Pa.  St.  614;  s.  c.  25  W.N. 

Cas.   329  ;  47  Leg.   Int.    144  ; 

20  Pitts.  L.  J.  (N  S.)  378  :  7 

L.    R.    A.  857;  18  Atl.   Rep. 

990 55,  56 

Commonwealth  v.  Empire  Pass. 

R.  R.Oo..  134  Pa.  St.  237;  s.c. 

19  Atl.  Rep.   629  ;  7   Rail.  & 

Corp.  L.J.  470 47 

Commonwealth  v.   Heming- 
way, 131  Pa.  St.  614;  s.  c.  7 

L.    R.    A.   360  :  25   W.  Mass. 

337;  18  Atl.  Rep.  963 55 


Commonwealth  v.  McKean 
County  Hank,  32  Pa.  Si.  is;,..     •„>■> 

Commonwealth  v.  Phoenix 
Iron  Co..  105  Pa.  St.  I  1 1  :  s.  c 
51  Am.  Rep.  184  :  23  Amer. 
L.  Reg.  388  ;  23  Cent.  L.  J. 
524 46,  17 

Commonwealth  v.  Pennsylva- 
nia B.  &  L.  Association.  'JO 
Pa.  C.  C.  589 4:1:2.  4:19,  -156 

Commonwealth  v.  Pottersville 
Saving  Fund  Association,  2 
Chest.    189 428 

Commonwealth  v.  Smith,  45 
Pa.  St.  59 51 

Commonwealth  v.  Redd  i  n  gs 
Saving  Bank,  133  Mass.  16; 
s.  c.  43  Am.  Rep.  495 81 

Commonwealth  v.  St.  Mary's 
Church,  6  S.  &  R.  508 102 

Commonwealth  v.  St.  Patrick's 
Society,  2  Binn.  441  ;  s.  c.  4 
Am.  Dec.  45:1 134 

Commonwealth  v.  Turner,  1 
Cush.  493 121 

Commonwealth  v.  West  Ches- 
ter Co.,  3  Grant  Cas.  200 21 

Commonwealth  v.  Woe]  per, 
3  S.  &  R.  29;  s.  c.  8  Amer. 
Dec.  628 56,  97,  138 

Commonwealth  v.  Worcester, 
3  Pick.  461 183 

Concordia  Savings,  etc.,  Asso- 
ciation   v.    Reed,   93  N.   Y. 
471  ;  s.    c.   4  Amer.   &  Eng. 
Corp.    Cas.    175.. 32,    36,    45,  132 
229,  252,  299 

Connecticut,  etc.,  R.  K.  Co.  v. 
Bailey,  24  Vt.  465  ;  s.  c.  58 
Am.  Dec.  181 150,  152 

Connolly  v.  Association,  6  W.N. 
Cas.  176 432 

Connor  v.  Hill,  11  Rich.  (S.  C.) 
193 166 

Conservative  Building  &  Loan 
Association  v.  Cad  v.  55  Til. 
App.  469     .".252.  313,  314 

Continental,  etc.  So.  v.  Peo- 
ple, 167  111.  195  ;  s.  c.  47  X.  E. 
Rep.  381 432,  433 

Converse  v.  Hood,  !  19  Mass. 
471  ;  s.c.  21  N.  E.  Rep.  878..     55 

Conway  v.  Log  Cabins  Perma- 
nent Building  Association. 
3:3  Md.  137 84 

Conyngham's  Appeal,  57  Pa. 
St.  474 105 

Cook  v.  Berlin  Mill  Co..  13  Wis. 
433 101 

Cook  v.  Henderson,  8  Am.  Law 
Rec.  429 163 


XXV111 


TABLE    OF    CASES. 


PANE 

Cook  v.  Kent,  105  Mass.  246...  202 

438 

Cooley  v.  Dominion  Building 
s,  >ciety,  24  L.  Can.  Jur.  Ill . .  422 

Cooper  v.  Mclndoe,  2  Montreal 
Supr.  388  ;  s.  c.  10  Leg.  News 
35  :  affirmed.  32  Lower  Can. 
Jur.  210 452,  461 

Cooper  v.  Oriental  Saving  and 
Loan  Association,  100  Pa.  St. 
.   KIT  ;  s.  c.   12  W.  N.  ( las. 
332 228,  436 

Corbett  v.  Woodward,  5  Sawy. 
403 50,  108 

Cork,  etc.,  R.  R.  Co.  v.  Cazen- 
ove,  10  Ad.  &  El.  (N.  S.) 
935 38 

Corn  Exchange  Bank  v.  Cum- 
berland Coal  Co.,  1  Bosw. 
436 96 

Corporation  Officers,  In  re, 
3  Pa,  C.  C.  188  79 

Corporation .  etc. ,  Society, 
In  re.  22  Vict.  L.  Rep.  (Aus- 
tralia )  47 350,  351 

Coryell  v.  New  Hope,  etc.,  Co., 
9N.  J.  Eq.  437 96 

Cotterell  v.  Stratton,  8  Ch. 
205:  45  L.  J.  Ch.  417;  28 
L.  T.  218;  21  W.  R.  234:  37 
J.  P.  4 371 

Cottrill  v.  Crum,  100  Mo.  397: 
s.  c.    13  S.  W.   Rep.   753  :    L8 

a.  St.  Rep.  54!) 116 

on  v.  Davis.  1  Stra.  53 96 

County     Life     Insurance     Co., 

re,L.  R.  5  Ch.  288 94 

ley  v.  Smyth,  46  X.  J.  L. 
380;  s.  c.  50  Am.  Rep.  432..  116 

Crabtree  v.  Old  Dominion,  etc.. 

;.  i''.. 

p.  711 251,  289 

Craft   v.    &  ton  R.  R. 

Co.,  150  Mass.  207  :  s.  c.  22 
X.  E.  Rep.  920;  5  1..  R.  A. 
'ill  :  28    Am.    &    iai-.   Corp. 

.  579 80 

Craig  v.  Firsl  Presbyterian 
Church,  88    Pa.  St.  42  :  s.  c. 

\h,.   Rep.   117 5:;.  1)1,  114 

Medicine  <  '■>.  7.  Mer- 
chants' Bank,  5!)  Hun,  561  ; 
I  1  X.  Y.Supp.    Mi  :  36   X.  Y. 

St.  Rep.  923 115 

■  r.  12  Me.  351.  .  .  .      1)5 

Crawford   v.   Branch    Bank,   7 

Ala  Co 

i   v.   Powell,  '.'    I..   I). 
Raym.  L013 ;  8.  «■.  1  W.  Black. 

92 

I  Brewing  Co.   \ . 


PAGE 

Flanner,  44  La.  Ann.  22  ;  s.  c. 

10  So.  384 107 

Crescent  City,  etc.,  Co.  v.  Deb- 
lieux,  40  La.  Ann.  155  ;  s.  c. 
3  So.  Rep.  726 168 

Cunningham's  Appeal,  108  Pa. 
St.  546 157 

Cresswell  v.  Oberly,  17  Bradw. 
281 27 

Criswell's  Appeal,  100  Pa. 
488 44 

Cross  v.  Fisher.  65  L.  T.  Rep. 
114:  (1892)  1  Q.  B.  467:  61 
L.  J.  Q.  B.  409  :  66  L.  T.  48  : 
40  W.  R.  265  :  56  J.  P.  372.  .95,  111 

Crone  v.  Crone.  26  Giant  Ch. 
459 275 

Crump  v.  United  States  Min- 
ing Co.,  7  Gratt.  353  :  s.  c. 
Am.  Dec.  116 153 

Culbertson  v.  Wabash  Navi- 
gation  Co.,  4  McLean.  545. . .  107 

Cullerne  v.  London  and  Sub- 
urban Building  Society ,  L.  R. 
25  Q.  B.  Div.  485 !  s.  c. 
59  L.  J.  L.  B.  525  :  63  L.  T. 
511  :  39  W.  R.  88;  6  T.  L.  R. 
449  :  55  J.  P.  148. . .   110.  128,  280 

Cumberland,  etc.,  R.  R.  Co.  v. 
Sherman,  30  Barb.  553 107 

Cummings  v.  Citizens'  Build- 
ing, Loan  and  Savings  Asso- 
ciation, 142  Ind.  600  :  s.  c.  42 
N.  E.  Rep.  213 299 

Cummings  v.  Webster,  43  Me. 
192 122 

Cunliffe  B.  Blackburn  and  Dis- 
1  rict  Building  Society.  9  App. 
( !as.  857  :  s.  c.  54  L.  J.  Ch. 
376  :  52  L.  T.  225  :  33  W.  R. 
309 410 

Cunningham  v.  Alabama  Life 
Insurance  Co.,  4  Ala.  652  .  . .    158 

Cunningham  v.  Mutual,  etc., 
Ass'n,  6  Pa.  Dist.  Rep.  99.  ...     86 

Curry  v.  Bank,  8  Port.  (Ala.) 
360 85 

Curtis  v.  Portland.  59  Me.  483. .     96 

Curtiss  v.  Granite  State.  et"\, 
Association,  69  <  'onn.  6  ;  s  o. 
'.:!.  Rep.  L023  417,  448 

Cushman  v.  Thayer  Manufact- 
uring Co.,  76  N.  Y.  365  :  s.  c. 
32   Am.  Rep.  315 164 

Custer  v.  Titusville,  etc.,  R.  R. 
Co.,  63  Pa.  St.  381 152 

Cutbill    v.    Kingdom.     I     Exch. 

494  :  s.  c.  17  L.J.   Exch.  177.     57 

246 
1 )'  \  rcy  v.  Tamar,  etc.,  R.   R. 

Co.,L.  R.2Exch.  158;  8.  c.  2 


TABLE   OF   CASES. 


XXIX 


PAGE 

Hurl.  &  C.  463;  36  L.  J. 
Exch.  (N.  S. )  37  ;  14  W.  R.  96    94 

Daggett  v.  Davis,  53  Mich.  35  ; 
s.  o.  18  N.  W.  Rep.  548;  51 
Am.  Rep.  91 105,  166 

Dahl  v.  Palache,  68  Cal.  248  ;  s. 
c.  9  Pac.  Rep.  94 89 

Damon  v.  Granby,  2  Pick.  315     96 

Dana  v  Bank  of  United  States, 
5  W.  &  S.  223 102,  4r,7 

Dane  v.  Young,  61  Me.  160....   163 

Dartmouth  College  v.  "Wood- 
ward, 4  Wheat.  518  ;  revers- 
ing 1  N.  H.  Ill 21,  23 

Davenport  Bank  v.  Gifford,  47 
la.  575 163 

Davidson  v.  Old  People's  Mut- 
ual Society,  39  Minn.  303  ;  s. 
c.  39  N.  W.  Rep.  803 124 

Davies  v.  Second  Chatham 
Building  Society,  61  L.  T. 
Rep.  680 130 

Davis  v.  Bank  of  England,  2 
Bing.  393 168 

Davis  v.  Memphis  City  R.  R. 
Co. ,  22  Fed.  Rep.  883 69 

Davis  v.  United  States  Electric, 
etc.,  Co.,  77  Md.  3.",  ;  s.  c.  25 
Atl.  Rep.  982 91 

Davis  v  West  Saratoga  Build- 
in-  Union,  32  Md.  285 417 

Davis  Mill  Co.  v.  Bennett,  39 
Mo.  App.  460 98 

Dawes  v.  North  River  Insur- 
ance Co.,  7  How.  462 61,  G3 

Dawkins  v.  Antrobus,  L.  R.  17 
Ch.  Div.  615;  s.  c.  44  L.  T. 
(N.  S.)  ."",57  ;  29  W.  R.  511..  .   137 

Day  v.  Mill  Owners'  Mutual 
Fire  Insurance  Co..  75  la. 
094  ;  s.  c.  78  N.  W.  Rep.  118.     29 

Dayton,  etc.,  R.  R.  Co.  v. 
Hatch,  1  Disney,  84 102 

Dearborn  v.  Northwestern  Sav- 
ings Bank,  42  Ohio  St.  017,  31,  422 

Deadrick  v.  Wilson,  8  Baxt. 
108 94 

Dean  v.  Davis,  51  Cal.  406 21 

De  Camp  v.  Alward,  52  Ind. 
468 458 

Decatur  Building  and  Invest- 
ment Co.  v.  Neal.  97  Ala.  717  ; 
s.  c.  12  So.  Rep.  780 335,  336 

Dedham  Institute  for  Savings 
v.  Slack,  6  Cush.  408 81 

Deering  v.  Bishop  Baley  Build- 
ing and  Loan  Association 
(N.  J.).  24  Atl.  Rep.  575 352 

De  Hascot's  Case,  Comb  202. . .  127 

De  la  Cuesta  v.  Insurance  Co., 
136  Pa.  St.  62,  658  ;  s.  c.  26 


PAGE 

W.  N.  Cas.  337  ;  47  Leg.  Int. 

466 ;  20  Atl.    Rep.  505 ;  9  L. 

R.  A.  631 157 

Delano's  Case,  121  111.   247  ;  s. 

c.  12  N.  E.  Rep.  676;  2  Am. 

St.    Rep.   81  ;    171   111.    App. 

531 108 

Delano  v.  Smith  Charities,   138 

Mass.  63 79,  97 

Delano  v.  Wild,  6  Allen,   1  ;  s. 

c.  83  Am.  Dec.  605.  .180,  204,  249 
Delaware,  etc.,  Canal    Co.     v. 

Pennsylvania    Coal    Co.,   21 

Pa,  St.  131 92 

Delaware  R,  R.  Co.  v.  Tharp, 

5  Hair.  Del.  454 23 

Delta  Lumber  Co.  v.  Williams, 

73  Mich.  86  ;   s.  c.  40  N.   W. 
Pei>.  940  ;  5  Rail.  &  Corp.  L. 

J.  139 73 

Deniston   v.    Terry,    141    Ind. 

67  :  s.  c.  41  N.  E.  Rep.  142.42!).  430 
Dennison  v.  Alpena,  etc.,  Asso- 
ciation, 75  N.  W.  Rep.  300.  .  337 
338,  456 
Dennison  v.  Jeffs,  65  L.  J.  Ch. 
43r> ;    s.   c.  (1896)  1  Ch.   611  ; 

74  L.  T.  270  ;  44  W.  R.  476.  .     38 

39.  40,  54,  456 
Denny  v. ."West  Philadelphia, 

etc.,  Association,  39  Pa.  St. 

154 189,  237,  259 

De  Ruyter  v.  St.  Peter's  Church , 

3    N.    Y.    238;    affirmin 

Barb.  Ch.  124 457 

Despatch    Line     v.     Bellamv 

Manf.  Co.,  12  N.  H.  20; 

c.  37  Am.  Dec.  203 92,  95,  97 

Detwilter  v.  Commonwe 

131  Pa.  St.  614  ;  s.  c.  25  W. 

N.  C.  329  ;  47  Log.  Int.  144.       55 

Deveaux,  In  i~e,  54  Ga.  675 25, 

26,  27 
DeWitt  v.  Hastings,  40  N.  Y. 

Supr.  Ct.  463 ! 

Dickerson  v.  Raleigh  Co-oper- 
ative    Land     and     Building 

Association  89  N.  C.  37 266 

Diemer  v.  Egolf,  1  Cheast.  Pa. 

55 177,  178 

Dill  v.  Wabash, etc.,  R.  R.  Co., 

21  111.  91 150 

Dilzer  v.   Beethoven    BuiL 

Association;  103  Pa.  S;. 

s.  c.  15  Phil.  344  ;  39  Leg.  In  i 

230 
Dime    Savings    Institution   v. 

Mulford,  31  N.  J.  Eq.  99  ....  266 
Directors  v.  Kisch,  L.  E.  2  II. 

L.  99 152 

bch  Line  v.  Bellamy  Mf. 


XXX 


TABLE   OF    CASES. 


Co.,   12  N.  H.  205;  s.  c.  37 

Am.  Dec.  203 98,  99,  100,  203 

District  of  Columbia  v.  Wag- 

gernan,  4  Mackey,  328 134 

Dobinson  v.    Hanks.   16    Sim. 

497  ;  s.  c.  39  Eng.  Ch.  Rep. 

406;  12  L.  T.  O.  S.  238 46 

Dobson  v.  Simonton,  86  (N.  C.) 

492 34 

Dodd   v.   Wilkinson.  42  N.  J. 

Eq.  647  ;  s.  c.  9  Atl.  Rep.  685  109 
Doernbecher  v.  Columbia  City 

Lumber  Co..  21  Ore.  573;  s. 

c.  28  Pac.  Rep.  899  ;  28  Am. 

St.  Rep.  766  ;  11  Rail.  &Corp. 

L.  J.  153 100 

Dominion  Building  and  Loan 

Association  v.  Gordon,  26  N. 

S.  551 317 

Doncaster  Permanent  Benefit 

Building  Society,  4  Eq.  479  ; 

s.  c,  36  L.  J.  Ch.  871  :  32  J. 

P.  3 343,370,380,  405 

Doran    v.     McNally,    7    Leg. 

News.  360  ;  s.  c.  1  Montreal 

Supr.  Ct.  21 38 

Doubled;)  v  v.  Muskett,  4  Moore 

&P.  750 115 

Dougherty  v.  Hunter,  54  Pa. 

St.  380 03 

Douglass  v.  Merchants'  Iusur- 
■  Co.,- 118  N.Y.  484;  s.  c. 
. .  E.  Rep.  803  ;  7  L.  R.  A. 

822  ;  44  Hun,  629  ;  9  N.  Y.  St. 

p.  302 74,78 

Downie  v.  White,  12  Wis.  176  ; 

s.  c.  78  Am.  Dec.  731 151 

Downing  v.  Potts,  23  N.  J.  L. 

66 163 

I.  .  Mizner,  42  Mich.  332..   94 

99 
Drake  v.  Hudson  River  R.  R. 

Co.,  7  Barb.  508 121,  126 

schler  v.  Fulham,  ( !olo.,  52 

I';..  Rep.  685  74 

Dublin, etc.,  1.'.  If.  Co.  v.  Black, 

s  Exch.  181 38 

Dudley  v.  ('oilier,  87  Ala.  431  ; 

s.  c.   13  Am.  St.  Rep.  •'.;,;  27 

Am.  A:   Eng.  Corp.  (  as.    I  In  ; 

6  Rep.  304 79 

■  v.  ( latawba,  etc.,  <  !o.,  5 
Ala.  82;  s.  c.   1 1    Am.    Dec. 

Mil 

I  )!in    v.  <  !on ircial  Hank',   1 1 

Marl..  580 163 

I  -•!!: -ui  i    v.   A  Ibrechl ,   12  Sim. 

I    140 

I  tanker  ion,    In  re,    I    Biss. 
J  inn  ton    v.   I  mperial  '  la  lighl 
<    ...  8  l;..n,.  &  A.I.  L25  ....   L23 


PAGE 

Dupuy  v.  Eastern  B.  &  L.  Asso- 
ciation, 93  Va.  460  ;  s.  c.  25 
S.  E.  Rep.  537  ;  35  L.  R.  A. 
215 210,217 

Durant  Land  Improvement  Co. 
v.  Thompson-Houston  Elec. 
Co.,  49  N.  Y.  Supr.  St.  Rep. 
715;  s.  c.  21  N.  Y.  Supp. 
764;  15  Daly,  337 60 

Durfee  v.  Old  Colony  R.  R.  Co., 
5  Allen,  230   25 

Durham  County  Permanent 
Investment  Land  and  Build- 
ing Societv,  In  re,  L.  R.  12 
Eq.  516  ;  s.  c.  25  L.  T.  Rep. 
(N.S.)  83;  41  L.  J.  Ch.  124.. 246, 
413,  414,  451 

Durham,  etc.,  Working  Men's 
Building  Societv  v.  Davidson, 
61  E.  J.  Q.  B.  473  ;  s.  c.  67  E. 
J.  269 ;  56  J.  P.  660  ;  8  T.  L. 
R.  428 371,  384 

Durkee  v.  Stringham,  8  Wis.  1,  157 

Dutchess  Cotton  Manf.  v. 
Davies,  14  John.  238  ;  s.  c.  7 
Am.  Dec.  459 34 

Dutton  v.  Marsh,  L.  R.  6  Q.  B. 
361 67 

Eagle,  etc.,  Mf.  Co.  v.  Brown, 
58  Ga.240 _ 79 

Eakins  v.  American  White 
Bronze  Co.,  75  Mich.  568  ;  s.  c. 
42  N.  W.  Rep.  982  117 

Earkright  v.  Logansport,  etc., 
R.  R.  Co.,13Ind.  404 21 

Early's  Appeal,  89  Pa.  St.  411  , 
s.  c.  7N.  W.  Cas.  184....  171.  172 
178    204 

East  Birmingham  Land  Co.  v. 
Dennis,  85  Ala.  565 ;  s.  c.  Ii 
So.  Rep.  317  ;  2  L.  R.  A.  836  , 
28  Cent.  L.  J.  402 i66 

Easl  Norway,  etc-.,  Lutheran 
( Jhurch  v.  Froislie,  37  Minn. 
447  ;  s.  c.  35  N.  W.   Rep.  26C     32 

Eastern  Plank  Road  Co.  v. 
Vauhn,  14  N.  Y.  546 27 

Eaton  v.  American  Building 
and  Loan  Association,  47 
Minn.  236  ;  s.  c.  49  N.  W.  Rep. 
sir, 200 

Eaton  v.  Walker,  76Mich.579- 
s.  e.  43  X.  W.  Rep.  638...  .33     34 

Economy  Building  Association 
\.  Eungerbuehler,  93  Ma.  St. 
258  :   s.  c.    in  W.  N.  Cas.    II  I 

38  Leg.  int.  :;:;:; 173,  1 77   f78 

•.'ill     ::a; 
Edelyn  v.  Pasco.  22  (Matt.  321    831 
'j:,  I.  391,  434,  439.   W4 
Eden   v.    Ridsdales  My.   Maud, 


TABLE   OF    CASES. 


XXXI 


PACK 

etc.,  Co.,  Q.  R.  2:5  L.  B.  Div. 

368 105 

Edgerly  v.  Emerson,  23  N.  H. 

555  ;  s.  c.  55  Am.  Dec  207.  .93,  95 
Edinburgh  Life  Assurance  Co. 

v.  Graham,  19  U.  C.  Q.  B. 

581 281 

Ehrenzeller    v.    Union   Canal 

Co.,  1  Rawle,  181 72 

Eidmen  v.  Bowman,  58111.  444  ; 

s.  c.  11  Am.  Rep.  90 24 

Elkins  v.  Camden,  etc.,  R.   R. 

Co.,  36  N.  J.  Eq.  467 88 

Elizabeth     City    Academy    v. 

Lindsey,  6  Ired.  L.  476 ;  s.  c. 

45  Am.  Dec.  500 31 

Elliot  v.  Abbott,  12  N.  H.  549 ; 

s.  c.  37  Am.  Dec.  227 52 

Ellis  v.  Ward,  137  111.  509  ;  s.  c. 

25  N.  E.  Rep.  530  ;  33  Am.  & 

Eng.  Corp.  Cas.  200. ....  .71,  114 

Ellis  v.  Pulsifer,  4  Allen,  165. .  68 
Elpaso  Building  and  Loan  As- 
sociation   v.    Lane,    81  Tex. 

369  ;  s.  c.  17  S.  W.  Rep.  77. .  258 

264 
Ellsworth  Woollen  Mf.  Co.  v. 

Faunce,  79  Me.  440;  s.  c.  10 

Atl.  Rep.   250  ;   4  New  Eng. 

Rep.  679 54,  65,  89 

Elton's  Estate,  1  Pa.  Dist.  Rep. 

458  ;  s.  c.  30  W.  N.  Cas.  275  ; 

49  Leg.  Int.  268 192,  445 

Engelhardt     v.      Fifth    Ward 

Permanent  Dime  Saving  and 

Loan   Association,  148  N.  Y. 

281  :  S.C.42N.  E.   Rep.   710; 

reversing  5  Misc.  Rep.   518; 

58  X.    Y.  St.  Rep.  92  ;  25  N. 

Y.  Supp.  833..  130,  326,  330,  332 
i.  336,  337,  344 
Ensey  v.   Cleveland  R.  R.,   10 

Ind.  178 34 

Episcopal  Church  v.  Varian,28 

Barb.   644 08 

Equitable,  etc..  Ass'n  v.  Hoff- 
man; s.  c.  27  S.  E.  Rep.  692. .     35 

287 
Equitable   B.    &    L.    Ass'n    v. 

Vance,  49  S.  C.  402  ;  27  S.  E. 

Rep.  274 174,  257 

Ervin  v.  Oregon  R.  Co.,  22  Hun 

(N.  Y.),566 48 

Essex  Building  Society  v.  Bee- 
man,  19  U.  C.  Q.  B.  509.  .454,  509 
Estate  of  National  Association, 

9  W.  N.  C.  79 243 

Eureka  Iron,   etc.,    Works    v. 

Bashnahan,  60  Mich.  332....  102 
European,    etc..    R.    R.   Co.   v. 

Poor,  59  Mo.  277 106,  107 


PAGE 

Evansv.  Brandon,  53  Tex.  56..  114 

Evans  v.  Lee,  11   Nev.  191 72 

Evansville,  etc.,  I'.  K'.  Co.  v. 
Possey,  12  Ind.  363 150 

Everham  v.  Oriental  Savings 
and  Loan  Association.  47  Pa. 
St.  352 188,  200,  222 

Everman  v.  Schmitt,  24  W.  L. 
Bull.  56;  reversed  in  pari  on 
another  point  (Ohio) .  1 1  N.  E. 
Rep.    139.. 200,  820,  322,  380,  382 

402 

Everett  v.  Smith,  22  Minn. 
53 53 

Everson  v.  Ellingson,  07  Wis. 
634 32 

Ewing  a*.  Robeson,  15  Ind.  26. .     34 

Excelsior  Fire  Insurance  Co., 
In  re,  16  Abb.  Pr.  8 56 

Eyre  v.  Building  Association, 
17  Leg.  Int.  148 130,  326 

Fagan  v.  People's    Saving  and 
Loan  Association,     55  Minn. 
437  ;  s.  c.  57  N.  W.  Rep.  142. .  252 
274,  278 

Falconer  v.  Campbell,  2  Mc- 
Lean 195  ;  s.  c.  10  Myer  Fed. 
Dec.  Sec.  10 21 

Farmer  v.  Smith,  4  H.  &  N. 
196  ;  s.  c.  28  L.  J.  Exch.  220  ; 

5  Jur.  (N.  S.)  5:53,    note 200, 

279,  318,  363 

Farmers',  etc..  Bank  v.  Down- 
ey, 53  Cal.  400  ;  s.  c.  31  Am. 
Rep.  02 106 

Farmers'  Bank  v.  MeKee.2Pa. 
St.  318 63 

Farmers'.,  etc.,  Bank  v.Wasson, 
48  la.  339 134,  158 

Farmers  &  Mechanics'  Build- 
ing Society  v.  Langstaff,  9U. 
C.  Q.  B.  183 81,454 

Faulkner's  Appeal,  11  W.  N. 
Cas.  4* 421,  451,  461 

Faust  v. Twenty-third,  etc.,  As- 
sociation, 84  Md.  186  ;  s.  c. 
35  Atl.  Rep.  890 427 

Faviell  V.  Eastern  Counties  R. 
R.  Co..  2  Exch.  344  ;  s.  c.  17 
L.  J.  Exch.  297   84 

Fawcett  v.  New  Haven  Organ 
Co.,  47  Conn.    224 73 

Female  Orphan  Asylum  v. 
Johnson,  43  Me.  180 100 

Ferguson  v.  Miners',  etc.. Bank, 
3  Sneed  009 22 

Field  v.  Field.  9  Wend.  305....     53 

Fifth  Baptist  Church  v.  Balti- 
more, etc..  R.  R.  Co.,  4Mac- 
kev  43, 23 

Fifth  Na1  ional  Bank  v.  Navassa 


XXX 11 


TABLE   OF    CASES. 


PAGE 

Phosphate  Co.,  119  N.  Y.  256  ; 

s.  c.  23  N.  E.  Rep.  77 66 

Fine  v.   Hornsly,  2    Mo.    App. 

61 140 

Finley,  etc.,  Co.    v.    Kurtz,    34 

Mich.  89 103 

Filon  v.    Miller    Brewing  Co., 

15  X.  Y.  Supp.  57;  s.  c.  38  N. 

Y.  St.  Rep.  602 94 

First   National    Bank  v.   Ben- 
nett, 33  Mich.  520 62 

First   National  Bank  v.  Chris- 
topher, 40  N.  J.  L.  435  ;  s.  c. 

29  Anier.  Rep.  262 93 

First  National  Bank  v.  Drake, 

35  Kan.  564  ;  s.  c.   11  N.  W. 

Rep.    443 ;     57      Am.      Rep. 

193 93 

First  National  Bank  v.  Gifford, 

47  la.  575 61 

First  National  Bank  v.  Hogan, 

47  Mo.  472 73 

First  National  Bank  v.    Kim- 

berlands,  16  W.  Va.  555. . .  .63,  65 
First  National  Bank  v.  Lucas, 

21  Neb.  280 66 

First  National  Bank  v.   Reed, 

[ich.  263 62,  70 

Fisher  v.  Patton,  33  S.  W.  Rep. 
1    134  Mo.  32;  s. 

o.  34  S.  W.  Rep.  1090 237 

Fisher  v.  Patton,    134  Mo.   i 

s.  c.   33  S.    W.   Rep.   451  ; 

S.  \V.  Rep.   10'.):; 189,  284 

Fitch  v.  Cunningham,  42  Hun, 

590  ;  s.  c.   10  N.  Y.   St.  R 

17 68 

Fitzgerald  v. IlermepinCounty, 
ation   (In  Min 
.  56  .Mi:i  '•.  57 

.   Y.  Rep.  1056 231,  23!! 

jerald  v.  Equitable  Reserve 

Fund  Life  Association,  3  N. 

V.  Supp.  214 124 

W 

I  .  s. 
.  •-. 

117 
ud 
106;  s.  c.  ■ 

W.  Rep.   L08 05 

.  v. 

!      tan,  304 1'  1 

•    v.    Bank  of    United 

. . .100,  103 

dng   v.  Self,  3   DeG.   M.  & 

I    !-.   J.  Ch.  29;  21 

I-.  T.  ').  S.  nil  :  :;  \V.   I,'.  89  : 

I  Jur.  (N.  s.  (  25;  8  Eq.  Rep. 

11: 


PAGE 

Flint  v.  Pierce,  99  Mass.  68  ;  s. 

c.  96  Am.  Dec.  691 122 

Flounders  v.   Hawley,  78  Pa. 

St.  45:    s.   c.  1  W.  N.   (as. 

74  ;  2  Del.  (Pa.)  219 237,  259 

Flynn    v.    Equitable      Saving 

Fund,  37  Leg.  Int.  333  ..177,  237 
Folger  v.  Chase,  18  Pick.  63.. . .     68 

Foot  v.  Prowse,  1  Str.  625 87 

Forbes  v.  San  Rapal  Turnpike 

Co.,  50  Cal.  340 102 

Forest  City,  etc.,  Association  v. 

Gallagher,  25  Ohio  St.  208.. ..    30 
133.  213.  214.  218,  231,  302 
Foster  v.  Essex  Bank,  16  Mass. 

244 34,  83 

Foster  v.   Mullanphy   Planing 

Mills   Co.,  92   Mo/ 79;  s.  c.  4 

S.  W.  Rep.  260 98,  260 

Foster  v.  White,  86  Ala.  467  ; 

s.  c.  6  So.  Rep.  88  ;  26  Am.  & 

Eng.  Corp.  Cas.  127  ;  6  Rail. 

&Corp.  L.  J.  88 46,  47 

Fox*s  Appeal,  112  Pa.  St.  337.  .   140 
Fox  v.  Cottage  Building  Fund 

Association,  81  Ya.  677 317 

Frank.  Ex  Parte.  57  Cal.  606. .   128 
Frankfort  Bank  v.  Johnson.  24 

Me.  490 103 

Franklin  Bridge  Co.  v.  Wood, 

14  (4a.  80 ....20,  25 

Franklin  Building  Association 

v.  Marsh.  29  N.  J.  L.  225. ...  251 
Franklin  Building  Association 

v.  Mather,  4  Abb.  Pr.  °74...  187, 
293,  295.  311,  316 
Franklin  Tire  Insurance  Co.  v. 

Hart,  81  Md.  59 118 

Franco-Texan     Land      Co.    v. 

Laigle,  59  Tex.  339 50 

Freehold  P  Building 

and  Saving  Society  v.  Ch< 

Irant  Ch.  412 261,  295 

Freehold  Loan  and  Saving  So- 
.  Farrell,31  U.  C.  C.  P. 

282,  291 

Freeman  v.  Machias,  etc.,  Co., 

38  Me.  345 50 

Freeman    v.    Mutual   Building 

and  Loan  Association,  90  Ga. 

190  :  s.  c.  15  S.  E    l:  •[>•  758..     76 
n    v.  Ottawa    Building 

Homestead   &  Saving  Asso- 
ciation, 111    [11.  182 ;  s.  c.  28 

N.  E.  Rep.  611.. .25,  171.  188,  201 
241,  252,  287 
■  .  Fidelil  v.  etc.,  Union, 

66  !!!.  Ann.  152  ;  affirmed,  46 

X.  E.   Rep.  784  ;  s.  c.  166  HI. 

35,  252 

i .   Fidelity,  etc.,  Union, 


TABLE   OP   OASES. 


XXX1U 


PAGE 

166  111.  128 ;  s.  c.  46  N.  E. 
Rep.  784  ;  affirming  66  111. 
App.  152 287 

Friedlander  v.  Slaughter  House 
Co.,  31  La.  Ann.  523 168 

Friel  v.  GUberton  Saving  Asso- 
ciation, 1  Leg.  Rec.  (Pa.) 
217 345,377 

Frost  Mf.  Co.  v.  Foster.  76  la. 
535  ;  s.  c.  41  N.  W.  Rep.  212.   115 

Frye  v.  Tucker.  24  111.  1  HO 73 

Fryeburg  Canal  v.  Frye,  5  Me. 
38 101 

Fuller  v.  Salem  and  Danvers 
Loan  and  Fund  Association, 
10  Gray,  04 325 

Fulton  v.  American  Building 
and  Loan  Association,  46 
Minn.  190  ;  s.  c.  48  N.  W. 
Rep.  781 144,  200 

Fulton  Bank  v.  New  York,  etc., 
Co.,  4 Paige,  127 67,  92 

Furey  v.  Knights  of  Pythias 
Building  ami  Loan  Associa- 
tion (N.  J.  Ch.),  34Atl.  Rep. 
380 299 

Gadd  v.  S.,  etc.,  Bk.,  17  N.  Y. 
Misc.  320;  s.  c.  40  N.  Y. 
Supp.  358 224 

Gallery  v.  National  Exchange 
Bank,  41  Mich.  169 ;  s.  c.  32 
Amer.  Rep.  149 62,     64 

Galveston  R.  R.  Co.  v.  Cow- 
drey,  11  Wall,  459 50 

Gardner  v.  Butler,  30  N.  J. 
Eq.  702 117 

Gardner  v.  Hope  Insurance 
Co.,  9R.  I.  194;  s.  c.  11  Am. 
Rep.  238 23 

Garrett  v.  Dillsburgh,  etc.,  R. 
R.,  78  Pa.  St.  465 22 

Gaskell  v.  Chambers,  28  Beav. 
368.. 104 

Gasparo  v.  Same,  40  AY.  N.  C. 
551 ......336,  345 

Gass  v.  Citizens'  Building  and 
Loan  Association,  95  Pa.  St. 
101 74 

Geiger  v.  Eighth  German 
Building  Association,  58  Md. 
569 247,  267 

Gemmell  v.  Davis,  75  Md.  546 ; 
s.  c.  32  Am.  Rep.  412 158 

German  -  American  Building 
Association  v.  Droge,  14  Ind. 
App.  691  ;  s.  c.  43  N.  E.  475..   151 

German- American  Seminary 
v.  Kiefer,  43  Mich.  105 105 

German  Evangelical  Congre- 
gation v.  Pressler,  14  La. 
Ann.  799 52,  102 


PACK 

German  Fair  Hill  Building  As- 
sociation v.  Metzger.  3  W.  N. 
C.  204 199,  223,  224,  279 

(ieinian  Mining  Co.,  In  re,  4 
De  Gex  M.  &  G.  19  ;  s.  c.  27 
E.  L.  &  Eq.  L58 106,  421 

German  Union,  etc.,  Associa- 
tion v.  Senchmeyer,  50  Pa. 
St.  67 46,  166 

( rermania  Building  Association 
v.  Neill,  93  Pa.  St.  322..  .171,  319 

Giblin  v.  McMullen,  17  W.  R. 
445;  21  L.T.  Rep.(N.  S.)214; 
2  P.  C.  315  ;  38  L.  J.  P.  C.  35..     83 

Gibson  v.  Goldthwaite,  7  Ala. 
281 ;  s.  c.  42  Am.  Dec.  592. . .     66 

Gibson  v.  Safetv,  etc.,  Associa- 
tion, 69  111.  App.  485 150 

Gibson  v.  Safetv.  etc.,  Associa- 
tion, 170  111.  4*4  ;  48  N.  E.  Rep. 
580 150.  350,  398 

Gilford  v.  New  Jersey  R.  R. 
Co.,  10  N.  J.  Eq.  171 24 

Gill  v.  Balis.  72  Mo.  424 103 

Gillis  v.  Bailey,  21  N.  H.  149. .  100 

Gillett  v.  Moody,  3  N.  Y.  479. .  114 

Gillett  v.  Phillips,  13  N.  Y.  114  114 

Gilman,  etc.,  R.  R.  Co.  v.  Kel- 
ly, 77  III.  436 106 

Gilmore  v.  Pope,  5  yiass.  491. .     98 

Glamorganshire  Banking  Co., 
Re.,  28  Ch.  Div.  620 48 

Glamorganshire  Iron  Co.  v.  Ir- 
vine, 4F.  &F.  947..       153 

Glass  v.  Hope,  16  Grant  Ch. 
420  ;  affirming  14  Grant  Ch. 
484 42,  140 

Glen's  Falls  Paper  Co.  v. 
White.,  18  Hun,  214 98 

Globe  Works  v.  Wright,  106 
Mass.  207 65 

Glynn  v.  Howe  Building  Asso- 
ciation, 22  Kan.  746 248 

Godbold  v.  Bank  of  Mobile,  11 
Ala.  191  ;  s.  c.  46  Am.  Dec. 
211 107 

Goddard  v.  Merchants'  Ex- 
change. 9  Mo.  App.  290  ;  s.  c. 
78  Mo.  699 128 

Goldsmith,  In  re,  L.  R.  10  Ch. 
App.  41  ;  s.  c.  44  L.  J.  Bank 
1  :  23  W.  R.  39  ;  31  L.  T.  (N. 
S.)  366 279 

Good  Hope  Building  Associa- 
tion v.  Steel,  11  W.  N.  Cas. 
204  ;  s.  c.  39  Leg.  Int.  70.  .39,     40 

Goodman  v.  Durant  Building 
and  Loan  Association,  71 
Miss.  310;  s.  c.  14  So.  Rep. 
146 209,  210,  231 

Goodrich  v.  Atlanta  National 


xxxiv 


TABLE   OF   CASES. 


Building  and  Loan  Associa- 
tion, 96  Ga.  803  ;  22  S.  E.  Rep. 
585 254,  585 

Goodrich  v.  City  Loan,  etc., 
Association,  54  Ga.  98 443 

Goodwin  v.  Union  Screw  Co., 
34  N.  H.  378 94 

Gorder    v.    Plattsmouth   Can- 
ning Co.,  36  Neb.  548  ;  s.  c. 
.;.  W.  Rep.  830 106 

Gordon   v.    Preston,  1  Watts, 

5;  s.  c.26  Am.  Dec.  75..  98,     99 

Gordon  v.  Winchester    Build- 
ing Accumulating  Fund  As- 
sociation, 12  Bush,  110..  127.  231 
257,  289,  439 

Gormerly  v.  Port  Richmond 
Building  and  Loan  Asssocia- 
tion,  3  W.  N.  Cas.  11. . .  .431,  433 

Gosling  v.  Veley,  7  Ad.  &  El. 
(X.  S.)  406;  s.  c.  19  L.J.  Q. 
B.  135 122 

Gouckenour  v.  Sullivan  Build- 
ing and  Loan  Association, 
119  Ind.  441  ;  s.  c.  21  N.  E. 
Rep.  1088 124,  213,  220 

Goulding  v.  Clark,  34  N.  H. 
148 51 

Gowen's  Appeal,  10  W.  N.  Cas. 
85 90 

Granby  Mining,  etc.,  Co.  v. 
Richards,  93  Mo.  106 25,     30 

Grangers'  Life,  etc.,  Co.  v. 
Kamper,  73  Ala.  325 156 

Grand  Lodge  Ancient  Order 
of  United  Woodmen  v.  Sa- 
fer, 44  Mo.  App.  445 129 

Grand  Rapids  Bridge  Co.  v. 
Prange,  35  Mich.  400;  24 
Am.  Rep.  585 34 

Granger  v.  Original  Empire, 
etc.,  Co..  59  Cal.  678;  s.  c.  9 

p.  Cas.  27 53,    97 

Granite  State  President  Assc- 
cial  ion  v.  .Monk  (N.  J.  Ch.), 
30  Atl.  Rep.  872 251,  286 

Granite  state  Provident  Asso- 
ciation v.  Sonderman,  48  111. 
App.  433;  affirmed,  1  15  111. 
App.  624  :  s.c.  31  X.  E.  Rep. 
1  I:: 353 

Gratz  v.  Redd,  I  B.  Mon.  178..   116 

(  oaves  v.  Mono  Lake  1 1.\  'Iran- 
lie  Mining  <  !o.,  81   <  !al.  303  ; 

B.C.  22  Pac.  Rep.  665 106 

Gray  v.  Bartford  Fire  Insur- 
ance Co.,  i  Blatchf.280 135 

Portland     Bank,    :: 
•i  ■     .  864  ;  s.  <•.  8  Am.   I  tec. 

L56 129,  157 

1  . .  'I'm  apike  Co.,  •!  Rand. 


PAGE 

578 ;  Ala.  787 ;  s.  c.  89  Am. 

Dec.  344 31 

Great  Falls,  etc.,  Insurance  Co. 

v.  Harvey,  45  X.  H.  292 127 

Greely  v.  Smith,  3  Story,  657. .     34 
Green  v.  Dennis,   6  Conn.  293  ; 

s.  c.  16  Am.  Dec.  58 31 

Green     v.     Graves,     1     Doug. 

(Mich.)  351 32 

Green  v.  Hamilton  Provident 

L.  Co.,  31  U.  C.  C.  P.  574. . .  275 

282 
Greenfield's    Estate,   1    Chest. 

(Pa.)  356 173.  177.  281 

Greenleaf    v.     Ludington,     15 

Wis.  558  ;  s.  c.  82  Am.  Dec. 

698 167 

Greensboro,  etc..  Turnpike  Co. 

v.  Stratton,   120  Ind.  294 ;  s. 

c.  22  N.  E.  Rep.  247 118 

Greenville,   etc.,  R.  R.   Co.  v. 

Johnson,  64  Tenn.  332 25 

Gregory    v.    Lamb,     16    Xeb. 

205 73 

Griffin  v.  Kentucky  Insurance 

Co.,  3  Bush,  592. 24 

Griffins  v.  Land   Co.,  3  Phila. 

447 63 

Griffiths  v.    Victorian    Perma- 
nent, etc.,  Societv,  L.  R.  6 

Vict.  (Australia)  259 40 

Grimes  v.  Harrison,    28   L.  J. 

Ch.  823:  s.  c.  33  L.   T.   Rep. 

113;   5  Jur.  (X.   S.)    528;  26 

Beav.  435  ;  23  J.  P.  421. .  .80,  113 
119,450,  460 
Grocers'     National      Bank     v. 

Clark,  48  Barb.  26 114 

Grohmann  v.   Brown,    68  Mo.     37 

App.  030 38,  44,  314,  421 

Grommes  v.  Sullivan,   81  Fed. 

Rep.  45 421 

Guardian    Permanent   Benefit 

Building  Society,  In  re,   L. 

R.   23  Ch.   Div.  4  10  :  s.  c.  52 

L.  J.  Ch.  857  ;  48  L.  T.  134  ;  32 

W.  R.  173..  113,  146,  328,  410,  411 

420 
Guilford  v.  Western  Union  Tel. 

Co.,  43  Minn.  131  ;  s.  c  40  N. 

W.  Rep.  70 166 

Hager  v.  Cleveland.  36  Md.  470  151 

152 
FEagermarj    v.  Ohio   Building, 

etc.,  Ass'n,25  Ohio  St.  18633,  27 

49,    125,  138,   190,  199.  200,    203 

206,  213,  214,215,  217,  218,  222 

270,  271,  282,  294,  317,  318,  436 

Hagerstown    Turnpike   v.   Co. 

Creeger,5  Earr.&John.  122; 

s.  c.  Am.  Dee.  105 31 


TABLE    OF    CASES. 


XXXV 


PAGE 

Hague  v.  Dandeson,  2  Exch. 
;  in 158 

Haigh  v.  United  States  Build- 
in--,  etc.,  Association,  lit  \V. 
V;t.  792 261,  206,  336 

Haile  v.  Pierce,  32  Md.  327;  s. 
c.  Am.  Rep.  L39 67 

Haines  v.  Arner.  Popular  In- 
surance Co.,  3  Jones  &  S.  P. 
266 61 

Hall  v.  Auburn  Turnpike  Co., 
27  Cal.  255;  s.  c.  Am.  Dec. 
T.-i 62,    65 

Hall  v.  Carey.  5  Ga.   239 92 

Hall  v.  Norwalk  Fire  Insurance 
Co.,  57  Conn.  105 ;  s.  c.  17 
Atl.  Rep.  356 84 

Hallam  v.  Indianola  Hotel  Co., 
56  la.  178;  s.  c.  9  N.  W.Rep. 
Ill 105,  106 

Hallett  v.  Halloner,  33  Barb. 
537 28 

Halstead  v.  Dodge,  51  N.  Y. 
Supr.  169 93 

Hamilton  Building  Associa- 
tion v.  Reynolds,  5  Duer,  671  221 

Hamilton  v.  Keith,  5 Bush,  158    23 

Hammerslough  v.  Kansas  City 
Building, Loan,  etc.,  Associa- 
tion, TO  Mo. so 75,  '260,  264 

Ha  instead  Building  Associa- 
tion v.  King,  58  Md.  279 440 

Handley  v.  Fanner,  29  Bav.  362  203 
319,  363 

Handley  v.  Stutz,  139  U.  S.  417     89 

Hanna  v.  International  Petro- 
leum Co.,  23  Ohio  St.  622. ...     26 

Hanner  v.  Greensboro  Building 
and  Loan  Association,  78  N. 
C.  188 256 

Hannerty  v.  Standard  Theatre 
Co.,  109  Mo.  297 ;  s.  c.  19  S. 
W.  Rep.  82 107 

Hanney  v.  Enterprise  Saving 
Fund  and  Building  Associa- 
tion, 16  W.  N.  Cas.  450.  .344,  345 
374,  378 

Hansbury  v.  Pfeiffer,  35  Leg. 
Int.    395 259 

Hanson  v.  Dexter,  36  Me.  316     97 

Harbison  v.  First  Presbyterian 
Society,  46  Conn.  529  ;  s.  c. 
33  Am.  Rep.  34 103 

Hardenburg  v.  Farmers,  etc., 
Bank,  3  N.  J.  Eq.  68 53 

Harmony  v.  Goldbeck,  13  W. 
N.  Cas.  24 80 

Harmony  Building  Association 
v.  Berger,  41  Leg.  Int.  280  ; 
s.  c.  17Phila.  314 454 


Harmony  Building  Association 
v.  Goldbeck,  13  W.  X.  Cas. 
24;  s.  c.  40  Leg.  Int.  L72 ;  30 
Pitts.  L.  Jr.  457 125 

I  la  i'n  v.  Woodward  (1ml.).  50 
N.  E.  Rep.  33 430 

Harper  v.  Calhoun,  7  How. 
(.Miss.)   203 94 

Harriman  v.  Southana,  16  Ind. 
190 34 

Harrington  v.  District  Town- 
ship. 47  la.  11 52,  93 

Harrington  v.  Workingmen's 
Benevolent  Association,  ~>> 
Ga.  340 L22,  135 

Harris'  Appeal,  18  W.  N.  Cas. 
11 L63,  307 

Harris  B.  &  L.  Ass'n  v.  Sim- 
mons. 19  Pa.  C.  C  110  :  s.  c. 
6  Pa.  Dist.Rep.  204.  .207.213,  215 

Harrod  v.  Hamer,  32  Wis.  162    30 

Hartford  Bridge  Co.  v.  Grang- 
er, 4  Conn.    142 94 

Hartford  v.  Co-operation  Mut- 
ual Homestead  Co.,  128 
Mass.  494 324,  336,  338 

Hartford  Bank  v.  Hart,  3  Day 
(Com.),  491  ;  s.  c.  3  Am.  Dec. 
274 94 

Hartridge  v.  Rockwell,  R.  M. 
Charlt.  260 103 

Hartt  v.  Harvey,  32  Barb.  55  ; 
s.  c.  10  Abb.  Pr.  330  ;  19 
How.  Pr.  245 90 

Hatch  v.  Barr,  1  Ohio,  390 68 

Hatcher,  Ex  Parte,  12  Ch.  Div. 
240 40 

Hatfield  v.  Huntington  City 
Building,  Loan  and  Savings 
Association,  132  Ind.  149  ;  s. 
c.  31  N.  E.  Rep.  532.  .201,  312,  313 

Haven  v.  N.  H.  Asylum,  13  N. 
H.  532  ;  s.  c.  38  Am.  Dec  512  125 

Haverson  v.  Cole,  6  W.  R,  17 . .     73 

197 

Harvey  v.  Municipal  Perma- 
nent Investment  B.  Society 
(In  England),  L.  R.  26  Ch. 
Div.  273  ;  53  L.  J.  Ch.  Div. 
1126:  51  L.  T.  (N.  S.)408:  32 
W.  557  ;  affirming  in  pari  52 
L.  J.  Ch.  Div.  349':  . .  .74,  234,  238 
321,  371 

Harvey  v.  O'Shaughnessey.  6 
Leg.  News,  369;  5  Lei;'.  News. 
429 446 

Harvie  v.  McGregor,  29  Cal. 
124 28 

Hawes  v.  Gas  Consumers  Ben- 
efit Co.,  9  N.  Y.  Supp.  490.  .  .   165 

Ilawkeye    Benefit    and    Loan 


XXXVI 


TABLE   OF   CASES. 


Association  v.  Blackburn  (In 
Iowa), -48  la.  385  ;  s.  c.  6  Cent. 
L.  Jr.  466 200.  231,  260 

Hawkins  v.  American  Building 
and  Loan  Association,  96  Ga. 
206 ;  s.  c.    22  S.  E.  Rep.  711  254 

312 

Hawley  v.  Northside,  etc., 
Assn,  (Colo.),  52  Pac.  Rep. 
408 284,  330.  335,  338,  342,  406 

Hax  v.  Davis  Mill  Co.,  39  Mo. 
App.  453 95,     96 

Haxtun  v.  Bishop,  3  Wend.  13  457 

Haynesv.  Cape  May,  50  N.  J. 
L.  55  ;  13  Atl.  Rep.  231 134 

Haynes  v.  People's  Building 
Loan  and  Savings  Associa- 
tion, 2  Ohio  N.  P.  181 ;  s.  c. 
3  Ohio  Dec.  228 299 

Hays  v.  Crutcher,  54  Ind.  260.     67 

Havs  v.  Kenyon,  7  R.  I.  136. .     70 

114 

Hazel  Loan  &  Building  Asso- 
ciation v.  Greenwood,  41 
Leg.  Int.  16  ;  s.  c.  17  Phila. 
242 221 

Hazel  Loan  &  Building   Asso- 
ciation v.  Groesbeck  41  Leg. 
Int.  16;  s.  c.  17  Phila,  242...   174 
222,  299 

Hazelet  v.  Bntler  University, 
84 Ind.  230.... *.     37 

Heading  v.  Bexar, etc., Associa- 
tion (Tex.  Civ.  App.),  26  N. 
W.  Rep.  468 , 461 

Heady  v.  Bexar  Building,  etc., 
Association  (Tex.  Civ.  App.); 
s.  c  26  S.  \V.  Rep.  468. . .  .233,  258 

452 

Heald  v.  Owen,  79  la.  23 32 

Heath  v.  Erie  R.  R.  Co.,  8 
Blatch.347 103 

I  loath  v.  N.  Y.  (I  old  Exchange, 
7  Abb.  I'r.  N.  Y.  251  ;  s.  c. 
38  I  low.   I'r.  L68 136 

Heckman  v.  Building  Associa- 
tion, 11  l.an.  Bar.  no 259 

Hedges  v.  Paquett,  :;  Ore.  77..  104 

Heggie   v.   Building  ami  Loan 
ociation,  107  X.  < '.  581  ;  s. 
e.  \-!  S.  E.   Rep.275.  .246,376,416 

Heinbokel  v.  National  Saving 
Loan  and  Building  Associa- 
tion, ■'.'.»  Minn.  340;  s.  c.  59 
N.  \V.  Rep.   1050 333 

I  feintzelman  v.  Druids   Relief 

\     ocial  ion.    88     .Minn.     L88  : 

36  N.  W.  Rep.  LOO 133 

Heiring  \ .  Vdams  ,ete.,  Ml'.  <  !o., 

1    Ky.  800 27 

J  I'  kelnkaemper     v.     <  terman 


PAGE 

Building  Association, 22  Kan. 

549 16,    19,  29,  130,  248,  268 

313,  314 
Hemperly  v.  Tyson,  170  Pa.  St. 

385  ;  s.  c.  37  W.  N.  Cas.  301  ; 

32  Atl.  Rep.  1081 319 

Heminway   v.   Herninway,  58 

Con.  443 ;    s.  c.  19  Atl.  Rep. 

766 72 

Hempstead  Building  Associa- 
tion v.  King,  58  Md.  279 320 

Henderson  v.   Bank,  L.  R.  40 

Ch.  Div.  170 ;  s.  c.  8  Rail  & 

Corp.  L.  J.  213 89 

Henderson  Building  and   Loan 

Association  v.    Johnson.    88 

Ky.  191  ;    s.   c.  3    L.   R.    A. 

289  ;  10  S.  W.  Rep.  7s7.  .257,  28S 
Henderson  v.  Railroad  Co.,   17 

Tex  560 ;   s.    c,  67  Am.  Dec. 

675 153 

Hennighaiasen  v.  Tisher,  50  Md. 

583. . .  .174,  316.  275,  338,  344.  395 
404,444 
Henry  v.  Jackson,  37Vt.  441 108  109 
Hensel  v.  International  Build- 
ing   and    Loan  Association, 

Tex.  20  S.  W.  Rep.  116 180 

Herbert  v.  Kenton  Building  & 

Savings  Association  of  Cov- 
ington, 11  Bush,  296.  .22.  127.  210 
231,  257,289 
Herbert  v.  Mechanics'  Building 

and  Loan  Association,  IT  N. 

J.  Eq.  497 302,  308 

Hibernia  Building  Association 

v.  McGrath.  32   W.    N.    Cas. 

233;  s.  c.   154  Pa.  St.  296  ;  26 

Atl.  Rep.  377 83 

Hi  hernia    Fire   Engine   Co.    v. 

Com.,  93  Pa.  St.  264 124 

Hicks  v.  Borough  of  Lanceston, 

1  Rolle  Abr.  514,  pi.  6 89 

Hide  v.  Holmes,  2  Moll.  372. . .  47 
Higgins  v.  Power,    I    Montreal 

Sup.  Ct.    268;   s.  c.    8  Leg. 

News,  197 188 

Higgins  v.  McCrea,   116  TJ.  S. 

671 124 

Hildyard  v.  South  Sea  Co.,  2  P. 

\\  ins.  76 168 

Hill's  Case,  L.  R.  20  Eq.  585..  403 
Eilles  v.    Parish,    11  N.   J.    Eq. 

380 50 

1 1  ills ci-  v.(  hernial),  etc.,  Co.,  6 

Nev.  51 99 

lliiiiman  v.  Ryan,  3  Ohio  C.  C. 

529 .198,  437,  440,  441 

llinton    v.    First   Birmingham 

Perfect   Thrift  Building  So-   . 

cicty 


TABLE   OF    CASES. 


xxxvu 


PAGE 

Hirsch  v.  Grand  Lodge,  etc.,  56 

Mo.  App.  101 123,  125 

Hoblyn  v.  Rex,    2    Bro.    P.  C. 

329 213 

Hoboken  Building  Association 
v.  Martin,  13  N.  J.  Eq.  428. .    33 
86,  87,  197,20::.  251,  266 
295,  376,437,  453 
Hodge  v.  First  National  Bank, 

22  Gratl;  51 62,  63,  65 

Hodges  v.  N.  E.  Screw  Co.,  1 

R  I.  312 ;   s.  c.  53  Am.  Dec. 

624 107 

Hodges  v.  Planters'  Bank,7  Gill 

&  J.  306 159 

Hodges  v.  Rutland,  etc.,  R.  R. 

_  Co.,  29  Vt.  220 117,  118 

Hodgins  v.    Ontario  Loan  and 

Debenture     Co.,    7    Ontario 

App.  202 124,  295 

Hodgson  v.  Duluth,  etc.,  R.  R. 

Co.,  46 Minn.  454  ;  s.  c.  49  N. 

W.  Rep.  197 89 

Hoffman    Steam  Coal  Co.    v. 

Cumberland,  etc.,  Co.,  16  Md. 

456;  s.  c.  77  Am.  Dec.  811..   105 
Hohenshell  v.  Home  Savings, 

etc.,     Association,    1-10    Mo. 

566 ;  41  S.  W.    Rep.  948 144 

145,  850,398,  447 
Holbrook     v.    Fanquier,   etc., 

Turnpike  Co.,  3Cranch  C.  C. 

425 63 

Holden  v.  Hoyte,  134  Mass.  181  81 
Holden  v.  Upton.  134  Mass.177  81 
Holder  v.  Lafavette,  etc.R.  R. 

Co,,  71111.  106;  s.  c.  22  Am. 

Rep.  89 117,  118 

Holgate  v.  Shutt,  L.  R.  28  Ch. 

Div.   Ill  ;    s.  c.   54  L.  J.  Ch. 

436  ;  51  L.  T.  673  ;  49  J.  P.  228    82 

314 
Hollowell    v.     The     Southern 

Building  and  Loan  Associa- 
tion, 120  N.  C.  286  :  26  S.  E. 

Rep.  781 210.  231,  256 

Holmes,  Ex  Parte,  5  Con.  435.  .  54 
Holmes  v.  Board  of  Trade,   81 

Mo.  137 95 

Holmes  v.  Smyth,  100  111.  413,     82 
124,  251 
Holmes  v.  Turner's  Falls  Lum- 
ber Co.,  150  Mass.  535  ;  s.  c. 

23  N.  E.  Rep.  305 69 

Holmes  v.  Willard,  125  N.  Y. 

75  ;  s.  c.   25  N.   E.  Rep.  183  ; 

11  L.  R.  A.  170 80 

Holt  v.  Winfield  Bank,  25  Fed. 

Rep.  812 70 

Holyoke    Building   and    Loan 

Association  v.  Lewis.  1  Colo. 


PAGE 

App.  127 ;  s.  c.  27  Pac.   Rep. 

872 130,  326 

Home  Building  Association  v. 

Boning,  7  Wkly.  L.  Bull.  174  ; 

s.  c.  10  Amer.  Rec.  626.. 236,  260 
284,  299 
Home  Mutual  Building  Asso- 
ciation v.   Thursby,   58  Md. 

284 247 

Home  Building  and  Loan  Asso- 
ciation v.  Van    Pelt,    (J4  Ga. 

615  ;  s.  c.  21  S.  E.  Rep.  606. .  436 

438 
Homestead      Association      v. 

Keith    (111.),  89  N.  E.   Rep. 

1072  429 

Hope  v.  Glass.  23  U.( '.  Q.B.  86  292 
Hopkins  v.    Baker,  3   P.  &  H. 

Va.  110 86 

Hoppin  v.  Buffum,  9  R.  I.  513  : 

s.  c.  11  Am.  Rep.  291 54 

Hopson    v.    j3±]tna    Axle    and 

Spring  Co.,  50  Conn.  597 106 

Horbury  v.  Bridge  Coal  Co.,  In 

re,  11  Ch.  Div.  109  ;  48  L.  J. 

Ch.  341;  40  L.  T.  353;  47  W. 

R.  433 57 

Horn  Silver  Mining  Co.  v.  E  van, 

42  Minn.  196  ;  44  N.  W.  Rep. 

56 108,  114 

Horton  v.  Columbian  Building 

and      Loan     Association,    6 

Wkly.  L.  Bull.  141 313 

Horton  v.  Wilder.  48  Kan.  222  ; 

s.  c.  29  Pac.  Rep.  566 90 

Horton  Ice  Cream  Co.  v.   Mer- 

ritt,  63  Hun,  628  ;  s.  c.  17  N. 

Y.  Supp.  718 63,     64 

Hoskins  v.  Mechanics'  Building 

and  Loan  Association,  84  N. 

C.  838 256 

Hoskingv.  Smith,  L.  R.  13  App. 

Cas.  582  ;  s.  c.  58  L.  J.   Ch. 

367;  59  L.  T.  565:  37  W.  R. 

257 293 

Houghton,    v.    First   National 

Bank,  26  Wis.    663  ;  s.    c.    7 

Am.  107 68 

Houlette's    Estate,    2   Chester 

511 188.  222.  223,  308 

Houser  v.  Hermann  Building 

Association,  41  Pa.  St.  478.. .  259 
Howard     Mutual      Loan     and 

Fund   Association   v.   Mcln- 

tire,  3  Allen,  571 45,  313 

Howard  v.    Marine   Industrial 

School,  78  Me.   230 96 

Howard  v.  Savannah,  T.  U.  P. 

Charlt.  173 124 

Howe  v.  Barney,  45  Fed.  Rep. 

668 114 


xxx  vm 


TABLE   OF   CASES. 


PAGE 

Howland  v.  Meyer,  3  N.  Y.  290    64 
Howley   Building   Association 

t.  Toylor,  39  Leg.  Int.  412...  216 
Hows'  Appeal,   18  W.   N.  Cas. 

14 177 

Hovle  v.  Plattsburgh,  etc.,  R. 

R.Co.,  54  N.  Y.  314  ;  s.  c.  13 

Am.  Rep.  595 107 

Hovt  v.  American  Ex.  Bank,  1 

Duer,  N.  Y.  652 ■ 48 

Hovt  v.  Bridgewater  Mfg.  Co., 

6N.  J.  Eq.  253 99 

Hovt  v.   Inter-Ocean  Building 

Association.  58  Minn.  345;  s. 

c.  60  N.  W.  Rep.  678. . .  .330,  337 
Hovt  v.  Sheldon,  3  Bosw.  207. .  138 
Hoyt   v.   Thompson,   5  N.    Y. 

320 66,  96,  138 

Hubbard  v.  Weare,  79  la.  678 ; 

s.  c.  41  N.  W.  Rep.  915. . .  .69,  115 
Hudson  City  Savings  Institute 

v.  Mc  Arthur,  8  N.  Y.  Wkly. 

Dig.  63 281 

Hughes'  Appeal,    30    Pa.    St. 

471 171,  259,  305 

Hughes  v.  Antietam  Mfg.  Co., 

34  Md.  316 27 

Hughes  v.  Canada  Permanent 

Loan  and  Saving  Society,  39 

U.  C.  Q.  B.  221 453 

Hughes  v.  D'Eynecourt,  3  N. 

R.  420  ;  116  El.  &  Eq.  819. .  .   202 

460 
Hughes  v.  Farmers',  etc.,  Asso- 
ciation (Tenn.),    46    S.     W. 

Rep.  372. . .  .203, 213,  232,  233.  236 
242.  249 
Hughes  v.  La  Compagnie  <les 

Villas,  5  Montreal  Sup.    Ct. 

L29  171,  261 

Hughes  v.  Layton,  10  Jur.  (N. 

513;  33  L  .1.  M.  C.  89....  202 
513 
Hughes   v.   Parker,   19  N.  H. 

181 54,  89 

Huguenol    National    Bank  v. 

Studwell,  6  Daly,  13 87 

Humble  v.  Mitchell,  11  Ad.  & 

El.  305  140 

I  [umboldl  Driving  Park   Asso- 
ciation, 31  Neb.   528;  52  N. 

\V.    Rep.    568;  33    Am.    St. 

Rep.  654 157 

Humboldl  Sa\  iir_rs    and    Loan 

Sociel  ies  v.  Wennerhold,  vl 

Cal.528 77 

Humphreys  v.  Mooney,  4  <  !olo. 

■    . " 51 

1 1 nm  v.  Cary,  82  X.  Y.  <;:, ;  s.  <•. 

3?    \ mi.  Rep.  •">  16  ;  affirming 

69  How.  Pr.  l'.'<; L08 


PAGE 

Hunt  v.  Hewitt,  7  Ex.  236  ... .  48 
Hunt  v.  School  District,  14  Vt. 

300  ;  s.  c.  39  Am.  Dec.  225. .  52 
Hunter  v.  Sun  Mutual  Insur- 
ance Co.,  26  La.  Ann.  13. . . .  87 
Huntington,  etc.,   Association 

v.  Melsheimer,  14  W.  N.  Cas. 

344 296,  430 

Huntsville  v.   Phelps,   27  Ala. 

55 137 

Hurlburt  v.   Britain,   2  Doug. 

(Mich.)  291 ..     32 

Hurlbut  v.   Marshall,  62  Wis. 

590 :  s.  c.  22  N.  W.  Rep.  852.  87 
Hurt  v.  Salisbury,  55  Mo.  310. .     29 

Huse  v.  Arnes,  104  Mo.  91 458 

Hussey  v.  Gallagher,    61   Ga. 

86 137 

Huston  v.  Reutlinger,  91  Ky. 

333  ;  s.  c.  15  S.  W.  867..  .127,  128 
Hutchison  v.    Green,    91    Mo. 

374 458 

Hyatt   v.  McMahon,   25  Barb. 

457 24 

Hyde  v.   Larkin,  35  Mo.   App. 

365  66 

Illinois  B.  &  L.   Association  v. 

People,  173  111.  638  ;  s.  c.  50  N. 

E.  Rep.  1007 434 

Illinois  B.  &  L.  Ass'n  v.  Walk- 
er (Tenn.),  48  S.  W.  Rep.  191    33 

323 
Illinois  Central   R.    R.    Co.    v. 

Wliittemore.  43111.  420 134 

Imperial  Gas  Co.    v.  Clarke,  7 

Bing.  95. 48 

Indianapolis,  etc..    Mining  Co. 

v.  Herkimer,  46  Ind.  142.  .27,  29 
Indianapolis,  etc.,  R.  R.  Co.  v. 

Hvde,  122   Ind.   188 ;  s.  c.  23 

N.  E.  Rep.  706 71 

Indianapolis  Rolling    Mill  Co. 

v.St.  Louis, etc., R.R.  Co., 26 

Fed.  Rep.   140 61,     66 

Inglehart,  In  re,  29  Grant.  Ch. 

418 453 

Ingoldby  v.  Riley,  28  L.  T.  (N. 

S.)55. 220 

Internationa]      Building     and 

Loan    Association  v.  AMmi  l , 

85  Tex.  220;  s.    c.    20   S.    W. 

Rep.  1  is  :    in  A  Bier,  and  Eng. 

Corp.  ('as.  371 258 

International     Building     and 

I  .(tan   Association  V.  Forlas- 

sain  (Tex.  Civ,  App.),  23  S.  W. 

Rep.  496 453 

International     Building     and 

I  loan  Assn.  v,  Mayers  (Tex. 
Civ.  App.)  :  •.'.-»  S.  W.  Rep. 
1132 173,  258,  267 


TABLE   OF    CASES. 


XXXIX 


PAGE 

International     Building;     and 

Loan  Association  v.  Biering, 

86  Tex.   470  ;  s.   c.  25  S.  W. 

Rep.  622 258,  268,  342 

International     Building     and 

Loan  Association  v.   Biering 

(Tex.   Civ.    App.),  23   S.   W. 

Rep.  1025   340 

International      Building     and 

Loan  Association  v.  Biering, 

(Tex.    Civ.    App.).  23  S.  W. 

Rep.  621 263,  268 

International      Building     and 

Loan  Association  v.   Braden 

(Tex.  Civ.  App.),  32  S.  W. 

Rep.  704 258,  315 

Interstate,  etc.,  Assn.  v.  Cairns, 

16  Wash.  215  ;  47  Pac.  Rep. 

509 175,    194 

Iron  Clay  Brick  Mf.  Co.,  In  re, 

19  Ont.  Rep.  113  :  s.  c.  33  Am. 

&  Eng.  Corp.   Cas.  277 107 

Iron   Railroad  Co.   v.  Fink,  41 

Ohio  St.    321  ;  s.    c.    51   Am. 

Rep.  84 164 

Irwin  v.  Bailey,  8  Biss.  523. . .  64 
Irwin  v.   Granite   State,    etc., 

Association,    38    Atl.     Rep. 

680 456 

Jackson  v.  Campbell,  5  Wend. 

572 81 

Jackson  v.  Cassidy,  68  Tex.  282  ; 

s.  c.  4  S.  W.  Rep.  541 257 

Jackson  v.  Myers,  43  Md.  452. .  418 
James  v.  Cincinnati,  etc.,  R.R. 

Co.,  2 Disney,  261 162 

James  D.  Howley  Building  As- 
sociation v.  Taylor,  39   Leg. 

Int.  412 216 

Jarrett  v.  Cope  68  Pa.  St.  67  209 
233,259,  455 
Jarvis  v.  Manhattan  Beach  Co., 

53  Hun,    362  ;    s.  c.  25  N.  Y. 

St.  Rep.    1  ;  6  N.   Y.    Supp. 

703  ;  6  Rail.  &  Corp.  L.  Jr. 

325 162 

Jennery  v.  Olmstead,  105  N.  Y. 

654 119 

Jennings  v.  Bank  of  California, 

79  Cal.  323  ;  s.  c.  21  Pac.  Rep. 

852;    12  Am.  St.   Rep.  145: 

Cent.  L.  Jr.   150 158,  169 

Jesup  v.  Illinois,  etc.,  R.  R.  Co., 

43  F.  Rep.  483 104 

John     v.     Farmers'     Bank.    2 

Blackf.  367  ;  s.  c.  20  Am.  Dec. 

119 31 

Johns    v.    Johns,    1    Ohio    St. 

359 140 

Johnson  v.  Albany,  etc.,  R.   R. 

Co.,  40  How.  Pr.  193 162 


PAGE 

Johnson  v.  Cra\vfordsville,etc, 
R.  R.  Co.,  11  Ind.  280 27 

Jolinson  v.  Elizabeth  Building 
and  Loan  Association,  104  Pa. 
St.  394;  s.  c.  41  Leg.  Int.  233  ; 
14  W.  N.  Cas.  244;  32  Pitts. 
Lep.  460...:;:;.  74,  263,  281,  282 
201.  310.  320,  294 

Johnson  v.  Jones,  23  X.  J.  Eq. 
216 90 

Johnson  v.  Potomac  Building 
Association,  2  Quart.  L.  Jr. 
347  ;  s.  c.  14  Leg.  Int.  393. . .  .  259 

Johnson  v.  Underbill  52  N.  Y. 
203 164 

Joliet  Electric  Light  Power  Co., 
v.  Ingalls,  23  111.  App.  45 65 

Jones  v.  Bank  of  Tennessee,  8 
B.  Mon.  122 34 

Jones  v.  Building  Association, 
94  Pa.  St.  215 420 

Jones  v.  Cincinnati  Type  Foun- 
dry Co.,  14  Ind.  89 33 

Jones  v.  Milton  Turnpike  Co., 
7  Ind.    547 52 

Jones  v.  Morrison,  31  Minn. 
140 71,  119,   157 

Jones  v.  National  Building  As- 
sociation, 94  Pa.  St.  215.  .74.  418 

Jordoin  v.  Dubois,  3  Lower  C. 
Jur.  325 00 

Judahv.  American,  etc.,  Insur- 
ance Co. ,  4  Ind.  333 52 

Junction  R.  R.  Co.  v.  Reeve,  15 
Ind.  236 93,    96 

Jungkuntz  v.  AVest  Liberty 
Building  Association.  0  Wklv. 
L.  Bull.  428.... 2G1,  338,  340,  345 

Juniata  Building  and  Loan  As- 
sociation v.  Hertzel,  103  Pa. 
St.  507  ;  s.  c.  41  Leg.  Int.  155  ; 
12  W.  N.  Cas.  431  ;  31  Pitts. 
L.  Jr.  473 283,  292,  311 

Juniata  Building  Association  v. 
Mixell,  84  Pa.  St.  313  ;  s.  c.  34 
Leg.  Int.  266. .  .  .39.  221,  281,  291 

Kadish  v.  Garden  City,  etc. 
Association,  151  111.  531  ; 
s.  c.  38  N.  E.  Rep.  230  ;  20 
Ch.  Leg.  News,  528  ;  affirm- 
ing 47  111.  App.  602 43,  280 

282,  314 

Kaiser  v.  Savings  Bank,  56  la. 
104 29 

Kansas  City  Hotel  Co.  v.  Hunt, 
57  Mo.  126 156 

Kearnev  v.  Andrews,  10  N.  J. 
Eq.70 88,  127 

Kehlenbeck  v.  Lodgeman,  lO 
Daly.  447 134 

Kelly  v.  Accommodation  Sav- 


xl 


TABLE   OF   CASES. 


PAGE 

ing  Fund  and  Loan  Associa- 
tion,  2  Phila.  237  ;    s.  c.  14 

Leg.  Int.  49 259,  308 

Kelly  v.  Mobile,  etc.,  Associa- 
tion, 64  Ala.  501 123,  251 

Kelly  v.  Perseverance  Build- 
ing Association,  39  Pa.   St. 

148 187,  259 

Kelsall  v.  Tyler,  25  L.  J.  Exch. 

153  :  s.    c.    30  J.   P.   150;  11 

Exch.    513;    26   L.    T.    Rep. 

206 42 

Kemp  v.  Wright  (on  appeal) , 

7   Rep.  631  ;s.  c.  (1895)  1  Ch. 

121  ;  64  L.  J.  Ch.  59  ;  71  L.  T. 

650  ;  43  W.  R.  213  ;  59  J.   P. 

133 131,     448 

Kemp  v.  Wright.  (1894)  2  Ch. 

472  :  s.  c.  71  L.  T.  Rep.   650  ; 

47  W.  R.  213;  48  J.   P.   588; 

1  Manson,  308 130,  448 

Kenedy  v.  Cotton.  28  Barb.  .59,  60 
Kennebec,   etc..  R.  R.   Co.  v. 

Kendall.:!!  Me.  470 129 

Kent   v.    Quick  Silver  Mining 

Co..  7s  N.  Y.  159. . .  .127.  144,  162 
Kent  Benefit  Building  Society. 

In  re,   1   D.    R.    &  Sm.  417 ; 

s.  c.  4T.  L.  Rep.(N.  S.)  610  ; 

30  L.  J.  Ch.  785  ;  7  Jur.  (N.  S.) 

1045  :  25  J.  P.  805;  9  W.  R. 

686 80,450,  460 

Kenton  Insurance  Co.  v.  Bow- 
man, 84  Ky.430;s.  c.  1  S.W. 

Rep.  717 61,  63 

Keyserv.  Ilitz.  133  U.  S.  138..  163 
Kilpatrick  v.  Home  Building 

and  Loan  A.ssociation,119Pa. 

St.  30;  s.  c.  Ail.  Rep.  754...     85 
Kilpatrick  v.  Penrose,  etc.,  ( 'o., 

49  Pa.  St.   118;  s.  c.  88  Am. 

Dec.  497 117 

Kimball  v.  Davis.  52  Mo.  A  pp. 

194 37.  38,  44 

Kimball  v.  I  rnion  Water  <  '<>.. 
II  Cal.  L73;  s.  c.  13  Am.  Rep. 

157 '.   165 

King  v.  Davis,  16  N.  Y.  Supp. 
127  :  61    Kim.  127;   II    N.    Y. 

St.  Rep.  898 69 

King    \.    International,    etc., 

Union,  170  111.  135;   is  N.   E. 

R  >p.   677  :  reversing   68  111. 

640  38,   150 

King-Sessing  Building  Associ 

cial  ion  v.  Roan, '»  W.  X.  Kas. 

15 171,  :;n; 

Kinkier  v.  Junica,  84  Tex.  1 16  ; 

Ifl  s.  \v.  Rep.  859 115 

Kirk  v.  Nowill.   l  T.  It.  lis....    136 

213 


PAGE 

Kisch  v.  Central  Railroad,  34 
L.  J.  Ch.  545 153 

Kisterbock's  Appeal,  51  Pa.  St. 
483 Ill,   191,  406,  444 

Kisterbock's  Appeal,  127  Pa. 
St.  601  ;  s.  c.  14  Am.  St.  Rep. 
868 168 

Knell  v.  Green  Street  Building 
Association,  34  Md.  67..      ..  308 

Knoblauck  v.  Blum  Building 
and  Loan  Association,  25 
Pitts.  L.  Jr.  39 346,  378,  390 

Knowlton  v.  Congress  Spring 
Co.,  14  Blatchf.  364 156 

Knoxv.  Shepherd,  2  L.  T.  Rep. 
(N.  S.)  351 42 

Knutson  v.  Northwestern,  etc., 
Association.  67  Minn.  201  : 
s.  c.  69  N.  W.  Rep.  889.  .446.  447 

Kohler  v.  Black,  etc.,  River 
R.  R.  Co..  2  Black.  215 104 

Kolff  v.  St.  Paul  Fund  Ex- 
change,  48  Minn.  215:  s.  c. 
30  N.  W.  Rep.  1036.    .'.   127,  189 

Kortright  v.  Buffalo  Commer- 
cial Bank.  20  Wend.  91  ;  s.  c. 
34  Am.  Dec.  317 163 

Krakowski  v.  North  N.  Y. 
Building  and  Loan  Associa- 
tion, 27  N.  Y.  Supp.  314  ;s.  c. 
7  Misc.  Rep.  188 24 

Kreamer  v.  Springville  Saving 
Fund  and  Loan  Association, 
1  Chest,  (Pa.)  353;  s.  c.  6 
W.N.    Cas.    267.... 171,  173, 

177,  307 

Krutz  v.  Paola  Town  Co..  20 
Kan.  397 32,  34 

Kupfer  v.  South  Parish,  12 
Mass.  185 94 

Kuppert  v.  Guttenburg  Bld'g 
Assn.,  30 Pa.  465.  .<>.  ill.  242,  259 
204,  305 

Kynaston  v.  Mayor  of  Shrews- 
bury, 2  Str.  1051 52 

La  Compagnie  de  Villas  v. 
Hughes,  11  Can.  Sup.  Ct.537  ■ 
s.  c.  1  Low.  <  'an.  Jur.  264  ; 
affirm ng  3  I  >orion,  175  ;  s.  c. 
4  Leg.  News,  361 452 

Lafterty's  Estate,  In  re,  2  Pa. 
Dist.  Rep.  216 91 

La  funds    v.     Deems,    SI    S.    W. 

507 :  reversing  I    A1>1>.  N.  C. 

318 ;s.  c.  52  Bow.  P.  11.. 135,  137 
Laine    v.    Brainard,    30  Com. 

56 96 

Laing   v.    R 1.    L.    R.   5  Ch. 

\pp.  I  :  s.  c.  39   L.  .).  Ch.  1  : 

21  L.  T.  Rep.  (N.  S.)  773  ;  18 

\V.  R.  76;  31  .1.  P.  13 1... 409,  421 


TABLE   OF    CASES. 


Xli 


PAGE 

Lake  v.  Security  Loan  Associ- 
ation, 72  Ala.  207 73 

Lambert  v.  Addison,  46  L.  T. 
(N.  S.),20 137 

Lancaster  Co.  v.  Cheraw,  etc., 
R.  R.  Co..  28  S.  C.  135 61,  63 

Lane  v.  Hank.  9  Heisk,  419 50 

Langelier  v.  Laroche,  L.  R.  3 
Quebec,  239 47,  49 

Langsdale  v.  Bonton,  12  Ind. 
467 123 

Larivee  v.  La  Societe  Canadi- 
enne-Francaise,  6  Montreal 
Q.  B.  464  437 

La  Societe  Canadienne-Fran- 
caise  de  Construction  de 
Montreal  v.  Daveluy,  20  Can. 
Sup.  Ct.  Rep.  449  ;  reversing 
Montreal  Law  Rep.  7  Q.  B. 
117 160,   172 

La  Societi  Canadienne  v.  La- 
pointe.  5  Montreal  Sup.  Ct. 
59 33 

La  Societe  Permanente  District 
v.   Rossil  t.  i-Leg.  News,  269  421 

Latchford  Succession.  42  La. 
Ann.  539  ;  s.  c.  7  So.  Reg. 
628 250 

Latham  v.  Washington  Build- 
in 'j;  and  Loan  Association, 
177  X.  C.  IP, 256,  266 

Latimer    v.     Equitable     Loan, 
etc.,  Co.,  81  Fed.  Rep.  776.  . .  142 
150,  397,  456 

Laurel  Run  Building  Associa- 
tion v.  Bayley,  1  Kulp,  215. .   171 

178 

Laurel  Run  Building  Associa- 
tion v.  Sperring,  106  Pa.  St. 
334  :  s.  c.  15  W.  N.  Cas.  340 ; 
3  Kulp,  67  ;  32  Pitts.  L.  J. 
R.  394 371)  826,  337,346,  436 

Leathby  v. Webster,  Saver.  252.  136 

Leavitt  v.  Beers.  H.  &  B.  Supp. 
221 71 

Lebanon,  etc..  Gravel  Road  Co. 
v.  Adair.  85  Ind.  244 92 

Lechmere  Bank  v.  Boynton,  11 
Cush.  369 21,  54 

Lee  v.  Rvan  (Tex.  Civil  App.), 
31  S.  W.  Rep.   1098 268 

Leeds  Banking  Co.,  In  re,  L.  R. 
1  Ch.  App.  561  ;  12  Jur. 
(N.  S.)  655;  14  L.  T.  (N.  S.) 
747  100 

Leggett  v.  New  Jersey  Manu- 
facturing Co..  1  N.  J.  Eq. 
541  ;  s.  c.  23  Am.  Dec.   728. .     65 

Lehigh  Iron  Co. 's  Estate,  12  Pa. 
Co.  Ct.  Rep.   257 457 

Le  Lievre  v.  Gould,  4  Rep.  274  ; 


PAGE 

s.  c.  (1895)  1  Q.  B.  491;  62  L. 
J.  Q.  B.  353  ;  58  L.  T.  626  ;  41 
W.  R.  468;  57  J.  P.  484 86 

Lepore  v.  Twin  Cities,  etc.,  As- 
sociation, 5  Pa.  Supr.  Ct.  276  ; 
s.  c.  40  W.  N.  C.  548 336,  344 

Lewis  v.  Graham,  4  Abb.  Pr. 
106 168 

Lexington  v.  Headley,  5  Bush, 
508 97 

Lexington,  etc.,  R.  R.  Co.,  v. 
Bridges,  7  B.  Mon.  566;  s.  c. 
46  Am.  Dec.  428 116 

Liberator  Permanent  Benefit 
Building  Society,  In  re,  71 
L.  T.  Rep.  106  (1895) 84 

Licking  County  Saving  Loan 
and  Building  Association  v. 
Bebout,  29  Ohio  St.  252.  .184,  273 

Life,  etc.,  Insurance  Co.  v. 
Mechanics'  Fire  Insurance 
Co.,  7  Wend.  31 66 

Lime  City  Building  Loan  and 
Saving  Association  v.  Black, 
136  Ind.  544;  s.  c.  35  N.  E. 
Rep.  829 45,  188,  201,  440 

Lime  City  Building,  Saving  and 
Loan  Association  v.  Wagner, 
122  Ind.  78  ;  s.  c.  23  N.  E. 
Rep.  689 ;  17  Amer.  St.  Rep. 
342 268.  294,  296 

Lincoln  Building  and  Savings 
Association  v.  Benjamin.  8 
Neb.  181 -.23,  209,  255 

Lincoln  Building  and  Savings 
Association  v.  Graham.  7 
Neb.  173 23,  35,  209,  255 

Lincoln  Building  and  Saving 
Association  v.  Haas.  10  Neb. 
581 ;  s.  c.  7  N.  W.  Rep.  327. 
See  269 291 

Lindon  Mill  Co.  v.  Lindon  Lit- 
erary Institute,  63  Vt.  581; 
s.  c  25  Amer.  St.  Pup.  783; 
22  Atl.  Rep.  675 61.  64,  65 

Link  v.  Germantown  Building 
Association,   89  Pa.  St.  15.  .  .   171 
204, 209,  259, 264,  265,  306,  455 

Lister  v.  Lou,-  Cabin,  etc.,  Asso- 
ciation, 38  Md.  115.  .144,  192.  246 
301,434,  435.4  15 

Little  v.  Merrill,  10  Pick.  543.  .     52 

Little  Rock,  etc.,  R.  R.  Co.  v. 
Page,  35  Ark.  304 106 

Little  Rock.  etc..  R.  R.  Co.  v. 
Little  Rock,  etc.,  R.  R.  Co., 
36  Ark.  663 21 

Liverpool,  etc..  Building  So- 
ciety, In  re,  15  So.  Jr.  177...   410 

Livingston  v.  Lynch,  4  Johns. 
Ch.  273 " 23 


xlii 


TABLE    OF    CASES. 


PAGE 

Livingston  Loan  and  Building 

Association    v.    Drummond, 

41)  Neb.  200  ;    s.  c.    68  N.    W. 

Rep.  753 220,256 

Lloyd  v.  Scott,  4  Pet,  205 264 

Loan  Association  v.  Stonemetz, 

29  Pa.  St.  534 117 

Loan   Corn  pan}-  v.   Conover,  5 

Phila.  18 421 

Loan  and  Protection  Ass'n  v. 

Holland,  63  111.  App.  58. .  .79, 150 
Locknane  v.  U.  S.  I.  &L.  Co., 

44  S.  TV.  Rep.  977 287 

Lockwood    v.  Mechanics'   Na- 
tional Bank.  9  R.  I.  308  ;  s.  c, 

11  Am.  Rep.  253 99,  123,  125 

Lockwood  v.    Robbins,    Clev. 

Rep.  101 45,151 

Lockwood    v.     Thunder     Bay 

River    Boom    Co.,  42    Mich. 

536 94 

Lomb  v.  Pioneers'  Savings  and 

Loan  Co.  (Ala.)   17  So.  Rep. 

670 30 

London     City     v.    Yanacker, 

Carth.  480 126 

London,  etc.,   R.  R.  Co.  v.  Mc- 

Michael,  5  Exch.  114 38 

London  &  County,  etc..  So.  v. 

Angell,  65  L.  J.  Q.  B.  194...     74 
London  India  Rubber  Co.,L.C. 

5  Eq.  519 145 

London      Provident     Building 

Society  v.  Morgan,  5  Rep.  510; 

s.  c  (1893)   2   <t>.  P..   266;     62 

L.J.  g.  B.  511  ;    69  L.  T.  595: 

57  J.  P.  696;  46  Amer.&Eng. 

Corp.    Cas.  512:    9  T.   L.  R. 

576 304,392,404,  448 

London  Tobacco  Pipe  Makers 

Co.  v.  Woodrooffe,  7  B.  &  C. 

136 

I. mii-  v.  ( 'it  izens'  Bank,  8  Utah, 

lot  ;  s.  c.  .".)  Pac.  Rep.  878...     69 
Long  Island    Ferry  Co.  v.  Ter- 

bell,  \S  X.  Y.  427 78 

I  ."i      !   la  N  I    I'.   R.  Co.,  In  re, 

19   Wend.  ■•',  ;    s.  <•.  3:2  Am. 

I).-.-.  429 56,  L36 

Longmonl  Supply  Ditch  <  !o.  v. 

( loffman,    1 1  ( !olo.  551  ;   s.  c. 

19  Pac.  Rep.  508 96 

Looker  v.  Wlngley,  I-  R.  9  Q. 

B.    DLv.   397  :    8.   c.    16  .1.  P. 

IT.'.  114,422 

Lord    v.   Essex   Building  Asso- 
ciation, :;r  Md.  820 27,  33 

Loubal  v.  Leroy,  15  Abb.  N.  < '. 

II;    8.  c.    65  Bow.  I'r 56,  96 

187,  388 
Lovejoy   v.   Mulkarn,   l<>  L.  J. 


Ch.  630;    s.  c.  37  L.  T.  77...  213 
215,  218 

Lovett  v.  German  Reform 
Church,  12  Barb.  67 90 

Low  Street  Building  Associa- 
tion v.  Zucker,  48  Md.  448. . .  229 
374,  402 

Luard'sCase,  1  De  Gex,  F.  &  J. 
533 39 

Lucas  v.  Greenville  Building 
and  Savings  Association,  22 
Ohio  St.  329 33.  261,  287 

Luse  v.  Isthmus  Transit  R.  R. 
Co.,  6  Ore.  125  ;  s.  c,  25  Am. 
Rep.  500 66 

Luzerne  Building  Association 
v.  McDermott,  2  Kulp,  203. . .     40 

Lycas  v.  San  Francisco,  7  Cal. 
463 125 

Lyndon    Mill    Co.    v.    Lyndon 
Literary,  etc.,  Institute,   63 
Vt.    581  ;     s.  c.    25    Am.    St. 
Rep.   783 ;    22   Atl.    Rep.  575    61 
64,  65 

Lynn  v,  Freemensburg  Build- 
ing and  Loan  Association, 
177  Pa.  St.  1  ;  s.  c.  35  Pitts. 
Leg.  Jr.  208:  20  W.  N.  C. 
185;  44  Leg.  Int.  462;  19 
Amer.  &  Eng.  Corp.  Cas.  68  : 

11  Atl.  Rep.  537 210, 213,  214 

218,  223 

Lyon  v.  American  Screw  Co., 
16  R.  1.  462:  s.  c.  17  Atl. 
Rep.  61 46 

Lyons  v.  Orange,  etc.,  R.  R. 
Co.,  33  Md.  18 23 

Lyster's   Case,  L.  R.   4  Eq.  233    96 

McAllen  v.  Woodcock,  60  Mo. 
174 107 

McAllister  v.  Kuhn,  96  U.  S.  87  165 
i  McAvitv  v.  Lincoln  Pulp,  etc., 
Co.,  82  Me.  504:  s.  c  20  Atl. 
Rep.  82 71 

McCahan  v.  Columbian  Build- 
ing Association,  40  M.I.  226  201 
269,  279,  -'in;.  318,  319 

McCall  v.  Bviam  Ml'g.  Co.,  6 
Conn.   428. 50,  99 

McCallion   v.   Hibernian   etc., 

Sooietv,  70  Cal.  163;    s.  c.  12 

Pac.  Pep.  Ill 26 

Mc<  'auley  v.  Workingmen's  B. 

.V-  S.  Ass'n,  97  Tenn.  421  ;  s. 

«■.  97  S.  W.   Pep.   L'I2;    35   P. 

R.  A.  •ill 234.  237 

Mi<  Jomb   v.  Barcelone  Apart- 

menl  Association, 31  X.Y.St. 

Rep. 325;  s.c.  mi  X.  Y.Supp. 

546 37 

McComb  v.  Belknap,  30   Abb. 


TABLE    OF   CASES. 


xliii 


N.  C.  119;s.c.24N.Y.Supp. 
935 452,  461 

McComb  v.  Cordona  Apart- 
incut  Association,  31  N.Y.  St. 
Rep.  334  ;s.  c.  10  N.  Y.  Supp. 
552 37 

McCortle  v.  Bates,  29  Ohio  St. 
419  ;  s.  c.  23  Am.  Rep.  758.  .     93 
McCullough  v.  Moss,  5  Denio, 
567 06 

McCullough  v.  Talladge  Insur- 
ance Co.,  46  Ala.  376 34 

McDaniels  v.  Flower  Brook  Mf . 
Co.,  22  Vt.  274 97 

McDermott  v.  Board  of  Police, 
5  Abb.  Pr.  422 122 

McDonald  v.  Chisholm,  131  111. 
273  ;  s.  c.  23  N.  E.  Rep.  596  ; 
affirming  s.  c.  30  111.  App. 
176 65,67 

McDonough  v.  Hennepin  Coun- 
ty Catholic  Building  and 
Loan  Assn.,  62  Minn.  122  ;  s. 
c  64  N.  W.  Rep.  106 125 

McGannon  v.  Central,  etc.,  As- 
sociation, 19  W.  Va.  726 191 

214 

McGowan  v.  Savannah,  etc., 
Association,  80  Ga.  515  ;  s.  c. 
5  So.  Rep.  775 427,  429 

McGrath  v.  Hamilton  Savings 
and  Loan  Association,  44  Pa. 
St.  383 200,  304,  374,  377,  390 

McHenry  v.  Jerett,  26  Hun, 
453 54 

McKenney  v.  Diamond   State 
Loan  Association,  8   Houst. 
557  ;  s.  c.  18  Atl.  Rep.   905.  .   132 
326,  327,  346,  326,  338 

McKeown  v.  Irish  Building  As- 
sociation, 5  Wkly.  L.  Bull.  52     23 
132.  377,  381 

McLaughlin  v.  Citizens'  Build- 
ing Loan  and  Savings  Asso- 
ciation, 62  Ind.  264 25,  33,  260 

287 

McMurrtry  v.  Montgomery  Ma- 
sonic Temple  Co.,  86  Ky.  206  ; 
s.  c.  5  S.  \V.  Rep.  570 106 

McNab  v.  Southern  Ass'n,  50 
s.  c.  89  :  27  S.  E.  Rep.  543. . .   336 

McNaughton  v.  Osgood,  41 
Hun,  109;  s.  c.  3  N.Y.  St. 
Rep.  795 119 

McNeely  v.  Woodruff,  13  N.  J. 
L.  352 54 

McNeil  v.  Boston  Chamber  of 
Commerce,  154  Mass.  277  ;  s. 
c.  28  N.  E.  Rep.  245 101 

McNeil  v.  Tenth  National 
Bank,  55  Barb.  59 168 


PAGE 

Machell    v.    Nevinson,   2    Ld. 

Raym.  1355 53 

Madison  Insurance  Co.  v.  Grif- 
fin, 3  Ind.  277 66 

Magdalena  Steam  Navigation 

Co.  v.  .Martin.  2  El.  &  El.  94..  38 
Magill  v.  Kauffman,  4  S.  &  R. 

317;  s.  c.  S  Am.  Dec  713....  66 
Mahone  v.  Manchester,  etc.,  R. 

R.  Co..  Ill  Mass.  72;  s.  c.  15 

Am.  Rep.  9 63,  65 

Maine  Guarantee   Co.    v.  Cox 

(Ind.) 42N.E.  Rep.  915,  323 

Maisch  v.  Saving  Fund,  5  Phil. 

30 116 

Malley    v.    People's    Building, 

etc.,  Association.  35   N.   Y. 

Supp.  14 280 

Mallory    v.    Mallory    Wheeler 

Co.,   61  Conn.   131  :     s.  c.  23 

Atl.  Rep.  708 117 

Maloney   v.   Leal   Estate,   etc., 

Association,  57  Mo.  App.  384  142 
207.  334,  338,  344 
Manahan  v.  Varnum,  11  (Lav. 

405 300.  301,  458 

Manufacturers  and  Mechanics' 

Saving  and    Loan    Ass'n,  v. 

Conover,  5  Phila.  18  ;  19  Leg. 

Int.  116.     See  275 291,  438 

Marble  Building  Association  v. 

Hooker,  Phil.    494;    s.  c.    16 

Leg.  Int.  356 259 

Marine    Bank   v.    Clements,    3 

Bosw.  600 63 

Markey  v.  Mutual  Benefit  In- 
surance Co.,  102  Mass.  78;  65 
Markley  v.  Rhodes,  59  la.  57. .  70 
Marks  v.  Monroe  Co.,  etc..  As- 
sociation 52  N.  Y.    St.   Rep. 

451 181,  191,  229 

Marlatt  v.  Levee  Steam  Cotton 

Press  Co.,  10  La.  583  ;  s.  c.  29 

Amer.  Dec.  468 61,  63 

Marlborough  Mfg.  Co.  v.  Smith. 

2  Conn.  579 103 

Marseilles  R.  R.  Co.,  In  re,  L. 

R,  7Ch.  161 93 

Marshall  v. Farmers',  etc..  Bank 

85  Va.  676:  s.  c.    17  Am.  St. 

Rep.  84  ;  8  S.  E.  Rep.  586.  108,  115 
Martin   v.  Nashville  Building 

Association,  2  Cold,  lis 22 

49.  126,  127.  231,  248,439 
Martin  v.  Niagara  Falls  Paper 

Manufacturing  Co.,  44  Hun, 

130 67 

Martin  v.  W.   J.  Johnson  Co., 

62  Hun.   557  ;    s.  c.   42  N.  Y. 

St,  Rep.  409:  17  X.  Y.  Supp. 

133  :  11  Rail.&  Corp.  L.J.  122.     47 


xliv 


TABLE   OF    CASES. 


PAGE 

Martindale  v.  Wilson-Cass  Co., 

134  Pa.  St.  348  ;  26  W.  N.  Gas. 

48  :  19  Atl.  Rep.  680  ;  19  Am. 

St.  Rep.  706 71,  117 

Massey    v.  Citizens   Building, 

etc..  Association.  22  Kan.  624  26 
33,  151,  178,  185,  198,  221.  248 
267,  280,  281,  291.  317.  450 
Master  Stevedores'  Association 

v.  Walsh,  2  Daly,  1 136,  137 

Mathews  v.  Associated  Press, 

61  Hun.  199  ;    s.  c.   15  N.  Y. 

Supp.  887 133 

Matter  v.  New  York  Cable  R. 

R.  Co.,  109  N.  Y.  32 29 

Matterson  v.  Elderfield,  L.  R. 

4  Ch.  207  :  s.  c.  17  W.  R.  422  : 
20  L.  T.  N.  S.  503  ;  36  J.  P. 
326 180,209,  279 

Mattu  v.  Primrose,  23  Md.  482  51 
Maudlin  v.  American  Savings 

&  Loan  Assn.,  65  Minn.  358  ; 

s.  c.  65  N.  W.  Rep.  645..  6.  7,  119 
207,  252 
Maule  v.  Building  Association, 

5  Phila.  421 266 

Maux  Ferry  Gravel  Road  Co. 

v.  Branegan,  40  Ind.  361. . . .   117 

Mayor  of  Oxford  v.  Wildgoose, 
3  Lev.  294 125 

Mearesv.  Davis  (N.  C),  28  S. 

E.  Rep.  L88 440,447 

: iics',  etc. ,  Association  v. 
Allen.  28  Conn.  97 260,  287 

Mechanics  and  Farmers'  Build- 
ing and  Loan  Association  v. 

Dorsey,  15  S.  C.  462 257 

ihanics'  Building  Associa- 
tion v.  Stevens,  5  Duel-.  676..     33 

313 
shanics  &  Workingmen's 
Building  &  Loan  Association 
v.  Swartz,  2  Lack.  Leg.  N. 
120;  s.  c.  5  Pa.  Dist.  R. 
318 382 

Mechanics'  Banking  Assn.  v. 
MariposoCo.,  3  Robt.  395.. .   163 

Mechanics',  etc.,  Association 
v.  Meriden  Agency  Co.,  2  1 
(  '..nn.   159 43 

shanics'  Building  Associa- 
i  ion  v.  Minnich,  1  Kulp.  Pa. 
513 25,34 

shanics',     etc.,     Association 

v.  People, 72  III.  App.  160.  ...  436 
Mechanics',  etc.,  Bank  v.  Smith, 

I!)  Johns.    118 126 

Mechanic  -'.  el  c,  A.ss'n  v.  Vier- 

ling,66  111.  App.  621 122, 

252,  296 
Mechanics  and  Workingmen's 


PAGE 

Mutual  Savings  Bank  & 
Building  Association  v.  Wil- 
cox, 24  Conn.  147. .  .  .43.  227,  260 

Mechanics'  Bank  v.  New  York, 
etc.,  R.  R.  Co.,  13  N.  Y.  599  156 

162 

Mechanics'  Mutual  Society  v. 
Lefebvre,  12  Rev.   Leg.    294  374 
375,  378 

Mechanics'  Bank  v.  Merchants' 
Bank,  45  Mo.  513 ;  s.  c.  100 
Am.  Dec.  388 134 

Mechanics"  Building  and  Loan 
Association  v.  Conover,  14  N. 
J.  Eq.  19. .  ..91,  161,  169,  178,  180 

251,  302 
Medical  Institution  v.  Patter- 
son, 1  Denio,  61 20 

M  e  i  k  e  1  v.  German  Savings 
Fund  Society,  69  Ind.  181.. .     34 

Meiklejohn  v.  Glasgow  Work- 
ingmen's Building  Society, 
13Rettie,  144 329 

Melville  v.  American  Benefit 
B.  A.,  33  Barb.  103   220.  232 

252,  455 
Memphis,    etc.,  R.   R.    Co.    v. 

Woods,  88  Ala.  630  ;  s.  c.  7  So. 
Rep.  108  ;  7  L.  R.  A.  605  ;  16 
Am.  St.  Rep.  81 91 

Mercer  v.  Ambler  Building  & 
Loan  Association,  20  Phila. 
351  :  s.  c.  48  Leg.  Int.  277  ;  10 

Pa.  C.  C.  51 6.  7,  142.  344 

351,  353,  445 

Merchantville  B.  &  L.  Associa- 
tion v.  Zane,  N.  J.  Ch.  38  Atl. 
Rep.  420 176.  293 

Meroney  v.  Atlanta  National 
Building  and  Loan  Associa- 
tion, 116  N.  C.   882;    s.  c.   21 

S.  E.  Rep.  924 35,  179,  185 

225.  230,  256,  267.  286 

Merrick  v.  Bank,  8  (iill  (Md.) 
51) 

Merrick  v.  Reynolds,  etc,  Co., 
101  Mass.  381 100 

Merrick  v.  Trustees  elc.  S  (iill 

Md.  50 103 

Merrick  v.  Van  Santvoord,   31 

N.  Y.  208 50 

Mnrill  v.   Mclntire,  13  Gray, 

157 249,  295,    155 

Me.  rilt  v.  Fairis,  22  111.  303...  52 
Met  ropolitan  Bank  v.   I  feiron, 

L.  R.  5  Exch.  Div.  319  ;  s.  c. 

31   Moak.  717 104 

Metropolitan    Loan    Ass*n    v. 

Esche,  75  Cal.513 77 

Mel  ropolitan  Permanenl  Build- 
ing   and    Emprovement    So- 


TABLE   OF   CASES. 


xlv 


PAGE 

city,  In  re,  L.  R.  7  Vict.  Eq. 

3  (Australia)  86 450,  452 

^Metropolitan  Safety  Fund  As- 
sociation v.  Windcver,  137 
111.417;  s.  c.  27  N.  E.  Rep. 
538;  affirming  37.111.  App. 
170 133 

Michigan  Building  and  Saving 
Association  v.  McDevitt,  77 
Mich.  1 ;  s.  c.  43  N.  W.  Rep. 
760;  30  Am.  &  Eng.  Corp. 
Cas.  665 175,  179,  255 

Mickles  v.  Rochester  City 
Bank,  11  Paige,  118 ;  s.  c.  42 
Am.  Dec.  103 107,  431 

Mickles  v.  Rochester  City 
Bank,  11  Paige,  118  ;  s.  c.  42 
Am.  Dec.  103 90 

Middlesborough   Building  So- 
ciety, In  re,  54  L.  J.  Chanc. 
Div.  592  ;  s.  c.   51   L.  T.    (N. 
S.)  743  ;  49  J.  P.  278. . .  .209,  214 
216,  220 

Middleborough,  etc.,  Society, 
In  re,  58  L.  J.  Ch.  771;  s.  c.  5 
T.  L.  Rep.  516 386 

Middlesborough  Building    So- 
ciety, 53  L.  T.  (N.  S.)  203. . .  330 
343,  385 

Middlesborough,  Redcar,  etc., 
Building  Society,  In  re,  58 
L.  J.  Ch.  771  ;  5*T.  L.  R.  516  315 
376,  396 

Middle  States,  etc.,  Co.  v.  Ha- 
gerstown,  etc.,  Co.,  32  Md. 
506  ;  s.  c.  33  Atl.  Rep.  886.  . .   175 
242.  270,  271).  302,  455 

Middleditch  v.  Ellis,  2  Exch. 
623 ;  s.  c.  17  L.  J.  Exch. 
365 319 

Middleton's  Case,  Dyer,  333  a. .   136 

Middlesex  Turnpike  Corpora- 
tion v.  Swan,  10  Mass.  384 ; 
s.  c.  6  Am.  Dec.   139 24 

Milford,  etc.,  Turnpike  Co.  v. 
Beach,  10  Ohio,  111 ;  s.  c.  36 
Am.  Dec.  79 24 

Miller  v.  Coal  Co.,  31  W.  Va. 
836  ;    s.  c.  8  S.  E.  Rep.  600. .     34 

Miller  v.  Cohen,  27  Ohio  L.  J. 
353 82 

Miller's  Estate,  2  Pears.  (Pa.) 
248 203,  450,  461 

Miller  v.  Ewer,  27  Me.  509  ;  s. 
c.  46  Am.  Dec.  619 50 

Miller    v.    Jefferson    Building 
Association,  50  Pa.  St.  32. . .  189 
326,  376,  381,  440 

Miller  v.  Ratterman.  47  Ohio 
St.  141  ;  s.  c.  23  Ch.  L.  Jr. 
416  ;  24  N.  E.  Rep.  496 145 


PAGE 

Miller  v.  Wild  Cat  Gravel  Road 
Co.,  52Ind.  58 37 

Mills  v.    Salisbury,    B.    &    L. 
Ass'n,  75  N.  C.  292.  .6,  7,  19,   127 
256,  266 

Miner  v.  Belle  Isle  Ice  Co.,  '.):; 
Mich.  97  ;  s.  c.  53  N.  W.  Rep. 
218;  17  L.  R.  A.  412 98,   117 

Miner's  Bank  v.  United  States, 
1  Greene  (la.),  553 23 

Mitchell  v.  Rubber  Reclaiming 
Co.  (N.  J.).  24  Atl.  Hep.  407    46 

Mobile  Mutual  Insurance  Co.  v. 
Cullom,  4!i  Ala.  558 158 

Mobile  Building,  etc.,  Associa- 
tion v.  Robertson,  65  Ala. 
389 251 

Mobrav  v.  Antrim,  123 Ind.  24  ; 
s.  c.'23N.  E.  Rep.  858 73 

Monitor  Building  Association 
v.  Eggen,  5  Wklv.  L.  Bull. 
752 273 

Mokelunne,  Hill,  etc..  Co.  v. 
Woodbury,  14  Cal.  424. . .  .27,  32 

Monevpenny  v.  Hartland,  1 
Cas"  &  P.  353  ;  s.  c.  2  Ibid. 
378 86 

Montgomery      Building      and 
Loan  Association  v.  Robin- 
son,   69   Ala.    413;    s.    c.    1 
Amer.  &  Eng.  Corp.  Cas.  403     23 
41,  43,  142,  231,  296,  298,312 

Monumental  Building  Associa- 
tion v.  Herman,  33  Md.  128..     38 

Monumental  Permanent  Build- 
ing and  Land  Society  v. 
Lewin,  38  Md.  445 213 

Moore  v.  Marshalltown,  etc., 
Co.,  81  la.  45;  46  N.  W.  Rep. 
750 163 

Moors  v.  Marriott,  L.  R.  7  Ch. 
Div.  543;  s.  c.  47  L.  J.  Ch. 
331  ;  26  W.  R.  626 112 

Morgan  v.  Boyer,  9  U.  C.  Q.  B. 
318 454 

Moran  v.  Grav  (N.  J.  Eq.).  38 
Atl.  Rep.  668 446,  447 

Morgan  v.  Merchants'  Bank, 
13  Lea,  234 64 

Morris,  etc.,  R.  R.  Co.  v. 
Ayers,  29  N.  J.  L.  393  ;  80 
Am.    Dec.  215 I'M 

Morrison,  Ex  Parte,  11  Jur.  719     96 

Morrison  v.  Dorsey,  48  Md. 
461 151,  169,  198,  199 

Morrison  v.  Glover,  19  L.  J. 
Ex.  20,  25  ;  4  Exch.  430 ;  14 
L.  T.  (O.  S.)  204;  14  L.  P. 
84 57,  190 

Morrow  v.  James,  4  Mack  ey 
D.  C.  59 73,  197 


xlvi 


TABLE   OF    CASES. 


PAGE 

Morton    Gravel    Road   Co.    v. 

Wysong,  51   Ind.  4 49,  126 

Morton    v.    Preston,  18   Mich. 

6U;  s.  c.  100  Am.    Dec.    146  165 

166 
Moses  v.  Ocoll  Bank.  1  Lea.  498  109 
Moses  v.  Scott,  84  Ala.  608  ;   s. 

c.  4  So.  Rep.  742 90 

Moses  v.  Tompkins,  84  Ala.  613  ; 

s.  c.  4  So.  Rep.  763  ;  4  Rail. 

&   Corp.   L.  J.    268  ;  Am.    & 

Eng.  Corp.  Cas.  634 88 

Mosliannon    Land  &   Lumber 

Co.  t.  Sloan.  109  Pa.  St.  532  ; 

s.  c.  7  Atl.  Rep.  102 73 

Mosier  v.  Kreigh,  49  111.  425. .     63 
Mosley  v.  Baker,  6  Hare,  87  :  s. 

c.  12  Jut.  551 ;  17  L.  J.  Ch. 

25 :    affirmed    on    appeal,    1 

Hall.  &  T.  301  :  s.  c.  13   Jur. 

817  ;  18  L.  J.  Ch.  457  ;  3  DeG. 

Mac.  &  G.  1082 200,  279,  357 

Mount  Sterling,  etc.,  Turnpike 

Road   Co.  v.  Loonev,  1  Met. 

55D  :  s.  c.  71  Am.  Dec.  491. .     63 
Movius  v.  Lee.  30  Fed.    Rep. 
sub  nom.  141  U.  S.  132  : 

24Blatch.  291 109,  114 

Mowbray  v.  Antrim,   123  Ind. 

24;  23  N.  E.  Rep.  858 83 

Mower  v.Staples,  32  Minn.  284    24 
Mowrey  v.  Indianapolis,   etc., 

R.  R.  Co..  4  Biss.  78. . .  .23,  24,  97 
Moxon  v.   Berkeley,   etc.,   So- 
ciety. 59  L.  Jr.  Ch.  524.  .302,  308 
Move  v.  Sparrow,  22  L.  T.  Rep. 

154;  s.  c.  18  W.    R.  400;    5 

W.  N.  33 414 

Mozley  v.  Alston,  1  Phil.  Ch. 

r90. 90 

Mueller  v.  Cohen,  27  Ohio  L. 

•I.  353 197 

Mueller     v.      Madison,     etc., 

Ass'n,  75  X.  W.  Rep.  277....  284 
Muir  v.  Newark  Savings  Insti- 
tution. L6  N.  .1.   Eq.  537 266 

Mulford  v.  Weisberger,  3  Luz. 

Reg.  99 178 

Mullanphy    Sa\  Lngs    Bank    v. 

Schott,  135   III.  635  :  s.  c.  N. 

E.  Rep.        ;  25  Am.  St.  Rep. 

401 106,  115 

Mullock  \.  Jenkins,    II    Beav. 

:  s.  c.  21  L..J.  Ch.  65 451 

460 
Mulloy    v.    Tli.'     Fifth    Ward 

Building  Associal  ion,  2  Mc- 

Arthur  fit.  C.)  •">'•»  I 208,   '-'51 

Mulrey  v.  Shawmul  .Mutual 
in'-  I n  ura uce  Co.,  I  \ Men, 
lit;:  s.  e.  81  Am.  Dec.  689...   12:; 


PAGE 

Mumford  v.  Hawkins,  5  Denio, 
355 84 

Munhall  v.  Boedecker.  44  III. 
App.  131 143,  300,  406,444 

Municipality  No.  2  v.  Orleans 
Cotton  Press,  18  La.  122  ;  36 
Am.  Dec.  624 85 

Murdock  v.  Blesdell,  106  Mass. 
370 101 

Murphy  v.  Goodland,  etc., 
Assn. ,  2  App.  Kan.  330  ;  s.  c. 
43  Pac.  Rep.  863. . .  .171.  224,  312 

Murray  v.  Scott,  L.  R.  9  App. 
Cas.  519  ;  s.  c.  53  L.  J.  Ch. 
745  ;  51  L.  T.  462  ;  33  W.  R. 
173.  .  .  .57.  190,  300.  326,  328,  385 
404,  410,  411,  414,   420.  422 
423,  444 

Murray  v.  Vanderbilt,  39  Barb. 
140 70 

Musgrave  v.  Nevinson,  1  Str. 
584;  s.  c.  2  Ld.  Raym.  1358.     52 

Muth  v.  Dolfield,  43  Md.  466.. .  418 

Mutter  v.  Eastern,  etc.,R.  R. 
Co.,  L.  R.  38  Ch.  Div.  92  :  s. 
c.  36  W.  R.  401  ;  57  L.  J.  Ch. 
615  ;  59  L.  T.  (N.  S.)  117.  ..46,  47 

Mutual  B.  &  L.  A.'s  Appeal,  33 
Pitts.  L.  Jr.  324  (1886) 443 

Mutual  Aid  Building  Society, 
In  re.  30  Ch.  Div.  434 ;  s.  c. 
55  L.  J.  Ch.  Ill ;  53  L.  T.  802  : 
34  W.  R.  143 422,  423,  444 

Mutual  Aid  Permanent  Benefit 
Building  Society,  In  re,  29 
Ch.  Div.  182  ;  s.  c.  54  L.  J. 
Ch.  493  ;  52  L.  T.  406  ;  33  W. 
R.  575 43 

Mutual  Societv,  In  re,  L.  R.  24 
Ch.  Div.  425" 346,  385 

Mutual  and  Permanent  Benefit 
Society,  In   re,  48  J.  P.  54...     77 

Mutual  Building  and  Loan  As- 
sociation v.  Hamel,  43  N.  J. 
L.  71 197 

Mutual  Savings  &  L.  Ass"n  v. 
Owings  (Ky.).  43  S.  W.  Rep. 
122 193,  257 

Mutual  Building  and  Loan  As- 
sociation v.  Tascott  (111.).  28 
N.  E.  Rep.  801  ;  25  Ch.'  L. 
News.  92  :  10  Amer.  A:  Eng. 
( lorp.  ( 'as.  301  ;  affirming  37 
111.  App.  2;  I 234,  311,  312 

Mut  ual  Building  and  Loan  As- 
social  ion  \  .  Tascott  .    111!   111. 

305:  s.   s,  32  N.  E.  Rep.  376; 
M»    Am.   &  Eng.  Corp.    Cas. 

861 172 

Myers  v.  Alpena,  etc.,  Ass'n 
(  Mich.),  75  N.  W.  Rep.  944..  255 


TABLE    OF    CASES. 


xlvii 


PAGE 

Myers  v.  Schoyer,  20  D.  C.  254  ; 

s.  c.  20  Wash  L.  Rep.  505  .  . .  25  I 
320,  321 
Nashua  Fire  Insurance  Co.  v. 

Moore,  55  N.  H.  4S 89 

Nassau    Phosphate  Co.,  In  re, 

2Ch.  Div.  610 38 

Natchez  Buildingand  Loan  As- 
sociation v.  Shields,  71  Miss. 

630;  s.  c.  15  So.  Rep.  793 229 

255,  266 
National  Nank  v.  Elliot,  55  la. 

104  ;  s.  c.  39  Am.  Rep.  107. .  .  119 
National  Bank  v.  Norton,  1  Hill, 

573 94 

National  Bank  v.  Texas  Invest- 
ment Co.,  74  Tex.  421  :    s.  c. 

12  s.  W.  Rep.  101 116 

National  Building  Association 

v.  Hottenstein,  10  Pitts.  L.  J. 

(N.  S. )  225  338 

National  Building   Association 

v.  Mangan,  2  Kulp,  19 179 

National     Exchange    Bank   v. 

Peters,  44  Fed.  Rep.  13  ;  s.  c. 

4  Bank  L.  J.  48 115 

National  Investment  Co.  v.  Na- 
tional Savings.  Loan  and  B. 
Ass'n,   49  Minn.  517  ;  s.  o.  52 

N.  W.  Rep.  138 282 

National  Loan,  etc.,  Co.  v. 
Stone.  46  S.  W.  Rep.  67 287 

National  Mutual  Building  and 
Loan  Association  v.  Ash- 
worth,  HI  Va.  706;  s.  c.  22  S. 
E.  Rep.   521 286 

National  Park  Bank  v.  Nichols, 
2  Biss.   146.., 152 

National  Permanent  Benefit 
Building  Society.  In  re.  L.  R. 

5  Ch.  App.   309';  s.  c.    18  W. 
R.  388  ;  34  J.  P.   341  :  22  L. 

T.  Be]).  284 410,  433,  440 

National     Saving,    Loan     and 

Building  Association.  In  re, 

9  W.  N.  Cas.  79  ;  s.  c.  37  Leg. 

Int.  299 38,  344,  374,  432,  455 

National     Security     Bank    v. 

Cushman.  121  Mass.  490 94 

Neath,  etc..  Society  v.  Luce,L. 

R.  43  Ch.   Div.   158  ;  s.   c.  59 

L.J.  Ch.  3  ;  61  L.  T.  Ill  ;  38 

W.  R.  122 412,413,  415 

Neifer  v.  Bank  of  Knoxville,  1 

Head,  162 67 

Neiler  v.  Keilev,  69  Pa.  St.  403  IOC 
Nelligan  v.  Campbell,  20  N.  Y. 

Supp.  234 ;  47  N.  Y.  St.  Rep. 

576 68 

Neuman  v.  Association,  78  N. 

Y.  Rep.  896 230 


PAGE 

Neuman  v.  N.  Y.,  etc.,  Ass*n.  1 1 
N,  Y.  Supp.  896  ;s.  c.  17  App. 
Div.  72 152.  153,  315 

New  Albany,  etc.  R,  R.  Co.  \. 
Haskell,  11  Ind.  301 50 

Newbury  v.  Detroit,  etc.,  R.  R. 
Co.,  17  Mich.  141 164 

Newcomb,  In  re,  18  N.  Y. 
Supp.  16;  s.  c.  42  N.  Y.  St. 
Rep.  442 89 

Newcomb  v.  Reed,  12  Allen, 
;!62 93 

New  England  Insurance  Co.  v. 
De  Wolf,  8  Pick.  56     73 

New  England  Iron  Co.  v.  New 
York  Co.,  55  How.  Pr.  (N, 
Y.)   351 48 

New  Haven  Wire  Co.  Cases.  57 
Conn.  352  ;  s.  c.  16  Atl.  Rep. 
393  :  5  L.  R.  A.  300  32 

New  Jersev.  etc..  v.  Bachelor, 
54  N.  J.  Eq.  600;  s.  c.  35  Atl. 
Rep.  745 229,  236,  298 

New  London,  etc.,  Bank  v. 
Brocklebank,  L.  R.  21  Ch. 
Div.   302 158 

New  York  Cable  Co.  v.  Mayor, 
104  N.  Y.   1 26 

New  York  R.  R.  Co.  v.  Miller, 
10  Barb.  260 24 

New  York.  etc..  R.  R.  Co.  v. 
Schuyler,  34  N.  Y.   30 162 

New     York,    etc.,      Assn.       v. 
Slaughter,  17  Pa.  C.  C.  66.  .19     35 
286,  323 

New  York  Protective  Associa- 
tion v.  McGrath.  5  N.  Y.  Supp. 
8 128 

New  York,  etc..  Ass'n  v.  Cannon 
(Tenn.).  41  S.  W.  Hep.  1054.  .     35 

New  York  National,  etc.,  Asso- 
ciation v.  Cannon  (Tenn.),  41 
S.  W.  Rep.  1054 323 

New  York,  etc.,  R.  R.  Co.  v. 
Ketchum,  27  Conn.  170.  .117,  118 

Newman  v.  Ligonier  Building, 
Loan  and  Savings  Associa- 
tion, 97  Ind.  295 312 

Newry,  etc.,  R.  R.  Co.  v. 
Coombe,  3  Exch.  505 38 

Newton  v.  Fay,  10  Allen.  505..   169 

Nicely's  Estate,  3  Kulp  (Pa.), 
47 284,    312 

Nicholas  v.  People's  Building 
Loan  and  Savings  A.ssocia- 
tion,  93  Ya.  3-0  ;  s.  c.  25  S. 
E.  Rep.  8 205 

Nickels  v.  People's  Building, 
Loan  and  Savings  Associa- 
tion (Va.),  25S.  E.  Rep.  522     175 

Nolloth  \.  Simplified   Building 


xlviii 


TABLE    OF    CASES. 


PAGE 

Society,  53  L.  T.  859  ;  s.  c.  34 
W.  Ii/73  ;  2  T.  L.  Rep.  97,  40,  164 

Norton  v.  State  Bank,  102  Ala. 
420 456 

Northampton  Bank  v.  Pepoon, 
11  Mass.  288 100 

North  American  Building  As- 
sociation v.  Sutten.  35  Pa.  St. 
463  ;  s.  c.  78  Am.    Dec.    349.  .      6 
45,  165,  166,  170.   172,  185,    187 
201,  204,  205,  305,  318 

North  Hudson  Mutual  Building 
and  Loan  Association  v.  First 
National  Bank,  79  Wis.  31  ; 
s.  c.  47  N.  W.  Rep.  300  ;  11 
L.  R.  A.  845;  35  Amer.  & 
Eng.  Corp.  Cas.  231....  103,  300 
420,  434 

North  Shore  Ferry  Co.,  In  re, 
63  Barb.   556 54 

Northwestern  Central  Building 
Association  v.  Henderson,  3 
Wkly.  L.  Bull.  386 191 

Norwich  and  Norfolk  Building 
Society,  In  re,  Smith  Case,  1 
L.  R.  1  Ch.  Div.  481  ;  s.  c.  45 
L.  J.  Ch.  143  ;  24  W.  R.  103,  131 
284,  386,  399 

Norwich  and  Norfolk  Building 
Society,  In  re,  45  L.  J.  Ch. 
785 331 

Novak  v.  Vypomocny,  etc., 
Ass'n,  68   III.  App.  582... 66,     74 

175 

Oak  Cottage  Building  Associa- 
tion v.  Eastman,  31  Md.  556  231 

269 

Oakes  v.  Turquand,  L.  R.  2  H. 
L.  325 152 

Oakland  Bank  v.  Wilcox,  60 
Cal.  126 70 

Oar  River  Navigation  Co.  v. 
Neal,  3  Eawks,  520 31 

O'Brien  v.  Cummings,  13  Mo. 
App.  L97 26 

Occidental  Building  and  I loan 
m  iation     v.    Sullivan.  62 
Cal.  391 201,  212 

Ocmulge  Building,  etc.,  Asso- 
i-ial  ion  v.  Thomson,  52  <  ia. 
l/i L86,  206,207,  208,  276,  318 

Ocmulgee    Building  ami  Loan 
iat  ion   v.  Thomson,  52 
Ga.  127;     -  c.    .V-  Ga.  350.  ...  S14 

Odd  Fellows'  Building  Asso- 
ciation v.  Bogan,  28  Ark. 
261 30 

O'Donahoe'  E  bate,  I..  I:.  L0  [r. 
Eq.  221    2;  1.  279 

I  n  \ .  Kip.  6  Johnson  <  'li. 
L60  90 


Ohio  Building  Association   v. 
Leyden,  1  Wkly.  L.  Bull.  126  ; 
s.  c.  4  Amer.  L.  Rec.  765. ...  190 
274,  280,  300 

Ohio  Insurance  Co.  v.  Nunne- 
macher,  15  Ind.  294 157 

Ohio,  etc.,  R.  R.  Co.  v.  McPher- 
son,  35  Mo.  13  ;  s.  c.  86  Am. 
Dec.  128 92,  93,  99 

Ohio  Valley,  etc.,  Association 
v.  Cobell  County,  42  W.  Va. 
818  ;  s.  c.  26  S.  E.  203 428 

Olcott  v.  Tioga  R.  R.  Co.,  40 
Barb.  179 67,68 

Olery  v.  Brown,  51  How.  Pr. 
92". 137,  173,174,307 

Olney  v.  Chadsey,  7  R.  I.  224. .     66 

O'Malley  v.  People,  etc.,  Am., 
92  Hun,  572  ;  s.  c.  72  N.  Y. 
St.  Rep.  289  ;  36  N.  Y.  Supp. 
1016 124,  193,  294,  296 

O'Malley  v.  People's,  etc.,  As- 
sociation, 35  N.  Y.  Supp.  14  ; 
s.  c.  13  Misc.  Rep.  638 124 

Onderkirk  v.  Central  National 
Bank,  119  N.  Y.  263  ;  s.  c.  23 
N.  E.  Rep.  875  ;  29  N.  Y.  St. 
Rep.  573 108 

Orangeville  Mutual  Saving 
Fund  and  Loan  Association, 
9  W.  N.  Cas.  251  ;  s.  c.  37 
Leg.  Int.  475 127.  255, 314 

Oregonian  Ry.  Co.  v.  Oregon 
Rv.  Co.,  23  Fed.  Rep.  233. ...     35 

O'Reilly  v.  Heydon,  14  N.  S. 
Wales,  283 187 

O'Reiley  v.  Kankakee  Valley 
Draining  Co. ,  32  Ind.  1 09 ....     28 

O'Rourke  v.  West  Pennsylvania 
Loan  and  Building  Associa- 
tion, 93  Pa.  St.  308;  s.  c.  14 
Phila.  145;  37  Leg.  Int.  27; 
8  W.  N.  Cas.  176 337,  352,  434 

Orr  Water  Ditch  Co.  v.  Reno 
Water  Co.,  17  Nev.  166 92 

Osborne  v.  Farmers  and  Me- 
chanics" Building  Societv,  5 
Grant  Ch.  326 453 

Osceola  Tribe  v.  Rost,  15  Md. 
295 124 

Ottawa  Union  Building  Society 
v.  Scott,  24  U.  C.  Q.  B.  341. .  220 
22  1.  22:. 

Outerson  v.  Fonda  Lake  Paper 
Co.,  49  N.  Y.  St.  Rep.  556; 
s.  c.  20  N.  Y.  Supp.  980... .71,  78 

( (verity  v.  FavH1e\  ille  Build- 
ing and  Loan  Association.  Hi 
N.  ('.  56.  ...171,  185,  256,  435,  444 

Overend  and  Gurney  Co.  v. 
Oiltl.,  L.  It.  5  11.  L.  494 108 


TABLE   OF   CASES. 


xlix 


PAGE 

Owen  v.  Roberts,  57  L.  T.  81 . . .  413 

Owen  v.  Whitaker,  20  N.  J.  Eq. 
122 90 

Pabst  v.  Building  Association, 
1  McArthur,  385 254 

Pacific  National  Bank  v.  Eaton, 
141  U.  S.  227  ;  s.  c.  11  Sup. 
Ct.  Rep.  984  ;  10  Ry.  &Corp. 
L.  Jr.  132 162 

Pacific  R.  R.  Co.  v.  Renshaw, 
18  Mo.  260 25 

Paffert  v.  Blum  Building  and 
Loan  Association,  25  Pitts. 
L.  Jr.  40 346,  378,  390 

Palmer  v.    Gates,  3  Sandf.  137   101 

Palmer  v.  Lawrence,  5  Sandf. 

161 26 

Palmer  v.  Nassau  Bank,  78111. 
380 64 

Pangborn  v.  Citizens,  etc.,  As- 
sociation, 35  N.  J.  Eq.  341..   295 

Parker  v.  Butcher,  3  L.  R.  Eq. 
762  ;  s.  c.  36  L.  J.  Ch.  552. . .  209 
215,  220 

Parker  v.  Fulton,  etc..  Ass'n, 
46  Ga.  166 157,  253,  265,  266 

Parker  v.  Putnam  Loan  and 
Building  Association,  46  Ga. 
166 127 

Parker  v.  Receiver,  49  N.  J.  L. 
465 65 

Parker  v.  United  States,  etc., 
Association,  19  W.  Va.  744. .     36 
45,  132,  218,  231,  261,  267 

Parsons  v.  Martin,  11  Gray,  111  166 

Patterson  v.  Workingmen's 
Building  and  Loan  Associa- 
tion, 14  Lea,  677;  s.  c.  10 
Amer.&  Eng.Corp.   Cas.  420.  248 

Pattison  v.  Albany,  etc.,  Asso- 
ciation, 63 Ga.  3*93..22,  32,34,  254 
266,  441 

Pawlick  v.  Homestead  Loan 
Association,  15  N.  Y.  Misc. 
Rep.  427  ;  s.  c.  37  N.  Y.  Supp. 
164 284,  827,  330 

Payette  v.  Free  Home  Build- 
ing, etc.,  27  111.  App.  307 33 

Payne  v.  Elliot,  54  Cal.  339. .. .  165 

Payne  v.  Freer,  25  Hun,  124 ; 
affirmed  91  N.  Y.  43 232,  253 

Pavnterv.  Clogg,  3  Phil.  480. .     90 

Parson  v.  Stoever,  2   Dill.  428  156 

Payson  v.  Withers,  5  Biss.  269    24 

Peabody  Building  and  Loan 
Association  v.  Houdman,  89 
Pa.  St.  261 84 

Pearsons  v.  Wheeler,  55  N.  H. 
41 93 

Pease  v.  Jackson,  L.  R.  3  Ch. 
576 293 


PAGE 

Peck  v.  Gurney,  L.  R.  6  H.  L. 

377 153 

Pendergast  v.  Bank  of    Stock- 
ton, 2  Sawy.  108   184,  158 

Pennsylvania  R.  R.  Co.  Appeal, 

86  Pa.  St.  HO 168 

Penobscot    Boom    Corporation 

v.  Lamson,  16  Me.  224  . .  .21,    22 
Pentz    v.    Stanton,    10  Wend. 

271 ;  s.  o.  25  Am.  Dec.  558. . .     67 
People  v.    Albany,  etc.,  R.  R. 

Co.,57N.  Y.  161 90 

People  v.    Albany,  etc.,  R.  R. 

Co.,  55  Barb.  84*]  :  s.  c.  7  Abb. 

Pr.  (N.  S.)  265  ;  38  How.  Pr. 

228 89,     90 

People  v.  Albany  Hospital,  61 

Barb.  697 88 

People  v.    Bachelor,   22  N.  Y. 

128 52 

People  v.   Ballard,  3  N.  Y.  St. 

Rep.  845 109 

People  v.    Beach,  19  Hun,  259    28 
People   v.    Board  of  Trade,  80 

111.  134 137 

People  v.  Bowen,  30  Barb.  24. .     26 
People   v.    Cheeseman,   7   Col. 

376 27 

People   v.  Crockett,  9  Cal.  112  129 

134 
People  v.  Crossley,  69  111.  195  188 
People  v.  Crowley,  69  111.  195  55 
People  v.  Cummings.  72  N.  Y. 

433 88 

People  v.  Eadie,  133  N.  Y.  573  ; 

s.  c.  30  N.  E.  Rep.   1147:  af- 
firming 18  N.  Y.  Supp.  53  ;  s. 

c.  53  N.  Y.  St.  Rep.  649 47 

People  v.  Empire,  etc.,  Co.,  17 

N.  Y.  Misc.   Rep.  221  ;  s.  c. 

N.  Y.  Supp.  235 447 

People  v.  Empire,  etc..  Co.,  13 

N.  Y.  Misc.   Rep.  221  ;  s.  c. 

34  N.  Y.  Supp.  235 432 

People  v.  Empire,  etc.,  Co.,  44 

N.  Y.  Supp.  308  ;  s.  c.  15  App. 

Div.  69 433 

People  v.  Fire  Department.  31 

Mich.  458 124,  129 

People  v.   Fleming,    59  Hun, 

518;  s.  c.  37  N.  Y.   St.    Rep. 

157  ;  13  N.  Y.  Supp.  715 87 

People  v.    Grand,  etc..  Plank 

Road  Co.,  10  Mich.  400 ,     24 

People  v.  Hills,  1  Lans.  202. . .     92 

People  v.  Kip,  4  Cow.  382 56 

People   v.    Loomis,    8    Wend. 

396 56 

People  v.  Lowe,  117  N.  Y.  175  ; 

s.  c.  22  N.  E.  Rep.  1016 ;  31 

Amer.  &  Eng.  Corp.  Cas.  249 ; 


TABLE    OF    CASES. 


reversing  47  Hun,  577. .  .103,  400 
436,  446 
People  v.  Maynard,  15    Mich. 

463 90 

People   v.  Medical    Society.  24 

Barb.  574 126,   128 

People  v.  National  Home  B.  & 

L.  Assn.,   7   Chicago   L.    Jr. 

193 135,  432,  439 

People  v.  Oakland  Co.  Bank,  1 

Don  )  282   50 

People  v.  Pacific  Mail  Steam- 
ship Co..  50  Barb.  280  ;   s.  c. 

34  How.  Pr.  193  ;  3  Abb.  Pr. 

(X.  S.  364 46,     47 

People  v.  Peck,  11  Wend.  604  ; 

s.  c.  27  Amer.  Dec.  104. .  .56,  90 
People   v.  Preston.  140  N.    Y. 

549  ;   s.  c.  35  X.  E.  Rep.  979  ; 

46  Amer.  &  Eng.  Corp.  Cas. 

494  ;  24  L.  R.  A.  57. .  .27,  143,  149 

444 
People  v.    Robinson,    64    Cal. 

373 54 

People  v.  Runkle.  9  Johns.  147,  87 
People  v.  St.  George's  Society, 

28  .Mich.  261 137 

People  v.  Seaman,  5  Denio,  409  56 
People  v.    Selfridge,    52    Cal. 

331 26,     28 

People  v.  Sterling  Mfg.  Co..  82 

111.  457... 126,  165 

People   v.    Throop.    12   Wend. 

138 121 

People  v.  Tibbetts,  4  Cow.  358  56 
People  v.    Trustees,  5    Wend. 

211 50 

People   v.  Twaddell,    18   Hun. 

127 55,  138 

People    v.     Walker,    9     Mich. 

328 47,     48 

Peopl.-  v.  Walker,  2   Abb.   Pr. 

125  :  s.  c.  2:!  Barb.  304 95 

People  v.   Young  Men's,   etc., 

Society,  65  Barb.  357 51 

People    v,    Xoung   Men's,  etc., 

Society,  ll  Mich.  67 128 

People's    Building,     Loan    ami 

Savings   Association  v.  Ash- 
woi-ili.   91    Va.   706;  s.  c.   22 

S.  E.  Rep.  522 205 

People's  Building  ami  Loan 
\  ociation  v.  Billing,  ml 
Mich.  1st;  :  s.c.62N.  W.  Rep. 

378 172.   171,  233,  238,  281 

People's    Building    ami    Loan 

ciation  v.   Furey,   IT  N. 

.1.  I'..,.   IK);  s.  e.  20   All.  Rep. 

171.  171.  2:'.::.  335,  341 

People'  Buildi  ngand  I  ."an  As- 
i  ocial  ion  v-  MoElxoy,  72  .Miss. 


PAGE 

434  ;  s.  c.  17 So.  Rep.  348.  .229,  231 

255 

People,  etc..  Association  v. 
Reynolds,  17  Ind.  App.  453  ; 
s.  c.  45  N.  E.  Rep.  522 193 

People's  Building,  etc.,  As- 
sociation v.  Rising  (Tex.  Civ. 
App.).  34  S.  W.  Rep.  147. .    .  258 

People's  Building  and  Loan  As- 
sociation v.  Wroth,  4:;  X.  J. 
L.  70 82,  83,  197 

People's  Savings  Bank,  etc., 
Association  v.  Collins.  27 
Conn.  145 33 

People's  S.  &  L.  Ass*n  v. 
Roberts,  5  Ohio  N.  P.  86. . . .   234 

261 

People's  Saving  and  Loan  As- 
sociation v.  Stevens.  3  Wkly. 
L.  Bull.  113 237 

People's  Mutual  Insurance  Co. 
v.  Westcott.  14  Gray,  440. .  .     53 

Pepe  v.  City  and  Suburb  Build- 
ing Societv.  3  Report  471  ;  s. 
c.  1893,  2'Ch.  311  :  62  L.  J. 
Ch.  501:  68  L.  T.  846;  41 
W.  R.  548 130,  330,  336,  399 

Pepper  v.  Chambei's,  7  Ex. 
226 48 

Percy    v.    Millaudon,  3  La.  568  104 

Percy  v.  Millaudon,  8  Mart. 
(N.  S.)   68 108 

Percy  v.  Millaudon,  8  La.  568  103 

Perpetual  Insurance  Co.  v. 
Goodfellow,  9  Mo.  149 126 

Perratt  v.  London  Scottish  Per- 
manent Benefit  (B.  S.),  59 
L.  T.  31 342,  343 

Perry  v.  Tuscaloosa  Cotton 
Seed  Oil  Mill  Co..  93  Ala,  364  ; 
s.  c.  9  So.  Rep.  217 91 

Peters  v.  Association,  12  Pa. 
C.  C.  192 142,  353 

Peters  Building  Association  v. 
Jaeeksdi.  51  Md.  198 202 

I'et  srsborough  R.  R.  Co.  v. 
Wood,  61  N.  H.  418 78 

Peto  v.  Hammond,  30  Beav. 
195;  s.  c.  8  Jur.  (X.  S.)  550  : 
31  L.J.  Ch.  354 ...     451 

Pew  v.  First  National  Hank. 
130  Mas..  391 117 

Pfaff  v.  Kensington  Building 
Association,  6  W.  X.  ('as. 
3l!t 55.  437,  445 

Pfeiffer'v.  Lansburg  Brake  Co., 
I  I  Mo.  A  pp.  59 79 

Pfeister  v.  Wheeling  Building 
Assn.,  19  W.   Virg.  676. ...7,  214 
227,  261,  291 

I'lislerv.  (ierwi-,  122  1ml.  567; 


TAI5LE   OP   CASES. 


li 


PAGE 

s.  c.  23  N.  E.  Rep.  1041.  .122,  129 

134 
Phelps   v.  Lvle,   2   Per.    &   T). 

314  ;  s.  c.  10  Ad.  &   El.    L13 ; 

3Jur.  479 91 

Philadelphia  Mercantile   Loan 

Association  v.  Moore.  47  Pa. 

St.  233  175,  170 

Philanthropic  Building  Asso- 
ciation v.  McKnight,  35  Pa. 

St.  470 ...171,  259,  265 

Phillips  v.  Columbia  City,  etc., 

Association,  53  la.  719;  s.  c. 

6  N.  W.  Rep.  121.. .  .231,  2G0,  263 

264 
Phillips  v.  Wickham,  1  Paige, 

590 55,  138 

Phillipsburg    Mutual  L.  &  B. 

Ass'n    v.  Hawk,  27  N.  J.  Eq. 

355  302 

Pickering's  Claim,  L.  R.  6  Ch. 

525 115 

Pickering  v.  Templeton,  2  Mo. 

App.  425 151 

Pickett   v.  School   District,  25 

Wis.    551  ;    s.  c.    3  Am.  Rep. 

105   105 

Pierce   v.  Canada   Permanent 

Loan    and    Savings    Co.,  24 

Ontario,  426 299 

Pierce  v.  New  Orleans  Building 

Co. ,  9   La.    397  ;  s.  c.  29  Am. 

Dec.  448 52 

Pierson  v.  Bank,  3  Cranch   Ct. 

363 165 

Pierson  v.   Cronk,   26  Abb.  N. 

Cas.  25 109 

Pierson  v.  Tower,  55  N.  H.  215  80 
Pike  Co.  v.  Rolland,  94  Pa.  St. 

238  99 

Pilkington  v.    Baker,   W.    N. 

1877 209,  210,  215 

Piper    v.  Chappell,  14  Mees.  & 

Wels.  624 137 

Pioneer's  Paper  Co.,  In  re,  36 

How.  Pr.  Ill 54 

Pioneer  Savings  and  Loan  Co. 

v.  Cannon,  96  Tenn.  599  ;  s.  c. 

36  S.  W.  Rep.  386 204,  286 

Pioneer  Savings  &  Loan  Co.  v. 

Everhart    (Tex.),  44   S.    W. 

Rep.  885 171,173,  258 

Pioneer  Savings  &   L.  Co.  v. 

Kaspar  (Kan.),  52  Pac.  Rep. 

623 173,  248 

Pioneer  Savings  and  Loan  Co. 

v.  Oxford  (Tex.  4 Civ.  App.), 

35  S.  W.  Rep.  1078.  .199,  203,  440 
Pioneer  Savings  &  L.  Associa- 
tion v.   Pancoast  (Tex.   Civ. 

App.),  43  S.  W.  Rep.  280. .. .  447 


PAGE 

Planet    Benefit    Building    and 
Investment   Sociel  y,    h 
L.   R.   1  1   Eq.  ill  ;  s.  c.  27  L. 
T.  (N.  S.)  638;  20  W.  J.. 
41  L.  J.  Ch.  7:J.s 433 

Plymouth  Building  Associal 

v.  Mangan,  2  Kulp,210.  .173,   177 
181,  3  i3,  445 

Plymouth  Building  A  -  ociation 
!  »od,  2  Kulp,  246...  . 

Pneumatic  Gas  Co.   v.   B 

113  U.  S.  323 L05 

Pollock  v.  Caroline,  i 

(S.  C.),29S.  E.  Rep.   ?7..35, 
266, 

Pollock  v.  National  Bank,  7  X. 
Y.  274:  s.  c.  57  An  I    76 

Poole   v.   West    Point    Bi 
Association,  30  Fed.  513.  .78,  156 

Port  v.  Russell,  36  Ind.  60  ;  s.  c. 
10  Am.  Rep.  5 106 

Port  Edwards,  etc.,  R.  R.  Co. 
Arpin.  80  Wis.  214  ;  s.  c.  49 
N.  W.  Rep.  828 156 

Port  Melbourne  v.  Permanent 
Savings  Building  Society,  L. 
R.  20  Vict.  (Australia)..  .508  292 

Portsea  Island  Building  Soci- 
ety v.  Barclay.  8  R,  389  ;  s.c. 
(1894)  3  Ch.  86  ;  63  L.  J.  Ch. 
837;  10  T.  L.  R.  526;  71  L.  T. 
Rep.  82  ;  1  Mansom,  339  ;  on 
appeal  affirmed,  12  Rep.  324  ; 
s.  c.  (1895)  2  Ch.  298 ;  64  L. 
J.  Ch.  579  ;  72  L.  J.  744 ;  43 
W.  R.  586 ;  11  T.  L.  R.  424. . .   293 

413 

Post  v.  Mechanics'  B.  &  L. 
Ass'n,  97  Tenn.  408;  s.  c. 
37  S.  W.  Rep.  216  ;  34  L.  R. 
A.  201 175.447,  448 

Potts  v.  Wallace,  146  U.  S. 
689 66,  458 

Pottsville  National  Saving 
Fund  Association  v.  Com- 
monwealth, 2  Chest.  (Pa.) 
189 427 

Poulter's  Co.  v.  Phillips,  6 
Bing.  N.  C.  714 124 

Powell  v.  Abbott,  9  W.  N.  Cas. 
231 455 

Powers  v.  Blue  Brass  B.  &  L. 
Association,  86  Fed.  Rep. 
705 457 

Prairie  State,  etc.,  Ass'n  v. 
Gorrie,  167  111.  414  ;  s.  c.  47 
N.  E.  Rep.  739 158,  338 

Prairie  State  Loan  and  Build- 
ing Association  v.  Gorrie,  64 
111.  App.  325  ;  affirmed,  154 
111.  240  ;  48  N.  E.  Rep.  1016. .     74 


lii 


TABLE   OF   CASES. 


Prairie  State  Loan  and  Build- 
ing Association  v.  Nubling, 
64  111.  App.  329  ;  s.  c.  48  N.  E. 
Rep.  1016 75,  329,  336 

Pratt  v.  Boston,  etc.,  R.  R.  Co., 
126  Mass.  443  167 

Pratt  v.  Meriden  Cutlery  Co., 
35  Conn.  36 48 

Pratt  v.  Goswell,  9  C.  B.  (N.  S.) 
706.   . 48 

Pratt  v.  Hutchison,  15  East, 
511 3 

Pratt  v.  Taunton  Copper  Co. , 
123  Mass.  110  ;  s.  c.  25  Am. 
Rep.  37 76,  167 

Premier  Permanent  Building, 
etc.. Association,  In  re,  L.  R. 
16  Vict.  (Australian)  20 439 

Premier  Permanent  Building 
Society,  In  re,  L.  R.  16  Vict. 
(Australia)  643 451 

Premier  Permanent  Building 
Association,  In  re,  11  Aus- 
tralia L.  T.  139 439 

Premium  Fund  Association's 
Appeal,  39  Pa.  St.  156. .  .189,  237 

259 

Presbyterian, etc.,  Fund  v.  Al- 
len.'106  Ind.  593;  s.  c.  7  N. 
E.  Rep.  317 123,  127 

Price  v.  Grand  Rapids,  etc.,  R. 
R.  Co.,  13  Ind.  58 97 

Priestly  v.  Hopgood,  10  L.  T. 
(N.S.)  646;  4  N.  R.  239;  28 
J.  P.  268  ;  12  W.  R.  1031 381 

Priest  v.  White,  89  Mo.  609... .  115 

Prilliman  v.  Mendenhall,  120 
Ind.  279  ;  s.  c.  22  N.  E.  Rep. 
247 118 

Printing  House  v.  Trustees,  104 
U.S.  711 24 

Printers'  Building  and  Loan 
A  ssociation  v.  Paxton  (Tex. 
Civ. App,),  33  S.  K.  Rep.  389  333 

Professional,  Commercial  and 
[ndustrial  Benefit  B.  S.,  In 
re,  L.  R.6  Ch.856;  s.  c.  25  L. 
T.  |  1ST.  S.)397  :  19W.  R.  1153..  410 

Progressive  Investment  and 
Building  Society,  In  re,  54 
L.  T.  45 ....346,  378,  423 

]'n>\  i< I •  -1 1 1  Building  Society  v. 
Greenhill,  L.  R.  n  Ch.  Div. 
122;  s.c.  88  L.  T.  Rep.  (N.  S.) 
I  10;  17  W.  R.  110.... 220,  221,  222 

224 

Pro\  indial  Building  Society,  In 
re,  80  N.  B.  628 875,  878 

I'pa  o  t  v.  Societe  <  lanadienne 
Francaise,  etc.,  2  Leg.  News. 
412..'. 132 


153 


Pryse  v.  People  B.  L.  S.  Ass'n, 

(Ky. ) ,  41  S.  W.  Rep.  574 35 

257,  287 

Puker  v.  Steele,  43  N.  Y.  Supp. 
346 48 

Pullman  v.  Upton,  96  U.  S.  329     24 

Pulsford  v.  Richards,  22  L.  J. 
Ch.  569  ;  s.  c.  17  Jur.  865  ;  19 
E.  C.  L.  &Eq.  387 

Quakertown  B  ui  1  d  i  n  g  and 
Loan  Association  v.  Sorver, 
33  Leg.  Int.  359 310 

Quein  v.  Smith,  108  Pa.  St.  325  ; 

s.  c.  42  Leg.  Int.  386 300,  375 

420 

Queen  v.  Second  Ave.  Ry.  Co., 
14  How.  Pr.  281  ;  3  J.  &  S. 
154 101 

Queen's  Benefit  Building  Soci- 
ety, In  re,  L.  R.  6  Ch.  Div. 
915  ;  19  W.  R,  597.  762 ;  40 
L.  J.  Ch.  381  ;  24  L.  T.  (N.  S.) 
346 433 

Rabbitt  v.  Wilcoxen.  103  la. 
35  ;  s.  c.  72  N.  W.  Rep.  306. .  351 

Racine,  etc.,  R.  R.  Co.  v.  Far- 
mers' Loan  and  Trust  Co.,  49 
111.331 50 

Railway  Co.  v.  Allerton,  18 
Wall.  233.  ...24,  103,  127,  155,  156 

Railroad  v.  Harris,  12  Wall.  65    50 

Railroad  Co.  v.  Hecht,  95  U.  S. 
168;  s.c.  29  Ark.  661 24 

Railroad  Co.  v.  Vanderbilt,  5 
Hun  ;  s.  c.  8  Mart.  (La.  N.  S.) 
68;  Erie,  123 104 

Raleigh  v.  Fitzpatrick,  43  N.  J. 
Eq.  501 107 

Randall  v.  National  Building, 
Loan  and  Protective  Union. 
43  Neb.  876  ;  s.  c.  62  N.  W. 
Rep.  252 172,173,255 

Randall  v.  National  Building. 
Loan,  Protective  Union .  42 
Neb.  809  ;  s.  c.  60  N.  W.  Kep. 
1019 173,  174,204,255 

Ranger  v.  Champion  Cotton 
Press  Co.,  51    Fed.   Rep.  61 .  .     46 

Rayner  v.  Alnusen,  15  Jur. 
1060 48 

Read  v.  Bank,  6  Paige,  337 55 

Read  v.  Buffman,  79  Cal.  77; 
s.  c.  21  Pac.  Rep.  555  ;  12  Am. 
St.  Rep.  131.... 73 

Reaper's  Hank  v.  Willard,  24 
111.  433 24 

Red  Bank  Mutual  Building  and 
Loan  Association  v.  Patter- 
son, 27  N.  J.  Eq.  223.  .251,  267,302 

Redliell'er  v.  House  and   Home 

Building  and  Loan  Associa- 


TABLE   OF   CASES. 


liii 


PAGE 

tion,  2  Mo.  A  pp.  Repr.  911  ; 

s.  c.  64  Mo.  App.  96 312,  317 

Redmond  v.  Dickei'son,  9  N.  J. 

Eq.  507 Ill 

Red  wine  v.  Gate  City  Loan  and 

Building  Association,  54  Ga. 

474 25 

Reed  v.  Bank  of  Newburgh,  6 

Paige,  377 70 

Reeve  v.  Lai  lies'  Building  As- 
sociation, 56  Ark.  335  ;  s.  c. 

19  S.  W.  Rep.  917  ;  18  L.  R. 

A.  129 171,  250 

Reeves  v.  White,  17  Q.  B.  995  ; 

s.  c.  16  Jur.  637  ;  21  L.  J.  Ch. 

169  ;  16  J.  P.  116.     See  283. .  283 

311 
Regina  v.  Arnaud,  9  Ad.  &  El. 

(N.  S.)806;  s.c.  11  Jur.  279; 

16  L.  J.  L.  B.  50 38 

Regina  v.  D'Eyncourt,  4  B.  &  S. 

8S0  ;  9  L.  T.  712  ;  33  L.  J.  M. 

C.  89;   10  Jur.  (N.  S.)  513  ;  116 

E.  C.  L.  820 202,450,  460 

Regina  v.  Grand  Canal  Co.,  1 

Ir.  L.  Rep.  337 47,  58 

Regina  v.  London  &  St.  Kath- 

erin's    Dock's    Co.,  44  L.  J. 

(Q,  R.)  4 48 

Regina  v.  Priest,  15  Jur.   554  ; 

s.  c.  20  L.  J.  Q.  B  (N.S.)  17; 

1  Eng.  L.  &  Eq.  250 84 

Regina  v.   Wilts,   etc.,   Canal 

Co.,  3  Ad.  &  El.  477 47 

Reid  v.    EatontonMf.  Co.,  40 

Ga.  98 129 

Reilly  v.  Mayer,  12  Beas.(N.  J.) 

Eq.  55 304,  309 

Reily  v.  Oglebay,    25  W.  Va. 

36 51 

Reiser  v.  William  Tell  Saving 

Fund  Association,  39  Pa.  St. 

137 237,  259 

Reliance    Permanent    Benefit 

Building  Society.  In  re,  61  L. 

J.    Ch.    453  ;    s.   c.    66  L.  T. 

(N.  S.)  823  ;  8  T.  L.  R.  525  343 
393,  398,  444,  525 
Relief  Saving  Fund  Associa- 
tion  v.    Longshore,    8  Luz. 

Leg.  Reg.  199 221,  281,  291 

Remington  v.   King,   11  Abb. 

Pr.  278 316,447 

Reno  Water  Co.   v.  Leete,  17 

Nev.  203 64 

Rex.  v.  Carmarthen,  1   Maule 

&S.  696 53 

Rex  v.  Cutbust,  4  Burr,  2204. ...   127 

213 
Rex  v.  Devonshire,  1  B.  &  C. 

609 96 


PAGE 

Rex  v.  Hill,  4   B.  &  C.  441. . . .     52 

Rex  v.  Lucas,  10  East,  235 47 

Rex  v.  May,  5   Burr.  2681 52 

Rex  v.  Merchants',  etc.,  Co.,  2 
B.  &  Ad.  115 47,  48 

Rex.  v.  Varlo,  Cowp.  248 96 

Rex.  v.  Westvvood,  2  Dow.  & 
CI.  21 , 125,  126 

Reynolds  v.  Georgia  State, 
etc.,  Ass'n  (Ga.),  29  S.  E. 
Rep.  187 43,  45,  254,  313 

Reynolds  v.  New  York  Build- 
ing Loan  Banking  Co.,  89 
Hun,  609 ;  s.  c.  35  N.  Y. 
Supp.  80  ;  69  N.  Y.  St.  Rep. 
259 328,  329 

Rhoadsv.  Hoernerstown  Build- 
ing and  Savings  Association, 
82  Pa.  St.  l.so  :  s.  c.  33  Leg. 
Int.  417.  .209.233.  259.  439,  450,  461 

Rhodes  v.  Missouri,  etc.,  Co., 
64  111.  App.  77. . .  .35, 189,  252,  323 

353 

Richard  v.  Southwestern  B.  & 
L.  Association,  49  La  Ann. 
481;  s.c.  21  So.  Rep.  643.  .241  250 

Richards  v.  Bib))  County  Asso- 
ciation,  24  Ga.   198 316,318 

Richardson  v.  Green,  133  U.  S. 
30 106 

Richardson  v.  Rogers,  45  Mich. 
591 458 

Richardson  v.  Williamson,  L. 
R.  6  Q.  B.  276  ;  40  L.  J.  Q.  B. 
145 113,115,416 

Richmond,  etc.,  R.  R.  Co.  v. 
Snead.  19  Gratt.  354  ;  s.  c.  100 
Am.  Dec.   670 63,  04,  166 

Ricker  v.  Larkin,  27  Bradw.  625    30 

Ricks  v.  Durant  Building  and 
Loan  Association  (Miss.),  18 
So.  Rep.  359 221,  320 

Ridgeway  v.  Farmers'  Bank.  12 
S.  &  R.  256;  14  Am.  Dec. 
681 100,  103 

Riley  v.   Oberly,  26  W.  Va.  36     99 

Rio  Grande  Cattle  Co.  v.  Burns. 
82  Tex.  50  ;  s.  c.  17  S.  W.  Rep. 
1043 162,  165 

Risk  v.  Delphos  Building  and 
Savings  Association,  31  Ohio 
St.  517 200,231,317 

Roberts  v.  American  B.  &  L. 
Ass'n,  62  Ark.  572  :  s.c.  36  S. 
W.  Rep.  1080. . .  .185,  207,  210,  215 

Robertson  v.  American  Home- 
stead    Association,    10    Md. 

397  ;   69  Amer.  Dec.  145 200 

222,  246,  247, 269, 295.  312,  318 

Robillard  v.  Society,  4  Leg. 
News,  133 133 


liv 


TABLE   OF   CASES. 


Robinson  v.   Mayor,  1  Hump. 

156  ;  s.  c.  34  Am.  Dec.  625. .  121 
Robinson  v.  Pittsburg,  etc.. Co., 

32  Pa.    St.  334  ;  s.  c.  72  Am. 

Dec.  792 150,  152 

Robinson  v.  Smith,  3  Paige,  222; 

s.  o.  24  Am.  Dec.  212 104 

Robinson  v.  Trevor,  L.  R.  12  Q. 

B.  Div.  423  ;    s.  c.  53  L.  J.  Q. 

B.  85  ;  50  L.  T.  (N.  S.)  190  ;  32 

W.  R.  374 293,  321 

Rochester     Savings     Bank    v. 

Whitmore,    49    N.  Y.  Supp. 

862 446,447 

Rockford,   etc.,  R.    R.  Co.    v. 

Sage,  65  111.  328  ;  s.  c.  16  Am. 

Rep.  587 118 

Rockville,  etc..  Turnpike  Road 

v.  Van  Ness,  2  Cranch,  C.  C. 

449 92,  93 

Rodgers  v.  Southwestern,  etc., 

Association,  7  W.  N.  Cas.  95  129 
228,  330 
Rodney  v.  South  R.  R.  Ass'n,  3 

N.  Y.  St.  Rep.  564 ;   s.  c.  14 

Daly,  70 78 

Rogers  v.  Danby  Universalist 

Society,  19  Vt.  187 105 

Rogers  v.  Hargo,  92  Tenn.  35  ; 

s.  c.  20  S.  W.  Rep.  430. . .  .173,  230 
Rogers  v.  Hastings,  etc.,  R.  R. 

Co.,  22  Minn.  25 118 

Rogers  v.   Jones,  1  Wend.  237  137 
Rogers  v.  Raines  (Ky.),38  S. 

W.  Rep.  483 175,  U7 

Rogers  v.  Southwestern  Mutual 

Saving   Fund    and  Building 

Ass'n,  7  W.  N.  Cas.  95  128 

Rolph  v.  Upper  Canada  Build- 
ing   Society,   11   Grant    Ch. 

275 112 

Root  v.  Olcott,  42  Hun.  536. . .     84 
Rosenback  v.  Salt  Springs  Nat. 

Bank.  53  Barb.  495 137 

Rosenberg  v.   Northumberland 

Building    Society,   22   Q.  B. 

Div.  at    p.  380;    s.  c.  60  L  .T. 

558;    37  W.   R.   368;   5  T.  L. 

R.  205 122,  131,  398,  399,  403 

Ross   v.   i  'rockd  1 ,    14  La.  Ann. 

823  93 

Ro      v.    Victorian    Permanent 

Society,    L.    R.   Eq.  8  Vict. 

(  Australia),  254 75 

Routh  v.  Webster,  lo  Beav.  561; 

ll    Jur.   701 116 

land's  Estate,  1   Del.  (Pa.) 

98 259 

Rowland  v.  Loan   Associal i<>n, 

116  N.  C.    .N77  ;  8.  c.  22  S.   E. 

Rep.  8 280 


PAGE 

Rowland  v.  Old  Dominion 
Building  and  Loan  Associa- 
tion (N.  C.) ;  24  S.  E.Rep.  366  175 

Rowland  v.  Old  Dominion 
Building  and  Loan  Associa- 
tion, 115  N.  C.  825  ;  s.  c.  18 
N.  E.  Rep.  965 175 

Rowland  v.  Old  Dominion 
Building  and  Loan  Associa- 
tion, 116  N.  C.  877  ;  s.  c.  22 
S.  E.  Rep.  8 175 

Rowland  v.  Old  Dominion 
Building  and  Loan  Associa- 
tion, 118  N.  C.  173  ;  s.  c.  24 
S.  E.  Rep.  366  ;  on  second  ap- 
peal, 116  N.  C.  877 ;  s.  c.  22 
S.  E.  Rep.  8  ;  on  first  appeal, 
115  N.  C.  825  ;  s.  c.  18  S.  E. 
Rep.  965 175,  225 

Rowland  v.  Old  Dominion,  etc.. 
Association  (N.  C.),22S.  E. 
Rep.  8 185 

Rowland  v.  Old  Dominion,  etc., 
Association,  115  N.  C.  825  ; 
s.  c.  18  S.  E.  Rep.  965 185 

Rowland  v.  VVorkingmen"s 
Building  and  Loan  Associa- 
tion, 1  Lack*  L.  Rec.  456 197 

Rudge  v.  Riehens,  L.  R.  8  C.  P. 
358;  s.  c.  42  L.  J.  C.  P.  127  ; 
28  L.  T.  537  319 

Ryan  v.  Leavenworth,  etc.,  R. 
R.  Co.,  21  Kan.  365 114 

Sabin  v.  Senate  of  the  National 
Union,  —  Mich.  —  ;  s.  c.  51 
N.  W.  Rep.  202 129 

Sacks  v.  Duckworth,  etc., 
Ass'n,  6  Ohio  Dec.  354 ;  s.  c. 
4  Ohio  N.  P.  214  36,  60,  198 

Sadler's  Case,  Id.  26...., 40 

Sagory  v.  Dubois,  3  Sandf.  Ch. 
466. 37 

Saint  John  Building  Society, 
In  re,  28  N.  B.  597 ;  s.  c.  374 
Occ.  N.  348.. 132,  348,377,  379,  397 

Salem  Bank  v.  Gloucester 
Bank,  17  Mass.  1  ;  s.  c.  9  Am. 
Dec.  Ill 102,  126 

Salmon  v.  Richardson,  30 Conn. 
360;  s.  c.  79  Am.  Dec.  255...   116 

Sailer  Building  Association  v. 
Rice,  8  W.  N.  Cas.  12 ;  s.  c. 
37  Leg.  Int.  146 39 

Sail  marsh  v.  Spaulding,  147 
Mass.  224  ;  s.  c.  17  N.  E.  Rep. 
316 107 

Sampson  v.  Bowdoinham,  etc., 
Corporation,  36  Me.  78 52 

Samuel  v.  Eolladay,  1  Woodw. 
400 .............    97 

San   Buenaventura    Mini  ng, 


TABLE   OF    CASES. 


lv 


PAGE 

etc.,  Co.  v.  Vassault,  50  Cal. 

534 89 

Sanders  v.  Page,    11  Colo.  518  ; 

s.  c.  19  Pac.  Rep.  468  a 70 

Sandford  v.   McArthur,  18  B. 

Mon.  411 115 

Sandhurst  Benefit  Building  & 

Improvement  Society  v.  De- 

laney,  L.  R.  3  Vict.  L.  (Aus- 
tralia) 234 135 

Sangster    v.  Cochrane,    L.    R. 

28  Ch.  Div.  298  ;  s.  c.  54  L.  J. 

Ch.  301 ;  51  L.  T.  (N.  S.)  889  ; 

33  W.  R.  221  ;  40  J.  P.  327. . .  321 
San    Jose    Savings     Bank    v. 

Sierra  Lumber  Co.,   63  Cal. 

179 92 

Santa  Clara  Mining  Association 

v.  Meredith,  49  Md.  389  ;  s.  c. 

33  Am.  Rep.  264 118 

Sargeant,    Ex    Parte,  17     Vt. 

425  63 

Sargeant  v.  Franklin  Insurance 

Co.,  8  Pick.  90  ;  s.  c.  19  Am. 

Dec.  206 134,  164,  165 

Sargeant  v.  Essex  Corporation, 

9  Pick.  202 134 

Sargeant  v.  Webster,  13  Met. 

187  ;  s.  c.  46  Am.  Dec.  743. . .  97 
98,  457 
Satterlee  v.  San  Francisco,  23 

Cal.  314 96 

Savage  v.  Rix,  9  N.  H.  265. ...  67 
Savannah  Cotton  Exchange  v. 

State,  54  Ga.  668 137 

Savings  Bank  v.  Davis,  8  Conn. 

191 53,  99 

Savings  Bank,  etc.,  v.  Benton, 

2  Met.  (Ky.)  240 84 

Savings  Bank  v.  Caperton,  87 

Ky.  306  ;  s.  c.  8  S.  W.  Rep. 

885  ;  12  Am.  St.  Rep.  488. . .  108 
Savings    Fund   v.    Murray,    14 

Leg.  Int.  133 171,  237,  259 

Sawtell  v.  N.  &  S.  L.  &  B.  Co., 

48  Pac.  Rep.  211 177 

Sawyer    v.    Menominee    Loan 

and     Building    Association, 

103  Mich.  228  ;  s.  c.  61  N.  W. 

Rep.  521 255'  521 

Scadding  v.  Lorent,  3  H.  L.  Cas. 

418 53 

Scanlan  v.  Snow,  2  App.  D.  C. 

137 133 

Schaeffer  v,  Missouri  Insur- 
ance Co.,  46  Mo.  248 37 

Schenectadv,  etc.,  R.  R.  Co.  v. 

Thacher,  "ll  N.  Y.  102 25 

Schlesinger's     Estate,    1    Law 

Times  (N.  S.),15 158 

Schmidt  v.   Hennepin  County 


PAGE 

Barrel  Co.,  35  Minn.  511  ; 

s.  c.  29  N.  W.  Rep.  200 158 

Schober  v.  Accommodation 
Saving  and  Loan  Associa- 
tion, 35  Pa.  St.  223 175,  228 

Schoff  v.  Bloom^eld,  8  Vt.  472     53 

Schofield  v.  Union  Bank,  2 
Cranch.  C.  C.  115 54 

Schout  v.  Conkey  Ave.,  etc., 
Asso.,  87  Hun,  568;  s.  c.  32 
N.  Y.  Supp.  713  ;  11  Misc. 
Rep.  454  ;  66  N.  Y.  St.  Rep. 
66 192,  332 

Schrick  v.  St.  Louis  Mutual 
Housebuilding  Co.,  34  Mo. 
423 126 

Schutte  v.  California  Building 
and  Loan  Association,  146 
Pa.  St.  324  ;  s.  c.  23  Atl.  Rep. 
336 197 

Scott  v.  Baker,  3  W.  Va.  285. .     67 

Scott  v.  Depeyster,  1  Edw.  Ch. 
513 108.  109 

Scott  v.  Llovd,  9  Pet.  418  ;  re- 
versing 4  Cranch,  C.  C.  206. .  264 

Scottish  Property  Investment 
Building  Society  v.  Boyd,  4 
Rettie,  127 448 

Scottish  Property  Investment 
Company  Building  Society  v. 
Stewart.  12  Rettie.  925  ;  s.  c. 
22  Scot.  L.  R.  619 329,  342 

Scovill  v.  Tliayer,  105  U.  S.  148  156 

Seagrave  v.  Pope,  1  De  G.  M.  & 
G.  783  :  s.  c.  16  Jur.  1099  ;  22 
L.  J.  Ch.  258  ;  15  E.  L.  &  Eq. 
477  ;  20  L.  J.  Rep.  158. . .  .242,  246 
277,  291,  357,  358 

Sears  v.  111.  &  Wesleyan  Uni- 
versity, 28  111.  183 73 

Sears  v.  King's  County  Ele- 
vated R.  R.  Co.,  152  Mass. 
151;  s.  c.  25  N.  E.  Rep.  98...     79 

Second  Avenue  R.  R.  Co.  v. 
Colman,  24  Barb.  300 80 

Second  Edinburgh  and  Leith 
Building  Society  v.  Aitken, 
19  Rettie,  603  ;  s.  c.  29  Scot. 
L.  R.  456 40 

Second  German  -American 
Building  Ass'n  of  Baltimore 
v.  Newman,  50  Md.  62 265 

Second  Manhattan  B.  Ass'n.  v. 
Hayes,  4  Abb.  App.  Dec.  183  ; 
s.  c.  2  Keyes,  192 314 

Second  National  Loan  and 
Homestead  Association  v. 
Hublev.  34  Leg.  Int.  6  ;  s.  c. 
24  Pitts.  L.  Jr.  50 331 

Second  New  York  Building  As- 
sociation v.  Gallier 


lvi 


TABLE   OF   CASES. 


Security  Loan  Association  v. 

Lake,   69  Ala.    456;   s.    c.    1 

Amer.    &  Eng.    Corp.    Cas. 

418;  s.    c.   72  Ala.  307.. 251,  324 
339,  445 
Seibel  v.  Victoria  Building  As- 
sociation,  43   Ohio   St.    371  ; 

s.  c.  1  West,  340  ;  10  Amer  & 

Eng.    Corp.     Cas.     463  ;     13 

Wkly.   L.    Bull.   242,  265;   2 

N.  E.  Rep.  371.. 171.  172.  184,  193 

145.  204,  230,  261,    321,   339,    395 
Seiznouret  v.  Home  Insurance 

Co.,  24  Fed.  Rep.  332 156 

Seldon  v.  Reliable  Savings  and 

Building  Association,  32  P.  F. 

Smith,  336  ;  s.  c.  2.  W.  N.  Cas. 

481 6.  171,203,  231,  263 

Selma  Building  and  Loan  As- 
sociation v.  Morgan,  57  Ala. 

33  429 

Selma,'  etc". ,'  R.  R. '  Co.  v.  Tip- 
ton, 5  Ala.  787  ;  s.  c.  39  Am. 

Dec.  344 31 

Seneca  County  Bank  v.  Lamb, 

26  Barb.  595 102,  128 

Setliff    v.    North,    etc.,    Ass'n 

(Tenn.  Ch.),  39  S.  W.   Rep. 

546.  .33,  43,  198,  216,  217,  222,  248 
S 'wull  v.  Boston  Water  Power 

Co.,  4  Allen.  27  7:  s.  c.  81  Am. 

Dec.  701.... 76,  167 

Seward  v.  Rising  Sun,  79  Ind. 

351 140 

Shackelford    v.    New  Orleans, 

etc.,  R.  R.  Co..  37  Miss.  202. .     94 
Sliakopee   Mining   Co.,    In   re, 

37  Minn.  91  ;  s.  c.   33  N.   W. 

Rep.  219 30 

Shannon    v.    Dunn,   43  N.    H. 

194 251 

Shannon  v.   Howard    Building 

Association,  36   Md.  383 L33 

196,  206,  207,  212,  216 
219,  221,  246,  294 
Shattuck  v.  Oakland  Smelting, 

!.,  Co.,  58  Gal.  550 117 

Shaw   \.    Port    Phillips,    etc., 

L.  R.  13  Q.  B.  Div.  107 168 

Slu-llield  Building  Associal  ion, 

In  re  Watson,  Ex  Parte,21  Q. 

B.  Div.  301  ;  s.  c.  57  L.J.  Q. 

B.  609;  59  L.  T.  401  ;  36  W. 

R.  829;  52  .).  P.  i  12 415 

Sheffield   Permanent   Building 

Sociel  \\  In   re,  5  L.  T.    Rep. 

211 824,  327,  328 

Sheffield,    etc.,    Building    So- 

fi.'tv.    In   iv,    I,.   I!..    .".'   |{.  I'.. 

Div.  17 1  :  s.  c.  58  L.  .1.  Q.  B. 

865;  60   L.  T.    L86;  53  J.   P. 


PAGE 

375 ;  5  T.  L.  R.  192 346,  380 

385,  396 
Sheffield  and  South  Yorkshire 

Permanent  Building  Society 

v.   Aizlewood,  L.  R.  44   Ch. 

Div.  412  ;  s.   c.  59  L.   J.   Ch. 

34 ;  62   L.  T.  678  ;   6  T.  L.  R. 

25.  . .  .110,  291,  292,  293,  452,  461 
Shelby  County  v.  Shelby  R.  R. 

Co.,  5  Bush.  225 23 

Shelby  v.  Mobile,  30  Ala.   540  ; 

s.  c.  68  Am.  Dec.  143 137 

Sheridan  Electric  Light  Co.  v. 

Chatham  National  Bank,  127 

N.  Y.  517  ;  s.  c.  28  N.  E.  Rep. 

4G7  :  40  N.  Y.  St.  Rep.  311. .  101 
Sheriff   v.    Glenton,   28   L.   T. 

(N.  S.)  65 319 

Sherman  Building  Association 

v.  Rock,  9  Phila.  75 ;  s.  c.  29 

Leg.  Int.  140 238 

Sherman  Center  Town  Co.  v. 

Swigart,  43  Kan.   292 ;  s.   c. 

19  Am.  St.  Rep.  137 67 

Shultz    v.    Christman,    6    Mo. 

App.  338 114 

Shinn   v.    Commonwealth,  73 

Va.  899 34,     77 

Shockley  v.  Fisher,  75  Mo.  498  457 
Shoe  &  Leather  Asso.  v.  Bailey, 

17  Jones  &  Sp.  (N.  Y.)  385" .  48 
Shropshire  v.  Behrens.  77  Tex. 

275 458 

Siborg  v.  Security,  etc.,  Asso- 
ciation    (Minn.).  75   N.    W. 

Rep.  1116 439 

Sibun  v.  Pearce,  44 Ch.  Div.  at 

p.  370  ;  63  L.  T.   123  ;  38  W. 

R.  658  ;  6  T.  L.  R.  262.  . .  .315,  330 
335,  337 
Siede  v.  Joshua  Hendv  Ma- 
chine Works.  86  Cal.  390.  .61,  63 
Sills  v.    North   &   Son tli  B.  L. 

Ass'n,    Chicago      Daily    Law 

Bull.,  January  16,1896 398 

Silver  v.  Barnes,  (i  Bing.  N.  C. 

180;  8  Scott,  300;3rE.  C.L. 

335 243,  245 

Silver  Hook  Road  v.  Green.  12 

R.  I.  164  ;  s.  c.  7  Rep.  187. . .  100 
Simons  v.  Vulcan  ( )il  and  Min- 
ing Co.,  61  Pa.  St.  202  ;  s.  c. 

100  Am.  Dec.  C28 104,  114 

Simpson  v.  Building  and  Sav- 
ing Association,  38  Ohio  St. 

349 190 

Simpson  v.  Kentucky  Citizens' 

Asso.   (Kv.),    II   S.    W.  Rep. 

570;  s.    c.    42    S.     W.     \lvV. 

834 23 

Sistare  v.  Best,  16 Hun,  611.. ..     64 


TABLE   OF    CASES. 


lvii 


PAGE 

Skinner's  Estate,  4  Phila.  189  ; 

s.  c.  17  Leg.  Int.  381 259 

Skinner  v.  Smith,  134  N.  Y.  249  ; 

s.  c.  31  N.  E.  Rep.  911  ;  af- 
firming 10  N.  Y.  St.  Rep.  81  ; 

s.  c.  56  Hun,  437 106 

Slee  v.  Bloom,   19  Johns.  466  ; 

s.  c.  10  Am.  Dec.  273 135 

Small  v.  Smith,  L.  R.  10  App. 

Cas.  119 293,  414 

Smith's  Case,  L.  R.  1  Ch.  Div. 

481 403 

Smith,  Ex   Parte,   39  Ch.  Div. 

546:  s.  c.   L.  J.  Ch.    134;  60 

L.  T.  97  :  4  T.  L.  R.  466,  712  100 
Smith  v.   Crescent   City,  etc., 

Slaughter  House  Co.,  30  Ala. 

Ann.   1378   168 

Smith  v.  Dorn,  96Cal.  73  ;  s.  c. 

30Pac.  Rep.  1024 99 

Smith  v.  Erb,  4  Gill  (Md.),457  88 
Smith  v.   Hurd,  12  Met.  371 ; 

s.  c.  46  Am.  Dec.  690 114 

Smith  v.  Law,  21  N.  Y.  296 53 

Smith  v.  Loni;-  Island  R.  R.  Co. , 

102  N.  Y.    190  ;  reversing  32 

Hun,  38 78 

Smith  v.  Los  Angeles,  etc.,  As- 
sociation, 78  Cal.  289 65,     96 

Smith   v.  Mechanics'  Building 

and  Loan  Association,  73  N. 

C.  372 256.  287,  294 

Smith  v.  Nashville,  etc..  R.  R. 

Co.,  91  Tenn.  221  :  s.  c.  IS  S. 

W.  Rep.  546 157 

Smith  v.    Natchez  Steamboat 

Co.,  1  How.  (Miss.)  479. ..  .  72 
Smith  v.  Old  Dominion  B.    & 

S.  Ass'n,  119  N.  C.  257;  21  S. 

E.  Rep.  40 256 

Smith  v.   Old  Dominion,  etc., 

Ass  n,  26  S.  E.  Rep.  40 ;  s.  c. 

119  N.  C.  257  78 

Smith  v.    Pilkington,  30  L.  T. 

Rep.  196;  s.  c.  4  Jur.  (N.S.) 

58;  22  J.  P.  5  ;  on  appeal,  1 

De  Cex  F.  &  J.  120  ;  29  L.  J. 

Ch.  227  ;  24  J.  P.  227.  .  .  .192,  279 
361,  362 
Smith  v.  Putman.  61  N.  H.  632  119 
Smith   v.   Reese  River  Co.,  L. 

R.  2Eq.  264;  s.  c.  L.  R.  4H. 

L.  64 116,  152 

Smith  v.  Skearv,  47  Conn.  47  105 
Smith  v.  Smith^  62  111.  493.  .63  71 
Smith  v.  Smith,  3  Desau,  557.  .     55 

Smith  v.  Wolf,  55  la.  555 86 

Smoot   v.  People's,  etc.,  Ass'n 

(Va.),  29  S.  E.  Rep.  746.  .288,  289 
Smyth  v.  Darley,  2  H.  L.  Cas. 

789 52 


PAGE 

Snarr   v.  Toronto   Permanent 

Building  and  Saving  Society, 

29  U.  C.  Q.  B.  317 421 

Snider's  Estate,  34  Leg.  Int.  49  42 
Snyder  v.  Studebaker,  19  Ind. 

462 32 

Societe     de     Construction     v. 

Banque,  1  Q.  B.   (Can.)  Rep. 

7:5 421 

Societe   Canadienne-Francaise 

v.  Daveluy,  20  Cas.  S.  C.  449  200 
Solomon  v.  Penoyar,  89  Mich. 

11  ;  s.  c.  50  N.  \V.  Rep.  644.  .  115 
Somerset  County  Building  and 

Loan  Association  v.  Cam- 
man,  11  >;.  J.  Eq.  382.  . .  .186,  382 
South  Bav  Meadow  Dam  Co.  v. 

Gray,  30  Me.  547 72 

South    Covington,   etc.,    R.  R. 

Co.  v.  Gest,  34  Fed.  Rep.  628  116 
Southgate  v.  Atlantic,  etc.,  R. 

P.  Co..  61  -Mo.  89 84 

South  London  Fish  Market  Co., 

In  re,  39  Ch.   Div.  324  ;  s.  c. 

60  L.  T.  68;  37  W.  R.  3 42 

Southern  Bank  v.  Williams,  25 

Ga.  534 34 

Southern  B.  &  L.  Ass'n  v.  An- 

niston   Trust   Co.,    101   Ala. 

582  ;  s.   c.  15  Southern  Rep. 

123  :  29  L.  R.  A.  120 174,  202 

251 
Southern   Building   and   Loan 

Association  v.  Harris,  98  Kv. 

41  ;  31  L.  R.  A.  41  :  32  S.  W. 

Rep.  261 35,  257,  328,  428 

Sparks   v.    Dispatch    Transfer 

Co.,    104  Mo.    531;  s.   c.   24 

Am.   St.   Rep.   351  ;  12  L.  R. 

A.    714  :  15  S.  W.   Rep.  417  ; 

34  Am.  &  Eng.    Corp.    Cas. 

373 63,64,  67 

Sparrow  v.  Farmer,    26   Be;1,  v. 

511;  28  L.  J.  Ch.  537  :  5  Jur. 

(N.  S.)  530:  33  L.  T.  (O.  S.) 

216  ;  23  J.  P.  500. . .  .200,  318,  363 
Spear  v.    Crawford,    14  Wend. 

20  ;  s.  c.  28  Am.  Dec.  513  .  .  .  37 
Spear  v.  Ladd.  11  Mass.  94. . . .  100 
Spears  v.  Ward.  48  Ind.  541 .  .  .  135 
Spengler  v.  Butterfield.  6  Colo. 

356 67 

Sperring's  Appeal,  71   Pa.   St. 

11  ;  s.  c.  10  Am.  Rep.  684...  108 
Sperry  v.  Dransfield,  2  N.  Z.  L. 

Rep.  319 77 

Spining  v.  Home  Building  and 

Savings  Association,  26  Ohio 

St.  483 27 

Spriggs  v.  Western  Union  Tel. 

Co.,  46  Md.  67 24 


lviii 


TABLE   OF   CASES. 


PAGE 

Springfield  Building  Associa- 
tion v.  Raber,  24  Pitts.  L.  Jr. 
23  ;  s.  c.  33  Leg.  Int.  329 ;  11 
Phila.  546 307 

Spring  Garden  Association  v. 
Tradesman's  Loan  Associa- 
tion, 46  Pa.  St.  493  ;  s.  c.  11 
Phil.  546  ;  33  Leg.  Int.  329. .  170 
172,  173,  177,  305,  404 

Spring  Valley  Water  Co.,  Ex 
Parte,  17  Cal.  176 27 

Springville  Building  Associa- 
tion v.  Raber,  33  Leg.  Int. 
329  ;  s.  c.  24  Pitts.  L.  Jr.  23. .  171 

172 

Spurlock  v.  Pacific  R.  R.  Co., 
61  Mo.  319 134 

Spyker  v.  Spence,  8  Ala.  333.. 61,  65 

Squires  v.  Brown,  22  How.  Pr. 
35 93 

St.  John  Building  Society,  In 
re,  28  N.  B.  597  ;  s.  c.  9  Occ. 
N.  348 375 

St.  John  v.  Erie  R.  R.  Co.,  22 
Wall.  136  ;  s.  c.  10  Blatchf. 
271 145 

St.  Joseph,  etc..  Building  As- 
sociation v.  Thompson,  19 
Kan.  321 283 

St.  Lawrence  Steamboat  Co., 
In  re,  44  N.  J.  L.  529 56 

St.  Louis  Colonization  Associa- 
tion v.  Hennessy,  11  Mo. 
App.  555 95 

St.  Louis  Domicile,  etc.,  As- 
sociation v.  Augustin,  2  Mo. 
App.  123 101,  454 

St.  Louis  Gas  Light  Co.  v. 
City  of  St.  Louis,  84  Mo.  202  ; 
affirming  11  Mo.  App.  55 ....     34 

St.  Louis  Institute,  In  re,  27 
Mo.   Apo.  <•>:;:; 25 

St.  Louis  v.  Withaus,  '■><>  Mo. 
646;  s.  <■.  15  Mo.  App.  '.'17...     53 

St.  Louis  Perpetual    Insurance 
,   v.  Goodfellow,  9  Mo.  149  15s 

Si.  Louis  v.Weber,  44  Mo. 
;,i; , 133,  134 

St.  Louis.    <•!<•..  Co.  v.    Y.-mtis, 

72  111.  App.  597;  s.  c.  17:!  111. 

:!■_»!  ;  s.  r.  :,()  N.  I-].  Ilcp.  .SOI..    35:5 

339 
St.    Louis.  etc.,  Co.    v.  Vantis, 

72  III.   \pp.  597 338 

St.  Luke's  Church  v.  Matthews, 

1    Desau,   578 ;  s.  c.    6   Am. 

Dec.  619 133 

St .   Nicholas  [nsurance  ( '<».  v. 

Bowe,  3  Bosw.  150 62 

Bt.  Paul,  etc.,  i:.  R.Co.,  In  re, 

86  Minn.  85  50 


PAGE 

Stacy  v.    Bank  of  Illinois,   5 

111.  91 118 

Stanwood     v.     Stanwood,     17 

Mass.  57 140 

Star  Savings  &    L.    Ass'n    v. 

Woods    (Tenn.),   42    S.    W. 

Rep.  872 263 

Starks  v.    Burke,    9  La.    Ann. 

341 103 

State  v.  Accommodation  Bank, 

26  La.  Ann.  288 23 

State  v.  Adams,  44  Mo.  570 103 

State  v.  American  Savings  and 

Loan  Association,  64  Minn. 

349 ;  s.  c.  67  N.  W.  Rep.  1. ..  35 
State  v.    Armstrong.  3  Sneed, 

634  :  Ex  Parte,  Chad  well.  59 

Tenn.  98 25 

State  v.  Bailey,  19  Ind.  452. ...  32 
State  v.   Bienville   Oil  Works 

Co.,  28  La.  Ann.  204 47 

State  v.    Bonnell,   35   Ohio  St. 

10 53,  99 

State  v.  Central  Ohio,  etc.,  As- 
sociation, 29  Ohio  St.  399. ...  28 
State  v.  Chute,  34  Minn.   135: 

s.  c.  24  N.  W.  Rep.  253. . .  .54,  56 
State  v.  City  of  Cincinnati,  23 

Ohio  St.  445 128 

State  v.  Conklin,  34  Wis.  1. . . .  124 
State  v.  Creveling,  39  N.  J.  L. 

465 ;    affirmed,  40   N.    J.    L. 

192    426,  427 

State  v.  Curtis.  9  Nev.  325. .. .  127 
State  v.  Ferguson,    31  N.  J.  L. 

107 99 

State   v.    Ferguson,    33   N.  H. 

424 126 

State  v.  Ferris,  42  Conn.  560.  .  54 
State  v.  Flitcraft  (Mo.),  36  S. 

W.  Rep.  675 434 

State  v.  Granville,  etc.,  So- 
ciety, 11  Ohio.  1 23 

State  v.    Greenville    Building 

Association.  29  Ohio  St.  92.  .  128 
190,  235,  283 
State  v.  Hornbacker,  42  N.  J. 

L.  035  ;  affirming   s.  c.  42  N. 

J.  L.   519 170.  242,  251,  426 

State  v.  How.  1  Mich.  512 32 

State  v.  Mayor,  33  N.  J.  L.  57. .  126 
State  v.  McGrath,  95   Mo.  193; 

s.   c.  8  S.   W.   Rep.  425  ;    22 

Aiucr.    &    Eng.    Corp.     ('as. 

620 429 

Slate  v.  Mclver,  2S.  C.  25 163 

State  v.  Merchants'  Exchange, 

Mo.  App.  96 136 

State    v.    Merchants',    37   Ohio 

St.  251 56 

State  v.  Oberlin   Building  and 


TABLE   OF   CASES. 


lix 


PAGE 

Loan   Association,    35    Ohio 

St.  258 128,  189,  234,  235,  236 

273,  376,  416,  438,  445 

State  v.  Ohio,  etc.,  K.  R.  Co., 
6  Ohio  C.  C.  414 96 

State  v.  Overton,  24  N.  J.  L. 
433;  s.c.  61  Am.  Dec.  671.  .121,  133 

State  v.  People's  Building  & 
Loan  Ass'n,  43  N.  J.  L.  389  .  .   165 

State  v.  People's  Mutual  Ben- 
efit Association  42  Ohio  St. 
579 117 

State  v.  Pettineli,  10  Nev.  141     88 

State  v.  Redwood  Falls  Build- 
ing &  Loan  Ass'n,  45  Minn. 
154 ;  s.  c.  47  N.  W.  Rep.  540  ; 
10  L.  R.  A.  752  ;  35  Araev.  & 
Eng.  Corp.  Cas.  244.. 142,  301,  345 
426,  429 

State  v.  Rohliffe  (N.  J.  L.),  19 
Atl.  Rep.  1099 57,  91 

State  v.  Sibley,  25  Minn.  387  .  .     21 

State  v.  St.  Louis,  etc.,  R.  R. 
Co.,  29  Mo.  App.  301 46.  47 

State  v.  Smith,  15  Ore.  98  ;  s. 
c.  14  Pac.  Rep.  814 60,  91 

State  v.  Smith,  48  Vt.  286.  .99,  157 

State  v.  Sportsmen's,  etc. ,  As- 
sociation, 29  Mo.  App.  326  . .     46 

State  v.  Thompson,  27  Mo.  365     56 

State  v.  Tudor,  5  Dav,  329  ;  s. 
c.  5  Amer.  Dec.  162.  .  ..V,.  56,  138 

State  v.  Wilmington.  3  Harr. 
(Del.)  294 54 

State  v.  Wright,  10  Nev.  167. .     88 

State  Bank  v.  Andrews,  18  N. 
Y.  St.  Rep.  167 116 

State  Bank  v.  Bell,  5  Blackf. 
127 84 

State  Bank  v.  Fox,  3  Blackf. 
431 68 

State  Bank  v.  United  States 
Pottery  Co. ,  34  Vt.  144 81 

State  Saving  and  Loan  Asso- 
ciation v.  Carroll.   15  Pa.  C. 
C.  522  ;  s.  c.  4  Pa.  Dist.  Rep.  6  375 
391.  441,  445,  446 

State  Saving  Association  v. 
Nixon- Jones  Printing  Co., 
25  Mo.  App.  642 159 

State  Savings  Association  v. 
Kellogg,  63  Mo.  540 375 

Steamboat  Co.  McCutcheon,  13 
Pa.  St.  13 63,  64 

Steamboat  New  World  v.  King, 
16  Howe.  469 108 

Steam  Engine  Co.  v.  Hubbard, 
101  U.  S.  188 93 

Stein  v.  Indianapolis  Building 
Loan  Fund  and  Savings,  18 
Ind.  237 264,  458 


PAGE 

Steinberger  v.  Independent  L. 
&  S.  Ass'n,  84  Md.  625  ;  s.  c. 
36  Atl.  Rep.  439 433 

Stepbens  v.  Overstolz,  43  Fed. 
Rep.  771 109,  114 

Stettaner  v.  New  York,  etc., 
Co.,  42  N.  J.  Eq.  46;  s.  c.  24 
Cent.  L.  S.  365 48 

Stevens  v.  Carp  River  Iron  Co., 
57  Mich.  427  ;  s.  c.  24  N.  W. 
Rep.  160 81 

Stevens  v.  Davidson,  18  Graft. 
819  ;  s.  c.  98  Am.  Dec.  692. . .   101 

Stevens  v.  Hill,  29  Me.  133. .100,  457 

Stevens  v.  Willard,  43  Vt,  092  104 

Stewart  v.  Mahoney  M.  Co.,  54 
Cal.  149 90 

Stewart  v.  St.  Louis,  etc.,  R. 
R.  Co.,  41  Fed.  Rep.  736 106 

Stewart  v.  Walla  Printing  Co., 
1  Wash.  521  ;  s.  c.  20  Pac. 
Rep.  005 163 

Stiles'  Appeal,  92  Pa.  St.  122  ;  s. 
c.  9  W.  N.  Cas.  83  ;  37  Leg. 
Int.  366 128,  235,  416 

Stohr  v.  San  Francisco  Musical 
Fund  Society,  82  Cal.  557  ; 
s.  c.  22  Pac  Rep.  1125.  ...120,  336 

Stokes  v.  New  Jersey  Pottery 
Co.,  46  N.  J.  L.  237 65 

Stoops  v.  Greensburg,  etc., 
Plank  Road  Co.,  10  Ind.  47..     21 

Story  v.  Furman,  25  N.  Y.  214    99 

Stow  v.  Wyse,  7  Conn.  214  ;  s. 
c.  18  Am'.  Dec.  99 52,  99 

Straus  v.  Carolina.  Interstate 
Building  and  Loan  Associa- 
tion, 117  N.  C.  308;  s.  c,  23 
S.  E.  Rep.  450  ;  affirmed,  118 
N.  C.  556 ;  s.  c.  24  S.  E.  Rep. 
116 314,  441 

Strauss  v.  Carolina  Intel-state 
Building  and  Loan  Associa- 
tion, 118  N.  C.  556  ;  s.  c.  23 
S.  E.  Rep.  450 225,  448 

Strohen  v.  Franklin  Saving 
and  Loan  Association,  115 
Pa.  St.  273;  s.  c.  8  Atl.  Rep. 
843;  6  Cent.  Rep.  779;  34 
Pitts.  L.  J.  327  ;  44  Leg.  Int. 
103  ;  19  W.  N.  Cas.  200 387 

Strong  v.  Wheaton,  38  Barb. 
616 37 

Sturdivant  v.  Hall,  59  Me.  172  ; 
s.  c.  8  Am.  Rep.  409  67 

Sturges  v.  Stetson,  1  Biss.  246  140 

Sturges  v.  Vanderbilt,  73  N.  Y. 
384 34 

Stutz  v.  Hendley,  41  Fed.  Rep. 
531  ;  s.  c.  139  U.S.  417 156 

Sullivan  v.  Jackson    Building 


lx 


TABLE   OF    CASES. 


and     Loan    Association,    70 

Miss.   94. ;    s.  c.   12   So.  Rep. 

590  :  46  Amer.  &  Eng.  Corp. 

Cas.  494 29,  226,  229,  231,  255 

Sullivan  Savings  Association  v. 

Copeland,  71  la.  07 260,  264 

Sullivan    v.    Stucky,    80   Fed. 

Rep.  491 * 447 

Sullivan  v.  Triunfo  Gold,  etc., 

Co.,  28Cal.  585 102 

Sullivan  v.  Lewiston  Institute 

of  Savings,  56  Me.  507 69 

Sumpter   Building   and    Loan 

Association  v.  Winn,  45  S.C. 

481 ;  s.  c.  23  S.  E.  Rep.  29. . .  257 
313,314 
Sunbury      Savings      Fund     & 

Building  Association  v.  Mor- 
ton, 1  Luz.  Leg.  Reg.  147. . .  259 
Sunderland,    etc.,    Society  v. 

Rawlings,   etc.,  Society.    L. 

R.  24  Q.  B.  394 ;  59  L.  J.  Q. 

B.  217  ;  62  L.  T.  29:', ;  38  W. 

R.  509;  54  J.  P.  613;  6  T.  L. 

R.199 339.  340,  347.  378 

Sunderland      36th      Universal 

Building  Society,  In  re,  8  R. 

at  p.  590 348 

Superior  Savings  and  Loan  So- 

ciety  v.  Lucas,  44  U.  C.  Q.  B. 

100.* 285 

Supply  Ditch  Co.  v.  Elliot,  10 

('<»!<».   327  ;    s.  c.  3  Am.    St. 

Rep.  587 104 

Supreme  Council  v.  Garrigus, 

104   Ind.    133;    s.  c.    3  N.  E. 

Rep.  818 135 

Susquehanna  Insurance  Co.  v. 

i'.  rrine,  7  Watts  &  S.  348...  123 
SutherL  rid  v.  Olcott,  95  N.  Y. 

93;  reversing  29  Hun,  161.. .  156 
Suydam  v.  Moore,  8  Barb.  358  24 
Swan  v.  North  British  Austra- 
lian Co.,  2  Hurl.  &  Colt.  175  168 
Swartwoul   v.  Michigan,  etc., 

R.  R.  Co.,  24  Mich.  389 31 

Sweeney  v.  El  Paso  Building, 

etc.,  ion,  26  S.   \V. 

Rep.  290 31,  173 

Swift  v.  State,  7  Houst  (Del.) 

338;  s.  c.  6  AH.  Rep.  856....  48 
Sword  v.  Wickersham,29  Kan. 

746 31 

Sykes's  Case,  in  Beav.  L62  .  is,  loi 

Sv n's  <  Ijiso,  L.  It.   5  CI,,   '.-'.is     :;s 

Tafl    \.    Presidio  R.  R.  Co.,  22 

Pac.    Rep.  485;  IN    Am.   St. 

Rep.  166 I'll 

Tafl  v.  Ward,  L06  Mas..  58.  ...  50 
Tagi  arl    v.    Perkins,   73  Mich. 

303;     .  c.  11  i     :   ' 


PAGE 

Tanner's  Appeal,  95  Pa.  St.  118    39 
104,  281,  291 

Tannett  v.  Rocky  Mountain 
National  Bank,  1  Colo.  278  ; 
9  Am.  Rep.  156 67 

Tarbell  v.  Page,  24  111.  46 32 

Taylor  v.  Collins,  40  L.  T.  Rep. 
(N.  S.)  168 197 

Taylor  v.  Great  India  Peninsula 
R.  R.  Co.,  4  DeGex  &  J.  559  168 

Taylor  v.  Griswold.  14  N.  J.  L. 
222  :  s.  c.  27  Amer.  Dec.  33,     55 

138 

Taylor  v.  Van  Buren  Building 
and  Loan  Association.  56 
Ark.  340;  19  S.  W.   Rep.   918  250 

Taylor  County  Court  v.  Balti- 
more, etc.,R.  R.  Co.,  35 Fed. 
Rep.  161 106 

Telegraph  Co.  v.  Davenport.  97 
IT.  S.  309 76,  Kir,  108 

Tennent  v.  City  of  Glasgow 
Bank.  4  App.  Cas.  615  :  s.  c. 
40  L.  T.  094  ;  27  W.  R.  649. . .   349 

Tennessee,  etc.,  R.  R.  Co.  v. 
East  Alabama  R.  R.  Co.,  73 
Ala.  420 96 

Terwilliger  v.  Great  Western 
Telegraph  Co.,  59  111.  249. .. .     87 

Texas  Homestead  Building  and 
Loan  Association  v.  Kerr 
(Tex.).  13  S.  W.  Rep.  1020. .  333 

Thames  Haven  Dock,  etc.,  Co. 
v.  Hall,  3    Eng.  Ry.  Cas.  441     93 

Thayer  v.  Duller,  141  U.  S.  234  ; 
s.  c.  11  Sup.  Ct.  Rep.  987. . . .  102 

Thewv.  Porcelain  Manufactur- 
ing Co.,  5  S.  C.  415  65 

Third  Ave.  R.  R.  Co.  v.  Ebling, 
12  Daly,  99 01 

Thirty-first  Street  Building  and 
Loan  Association  v.  Wether- 
ell,  43111.  App.  509 200 

Thomas  v.  Brownsville,  etc.,  R. 
R.  Co.,  2  Fo4.  Rep.  877  :  s.  c. 
1  McCray,  392 106 

Thomas  v.  Brownsville, etc.,  R. 
R.  Co.,  109  F.  S.  522;  revers- 
ing 2  Fed.  Rep.  877 105 

Thomasv.  Sweet,  37  Kan.  183; 
s.  c.  11  Pac.  Rep.  545 70,  105 

Thompson  v.  Gillison,  28S.  C. 
531  ;  6  S.  E.  Rep.  333:  22 
Amor.  &  Eng.  Corp.  Cas. 
615 257,  264 

Thompson  v.  Hudson.  L.  R.  2 
Ch.  App.  255 209 

Thompson  v.  McKee,  5  Dak. 
IP.1:  s.  c.  37  N.  W.  Rep.  367    66 

Thompson    v.    North    Carolina, 
.    !,.  Association,  120  \. 


TABLE   OF    CASES. 


lxi 


PAGE 

C.  420  ;  s.  c.  27  S.  E.  Rep.  118  447 

456 
Thompson  v.  People,  23  Wend. 

537 27 

Thompson  v.  Sullivan,  28  S.  C. 

534  ;  s.  c.   22  Amer.  &   Eng. 

Corp.  Cas.  615 86 

Thompson  v.  Williams,  75  Cal. 

153;  18Pac.  Rep.  153  ;  9  Am. 

St.  Rep.  187 ..99,  100 

Thomson   v.   Ocmulgee  Build- 
ing, etc.,  Association,  56  Ga. 

350 276 

Thornburg  v.  New  Castle,  etc., 

R.  R.  Co.,  14  Ind.  499 153 

Thome  v.  Thome,  63  L.  J.  Ch. 

58  ;  s.  c.  69  L.  T.  378  ;  42  W. 

R.  283  ;  (1893)  3  Ch.  196 ;  8 

Rep.  282 42 

Thorn  v.  Croft,  L.  R.  3  Eq.  193  : 

s.  c.  36  L.  J.  Ch.  68  ;  31  J.  P. 

356;  15  L.  T.  Rep.  (N.  S.) 

205;  15  W.  R.  54 430 

Three  Towns   British    Mutual 

Deposit  and  Loan  Society  v. 

Doyle,  7  L.  T.  Rep.  (N.  S.)  276  ; 

s.  c.  11  W.  R.    22;    13  C.  B. 

(N.  S.)  290;  106   Eng.    C.    L. 

Rep.  289 211 

Tierney,  In  re,   9  Ir.  Rep.  11 ; 

s.  c.  8  Ir.  L.  T.  Rep.  29. .  .125,  137 
211,  213,  218 
Tift   v.    Quaker  City  National 

Bank.  141  Pa.    St.  550  ;  s.  c. 

21  Atl.   Rep.  660  ;   9  Rail.  & 

Corp.  L.  Jr.  426 118 

Tilley    v.    American  Building 

and  Loan  Association,  52  Fed. 

Rep.  618  ;  s.  c.  40  Am.  &  Eng. 

Corp.  Cas.  375.  .171,  199,  250,  285 
Tippets  v.  Walker,  4  Mass.  595  100 
101,  140 
Titus  v.  Cairo,  etc.,  R.  R.  Co., 

37  N.  J.  L.  98 63 

Tobey  v.  Hakes,  54  Conn.  274  ; 

1  Am.  St.  Rep.  114 165 

Toledo,  etc.,  R.  R.  Co.  v.  John- 
son, 49   Mich.  148.. 31 

Tome  v.  Parkersburgh    R.    R. 

Co.,  39  Md.  36;  s.  c.  17  Am. 

Rep.  540 162 

Tomkinson  v.  Balkis,  etc.,  Co., 

2Q.  B.  614 166 

Topeka  Mfg.    Co.  v.   Hale,  39 

Kan.  23 150 

Topeka  Primary  Association  v. 

Martin,  39  Kan.  750  ;  s.  c.  18 

Pac.  Rep.  941 61     63 

Toponce  v.  Corinne   Mill,  etc., 

Co.,  6 Utah,  439  ;  s.  c.  24 Pac. 
Rep.  534 71 


PAGE 

Tosh  v.  North  British  Building 

Society,  11  App.  Cas.  489  ;  35 

W.  R.  413;  14  Rettie(H.  L.), 

6  ;  24  Scot.  L.  R.  128.  . .  .370,  381 
384,  8 
Towle  v.  American,  etc.,  Assn., 

75  Fed.  Rep.  938....  150  "^rK  398 
421,  432 
Towne  v.  Rice,  122  Mass.  67. . .  07 
Town  of  Searcy   v.  Yarnell,  47 

Ark.  269  ;    s.  c.  1  S.  W.  Rep. 

319 35 

Tradesman's  Building  and  Loan 

Association  v.  Thompson,  31 

N.  J.  Eq.  536  ;  s.  c.  32   N.  J. 

Eq.  133 85 

Tradesmen's  National  Bank  v. 

Manhattan    Lumber  Co.,    18 

N.  Y.  Supp.  920 62,     66 

Treffeirson's     Estate,    3  Knlp, 

308 173,  307 

Tregear    v.    Etiwanda   Water 

Co.,  76  Cal.  537  :  s.  c.  9  Am. 

St.   Rep.    245  ;  18   Pac.  Rep. 

658 140,  165 

Trip     v.     Northwestern     Nat. 

Bank,  41  Minn.  400 457 

Tripp   v.  Swanzev   Paper   Co., 

13  Pick.  291..." 103 

Trisconi    v.    Winship,    48    La. 

Ann.  45  ;  s.  c.  9  So.  Rep.  29; 

9  Rail.  &  Corp.  L.  J.  469. . . .  109 
Trowbridge    v.    Hamilton,    52 

Pac.  Rep.  328.  ..122,  128,  300,  456 
Troy  Turnpike   Co.  v.  McChes- 

ney,  21  Wend.  296 85 

Trustees   v.    Bosseiux,   3    Fed. 

Rep.    817;  s.   c.    4    Hughes, 

387 108 

Trustees  v.  Flint,  13  Met.  539.  129 
Trustees  v.  Hill,   6   Cow.    23; 

s.  c.  16  Am.  Dec.  429 31 

Trust  Co.  v.  Floyd,  47  Ohio  St. 

525  ;  s.  c.  26  N.  E.  Rep.  110  ; 

12  L.  R.  A.   346;  21  Am.  St. 

Rep.  846 114 

Trust  Co.  v.  Weed,  14  Phila. 

422 105 

Tunis  v.  Hestonville,  etc.,  R.  R. 

Co.,  149  Pa.  St.   70  ;  s.  c.   24 

Atl.  Rep.  88  ;  15  L.  R.  A.  665  ; 

affirming    1   Pa.    Dist.   Rep. 

135 90     91 

Turner  Bau-Verein  v.  Wood- 
burn,  27  Wkly.  L.  Bull.  409  44 
171,  203 
Turner      v.    Interstate,     etc., 

Ass'n  (S.  C),  27  S.  E.  Rep.  947  35 
257,  287 
Turquand  v.  Marshall,  L.  R.  4 

Ch.  376 108 


lxii 


TABLE   OF    CASES. 


PAGE 

Tuttle  v.  Walton,  1  Ga.  43 159 

Twelfth  Street  Market  Co.  v. 
Jackson,  102  Pa.  St.  269 68 

Twenty-First  St.  B.  &  L.  Assn. 
v.  Wetherell,  43  ILL  App. 
509  :  affirmed,  153  111.  361  ; 
s.  c.  39  N.  E.  Rep.  143 159 

Twin  Cities,  etc.,  Association 
v.  Lepore,  17  Pa.  C.  C.  426. .  446 

447 

Tyler  v.  Anglo-American,  etc., 
Association,  52  N.  Y.  Supp. 
7  7   452 

Tyler  v.  Savage,  143  U.  S.  79  ; 
s.  c.  12  Sup.  Ct.  Rep.  340. .. .     69 

Tyler  v.  The  Old  Post  Associa- 
tion, 87  Ind.  323 76 

Tyrell  Loan  &  BuildingAssocia- 
tion  v.  Haley,  139  Pa.  St.  476  ; 
s.  c.  20  Atl.  Rep.  1063;  48 
Leg.  Int.  345;  reversing  27  W. 
N.  Cas.  244.. 187, 193,  317,  320,  434 

Tyrell  Loan  &  Building  Asso- 
ciation v.  Haley,  163  Pa.  St. 
301  ;  s.  c.  35  W.  N.  Cas.  269  ; 
30  Atl.  Rep.  154 184,  193,  442 

Ulster  Permanent  Building 
Society  v.  Glenton,  L.  R.  21 

Ir.  Ch.  124 300 

See  Rumney  &  Smith. 

Ulster  R.  R.  Co.  v.  Banbridge 
R.  R.  Co.,  L.  R.  2  Ir.  Eq.  190  106 

Underbill  v.  Santa  Barbara, 
etc.,  Co.,  93Cal.  300  ;  s.  c.  28 
Pac.  Rep.  1049 109 

Underwood  v.  Waldron,  12 
Mich.  73 50 

Union  Bank  v.  Laird,  2 
Wheat.  390 159 

Union  Building  Loan  Associa- 
tion v.    Masonic   Hall,   etc., 

Ass'n,  29  N.  J.  Eq.  389 43 

157,   159,    L69,    199,  223,  224 
279,  280,  281,  291,  292,  303 

Union  Hotel  Co.  v.  Hersee,  15 
Hun,  371 150 

Union  Locks,  etc.,  Co.  v. 
Towna,  1  X.  II.  I  I  :  s.  c.  8 
Am.  Dec.  32 24 

Union  Manufacturing  Co.  v. 
Pitkin,  1  I  Conn.  17  1 84 

Union    Mutual    Fire    Insurance 

Co.  v.  Keyser,  32  X.   II.  313; 

s.  c.  M  Am.  Dec  375...  .102,  124 
Union  Xat  tonal  Hank  v.   Hunt, 

76  Mo.    139  ;    reversing  7   Mo. 

A  IM>.  42 152 

Union    Pacific    R.    R.   Co.    v. 

( Jhicago.  etc.,  I«'.   !>'•  Co.,  51 

Fed.   Rep.  309  ;  s.  <•.  47  Fed. 

Rep.  15 loi 


PAGE 

Union  Savings  Association  v. 

Seligman,  92  Mo.  635  ;  s.   c. 

15  S.  W.  Rep.  630 55 

Union  Turnpike  Co.  v.  Jenkins, 

1  Qaines  381 102 

Uniontown  Building  and  Loan 

Association's  Appeal,  92  Pa. 

St.  200 310 

United    States    v.    McKelden, 

MacArthur  &  Mackey  (D.  C), 

162 53 

United  States  Saving  and  Loan 

Co.  v.  Cade.  15  Wash.  38  ;  s. 

c.  45  Pac.  Rep.  656 296,  317 

United  States  Express  Co.   v. 

Redbury,  34  111.  459 34 

United    States    Building    and 

Loan  Association  v.  Silver- 
man, 85  Pa.  St.  394  ;  s.  c.  4 

W.  N.  Cas.  546  ;  35  Leg.  Int. 

51 333,  330.  336,  337,  338,  344 

378 
United     States,    etc.,     Co.    v. 

Sullivan,  80  Fed.  Rep.  762  . .  243 

342 
Upton  v.  Jackson,  1  Flipp,  413  156 
Upton  v.  Tribilcock,  91  U.  S. 

50 153 

Usher  v.  Sutton,  31  Kan.  286. .     66 

Valk  v.  Crandall,  1  Sandf.  Ch. 

179 26,     64 

Vanderpoel  v.  Gorman,  140  N. 

Y.  563 457 

Van  Hook  v.  Somerville  Manf. 

Co.,  5  N.J.  Eq.  137 98 

Van    Pelt  v.   Home   Building 

and  Loan  Association,  87  Ga. 

370  ;  s.  c.  Rep.  574  ;  s.  c.  79 

Ga.  439  ;  4  S.  E.  Rep.  501  ;  19 

Amer.  &  Eng.  Corp.  Cas.  66  254 
436,  438 
Vansands  v.  Middlesex  County 

Bank,  26  Conn.  144, 158 

Van    Wagon   v.  Genesee  Falls, 

Assn.,  88  1 1  un.  43;  s.  c.  34  N. 

Y.   Supp.   491,   68  N.    Y.   S. 

Rep.  498 74,     75 

Vermont  Loan  and   Trust  Co. 

v.  Whithed,  2  N.  D.  82  ;  s.  c. 

49  X.  W.  Rep.  318;  35  Amer. 

&  Eng.  Corp.  Cas.  250... 231,  287 

289 
Vernon  Society  v.  Hills,  6  Cow. 

2:!;  s.c.  16  Am.  Dec.  429.  .87,  89 
Victoria   Building   Association 

v.Tlie  Arbiter  Bund.  6  Wkly 

I,.   Bull.    823;   S,    C.   10    Anicr. 

L.  Rec  485 122,  L90,  280,  300 

Victoria     Permanent     Benefit 
Building     Investment     and 


TABLE   OF   CASES. 


lxiii 


PAGE 

Freehold  Land  Society,  In 
re,  L.  R.  9  Eq.  605  ;  s.  c.  39 
L.  J.  Ch.  628;  18  W.  R.  967; 
L.  T.   (N.  S.)  777;  34  J.  P. 

532  ;  6  Mag.  Cas.  174 44,     45 

411,  422 

Vincent  v.  Harrison  B.  &  D. 
•     Association,   5   Ohio    N.    P. 
Rep.  273 343,  379 

Vinter's  Co.  v.  Passey,  1  Burr, 
235 124 

Vorris  v.   Renshaw,  49  111,  425    63 

Vos  v.  Cedar  Grove  Land  and 
Building  Association. 9  Wkly. 
L.  Bull.   194 452,  461 

Vreeland  v.  New  Jersey  Stone 
Co..  29  N.  J.  Eq.  190 152 

Wadlinger  v. Washington  Ger- 
man Building  and  Loan 
Ass'n,  153  P.  St.  622  ;  s.  c.  26 
Atl.  Rep.  647..  .172,  175,  337,  345 

Wait  v.  Nashua  Armory  Asso- 
ciation, 2:3  Atl.  Rep.  (N.  H.) 
77  ;  14  L.  R.  A.  356;  34  Cent. 
L.  J.  119 63 

Waite  v.  Windham,  etc.,  Co., 

36  Vt.  18 79,     94 

Waite  a-.  Windham,  etc.,  Co., 

37  Vt.  608 79,     94 

Walker  v.    British   Guarantee 

Ass'n,  21  L.  J.  Q.  B.  257  ;  s. 

c.  16  Jur.  885  ;   16  J.  P.  582; 

19  L.  T    (O.  S.)  87 83 

Walker  v.  General,  etc..  Build- 
ing Society,  L.  R.  36  Ch.  Div. 

777;  67  L.T.  574 336 

Walker  v.  Giles,  6  C.  B.  662  ; 

s.  c.  13  L.  T.    Rep.    209 ;   13 

Jur.  588  ;  18  L.  J.  C.  P.  323  ; 

60  E.  C.  L.  662 119,  430 

Walker  v.    Granite    Bank,  44 

Barb.  (N.Y.)  39 48 

Wallace    v.    Lincoln    Savings 

Bank,  89  Term.  630  ;  s.  c.  15 

S.  W.  Rep.  448 ;  24  Am.  St. 

Rep.  625  ;    4  Banking  L.  J. 

249;  9  Rail.  &  Corp.  L.  J.  482  108 
Walker  v.  Mobile,  etc.,  R.  R. 

Co.,  34  Miss.  245 152 

Walsh  v.  Sexton,  55  Barb.  472  164 
Walters    v.    Anglo-American, 

etc.,  Co.,  50  Fed.  316 66 

Walters   v.   Texas   Building  & 

Loan  Association  (Tex.  Civ. 

App.),  29  S.  W.  Rep.  51.... 
Walton  v.  Edge,  10  A.pp.  Cas. 

33  ;  54  L.  J.  Ch.  362  ;  52  L.  T. 

666;   33  W.  R.  417;  49  J.  P. 

468 330,346,  349,  385 

Walton  v.   Riley,  85  Ky.  413  ; 

s.  c.  3S.  W.  Rep.  605 30 


PAGE 

Walworth    County     Bank    v. 

Farmers'  Loan,  etc.,  Co.,  14 

Wis.  325 63,  166 

Walworth  v.  Brackett,  98  Mass. 

98 51 

Wangerien  v.  Aspell,  47  Ohio 

St.  250  ;  s.  c.   24  N.  E.   Rep. 

405  ;  23  Wkly.  Bull.  380..  132,  189 
190,  274,  346,  376 
Ward  v.  Davidson,  89  Mo.  445  ; 

s.  c.  1  S.  W.  Rep.  846 71,  104 

117 
Ward  v.  North  Fairmont  B.  & 

S.  Co.,  5  Ohio  N.  P.  133 330 

Ward  v.  Salem  St.  R.  R.  Co., 

108  Mass.  332 106 

Ware   v.    Banker's,    etc.,    Co. 

(Va.),  29  S.  E.  Rep.  744 286 

Wardell  v.    Railroad   Co.,  103 

U.  S.  651 104 

Wardell  v.  Union  Pacific  R.  R. 

Co.,  4  Dill,  330 101 

Warner  v.  McMullin,  131  Pa. 

St.  370  ;  lb  Atl.  Rep.  1056. . .  70 
Warner  v.  Mower,  11  Vt.  385..  52 
53,  99 
Warren  v.  King,  108  U.  S.  389  ; 

s.  c.  2  Fed.  Rep.  36 145 

Washington  B.  &  L.  Ass'n  v. 

Beaghen,  27  N.  J.  Eq.  99. . . .  302 

310 
Waterlow  v.  Sharp,  L.  R.  8  Eq. 

501  ;  s.  c.  20  L.  T.  (N.  S.)  902  421 
Waterman  v.  Chicago,  etc.,  R. 

R.  Co.,   139  111.  658;  32  Am. 

St.  Rep.   228,-  29  N.  E.  Rep. 

689:  34  Apps.  268 79 

Watkins      v.     Workingmen's, 

etc.,  Ass'n,  97  Pa.  St.  514;  s. 

c.  38  Leg.  Int.  337  ;  10  W.  N. 

Cas.  414... 143,  171,  172,  179,  181 
187,  200,  201,  204,  229,  285,  325 
Watson  v.  Bendigo  Permanent 

Loan  and  Building  Society, 

L.  R.  Eq.  10  Vict.  (Australia) 

26 122.  123,  125 

Watson  v.    Sidney   F.  Woody 

Printing  Co.,    56   Mo.   App. 

145 126 

Watson  v.  Spratlev,  10  Exch. 

222 .* 140 

Watts  Appeal,  78  Pa.  St.  370.  .  109 
Watts   v.     National   B.    &    L. 

Ass'n  (Ky.).  48  S.W.Rep.  839  23 
Waverly,  etc.,   Association  v. 

Buch,   64  Md.    338;   s.    c.    1 

Cent.  Rep.   4*4 ;  14  A.  &  E. 

Corp.  Cas.  649 247,  267 

Wayne      International,      etc., 

Ass'n  v.  Moats.  1  19  hid.  123; 

s.  c.  18  N.  E.  Rep.  793 154 


lxiv 


TABLE   OF   CASES. 


"Weatherly  v.  Medical,  etc. ,  So- 
ciety, 76  Ala.  567 137 

Weaver  v.    Barden,  49  N.  Y. 

286 76 

Webb  v.  Ridglev,  38  Md.  365. .  55 
Webster  v.  Upton,  91  U.  S.  65  37 
Weeks  v.  Propert,  L.  R.  8  C.  P. 

427 115 

Weeks  v.  Silver  Islet,  etc.,  Min- 
ing Co.,  55  N.  Y.  Supr.  Ct. 
l;s.  c.  8N.  Y.  St.  Rep.  110..     66 
WTeidenfeld  v.  Sugar  Run  R. 

Co.,  48  Fed.  Rep.  615 101 

Weiss's  Appeal,  5  W.  N.  Cas. 

423 170,  308 

Weise  v.  San  Francisco,  etc., 

So.,  Id.  645 129 

Welbach  v.  Lehigb  Building 
Ass'n,  4  W.  N.  Cas.  157  ;  s.  c. 
34  Leg.  Int.  265  ;  84  Pa.  St. 

211 38,  221,  304 

Welch  v.  Importers',  etc.,  Na- 
tional Bank,  122  N.  Y.  177  ; 
s.  c.  25  N.  E.  Rep.  269: 33  N.Y. 
St.  Rep.  452  ;  8  Rail.  &  Corp. 

L.J.  475 106 

Welch  v.  AVodsworth,  30  Conn. 

149 260,  287 

Wells  v.  Gates,  18  Barb.  554. .     20 

96 
Wells  v.  Rahway,  etc.,  Co.,  19 

X.  J.  Eq.  402 95 

Wells  v.  Rodgers,  60  Mich.  525; 

s.  c.  27  N.  W.  Rep.  671 97 

Wells  v.  Smith,  7  Abb.  Pr.  261  166 
Wells  v.  Southern  Minn.  R.  R. 

Co.,  1  McGrary,  18 72 

West  v.  Bullskin  Prairie  Ditch- 

ingCo.,  32  Ina.  138 28 

Wist  Barrisburg  Loan  and 
Building  Association  v.  Mor- 

iithal,2  Pears.  343  27 

AWst  London  &  General  Pen- 

manent  Benefit  B.  S.,  In  re, 

h.  352;  s.  c.    63   L. 

.J.  ('],.  506;  70  L.T.  Rep. 796; 

42  W.  R.  535;  LOT.  I..  R.  280 ; 

8  Rep.  764 L46,  394,404,  416 

AWst  Riding,  etc.,  Society,  In 

,,.    L.  R.  13  Ch.   Div.  407;  s. 

c-  .V.i  L.  J.  Ch.    197:  62  L.  T. 

38    W.    R.  376;  6  T.  L. 

Rep.    L60 391,  392 

Wesl  Riding  of  Yorkshire  Per- 
manent Benefit  Building  So- 
ciety, In  re,  L.  R.  Ir>  Ch.  Div. 
463=  s.  c.  59  L.J.  Ch.  823;  68 
I,  T.  153;  89  W.  R.  74.. 122,  129 
380.  381,  886,  414 
AW  t  Branch  Bank  \.  Arm- 
strong, 40  Pa.  St.  278 159 


Western  Bank  v.  Gilstrap,  45 
Mo.  419 

West  Winsted,  etc.,  Associa- 
tion v.  Ford,  27  Conn.  285. . . 


84 

260 
453 


Western  Canada  L.  &  S.  S.  v. 

Hodges,  22  Grant  Ch.  566. . .  274 
Westchester  Fire  Insurance  Co. 

v.  Earle,  33  Mich.  143 124 

Westchester,  etc.,  R.  R.  Co.  v. 

Jachson,  77  Pa.  St.  321 144 

Westcott  v.  Atlantic  Silk  Co., 

3  Met.  282 63 

Westerfield  v.  Raddle,  7  Daly, 

326 63 

Western  R.  R.  Co.    v.    Bayne, 

11  Hun.  166   63,     65 

Westervelt  v.  Damerest,  46  N. 
J.  L.  37  ;  s.  c.  50  Am.  Rep. 

400 116 

Weston's  Case,    L.    R.    10  Ch. 

Div.    579 104,  106 

Weston  v.  Bear  River,  etc., 
Co.,  5  Cal.  186  ;  s.  c.  63  Am. 

Dec.   117 164 

AVetherbee  v.  Fitch.  117  111.  67    64 
Wetherell    v.    Thirty-first  St. 
Building  and    Loan  Associa- 
tion, 153  111.  361  ;  s.  c.  39  N. 

E.  Rep.  143 134,  224,  342,  343 

Wetterwulgh  v.  Knickerbocker 
Building  Association,  2 

Bosw.  381 325,  337.  344,  353 

AVheeler,  In  re,  2  Abb.  Pr.  361      56 
Whilden  v.    Broomall,    1   Del. 

(Pa.)   142 173,177,  307 

White's  Case.  Id.    157 40 

White  v.  Mechanics'  Building 
Association,  22  Gratt.  233. ...  136 
254,  435,  444 
AVhite  v.  New  York  Agricultu- 
ral Societv,  45  Hun,  580  ;  s.  c. 

10  N.  Y.  St.  Rep.  594 556 

White  v.  State,  62  Ind.  273. ...     31 
White  v.  AVestport  Cotton  Man- 
ufacturing  Co.,  1  Pick,  215  ; 

s.  e.  11  Am.  Dec.  168 65 

Whitefoot  v.  National  Frater- 
nity Building  &  Loan  Asso- 
ciation, 18  Montana,  164  ;  s.  c. 

44Pae.  Rep.   514 334 

AVhite  Hall,  etc.,  R.  R.  Co.  v. 
Meyers,  19  Abb.  Pr.    (N.  S.) 

34 151 

White  Haven  Loan  Building 
Association  v.  Kelly,  1  Kulp, 

9  ;  s.  e.  Luz.   Leg.  Rep.  9 436 

White  Mountains  I?.  R.   Co.    v. 

Eastman,  34  N.  II.  124 151 

White  River  Bank,  In  re,  23  Vt. 
478 22 


TABLE   OF   CASES. 


lxv 


Wickersham  v.  Crittenden,  93 
Cal.  17 ;  s.  c.  28  Pac.  Rep. 
788   95,  117,   119 

Wier  v.  Granite  State,  etc.,  As- 
sociation, (N.  J.  Eq.),  38  Atl. 
Rep.  043 446,  447,  448 

Wierman  v.  International,  etc., 
Union,  67  111.  App.  550.  .128,  142 
150,  397 

Wiggin's  Appeal,  100  Pa.  155; 
s.  c.  12  W.  N.  Cas.  209 ;  39 
Leg.  Int.  588 

"Wight  v.  Shelby,  etc.,  R.  R. 
Co.,  16  B.  M.  Mon.  4 ;  s.  c. 
63  Am.  Dec.  522 150,  153 

Wikes  v.  Clements,  9  U.  C.  Q. 
B.  339 81 

Wilbur  v.  Lynde,  49  Cal.  290  ; 
s.  c.  19  Am.  St.  Rep.  645. ...   105 

Willcocks,  Ex  Parte,  7  Co.  402  ; 
s.  c.  7  Amer.  Dec.  525 . .  54,  56,     95 

126 

Wild  v.  Western  Union  Build- 
ing and  Loan  Association.  30 
Mo.  App.  200 46 

Wilkinson  v.  Bauerle,  41  N.  J. 
Eq.  635  ;  s.  c.  7  Atl.  Rep.  514  107 

Williams  v.  Chester,  etc.,  R. 
R.  Co.,  5E.  L.  &  Eq.  497...     73 

Williams  v.  Halliard,  38  N.  J. 
Eq.  363 114 

Williams  v.  McDonald,  42  N.  J. 
Eq.  392 109 

Williams  v.  McCay,  46  N.  J. 
Eq.  25;  s.  c.  18  Atl.  Rep. 
824 69,  101,  107,  109 

Williams  v.  Prince  of  Wales, 
etc. ,  Co. ,  33  Beav.  338 48 

Williamson  v.    Kokomo,    etc., 
Association,  89  Ind.  390.  .29,     32 
33,  314 

Williar  v.  Baltimore  Brother's 
Loan  and  Annuity  Associa- 
tion, 45  Md.  546 246,  247 

Wilson,  Ex  Parte,  L.  R.  8  Ch. 
49  ;  s.  c.  42  L.  J.  Ch.  81  ;  27 
L.  T.  (N.  S.)  597 116 

Wilson  v.  Altna  Insurance  Co., 
27  Vt.  98 135 

Wilson  v.  Kings  County  Ele- 
vated R.  R.  Co.,  114  N.  Y. 
487;  s.  c.  21  N.  E.  Rep.  1015; 
24  N.  Y.  St.  Rep.  81  ;  6  Rail. 
&  Corp.  L.  J.  324 ;  40  Alb. 
L.  J.  346 93 

Wilson  v.  Little,  2  N.  Y.  443  ; 
s.  c.  51  Am.  Dec.  307 168 

Wilson  v.  Miles  Platting  Build- 
ing Society,  L.  R.  22  Q.  B. 
Div.  381,  note 131,   327,  399 

Wilson  v.  Upper  Canada  Build- 


PAGE 

ing    Society,    12  Grant  Ch. 
206... 214,  224,  229,  262,   274,  375 

3S7 

Wilson  v.  Shoenlaub,  99  Mo. 
96  ;s.  c.  12  S.  W.  Rep.361..296,  299 

Winchester  v.  Baltimore,  etc., 
R.  R.  Co.,  4  Md.  231 6y 

Winchester  Building  Associa- 
tion v.  Gilbert,  23  Gratt. 
787 186,  254,    295,  304 

Windhorst  v.  Gerniania  B.  A., 
7  Wkly.  L.  Bull.   29 236 

Windisch  v.  Korman,  5  Wkly. 
L.  Bull.  364 273,  274 

Win  dram  v.  French,  151  Mass. 
547  ;  s.  c.  24  N.  E.  Rep.  914  ; 
8L.  R.  A.  750 162 

Windsor  v.  Bandel.  40  Md.  172  441 

Winget  v.Quincy  Building  and 
Homestead  Association,  128 
111.  67  ;  s.  c.  21  N.  E.  Rep.  12  ; 
25  Amer.  &  Eng.  Corp.  Cas. 
652  ;  affirming  29  111.  App. 
173 25,  33,  287,  316,  320 

Winsor,  Ex  Parte,  3  Story,  411  100 

101 

Winter  v.  Baker,  34  How.  Pr. 
183  ;  s.  c.  50  Barb.  432 115 

Winter  v.  Muscogee  R.  R.  Co., 
11  Ga.  438 23 

Winterer  v.  Building  Associa- 
tion, 4  Leg.  Int.  122 ;  s.  c.  10 
Phila.  426 192 

Winterer  v.  Fairmount  Build- 
ing Association,  44  Leg.  Int. 
122 132,  232,  341 

Winters  v.  Armstrong,  37  Fed. 
Rep.  508 156 

Wisconsin,  etc.,  Bank  v.  Filer,  84 
Wisconsin,  etc.,  Bank  v.  Fil- 
er,   84    Mich.    496;  s.   c.   88 
Mich.  67 62,     65 

Witney  v.  Union  Trust  Co.,  65 
N.  Y.  576 100 

Witters  v.  Sowles,  31  Fed.  1 ; 
s.  c.  24  Blatch.  332 109 

Witters  v.  Sowles,  38  Fed.  Rep. 
700 39 

Wittman  v.  Concordia,  etc., 
Association,  7  W.  N.  Cas.  80  ; 

s.  c.  36  Leg.  Int.  72 337,  338 

378,  390,  391 

Wohlford  v.  Citizens'  Building 
&  Loan  Association,  140  Ind. 
662  ;  s.  c.  40  N.   E.   Rep.   694    29 
100,  103,  311,  374,  377,  400 

Wolbach  v.  Lehigh  Building 
Association,  4  W.  N.  Cas. 
157  ;  s.  c.  34  Leg.  Int.  265  ; 
84  Pa.  St.  211 39,  221,  304 

WTolfe  v.  Conkey  Avenue  Sav- 


Ixvi 


TABLE    OF   CASES. 


I  AGE 

ings  Aid  and  L.  Ass'n,  82 
Hun,  201  ;  s.  c.  27  N.  Y.  Supp. 
44  ;  58'  N.  Y.  St.   Rep.  656.  . .   327 

Wolfe  v.  Conkey  Avenue  Sav- 
ings,   etc.,    Association,    75 
Hun,  201  ;  s.  c.  27  N.  Y.  Supp. 
44  ;  53  N.  Y.  St.  Rep.  656. . .  129 
330,  332,  334 

Wolfe  v.  Asso.,  etc.,  58  N.  Y. 
Rep.  656 125 

Wonson  v.  Fenno,  129  Mass. 
405 164 

Wood  v.  Boney(N.  J.),  21  Atl. 
Rep.  574 99 

Wood  Hydraulic,  etc.,  Co.  v. 
King,  45  Ga.  34 99 

Wood  v.  Lost  Lake,  etc.,  Co., 
23  Ore.  20;  s.  c.  37  Am.  St. 
Rep.  651  ;  23  Pac.  Rep.  848. .     72 

117 

Wood  v.  Union  Gospel  Church, 
etc.,  Association,  69  Wis.  9. .     29 

Woodruff  v.  Dubuque,  etc.,  R. 
R.  Co.,  20  Fed.  Rep.  91 .  .  .54,     55 

Worcester  Turnpike  Co.  v.  Wil- 
lard,  5  Mass.  80  ;  s.  c.  4  Am. 
Dec.  39 98 

Workingman's  Building  and 
Loan  Association  v.  Cole- 
man, 89  Pa.  St.  428 ;  s.  c.  36 
Leg.  Int.  346  ;  8  W.  N.  Cas. 
17 22,  32,  439 

Workingmen's  Building  and 
Loan  Association  v.  Cole- 
man, 89  Pa.  St.  428  ;  s.  c.  36 


PAGE 

Leg.  Int.  346  ;  s.  c.  6  W.  N. 

Cas.  141 233,  430 

Worth,  Ex  Parte,  4  Drew.  529   153 

Wright  v.  Lee,  2  S.  D.  596 458 

Wright    v.    Quincy   Building, 

etc.,  Association,  128  111.  67  ; 

s.    c.    21    N.    E.  Rep.   12;  25 

Amer.  &  Eng.  Corp.  Cas.  652  252 
Wright  v.  Shelby  R.  R.  Co., 

B.  Mon.  4;  s.  c.  63  Am.  Dec. 

522 150 

Whetstone  v.  Ottawa  Univer- 
sity, 13  Kan.  320 28 

Whittingham  v.  Murdy,  60  L. 

T.  Rep.  956 39 

Wirst  Winsted  Savings  Bank, 

etc.  v.  Lord,  27  Conn.  282. . .  33 
Wyman     v.     Hallowell,    etc., 

Bank,    14  Mass.    58;  s.  c.  7 

Am.  Dec.  194 102 

Wynne  v.  Moore,  1  Australian 

Jur.  Rep.  156...   461 

Yankton   B.   &  L.  Association 

v.  Dowling  (S.  D.),  74  N.  W. 

Rep.  438 228 

Yannish   v.   Pioneer  Fuel  Co. 

(Minn.).  66  N.  W.  Rep.  198. .  458 
York  v.   Passaic,  etc.,  Co.,  20 

Fed.  Rep.  471 164 

York  Trust,  etc.,  Co.  v.  Gal- 
latin (Pa.),  40  Atl.  Rep.  317  174 
Zabriskie  v.  Hackensack,  etc., 

R.  R.   Co.,  18  N.  J.  Eq.  178; 

s.  c.  90  Am.  Dec.  617.  .24,  25,  103 
Zinn  v.  Mendel,  9  W.  Va.  580. .  151 


CHAPTER   I. 


HISTORICAL  REVIEW. 


Sec.  1.  Chinese  Building  Associations. 

2.  Early  English,  Scottish  and  American    Building  Associations,, 

Sec.  1— Chinese  Building  Associations. 

The  origin  of  building  and  loan  societies  cannot  be  de- 
termined with  certainty.  The  earliest  societies  of  which 
we  have  any  knowledge,  existed  in  China,  and  were  called 
Lee  Woee.  They  were  first  established  by  Pong  Koong,  a 
man  of  wealth,  and  were  recognized  institutions  of  that 
country  as  early  as  B.  C.  200.  Mr.  John  Henry  Gray 
gives  an  account  of  these  societies  and  speaks  of  them, 
as  still  in  existence  at  the  time  his  history  was  written — 
within  the  last  generation.1 

"  Sometimes  persons,"  he  says,  "  in  need  of  money  resort 
to  money-lending  companies.  These  are  of  two  kinds, 
named  Lee-woee,  or  interest-receiving  societies,  and  Yee- 
woee,  or  non-interest-receiving  societies.  The  societies 
called  Lee-woee  were  instituted  by  a  person  named  Pong 
Koong,  an  official  of  great  wealth  who  flourished  during  the 
Hon  dynasty.  *  *  *  The  way  in  which  such  societies 
were  formed  was  as  follows  :  A  person  who  is  anxious  to 
obtain  a  loan  *  *  *  calls  upon  his  relatives  and 
friends  to  form  a  society.  The  first  rule  is  that  a  company 
shall  consist  of  a  definite  number  of  members ;  that  each 
member  shall  contribute  an  equal  sum  to  the  fund  ;  that 
a  meeting  shall  be  held  at  the  end  of  each  quarter  ;  that 

1  History  of  the  Laws,  Manners,  and  Customs  of  the  People  of  China, 
by  John  Henry  Gray,  M.  A.,  LL.  D.,  Vol.  2,  p.  84. 


2  BUILDING   AND   LOAN   ASSOCIATIONS.  CH.  I. 

at  such  meetings  all  members  must  attend ;  *  *  *  that 
due  notice  of  the  meeting  shall  be  given ;  that  each  meet- 
ing shall  be  held  at  the  house  of  the  President  of  the 
Club ;  that  the  various  sums  contributed  to  the  fund 
shall  be  carefully  weighed  and  examined  by  him.  *  *  * 
The  second  rule  is  to  the  effect  that  at  each  properly 
notified  meeting  the  borrower  shall  pay  back  an  instal- 
ment of  the  loan  with  interest  at  a  rate  per  mensem 
previously  agreed  upon.  The  instalment  to  the  fund 
shall  be  equal  to  the  amount  contributed  by  each  individ- 
ual in  the  first  instance,  the  interest  to  be  divided  equally 
amongst  the  members  of  the  club.  The  third  rule  is  that 
each  member  shall,  at  each  of  the  meetings  duly  and  prop- 
erly notified,  contribute  to  the  fund  a  sum  equal  to  that 
which  he  contributed  at  the  first  meeting ;  that  in  order  to 
give  each  an  opportunity  of  borrowing  the  collective 
amount  thus  formed,  each  shall  deposit  in  a  lottery-box 
placed  on  the  table  for  that  purpose,  a  tender,  written  in  a 
legible  hand,  setting  forth  the  rate  of  interest  which  he  is 
disposed  to  pay  on  the  amount  in  question  ;  that  the  ten- 
ders shall  then  be  taken  out  of  the  lottery-box  by  the  presi- 
dent of  the  club,  and  that  he  who  is  found  to  have  made  the 
highest  offer  shall  be  declared  the  receiver  of  the  loan. 
*  *  *  The  fifth  rule  is  that  each  member  shall  be  pro- 
vided with  a  book  in  which  the  minutes  of  each  meeting 
may  be  duly  recorded,  and  that,  should  any  member  be 
unable  to  contribute  to  the  general  fund  at  any  one  of  the 
meetings  the  amount  required  from  him,  three  days'  grace 
shall  be-  allowed  him.  At  the  expiration  of  that  time, 
should  he  continue  a  defaulter,  he  shall  be  mulcted  in  the 
sum  of  two  mace  per  diem  until  the  sum  due  be  paid  up." 

It  will  be  noted  in  this  somewhat  lengthy  quotation  that 
some  of  the  principal  features  of  the  modern  association  are, 
and  Tor  two  thousand  years  have  been  preserved  in  theLee- 
wt>ee  associations ;  e.  g.  (1)  the  formation  of  a  society  of 
limited  number;  (2)  equal  contribution  and  payment  at 
st;it<<l  periods;  (}'>)  lines  for  failure  to  pay;  (4)  loans  made 
upon  eompctitive  bids;  (5)  an  equal  share  in  the  profits 
upon  loans. 


SEC.  II.  HISTORICAL   REVIEW.  6 

Sec.  2— Early  English,  Scottish,  and  American  Building 
Associations. 

The  first  English  associations  were  contemporaneous  with 
and  may  be  regarded  as  an  outgrowth  of  what  is  known  in 
the  history  of  economics  as  the  "  Factory  System  "—that 
remarkable  movement  of  the  last  quarter  of  the  eighteenth 
century,  which  disclosed  to  craftsmen  and  wage-workers  of 
all  classes,  the  immense  possibilities  of  co-operation.  It  was 
in  fact  the  discovery  of  a  new  source  of  power.  It  is  not 
surprising,  therefore,  that  associations  known  as  "  building 
clubs"  should  have  existed  at  Birmingham,  England,  as 
early  as  1795. *  There  is  authority  for  the  statement  that 
such  societies  existed  there  as  early  as  1781,2  and  perhaps 
even  at  an  earlier  date.  Our  information  concerning  them, 
however,  is  vague  and  unsatisfactory.  The  first  building 
association  concerning  which  we  have  any  definite  informa- 
tion is  the  "  Greenwich  Union  Building  Association,"  estab- 
lished in  1809.3  A  society  was  organized  in  1815,  in 
Scotland,  by  the  Earl  of  Selkirk,  which  has  been  regarded 
as  the  prototype  of  modern  associations. 

During  the  decade  between  1830  and  1840,  building  asso- 
ciations, both  in  England  and  America,  had  so  far  increased 
in  numbers  and  importance,  as  to  require  legislative  enact- 
ments for  their  management  and  control.4  The  first  society 
in  America  was  organized  in  1831,  at  Frankfort  (now  a  part 
of  Philadelphia),  Pennsylvania.  It  was  called  "  The  Oxford 
Provident  Building  Association,"  and  was  the  result  of  a 
suggestion  by  gentlemen  familiar  with  the  operation  of  the 
English  societies.5  This  example  was  followed  in  1836  by 
the  organization  of  the  "  Brooklyn  Building  and  Mutual 
Loan  Fund  Association  of  Brooklyn,  N.  Y.,"  from  which 

1  Encyclopaedia  Britannica,  vol.  5  The  names  of  the  gentlemen 
4,  p.  513.  forming    this    association     were ; 

2  Johnson's  Universal  Cyclopse-  Samuel  Pilling,  Jeremiah  Hor- 
dia,  vol.  1,  p.  821 ;  Langford's  Cen-  racks,  Dr.  Henry  Taylor,  Isaac 
tury  of  Birmingham  Life.  Shallcross    and  James  Y.  Castor. 

3  Pratt  v.  Hutchinson,  15  East,  p.  Bibb  County  Loan  Assn.  v.  Rich- 
511.  ards,  21  Ga.  592. 

4  Johnson's   Universal  Cyclopae- 
dia, vol.  p.  821. 


BUILDING    AND   LOAN   ASSOCIATIONS. 


CH.  I. 


date  the  idea  seems  to  have  been  accepted  as  a  permanent 
feature  of  our  institutions,  and  has  found  ready  acceptance 
in  all  portions  of  the  Union. 

They  did  not,  however,  meet  with  uniform  favor  or  suc- 
cess. Between  1850  and  1860,  many  of  the  States  enacted 
laws  for  their  regulation.  An  act  was  passed  in  New  York 
in  1851,  and  within  five  years  they  had  made  such  consider- 
able increase  in  number  that  the  Legislature  deemed  it 
necessary  to  appoint  a  commission  to  inquire  into  their  con- 
dition and  management.1  Notwithstanding  the  conditions 
which,  at  certain  times  and  in  certain  localities,  may  have 
impeded  their  growth,  there  has  been  an  enormous  increase 
in  the  number  and  in  the  volume  of  business  transacted.2 


1  See  Assembly  Documents  (N. 
Y.)  1856,  vol.  3  ;  The  Report  states  : 
"  The  idea  as  well  as  the  mode  of 
management  seems  to  have  been 
borrowed  from  the  system  already 
in  vogue  in  Great  Britain.  Ru- 
mors of  its  wonderful  successes 
there,  together  with  the  assurance 
to  the  public  that  the  evils  which 
had  been  discovered  in  the  English 
associations  had  all  been  avoided 
in  the  American,  gave  it  an  im- 
petus in  the  state  of  New  York  that 
amounted  almost  to  insanity.  The 
discovery  of  gold  in  the  west  had 
stimulated  the  spirit  of  risk  and 
speculation  to  the  degree  that  fail- 
ure of  some  of  the  associations  was 
inevitable."    Between  the  date  of 


the  passage  of  the  Building  &  Loan 
Association  act  in  1851,  and  there- 
port  of  the  committee  in  1856, 
thirty-six  out  of  seventy-two  As- 
sociations, which  had  organized 
under  that  act  had  ceased  to  exist. 
See  Ninth  Annual  Report  of  Com- 
missioner of  Labor  (1893),  Building 
and  Loan  Associations,  p.  29. 

2  In  1893,  the  assets  of  Building 
and  Loan  Associations,  national 
and  local,  amounted  to  $328,  852, 
885,  00.  In  Ohio  the  investment 
in  prepaid  and  paid-up  stock  alone 
amounted  to  $12,162,432,00.  In 
Indiana,  to  $3,383,254,00;  of  all 
the  other  states  Pennsylvania  and 
Illinois  alone  exceeded  $1,000,000. 


CHAPTER  II. 

GENERAL    DESCRIPTION     OF     BUILDING   AND    LOAN     ASSOCIATIONS. 

Sec.     3.  Definition. 

4.  Favorably  received  by  the  Courts. 

5.  General  scope  and  methods  of  Association. 

6.  Benefits  derived  from  the  plan  of  Building  and  Loan  Asso- 

ciations. 

7.  Terminating  Plan. 

8.  Serial  Plan. 

9.  Permanent  Plan. 

10.  Paid  up  and  prepaid  stock. 

11.  Bowkett  Societies. 

12.  Starr-Bowkett  Societies. 
12  a.  Dayton  or  Ohio  Plan. 

13.  Concerning  Methods  of  Business. 

Sec.  3 — Definition. 

A  building  association  may  be  defined  as  a  society  (gener- 
ally incorporated)  organized  for  the  purpose  of  creating  a 
fund  derived  from  periodical  payments  by  persons  upon 
stock  subscribed  for  by  them,  as  well  as  from  fines,  forfeit- 
ure and  incidental  fees ;  and  if  the  shareholder  be  also  a 
borrower,  by  the  payment  of  premiums  and  interest ;  which 
fund  is  to  be  loaned  to  its  members  secured  by  mortgage 
upon  real  estate  to  enable  them  to  secure  homes  ;  such  pay- 
ments to  continue  until  the  sum  of  the  payments  and  profits 
on  each  share  equal  its  face  value  (after  deducting  necessary 
expenses  incident  to  the  management  of  the  society's  busi- 
ness), at  which  point  of  time  all  the  shares  of  such  members 
as  are  matured,  are  canceled  or  extinguished.1 

1  Scratchley  on   Building  Socie-  cial   description  of  building  asso- 

ties,    Part   1,   Sec.    2 ;  Fleming  v.  ciations  or  societies,   see   note  to 

Self,  3  DeG.  M.  &  G.  997;  SC,  24  L.  section  9. 

J.  Ch.  29 ;  24  L.  T.  (O.  S.)    101  ;  3  In  England  a  building  and  loan 

W.  R.  89;  1  Jur.  (N.  S.)  25;  3  Eq.  association  is    called    "Society"; 

Rep.  14  ;  18  J.  P.  772.     For  a  judi-  that  is  also  the  statutory  name. 

5 


6  BUILDING   AND   LOAN    ASSOCIATIONS.  CH.  II. 

Sec.  4 — Favorably  Received  by  Courts. 

Societies,  known  as  building,  loan  fund,  and  savings  as- 
sociations, are  now  recognized  as  important  factors  in  the 
social  and  economic  development  of  this  country.  The  con- 
trolling idea  is  the  massing  of  the  separate  earnings  of  wage- 
workers,  and  the  savings  of  persons  of  small  means,  in  such 
a  manner  as  to  aid  them  in  procuring  homes.  It  is  the  or- 
ganization of  thrift  and  self-help ;  a  practical  application  of 
the  maxim  that  in  "  union  there  is  strength."  The  effect  of 
such  a  movement  is  to  dignify  the  home  ;  to  foster  morality, 
and  to  make  thoughtful,  wise,  and  responsible  citizens.  It 
is  for  such  reasons  that  the  law  and  the  courts,  where  such 
associations  have  been  properly  conducted,  have  looked  upon 
them  with  favor.  Whether  they  shall  retain  the  favorable 
estimation  of  legislatures  and  courts  will  depend  in  large 
measure  upon  the  wise  forecast  and  determined  purpose  of 
those  who  control  such  institutions.  Those  departures  from 
the  original  idea,  intended  to  enhance  the  profits  of  inves- 
tors, without  in  any  degree  aiding  those  who  are  endeavor- 
ing to  build  homes,  have  been,  and  in  the  future  probably 
will  be,  severely  censured  by  the  courts.1 

Sec.  5 — General  Scope  and  Methods  of  Associations. 

The  conditions  which  make  building,  loan,  and  savings 
associations  or  societies  desirable  are  necessarily  the  same 
everywhere.  It  is  one  of  the  ordinary  manifestations  of  the 
development  of  an  industrial  people.  The  methods,  the 
objects,  and  the  remedial  measures  required  are  in  the  main 
the  same. 

The  method  followed  by  the  earliest  English  societies  lias 
been  described  by  an  English  author2  as  contemplating  the 

1  Maudlin   v.  American  Savings  recently  more  favorable;  see  Sel- 

<v   Loan  Asm..  <;.">  Minn.  358;  s.  c.  don  v.  Reliable  Savings  &  Building 

65  N.  W.  Rep.  645;  Mills  v.  Salis-  Assn., 32  P. F.  Smith  336;  Johnson 

bury  B.  &  L.  Assn.,   ;r,  X.  ('.  292;  v.  Elizabeth  B.  &  L.  Assn.,  104  Pa. 

Bekelnkaemper  v.   Bldg.  Assn.,  22  St.  394;  Mercer  v.  Amber  B.  &  L. 

Kan.  554;   Kupperl  v.  Guttenburg  Assn.,  10   Pa.  C.  C.  Rep.  51;  Re- 

Bldg.     \    n..   30    Pa.    165;    North  port  of  Legislative  Com.  of  N.  Y. , 

American   Bldg.  Assn.,  v.  Sutton,  Paine's  B.  &  L.  Assns. ,  p.  11. 

:;.">    Pa.    163;   The    feeling  of  the  z  Scratchley  on   Building  Socie- 

Courts    in  iVmi' ■yU.-iniii    lias    hecii  lies,  p.  4,  note. 


SEC.  VI.  GENERAL    DESCRIPTION.  7 

purchase  of  "  a  plot  or  plots  of  land  with  or  without  some 
tenements  upon  it ;  and  after  it  had  been  built  on  at  the  so- 
ciety's expense  the  said  tenements  were  all  allotted  and 
mortgaged  to  the  society  in  some  instances,  or  let  to  mem- 
bers or  others  at  a  fair  rental,  and  this  mode  of  operation 
carried  on  until  every  member  was  in  possession  of  a  free- 
hold estate,  or  had  received  the  amount  of  his  share  in 
full." 

This  plan,  however,  had  not  sufficient  flexibility  to  adapt 
itself  to  the  needs  of  the  members,  so  that  the  attribute  of 
a  loan  company  became  one  of  the  necessary  conditions  of 
their  successful  operation. 

As  associations  are  now  ordinarily  conducted,  there  must 
be  the  payment  of  stipulated  dues ;  there  would  naturally  be 
a  time  fixed  when  a  share  would  probably  mature  and  when 
the  payments  made  upon  stock  would  be  supposed  to  equal 
the  face  value  of  the  same  ;  when  a  loan  fund  had  accumu- 
lated, the  question  naturally  arises  as  to  the  manner  in  which 
allotments  shall  be  made  to  those  desiring  to  borrow,  results 
in  the  payment  of  a  premium  by,  and  an  award,  to  the  high- 
est bidder;  that,  although  membership  implies  the  prompt 
payment  of  instalments  when  due,  yet  that  many  would 
probably  fail  to  pay,  and  that  such  sums  would  therefore  be 
withheld  from  the  earning  fund  of  the  association  and  its 
profits  decreased  ;  that,  therefore,  such  persons  should  pay 
a  fine,  presumed  to  be  equal  to  the  earning  capacity  of  the 
amounts  so  withheld  ;  that  if  from  any  cause  a  member 
might  desire  to  withdraw  from  the  association,  after  having 
entered  into  an  agreement  to  pay  upon  his  stock  to  matur- 
ity, he  should  be  permitted  to  do  so  only  upon  such  terms 
as  would  work  no  detriment  to  the  remaining  members.1 

Sec.  6 — Benefits   Derived   from   the   Plan   of  Building 
Associations. 

The  chief  benefits  to  be  derived  from  a  membership  in  a 

1  Pfeister  v.  Wheeling  Building  Maudlin  v.  Amer  B.  &  L.  Assn.. 

Assn.,    19    W.    Virg.    676;    Bibb.  63  Minn.  358  ;  S.  C.  65  N.  W.  Rep., 

County  Loan  Assn.  v.  Richards,  21  p.  645  :  Mills  v.  Salisbury  B.  &  L. 

Georgia  592 ;  Mercer  v.  Amber  B.  Assn.,  75  N.  C.  292. 
&  L.   Assn.,    10  Pa.    C.  C.  R.   51 


8  BUILDING    AND   LOAN   ASSOCIATIONS.  CH.  II. 

building  and  loan  association  are  the  opportunity  to  secure 
interest,  either  upon  small  savings,  or  upon  larger  deposits 
made  as  an  investment;  and  to  borrow  money  upon  ap- 
proved security  when  required.  Building  and  loan  stock,  in 
some  localities,  has  been  deemed  a  very  desirable  investment 
in  the  form  of  prepaid  and  paid  up  stock,  for  the  reasons 
that  the  resources  of  the  associations  are  represented  by 
realty  mortgages,  which  by  reason  of  continuous  partial  pay- 
ments are  being  constantly  rendered  more  safe  and  valuable 
and  are  therefore  deemed  better  securities  than  similar 
investments. 

The  formal  incidents  of  membership  are  now  so  well 
understood  as  to  make  any  detailed  statement  seem  un- 
necessary.1 

Sec.  7 — Terminating  Plan. 

In  societies  of  this  class,  as  the  name  indicates,  a  definite 
time  is  fixed  from  which  members  are  required  to  make  pay- 
ments, upon  their  stock.  If  an  application  for  membership 
is  accepted  after  such  date  the  accrued  or  back  payments 

1  There  are  two  classes  of  mem-  evidences  of  title  ;  (7)  Bidding  for 

bers — investors  and  borrowers.     A  loan  ;  (8)  execution  of  obligations 

proposed  borrower  is  presumed  to  of  debt ;  (9)  Payments  thereon  ac- 

be  a  member  at  the  time  his  appli-  cording  to  the  rules  and  by-laws  of 

cation  is  made.     This  is  however,  the  association, 

not    generally    true    in    practice.  Where  the  money  is  "  sold "  it  is 

Whore  the  obtaining  of  a  loan  is  offered  at  the  full  value  of  each 

the  object  of  membership  the  ap-  share.     The    person    desiring   the 

plicant    generally   first  ascertains  loan,  offers  the  sum  he  is  willing 

whether  his  property  will   be  ac-  to  pay  upon  each  share  for  the  pref- 

cepted  as  security  for  the  loan  de-  erence.     This    sum    is  called    the 

sired.     The  issuance  of  stock  gen-  "bonus"    or    "premium."      This 

erally  accompanies  the  execution  sum  lie  agrees  to  pay  in  addition 

of  the    liond   and   mortgage.     The  to  interest  and  other  charges  pre- 

formal  steps,  however,  are;  (1)Is-  scribed  by  the  rules  and  by-laws  of 

suance  of  a  stock  and   credit  pass  the  association.     The  sum  paid  for 

book;  (2)  Application  for  loan ;  (3)  the  use  of  the  money  is  therefore 

li  upon  realty,  accompanying  the  higher  than  the  interest  usually 

description,  is  frequently  an  affi-  paid  upon  an  ordinary  loan;  but 

davil  covering  essential  facts;  (4)  against,  this  sum  is  to  be  credited 

Report  of  appraisors ;  (5)  Approval  the   proportion  of  earnings  upon 

01     rejection    of     application    by  his  stock,  derived  from  premiums, 

Hoard  of   Directors;    (i   Perfecting  fines,  and  other  sources. 


SEC.  VIII.  GENERAL    DESCRIPTION.  9 

must  be  paid  to  the  date  of  the  issuance  of  the  stock.  Un- 
der this  plan  the  period  is  also  determined  at  which  the 
business  of  the  society  shall  be  closed.  The  object  to  be 
attained  is  the  same  as  in  other  plans  of  associations ; 
namely,  to  provide  for  partial  payments  which  together 
with  the  earnings  thereon  will,  at  a  given  date,  equal  the 
face  value  of  the  stock  subscribed  for ;  and  to  enable  the 
member  to  obtain  loans.  These  associations  comprise  about 
thirteen  per  cent,  of  the  total  number  of  associations  in  the 
United  States.1  The  comparatively  small  number  of  asso- 
ciations of  this  class  is  probably  due  to  the  practical  objec- 
tions which  develop  as  an  association  advances.  If  a  person 
desires  to  become  a  member  after  the  association  has  been 
in  operation  for  a  considerable  time,  he  must  place  himself 
on  an  equal  footing  with  other  members  and  pay  the  in- 
stalments then  due,  which  in  many  instances  amounts  to  a 
considerable  sum.  If  it  is  sufficient  to  prevent  a  person 
from  becoming  a  member,  it  would  in  many  instances  de- 
prive the  associations  of  desirable  members.  Again,  ex- 
perience in  such  associations  has  shown  that  the  earnings 
and  losses  for  a  given  period  are  difficult  to  estimate,  and 
that  the  date  fixed  at  which  shares  of  stock  should  mature 
is  much  earlier  than  the  earnings  will  permit,  so  that  the 
borrower  must  continue  his  payments  for  an  indefinite 
period.  In  many  cases  this  results  in  hardship.  Moreover 
as  the  period  for  closing  the  association  approaches,  those 
who  desire  to  borrow  are  unwilling  to  do  so  for  a  com- 
paratively short  period,  so  that  money  remains  idle  in  the 
treasury  of  the  association  and  the  earnings  are  correspond- 
ingly reduced.  This  condition  results  in  Avithdrawals, 
which,  if  the  association  is  about  to  wind  up  its  business, 
become  an  additional  cause  of  embarrassment. 

Sec.  8 — Serial  Plan. 

The  chief  objections  to  the  terminating  plan,  which  ex- 
perience has  demonstrated  to  be  valid,  are  avoided  in  the 

1  Report  of  the  Commissioner  of  Labor  (1898),  Building  &  Loan  As- 
sociations, p.  24. 


10  BUILDING    AND   LOAN   ASSOCIATIONS.  CH.  II. 

Serial  plan.  Serial  associations,  in  this  country,  comprise 
about  fifty-six  per  cent,  of  the  entire  number.1  The  capital 
stock  of  these  associations,  for  the  purpose  of  issuance,  is 
divided  into  equal  portions,  and  is  issued  in  series.  The 
periods  at  which  issues  of  stock  are  made  may  be  long  or 
short — monthly,  quarterhr,  semi-annually  or  annually,  and 
these  issues  continue,  until  the  entire  capital  stock  is  ex- 
hausted. If  the  series  are  issued  annually,  the  profits  of  the 
first  series  would  be  estimated  at  the  expiration  of  the  first 
year,  on  the  number  of  shares  in  that  series ;  a  second  series 
is  then  issued  and  at  the  expiration  of  the  second  year  the 
earnings  are  apportioned  among  the  total  number  of  shares 
in  both  series,  and  so  on  until  the  whole  amount  of  the 
capital  stock  is  issued.  While  there  is  a  community  of 
interest  of  all  the  shareholders  in  the  earnings  of  the  asso- 
ciation, yet  the  issuance  of  stock  at  different  periods,  gives 
to  each  series  a  distinct  value,  and,  in  a  sense,  makes  it  a 
distinct  association. 

The  terminating  plan  interrupts  the  continuity  of  the 
corporation  ;  the  serial  and  permanent  plans  preserve  this 
attribute.  The  serial  embodies  features  of  both  the  ter- 
minating and  permanent  plans.  It  prevents  the  associa- 
tion from  becoming  extinct  upon  maturity  of  the  shares,  it 
makes  the  conditions  under  which  persons  may  become 
members  more  favorable,  and  invites  the  co-operation  of 
those  who  are  likely  to  make  valuable  additions  to  the  society, 
either  as  "borrowers  or  investors. 

Sec.  9 — Permanent  Plan. 

Under  this  system  the  period  during  which  the  association 
may  do  business  is  extended  and  made  perpetual.  Persons 
may  become  shareholders  at  any  time  without  making  ar- 
rearage payments.  As  a  rule  the  profits  are  divided  and  a 
credit  entered  to  each  member,  at  stated  periods,  upon  the 
basis  of  the  amount  actually  paid  on  his  shares.  There  is 
ater  certainty  as  to  the  period  during  which  payments 
mu-.!  continue,  as  wed  as  the  amount  to  which  a  mem  her  is 
entitled   upon   withdrawal.      Under  this  plan  there  is  no 

1  Report  of  U.  8.  Commr.  of  Labor  (1893),  B.  &  L.  Assns.,  p.  24. 


SEC.  X.  GENERAL   DESCRIPTION.  11 

initiation  fee  nor  any  fines  or  forfeitures  for  non-payments. 
Payments  are  permitted  in  any  amounts  desired. 

The  conditions  of  withdrawal  are  the  same  as  in  other 
associations.  An  objection  has  been  urged  to  this  form  of 
association  upon  the  ground  that  a  periodical  division  of 
profits  enables  a  withdrawing  member  to  receive  an  equal 
benefit  with  a  continuing  member ;  that  the  inducement  to 
members  to  continue  in  the  association  is  diminished,  and 
that  the  ability  of  the  association  to  mature  its  stock  is 
decreased.  It  has  so  many  advantages,  however,  over  any 
other  form,  and  is  so  readily  adapted  to  the  business  of  large 
associations,  that  we  may  readily  believe  that  it  will  in  the 
future  receive  a  more  general  adoption.1 

Sec.  10— Paid  Up  and  Prepaid  Stock. 

Stock  is  issued  called  "  paid  up"  stock,  which  is  subject  to 
call  and  cancellation,  and  which  may  or  may  not  participate 
in  the  dividends  of  the  association.  Usually  it  is  required 
that  the  money  paid  for  it  shall  be  paid  in  for  a  stated 
period  before  the  stock  which  represents  it  will  be  permitted 
to  participate  in  the  dividends.  A  kind  of  stock  called  "  pre- 
paid" stock  is  also  issued.  The  purchaser  pays  a  fixed 
amount, — say  fifty  dollars, — on  each  share  of  stock  of  one 
hundred  dollars,  and  that  sum  remains  until  the  earnings, 
together  with  the  original  amount  paid,  equals  the  face  value 
of  the  shares,  or  one  hundred  dollars  each. 

1  "  Building  societies  exist  under  this  is  not  all ;  one  main  object  is 

the  provisions  of  the   Act  6  &  7  to  enable  members  to  obtain  their 

Will.  4,  c.  32,  sections  1,  3,  4,  5  (f).  £100  by  anticipation  on   their  al- 

The    principle   is    this :    members  lowing  a  large  discount.     For  this 

subscribe  monthly  sums  which  are  purpose,  when  a  sufficient  sum  is 

accumulated  till  the  fund  is  suffi-  in  the  hands  of  the  treasurer,  the 

cient  to  give  a  stipulated  sum  to  members  who  desire  to  get  their 

each  member,  and  then  the  whole  shares  in  advance,  bid  by  a  sort  of 

is  divided  amongst  them  ;    in  the  auction  the   sum  which  they   are 

society  now  in  question  the  sum  to  ready  to  allow  as  discount,  and  the 

be  raised  for  each  member  is  £100.  highest  bidder  obtains  the  advance. 

If  this  were  all  it  wrould  be  a  very  Thus  if  at  the  end  of  a  year  a  sum 

simple  transaction,  mere  accumu-  of  £500  is  in  the  hands  of  the  treas- 

lation,  and  the  only  question  would  urer    arising    from    the    monthly 

be,  how  to  invest  sums  subscribed  subscriptions,  and  the    holder  of 

to  the  greatest    advantage.     But  ten  shares  is  willing  to  allow  a  dis- 


12 


BUILDING    AND   LOAN   ASSOCIATIONS. 


CH.  II. 


Sec.  11 — Bowkett  Societies. 

The  plan  of  these  societies  was  formulated  by  Dr.  Bowkett, 
of  Scotland,  and  is  best  described  in  his  testimony  before  the 


count  of  fifty  per  cent,  (no  one  of- 
fering more),  the  £500  is  or  may 
be  advanced  to  him.  being  £50  in 
satisfaction  of  each  of  his  ten 
shares.  For  this  accommodation  he 
is  bound  to  pay  monthly,  till  a 
fund  is  raised  sufficient  to  give 
£100  per  share  to  all  the  other 
members,  not  only  the  original 
monthly  subscription,  but  also  a 
further  monthly  sum  called  re- 
demption money.  The  statute  (g. ) 
provides  that  the  shares  shall  not, 
in  any  society,  exceed  £150  each  ; 
in  this  society  the  shares  are  fixed 
by  the  rules,  as  I  have  already 
stated,  at  £100  each.  The  amount 
of  the  monthly  subscriptions  and 
redemption  money  is  fixed  by  the 
rules  of  each  society  ;  here,  the 
monthly  subscription  on  each  share 
is  8s.  6d. ,  the  monthly  redemption 
money  3s.  6d.,so  that  the  monthly 
payment  of  each  member  who  has 
not  received  his  share  in  advance 
is  8s.  6d.,  by  those  who  have  been 
advanced  it  is  12s.  If,  after  such 
an  advance  as  I  have  supposed,  no 
further  advances  were  made,  the 
natural  course  of  the  society  would 
be  that  tbe  members,  other  than 
the  holder  of  the  ten  shares,  would 
continue  their  monthly  subscrip- 
tions, and  I  In-  owner  of  the  ten 
shares  would  continue  his  monthly 
subscriptions  and  redemption 
money,  till  the  fund  thus  raised 
should  be  sufficient  to  pay  £100  per 
Bhare  t<>  every  member,  ol  her  t han 
the  bolder  of  the  ten  satisfied 
:  bares.  Tims,  if  there  were  one 
hundred  shares,  ami  al  ) he  end  of 
i  he    fin  t    j  ear  I  here   w  as  £500  in 

lia  ml  t  In-   COndil  ion   of  each    share- 


holder, before  any  advance  made, 
would  be  that  he  would  be  bound 
to  pay  8s.  6d.  per  month,  say  £5 
per  annum,  till  by  the  payments 
and  the  £500  in  hand  the  requisite 
amount,  that  is  £10,000  being  £100 
for  each  £100  .share,  should  have 
been  raised  by  accumulation.  Af- 
ter the  advance,  the  condition  of 
every  shareholder,  other  than  the 
holder  of  the  ten  advanced  shares, 
is  that  he  is  to  contribute  his 
monthly  payments  till  the}',  to 
getherwith  the  monthly  pa3"ments 
and  redemption  money  contrib- 
uted by  the  holder  of  the  advanced 
shares,  are  sufficient  to  realize  not 
£10,000;  but  £9,000  that  is  £100 
for  each  share  other  than  the  ten 
shares  of  the  advanced  member, 
whose  shares  will  have  been  al- 
ready satisfied  by  £500.  He  loses 
his  interest  in  the  £500  advanced 
to  the  holder  of  the  ten  shares,  but 
on  the  other  hand  the  sum  to  be 
raised  is  only  £9,000  instead  of 
£10,000,  and  the  monthly  contri- 
bution is  increased  by  the  amount 
of  the  redemption  money  paid  by 
the  member  who  has  received  his 
ten  shares  in  advance.  Further 
advances  are  made  from  time  to 
time,  as  funds  are  accumulated, 
and  as  members  are  inclined  to 
give  high  discount  in  order  to  ob- 
tain payment  of  their  shares  by 
anticipation,  the  gain  to  the  society 
arises  mainly  from  the  high  rate  of 
discount  winch  members  in  want 
of  money  are  ready  to  give.  In 
truth  the  whole  scheme  is  but  an 
elaborate  contrivance  for  enabling 
persons  having  sums  for  which 
they  have  do  immediate  want,  to 


SEC.  XI. 


GENERAL    DESCRIPTION. 


13 


royal  commissioners  appointed  to  examine  into  the  practices 
of  building  societies  of  Great  Britain  :  "  They  are  based  on 
a  principle  of  arithmetic,  which  scarcely  any  one  connected 


lend  them  to  others  at  a  very  high 
rate  of  interest.  In  order  to  secure 
the  due  payment  of  the  monthly 
subscriptions  and  redemption 
money  by  the  members  who  have 
received  their  shares  in  advance, 
they  are  obliged  to  give  satisfac- 
tory, real  security  to  the  trustees 
of  the  society  and  "the  statute  pro- 
tects such  mortgages  from  the  op- 
eration of  the  laws  which  until  last 
session  were  in  force  against  usury. 
Besides  this  advance  to  a  member 
of  his  share,  deducting  discount, 
the  rules  provide  also  for  the  case 
of  a  member  desiring  to  withdraw 
from  the  society  altogether.  By 
the  16th  rule,  any  member  may 
withdraw  on  certain  terms  there 
laid  down  ;  the  principle  being, 
that  he  is  to  pay  a  small  sum,  by 
way  of  fine  or  penalty,  if  he  with- 
draws at  an  early  date  after  the 
formation  of  the  society  ;  but  if  he 
withdraws  after  having  been  a 
member,  and  so  having  paid  his 
subscriptions,  for  several  years, 
then  upon  withdrawing  he  is  to 
receive  back  the  full  amount  of 
the  subscriptions,  and  also  to  take, 
if  the  directors  think  fit,  a  further 
sum,  to  be  from  time  to  time  fixed 
by  them,  by  way  of  bonus  upon 
what  are  called  the  profits  of  the 
society.  This  is  provided  for  by 
the  16th  rule,  which  is  thus  : — 
'  That  any  person  who  shall  be  de- 
sirous of  withdrawing  from  this 
society  any  share  or  shares  which 
shall  not  have  been  purchased,' — 
that  is,  which  have  not  been  taken 
up  or  advanced  ('  purchased '  is  an 
extraordinary  and  odd  way  of  de- 
scribing it) — '  shall  be  allowed  to 


do  so  on  giving  one  month's  notice, 
in  writing,  of  his  or  her  intention. 
to  the  directors  at  any  general 
meeting  of  the  society  ;  and  the 
money  subscribed  in  respect  of 
such  share  or  shares  shall  be  repaid 
to  such  member,  subject  only  to 
the  forfeitures  next  hereinafter 
mentioned  ;  that  is  to  say,  if  appli- 
cation to  withdraw  shall  be  made 
within  the  first  year  from  the  first 
meeting  thereof,  a  forfeiture  of 
half-a-guinea  per  share  ;  if  within 
the  second  year  of  such  meeting,  a 
forfeiture  of  5s.  6d.  per  share  ;  that 
if  the  application  to  withdraw  any 
such  shai'e  or  shares  shall  be  made 
within  the  fifth  or  any  subsequent 
year  from  such  first  meeting,  the 
directors  are  hereby  empowered  to 
allow  the  members  so  desirous  of 
withdrawing,  out  of  the  profits 
which  the  society  shall  have  re- 
alized, a  bonus  for  the  withdrawal 
of  each  share,  as  they  shall  from 
time  to  time  appoint.'  It  is  obvi- 
ous that  this  is  an  arrangement 
which  may,  if  the  calculation  be 
properly  made,  be  carried  into  ef- 
fect without  injury  to  the  society. 
When  the  member  withdraws,  the 
society  thenceforth  loses  the  bene- 
fit of  his  monthly  subscriptions  ; 
but  then  they  are  relieved  from  the 
obligation  of  making  up  the  £100 
to  which  he  would  eventually  be- 
come entitled.  If  the  member 
upon  withdrawing  merely  took 
back  the  amount  of  his  subscrip- 
tions, the  society  would  obviously 
benefit  to  the  extent  of  the  interest 
made  by  means  of  those  subscrip- 
tions previous  to  the  member  with- 
drawing ;   and  it  is  obvious  that 


14 


BUILDING   AND   LOAN    ASSOCIATIONS. 


CH.  II. 


with  building  societies,  or  any  one  else,  seems  to  comprehend. 
The  principle  is  this :  that  by  a  certain  arrangement,  men 
uniting  together  can  realize,  in  the  first  instance,  the  same 


out  of  the  interest  so  realized  an 
allowance  may  be  made  to  the 
withdrawing  member,  still  leaving 
to  the  society  some  benefit  from 
his  past  contributions.  The  sums 
subscribed  by  a  member  who  with- 
draws have  contributed  to  make 
up  the  fund  out  of  which  the  shares 
of  those  members  who  have  been 
advanced  (that  is,  have  taken  a 
smaller  sum  at  once,  allowing  a 
large  discount,  in  lieu  of  the  full 
sum  of  £100)  have  been  made  good ; 
they  therefore  enable  the  society 
to  obtain  a  larger  monthly  pay- 
ment, that  is,  12s.,  instead  of  8s.  6d. 
(h)  upon  each  share,  and  to  reduce, 
on  favorable  terms,  the  number  of 
shares  eventually  to  be  provided 
for.  This  is,  in  truth,  substan- 
tially an  investment  at  a  high  rate 
of  interest ;  and  the  benefits  there- 
by accruing  may  not  inaptly  be 
designated  by  the  name  of  '  pro- 
fits.' "What  is  the  precise  amount 
of  benefit,  which  from  tbese  differ- 
ent causes  may  have  resulted  to 
the  society  from  the  subscriptions 
of  each  member,  must  be  a  problem 
very  difficult  to  solve, — not,  per- 
haps, admitting  of  any  absolutely 
accurate  solution  ;  but  it  may  be 
possible  to  arrive  at  it  in  a  rough 
way,  so  as,  at  least,  to  enable  the 
di lectors  to  fix,  from  time  to  time, 
l  In. sum  which  may,  without  detri- 
ment to  the  interest  of  the  society, 
be  paid  to  any  member  desirous  of 
withdrawing,  beyond  the  amount 
of  t  lie  principal  monies  subscribed, 
ami  t  he  161  h  rule  enables  the  direc- 
tors to  lix  upon  such  a  sum  ;  -it  be- 
ing,  I  t  hink,  not  inaccurately  de- 
scribed as  a  bonus  upon  the  profits 


of  the  society.  The  interest  of 
members,  as  well  those  taking 
the  shares  by  anticipation  as  those 
quitting  the  society,  are  thus  toler- 
ably well  provided  for  ;  but  another 
case  was  contemplated,  namely, 
that  of  members  who,  having  re- 
ceived their  shares  by  anticipation, 
might  be  desirous  of  relieving 
themselves  from  the  burden  of  con- 
tinuing the  payment  of  their 
monthly  subscriptions  and  re- 
demption money.  From  the  very 
nature  of  these  societies  it  is  im- 
possible to  know  with  certainty 
how  long  it  may  be  necessary  to 
continue  the  monthly  payments. 
They  must  be  made  until  the  sum 
necessary  to  give  every  unadvanced 
member  the  full  amount  of  his 
share  has  been  accumulated.  The 
time  required  for  this  purpose 
would  be  more  or  less,  according 
to  the  amount  of  benefit  which  the 
society  may  derive  from  the  dis- 
count given  on  the  shares,  and 
from  the  interest  made  on  the  in- 
vestments,— in  other  words,  as  the 
profits  realized  be  large  or  small. 
Reasoning  a  priori,  the  fair  course 
would  seem  to  be,  that  the  society 
should  ascertain,  as  nearl}r  as  may 
be,  the  period  of  time  during  which 
the  monthly  payments  will  have 
to  be  continued,  and  thus  allow 
any  advanced  member  to  relieve 
himself  from  the  obligation  of  con- 
tinuing his  monthly  payments  on 
paying  down  at  once  a  sum  equiv- 
alent to  their  present  value.  Thus, 
if  the  monthly  payment  is  12s.,  and 
it  is  ascertained  that  the  payments 
must  probably  continue  to  be  made 
for  twelve  years,  it  would  seem  to 


SEC.  XI. 


GENERAL   DESCRIPTION. 


15 


amount  of  interest  for  their  own  savings  that  they  are  accus- 
tomed to  pay  for  other  people's  money  ;  next,  that  they  can 
practically  obtain  one-fourth  more  than  that  rate  of  interest ; 


be  a  reasonable  arrangement  that 
the   advanced  member,  who  was 
liable  to  pay  12s.  per  month  for 
twelve  years,  should  be  free  from 
his   liability   on  paying  down  at 
once    a    sum    which    an    actuary 
should  say  is  equivalent,  in  present 
money,  to  such  continued  prospec- 
tive payments.     This,  however,  is 
not  the  principle  upon  which  the 
plan  of  redemption  is  given  by  this 
society.     The  provision  on  this  sub- 
ject is  to  be  found  in  the  14th  rule, 
and   is  as  follows  : — '  That  if  any 
member  of  this  society  who  shall 
have  received  his  share  or  shares, 
or  any  portion  of  them,  shall  be 
desirous  of  paying  and  satisfying 
the  security  or  securities    which 
shall  have  given  for  the  same,  and 
shall  give  notice  of  such  his  desire 
to  the  directors,  the  directors  shall, 
within     one     month     thereafter, 
award  to  such  member  the  same 
proportion  of  profit  per  share  as  is 
allowed  on  the  withdrawal  of  un- 
purchased shares  ;  and  the  direc- 
tors shall  make  a  deduction  of  such 
profits  and  of  the  amount  of  sub- 
scriptions paid  in  by  such  member, 
from  the  full  amount  expressed  to 
be  received  in  and  by  the  mort- 
gage ;  and  the  directors  are  hereby 
authorized  and  empowered  to  re- 
ceive the  balance  in  one  payment, 
or  by  such  installments  as  the  di- 
rectors and  members  shall  agree 
upon  ;  and  on  the  payment  of  the 
balance,  together  with  all  fines  and 
other  sums  due  in  respect  of  such 
shares,   the  directors  shall  desire 
the  trustees  to  deliver  up  all  deeds 
and  documents  in  their  custody  re- 
lating to  the  security  of  the  mem- 


ber on  such  property  and  at  his  or 
her  costs  to  endorse  a  receipt,'  etc., 
according  to  the  statute.     It  is  im- 
possible to  read  this  rule  without 
being  strongly  impressed  witli  the 
belief  that  those  who  framed  it  had 
not  duly  considered  how  it  would 
operate.      When    an  unadvanced 
member  withdraws  from  the  so- 
ciety, it  is  reasonable,  and  not  nec- 
essarily  inconsistent  with  his   in- 
terest, that  he  should  receive  back, 
not  only  the  principal  sums  which 
he  has  contributed,  but,  also   by 
way  of  bonus,  a    portion  of  the 
benefit  which    those    sums    have 
gained  for  the  society.     Up  to  the 
time  of  his  withdrawing  he  has  re- 
ceived nothing.     When    he   with- 
draws,  he  loses  all    right  to  the 
share, — that  is,  £100,  to  which,  if 
he  had  not  withdrawn,  he  would, 
like    every    continuing     member, 
have  been  eventually  entitled, — and 
is  content  to  take  in  lieu  of  it  the 
amount  of  what,  for  a  series  of 
years,  he  has  been  paying,  together 
with  a  portion  of  what  has  been, 
as  it  were,  accumulated  in  respect 
of    those    payments    towards  the 
eventual  realization  of    his    £100 
share.       This   is    the    position    in 
which     a    withdrawing     member 
stands  at  the  time   of  his   with- 
drawal.      But    the    condition    on 
which   an   advanced   member    re- 
deems (which  is,  in   truth,   with- 
drawing) is  very  different.     He  is 
not  a  member  who  lias,  up  to  the 
time  of  withdrawing,  received  his 
full  share,  though  he  lias,  in  fact, 
received  that  which  he  was  con- 
tent to  take,  supposing  redemption 
were  out  of  the    question,  as  an 


16  BUILDING   AND   LOAN   ASSOCIATIONS.  CH.  II. 

and,  next,  that  that  rate  of  interest  is  compound  interest. 
The  plan  is  this :  one  hundred  persons,  putting  down  9|-cZ. 
a  week,  will  produce  £2  Is.  2d.  each  year.  Leaving  the  Is.  2d. 
out  of  the  question,  to  pay  the  current  expenses  (and  that 
amount  is  nearly  sufficient),  they  have  at  the  end  of  the  year 
£200 ;  they  draw  lots  for  it,  and  the  one  to  whom  it  falls 
has  the  £200  lent  to  him,  without  interest,  provided  he  expends 
it  upon  freehold  property,  and  repays  it  at  the  rate  of  10 
per  cent,  per  annum,  continued  for  ten  years.  After  that 
he  continues  his  subscription  until,  if  he  is  one  of  the  earlier 
persons,  he  has  paid  £62,  and,  if  one  of  the  latter  ones, 
£50.  Each  member  has  all  his  subscription  back  again, 
the  principle  being  that  the  subscriber  lends  the  society 
a  small  sum  annually  for  a  long  time,  and  the  society  lends 
him  a  large  one  for  a  long  time."  2 

Sec.   12 — Starr-Bowkett  Societies. 

The  chief  difference  between  the  Starr-Bowkett  societies 
and  the  preceding  (Bowkett  societies)  is  that  in  the  Starr- 
Bowkett  societies,  after  a  man  has  repaid  that  which  is  lent 
to  him  upon  property,  he  has  to  pay  an  increased  subscrip- 
tion, so  as  to  make  the  society  terminate  at  an  earlier  period 
than  it  would  do  if  the  member  still  continued  to  pay  his 
ordinary  subscription.  "  Thus,  a  man  who  has  an  advance  of 
£300  pays  back  at  the  rate  of  £30  a  year,  and  a  subscription  of 
Is.  3d.  a  week,  or  £3  5s.  per  annum.  At  the  end  of  ten  years 
he  would  have  repaid  the  £300,  and  paid  into  the  society  in 
subscriptions  £32  10s.  The  society  now  sa}rs,  in  order  to  ena- 
ble other  members,  who  have  been  waiting,  and  are  still  anx- 
ious to  get  their  appropriations,  to  do  so,  and  to  make  the 
society  terminate  as  quickly  aspossible,we  think  it  is  only  right 

equivalent  to    the    whole    of   his  L.  J.  Ch.  29 ;  24  L.  F.  O.  S.  101 ; 

share.     The  rule,  therefore,  which  3  W.  R.  89  ;  1  Jur.  N.  S.  25  ;  3  Eq. 

gives  to  him,  on  redeeming  his  ob-  Rep.  14  ;  18  J.  P.  772. 

ligations,  the  same  sum,  under  the  *  First  Report  of  Commissioners, 

name  of  '  profits,'  as  is  given  to  a  p.  64. 

non-advanced    member  withdraw-  This  kind  of  a  building  society  is 

ing,  appears  to  be  hardly  reasona-  now  prohibited  by  statute.     Act  of 

ble."     Lord  Cranworth  in  Fleming  Parliament,   1894,   57  &   58  Vict. 

v.  Self,  8  DeG.M.  &  G.  997  ;  s.  c.  24  Chap.  47,  Sect.  12. 


SEC.  Xlla.  GENERAL   DESCRIPTION.  17 

that  you  should  make  up  your  proportion  of  subscription, 
viz. :  £81  5*.,  by  paying  at  the  rate  of  £30  a  year  during  the 
next  two  years.  The  result  is,  that  at  the  end  of  eleven  and 
a  half  years  from  the  time  the  man  borrowed  the  money  he 
has  repaid  the  £300  lent  to  him,  and  he  has  £81  5s.  subscrip- 
tion in  the  society.  At  the  close  of  the  society  their  sub- 
scriptions are  returned  to  the  members,  the  society  first 
deducting  a  sufficient  amount  for  his  share  of  the  working 
expenses."  1 

Sec.  12a — Dayton  or  Ohio  Plan. 

In  Ohio  has  grown  up  a  plan  of  ^permanent  society  having 
its  origin  in  the  city  of  Dayton,  and  usually  named  after  that 
city.  In  the  report  of  the  Inspector  of  Building  and  Loan 
Associations  of  that  State  for  1892  this  plan  is  described  as 
follows  :  "  JSTo  initiation  fee  is  charged,  and  the  only  require- 
ment for  membership  is  the  payment  of  twenty-five  cents  for 
a  pass-book.  Dues  at  the  rate  of  twenty-five  cents  per  week 
for  each  one  hundred  dollar  share  can  be  paid  at  any  time ; 
no  fines  or  forfeitures  are  exacted  for  nonpayment,  and  the 
member  can  suit  his  own  convenience  about  his  payments.  It 
is  a  simple,  businesslike  plan.  The  member  being  permitted 
to  begin  making  payments  at  any  time  and  in  such  sums  as  suit 
his  own  convenience,  the  dividend  accredited  to  him  at  each 
settlement  is  calculated  on  the  basis  of  his  actual  payments. 
Another  important  feature  is  the  issue  of  certificates  of 
paid-up  stock,  the  face  value  of  which  is  paid  in  at  once, 
instead  of  being  subject  to  weekly  or  monthly  payments  as 
ordinary  running  stock.  It  has  been  the  experience  of 
many  associations  operating  upon  the  plan  of  receiving  only 
small  weekly  or  monthly  stock  payments  that  often  when 
there  is  a  demand  for  loans,  it  requires  a  long  time  to  ac- 
cumulate the  sum  of  money  desired.  With  the  paid-up 
stock  feature  it  has  been  found  that  this  can  be  regulated  in 
a  measure,  and  it  makes  available  to  the  association  a  larger 
amount  of  money.     Paid-up  stock  is  usually  governed  by 

1  Davis    on    Building    Societies  have  been  abolished.     Act  of  Par- 

(3rd)  65-69.  liament,  1894,  57  &  58  Vict.  Chap. 

These  kinds  of  Building  Societies  47,  Sect.  12. 

2 


18  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  II. 

the  same  rules  regulating  running  stock,  except  that  it  is 
not  issued  at  all  times  and  that  the  dividends,  instead  of 
being  credited,  are  paid  out  in  cash  either  annually  or  semi- 
annually. Most  of  the  associations  issue  this  stock  upon  the 
express  condition  that  it  may  be  called  in  and  canceled  at 
any  time.  This  would  be  done  in  the  event  of  an  accumu- 
lation in  the  treasury  of  a  large  sum  of  money  for  which 
there  would  be  no  demand  from  members  desiring  loans. 
But  experience  teaches  that  it  is  rarely  necessary  to  re- 
sort to  this  remedy,  the  supply  of  money  being  usually  reg- 
ulated by  the  issue  of  the  stock.  Holders  of  paid-up  stock 
are  generally  required  to  have  their  money  on  deposit  for 
thirty  days  before  it  becomes  entitled  to  dividends,  or  some 
associations  establish  the  rule  that  when  the  stock  is  taken 
between  a  six  months'  dividend  period  it  does  not  begin 
to  draw  dividends  until  the  beginning  of  the  next  six 
months.  Paid-up  stock  can  be  withdrawn  just  as  running 
stock  by  giving  the  usual  notice  required,  and  is  paid  out 
with  running  stock  in  the  order  in  which  the  notices  for  with- 
drawal were  filed.  Still  another  feature  of  the  Dayton  plan  is 
that  the  payments  made  by  the  borrowing  and  depositing 
members  are  precisely  the  same.  The  weekly  payment  of 
the  borrowing  member  is  applied  first  to  the  payment  of  in- 
terest and  premium  upon  his  loan  and  the  balance  placed  on  a 
credit  to  the  same.  These  credits  begin  to  draw  dividends  at 
once,  and  are  compounded  semi-annually.  The  payments  are 
required  to  be  continued  until  the  weekly  credits  and  the 
dividends  declared  thereon  equal  the  matured  value  of  the 
shares."  x 

Sec.  13 — Concerning  Methods  of  Business. 

The  prosperity  of  building  and  loan  associations,  and 
their  continuance  in  the  confidence  of  the  public,  will,  in 
the  future,  depend  largely  upon  the  wisdom  and  prudence 
with  which  they  are  managed.  The  courts  have  already 
given  admonitions  that  should  be  heeded.  The  compe- 
titive spirit  has  led  to  the  adoption  of  various  "plans" 
more  or  less  plausible  and  at  tractive  to  possible  subscribers. 

i  Ohio  Inspector's  Report  for  1892,  pp.  27-28. 


§  13  GENERAL   DESCRIPTIONS.  19 

Many  of  these  departures  from  original  methods  have  been 
considered  by  the  courts  and  held  to  be  unsound  in  princi- 
ple and  practice.  In  the  case  of  Mills  v.  the  Salisbury 
Building  and  Loan  Association,1  the  court  says  :  "  We  are 
told  that  these  associations  are  common  in  Europe  and  in 
many  of  our  sister  states.  We  are  aware  of  it.  They 
commenced  in  Europe  under  as  simple  legislation  as  ours, 
but  were  soon  perverted.  The  same  may  said  of  them  in 
America."  In  the  case  of  Maudlin  v.  the  American  Savings 
and  Loan  Association,2  the  court  says  :  "  So-called  building 
associations,  operated  on  the  plan  of  the  defendant,  have  so 
often  become  the  instruments  of  oppression  and  extortion 
as  to  call  down  the  censure  of  some  eminent  courts.  The 
original  purpose  of  building  societies,  viz. :  to  enable  people 
of  small  means  to  build  or  buy  homes,  is  entirely  wanting."3 

1  Mills  v.   Salisbury  Building  &  63  Minn.  511;  Hekelnkaemper  v. 
Loan  Association,  75  N.  C.  292.  Building  Association,  22  Kas.  554. 

2  Maudlin  v.   Amer.    Savings  &        3  See  also  New  York,  etc.,  Ass'n. 
Loan  Ass'n.   65  N.   W.  Rep.   645,  v.  Slaughter,  17  Pa.  C.  C.  66. 


CHAPTER  III. 

INCOEPORATION. 

Sec.  14.  Legislature  Must  Create. 

15.  Special  Legislative  Act. 

16.  Validity  of  Special  Charter. 

17.  Amendments  of  Special  Charter. 

18.  Incorporation  by  Court. 

19.  Incorporation  by  Articles  of  Association,  Validity  of  Statute. 

20.  The  Charter. 

21.  When  Life  of  Corporation  Begins. 

22.  Substantial  Compliance  with  Statutes  necessary. 

23.  Claiming  More  than  Allowed  by  Statute. 

24.  Specifying  Powers. 

25.  Place  of  Business. 

26.  Amendments  of  Articles. 

27.  Recording  Articles. 

28.  Name. 

29.  Banking  Powers. 

30.  Irregular  and  De  facto  Corporations. 

31.  Estoppel  to  Deny  Corporate  Existence. 

32.  Foreign  Building  Associations. 

Sec.  14 — Legislature  Must  Create. 

In  this  country  only  the  legislature  can  authorize  the 
creation  of  a  corporation.1 

Those  societies  or  collections  of  individuals  which  are  not 
organized  pursuant  to  some  general  or  special  enactment  or 
authority  of  the  legislature  are  mere  partnerships  and  the 
members  thereof  mere  partners.2 

Sec.  15 — Special  Legislation  Act. 

It  is  no  uncommon  thing  for  a  corporation  to  be  organ- 
ized under  an  act  of  the  legislature  passed  especially  for  its 

1  Franklin  Bridge  Co.  v.  Wood,        a  Wells  v.  Gates,  18  Barb.  554. 
11  Qa.  Sl» :  Medical  Institution  v. 
Patterson,  1  Denio,  61. 
20 


§   15.  INCORPORATION.  21 

incorporation.  This  kind  of  legislation  has  been  quite  com- 
mon in  the  United  States,  much  more  so  than  at  present ; 
and  under  such  acts  many  of  the  first  building  associations 
were  organized.  In  such  instances  it  is  not  necessary  that 
the  legislature  should  declare  in  express  words  that  it  should 
be  a  corporation ;  it  being  sufficient  if  it  be  given  corporate 
powers  with  authority  to  invoke  their  exercise.1  And 
this  is  true  even  though  they  be  called  "  joint  stock 
companies." 2  If  the  legislature  declare  certain  named 
persons  a  corporation,  this  makes  them  a  corporation  the 
instant  the  incorporating  act  goes  into  force.3  But  it  may 
provide  that  they  shall  be  a  corporation  upon  perform- 
ance of  certain  acts ;  and  then  until  those  acts  are  per- 
formed no  corporation  will  spring  into  existence.4  A 
corporation  may  be  created  simply  by  declaring  that  certain 
persons  should  constitute  a  corporation  with  all  the  powers 
of  a  certain  other  designated  corporation.5  It  is  no  uncom- 
mon thing  for  the  legislature  to  grant  to  certain  named 
persons  "  and  their  associates "  a  charter.  When  such  is 
the  case  the  word  "  associates "  usually  refers  to  those 
already  associated  with  the  persons  named,  but  it  may  also 
include  those  who  come  afterwards.6  In  such  instances 
evidence  is  admissible  to  show  who  were  included  in 
the  word  "  associates." 7  The  courts  will  construe  liber- 
ally that  part  of  the  provisions  of  the  act  for  the 
organization.8  If  the  majority  of  those  named  refuse  to 
organize  the  corporation,  the  minority  may  proceed  to  do  so  ; 
and  if  all  refuse,  the  court  may  compel  them  to  do  so  by 
mandamus.     The   majority   have   full  power  to   organize 

1  Denton  v.   Jackson,   2  Johns.        4  Dartmouth    College  v.   Wood- 
Ch.  324;  Commonwealth  v.  West    ward,  4  Wheat.  791. 

Chester    Co.,   3  Grant  Cas.    200;        5  Binghampton    Bridge  Case,   3 

Dean   v.    Davis,   51   Cal.   406 ;  see  Wall.    78  ;    Penobscot  Boom  Cor- 

Falconer  v.  Campbell,  2  McLean,  poration  v.  Lamson,  16  Me.  224. 
195  ;  S.  c.  10  Myer.  Fed.  Dec.  §  10.        6  Lechmere  Bank  v.  Boynton,  11 

2  Blanchard  v.  Kaull,  44  Cal.  440.  Cush.  369. 

3  Stoops    v.     Greensburg,     etc.,        7  State  v.  Sibley,  25  Minn.  387. 
Plank  Road  Co. ,  10  Ind.  47;  Little        8  Eakright  v.    Logansport,  etc., 
Rock,  etc..  R.  R.  Co.  v.  Little  Rock,  R.  R.  Co.,  13  Ind.  404  ;  Covington, 
etc.,  R.  R.  Co.,  36  Ark.  663.  etc.,  Plank  Road  Co.,  3  Ind,  510. 


22  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.    3. 

the   corporation,   even  if  the  minority   do    not    refuse  to 

assist.1 

Sec.  16 — Validity  of  Special  Charter. 

The  legislature  has  power  to  create  a  corporation  in  dis- 
regard of  the  rules  of  the  common  law,  and  the  charter  for 
that  reason  cannot  be  questioned.2  The  power  of  the 
legislature  to  create  a  corporation  is  not  subject  to  review 
unless  the  provisions  of  the  charter  granted  violate  some 
provision  of  the  Constitution.3  The  charter  cannot  be 
attacked  collaterally  for  bad  faith  or  fraud  in  obtaining  it.4 
JSTor  that  bribery  was  used  in  obtaining  it.5  Illegal  clauses 
in  the  charter  will  not  avoid  it.6  Where  the  legislature 
declared  the  object  of  incorporating  certain  individuals  to 
be  "  to  assist  members  thereof  to  become  their  own  land- 
lords," and  the  principal  object  of  the  corporation,  as  evi- 
denced by  its  charter  and  the  by-laws  which  were  declared 
in  advance  to  have  "  the  force  and  effect  of  legal  enact- 
ment," was  to  authorize  usurious  interest  upon  loans,  it  was 
held  that  the  whole  proceeding  was  simply  an  elaborate  ef- 
fort to  evade  the  general  laws  of  usury,  and  the  act  was, 
therefore,  void,  because  it  was  special  legislation.7 

1  Commonwealth     v.      McKean  2  Penobscot    Boom    Corporation 

County  Bank,  32  Pa.  St.  185  ;  Mat-  v.  Lamson,  16  Me.  224. 

ter  of  White  River  Bank,  23  Vt.  3  Clarke  v.     Brooklyn    Bank,    1 

478.  Edw.  Ch.  361. 

Where  provisions  of  the  special  4  Pattison  v.   Albany,  etc.,  Asso- 

charter  are  like  those  of  a  general  ciation,    63   Ga.    393  ;    Garrett    v. 

statute  for  the   incorporation    of  Dillsburgh,  etc.,  R.  R.,  78  Pa.  St. 

societies,  and  it  provides  that  these  463. 

special  provisions  shall  govern  the  5  Ferguson  v.  Miner's,  etc.,  Bank, 

company  incorporated  by  it,  such  3  Sneed,  609. 

provisions  control  to  the  exclusion  6  Miller's  Estate,   2  Pears.  248; 

of  the  general  law.     Briggs  v.  Cape  Workingman's  Building  and  Loan 

Cod  Ship  Canal  Co.,  137  Mass.  71.  Association  v.  Coleman,  89  Pa.  St. 

A  statute  incorporating  a  build-  428;  s.  c.  36  Leg.  Int.  346;  8  W.  N. 

ing  and  loan  association  and  kI<i-  ('as.     17:   Becket    v.    Uniontown 

to  by-laws  already  adopted  by  Building  and  Loan  Association,  88 

those    asking     the     incorporation  Pa.  St.  211. 

makes  such  by-laws  a  part  of  the  7  Martin   v.   Nashville   Building 

ad    withoul    embodying  them  in  Association,  2  Cold.  418;  Herbert 

the  act.     Bibb.  Count}  Loan  Asso-  v.    Kenton    Building  and  Savings 

ciation  v.  1,'iclia  r<  I :  .  '.'I  Ga.  592.  Association  of  Covington,  11  Bush- 


§    17.  INCORPORATION.  23 

Sec.  17 — Amendments  of  Special  Charter. 

The  constitution  of  the  United  States  provides  that  "  no 
State  shall  *  *  *  pass  any  *  *  *  law  impairing  the 
obligation  of  contracts  "  ;  and  many  state  constitutions  con- 
tain similar  provisions  with  respect  to  their  general  legisla- 
tion. By  reason  of  this  prohibition  it  is  beyond  the  powers 
of  the  legislature  to  make  fundamental  changes  in  the 
charter  of  an  existing  private  corporation  without  the  con- 
sent of  all  the  stockholders  or  members,1  unless  the  legis- 
lature has  reserved  the  power  to  amend  it,  or  the  right  is 
reversed  by  the  constitution  of  the  state  ;  2  or  by  some  stat- 
ute which  is  operative  notwithstanding  the  silence  of  the 
charter.3  If,  however,  the  power  of  amendment,  or  even 
of  repeal,  has  been  properly  reserved,  the  legislature  is  free 
to  carry  out  its  own  arbitrary  notions  and  either  amend 
or  repeal  the  charter  in  such  manner  as  it  sees  fit.3  But 
amendments  in  furtherance  of  the  original  plan  are  valid, 
when  made  on  the  application  of  the  corporation  or  a 
majority  of  the  members.5  The  granting  of  auxiliary 
powers  does  not  require,  perhaps,  either  the  consent  of  the 

296 ;    Simpson   v.   Kentucky   Citi-  ward,  4  Wheat.    518 ;  reversing,  1 

zens'  Asso.    (Ky.),  41  S.  W.   Rep.  N.    H.    Ill;    McKeown    v.    Irish 

570  ;  s.  c.  42  S.  W.  Rep.  834  ;  Watts  Building  Association,  5  Wkly.   L. 

v.  National  B.  &  L.   Ass'n.  (Ky.),  Bull.   52;  Livingston  v.   Lynch,   4 

42  S.  W.  Rep.  839.  Johns  Ch.  573. 

Where  the  constitution  of  a  state  '2  Delaware  R.  R.  Co.  v.  Tharp, 

provided  that  "  Each  law  shall  em-  5  Harr.  (Del.),  454. 

brace  but  one  subject,  which  shall  3  Mowrey  v.    Indianopolis,  etc., 

be  described  in  the  title,"  a  statute  R.  R.  Co.,  4  Biss.  78  ;  Hamilton  v. 

with  a  title  as  follows  was  held  Keith,    5    Bush,    458 ;     Lyons    v. 

valid,  viz.  :  "An  act  to  incorpor-  Orange,  etc.,  R.  R.  Co.,  33  Md.  18. 

ate  The  Montgomery  Mutual  Build-  4  Miner's  Bank  v.  United  States, 

ing  and  Loan  Association."     Mont-  1  Greene  (la.)  553;  State  v.  Gran- 

gomery,  etc.,  Association  v.  Rob-  ville,  etc.  Society,  11  Ohio  1  ;  Gard- 

inson,  69  Ala.  413.     Under  a  like  ner  v.  Hope  Insurance  Co.,  9  R.  I. 

provision    in  Nebraska  the  words  194;  s.  C.  11  Am.  Rep.   238;  Close 

'•  and  other  purposes"  added  to  the  v.  Glenwood  Cemetry.   107   U.  S. 

title  of   an  act  was    treated  as  a  466. 

nullity.      Lincoln     Building    and  5  State  v.  Accommodation  Bank, 

Savings  Association  v.  Graham,  7  26  La.  Ann.  288:  Winter  v.  Mus- 

Neb.    173;    Same  v.    Benjamin,   8  cogee  R.  R.  Co.,  11  Ga.  438  ;  Shelby 

Neb.  181.  County    v.    Shelby    R.    R.    Co.,  5 

1  Dartmouth  College  v.    Wood-  Bush.  225. 


24  BUILDING   AND   LOAN   ASSOCIATIONS.         Cll.  III. 

stockholders  or  the  corporation.1  So  if  the  corporation  has 
been  granted  power  to  pursue  a  special  remedy  its  charter 
in  that  respect  may  be  amended  if  it  be  given  by  another 
act  as  adequate  remedy.2  Any  material  change  in  the 
charter  Avhich  has  the  effect  to  change  the  original  contract 
of  the  subscriber  to  the  corporate  stock  is  a  nullity  and  void, 
unless  all  the  stockholders  consent  to  it.  The  majority 
here  cannot  bind  the  minority  ; 3  but  if  the  majority  do  ac- 
cept the  amendment  such  majority  will  be  bound  by  it, 
although  the  minority  will  not.4  An  amendment  author- 
izing the  increase  of  the  capital  stock  is  valid  ; 5  and  a 
stockholder,  by  lying  by  and  accepting  the  provisions  of 
the  amendment,  may  be  bound  by  acquiescing  therein.6 
An  amendment  changing  the  name  of  the  corporation  ; 7  or 
increasing  the  number  of  directors,8  is  valid.  If  the  right  to 
alter  or  amend  a  charter  has  been  reserved  in  it  by  the 
legislature,  then  it  would  seem  that  they  have  full  power  to 
make  any  amendment  they  see  fit,  at  least  if  the  majority 
accept  the  amendment ; 9  and  the  same  is  true  if  the  right 
has  been  reserved  in  a  general  statute.10 

1  Sprigg  v.  Western  Union  Tel.  Building  and  Loan  Asssociation, 
Co.,  46  Md.  67;  Hyatt  v.  McMahon,     27  N.  Y.  Supp.   314;  s.  C.  7  Misc. 

25  Barb.  457  ;  Gifford  v.  New  Jer-    Rep.  188. 

sey  R.  R.  Co.,   10  N.  J.  Eq.  171;  *  Mowrey   v.  Indianapolis,  etc., 

People  v.  Grand,  etc.,  Plank  Road  R.  R.  Co.,  4  Biss.  86  ;  Chesapeake, 

Co.,  10  Mich.  400.  etc.,  Co.  v.  Robertson,  4    Cranch 

2  Reaper's  Bank  v.  Willard,  24  C.  C.  291  ;  Clearwater  v.  Meredith, 
111.  433  ;  Hyatt  v.  McMahon,  25  1  Wall.  25 ;  Railway  Co.  v.  Aller- 
Barb.  457 ;  Railroad  Co.  v.  Hecht,  ton,  18  Wall.  233  ;  Printing  House 
95  U.  S.  168  ;  S.  c.  29  Ark.  661.  v.  Trustees,  104  U.  S.  711. 

3  Union  Locks,  etc.,  Co.  v.  Towna.  5  Payson  v.  Withers,  5  Biss.  269  ; 
1  N.  H.  44  ;  s.  C.  8  Am.  Dec.  32 ;  Pullman  v.  Upton,  96  U.  S.  329 ; 
Middlesex  Turnpike  Corporations.  Eidmen  v.  Bowman,  58  111.  444; 
Swan,  K)  Mass.  :!S4:  s.  c.  6  Am.  s.  c.  11  Am.  Rep.  90 ;  Buffalo,  etc., 
Dec.  139;  Central  R.  R.  Co.,  v.  R.  R.  Co.  v.  Dudley,  14  N.  Y.  336. 
Collins,  W  Ga.  617;  Zabriskie  v.  6  Chubb  v.  Upton,  95  U.  S.  665. 
BaekensackR.  R.  Co.,  18 N.  J.  Eq.  7  Buffalo,  etc.,  R.  R.  Co.  v.  Dud- 
170:  Milford   etc.  Turnpike  Co.  v.  ley,  supra. 

Beach,  10  Ohio,  til ;  S.  C.  36  Am.  8  Mower  v.  Staple  .  32  Minn.  284. 
Dec.  79;  Krakowski  v. North  N. Y.        »  New  York  R.  R.  Co.  v.  Miller, 


to  Griffin  v.  Kentucky  Insurance  Co.,  3  Bush.  592 ;  Suydam v. Moore, 
6  Barb.  358. 


§  19.  INCORPORATION.  25 

Sec.  18 — Incorporation  by  Courts. 

Without  a  constitutional  provision  to  that  effect,  the  legis- 
lature cannot  authorize  the  courts  of  the  state  to  create 
corporations ; 1  but  it  may  authorize  the  courts  to  organize 
corporations  by  approving  their  proposed  charter.2  In  such 
cases  the  courts  are  not  bound  to  approve  or  disapprove  the 
exact  provisions  presented,  but  may  modify  them.  In  what- 
ever form  the  articles  of  the  proposed  corporation  may  be 
when  approved  by  the  court  they  will  measure  the  limit  of 
its  powers,  not  transcending  the  general  statute  on  the  sub- 
ject of  corporations.3 

Sec,  19 — Incorporation     by  Articles    of  Association — 
Validity  of  Statute. 

A  statute  authorizing  the  formation  of  corporations 
through  the  agency  of  judicial  or  ministerial  officers  is  con- 
stitutional.4 The  granting  to  a  number  of  individuals 
named  in  the  articles  of  association  the  srjecial  powers  con- 
ferred by  the  general  statute  is  not  the  granting  of  any 
special  or  exclusive  privilege,  immunity  or  franchise  what- 
ever.5 

10  Barb.   260;   Schenectady,  etc.,  tion  v.  Minnich,  1  Kulp  (Pa.)  513; 

R.  R.  Co.  v.  Thacher,  11  N.  Y.  102  ;  Albright  v.  Lafayette  Building  and 

Durf ee  v.  Old  Colony  R.  R.  Co. ,  5  Saving    Association,    102    Pa.   St. 

Allen,  230;    Banet  v.  Alton,  etc.,  411. 

R.  R.  Co.,  13  111.  504;  Pacific  R.R.  *  Granby    Mining,    etc.,    Co.   v. 

Co.  v.  Renshaw,  18  Mo.  260  ;  But  Richards,  95  Mo.  106. 

see  Zabrislde  v.  Hackensack,  etc.,  5  Holmes  v.  Smythe,  100  111.  413  ; 

R.  R.  Co.  3  Green  (N.J.)  78  ;  s.  c.  Freemen  v.  Ottawa  Building,  etc., 

90  Am.  Dec.  617.  Association,  114  111.  182 ;   Winget 

1  State  v.  Armstrong,  3  Sneed.  v.  Quincy  Building,  etc.,  Associa- 
634;  Ex  parte  Chad  well,  59  Tenn.  tion,  128  111.  67;  s.  c.  21  N.  E. 
98.  Rep.  12;  25  Amer.  &  Eng.  Corp. 

2  Id;  Greenville,  etc.,  R.  R.  Co.,  Co.'s,  652. 

v.  Johnson,  64  Tenn.  332  ;  Frank-  By  contracting  with  an  Associa- 

lin  Bridge  Co.  v.  Wood,  14  Ga.  80  ;  tion,  as  a  corporation,  for  a  loan  of 

Li  re  Charter  of  Philadelphia  Ar-  money,   a  member  thereof  is  es- 

tisans'  Institute,  8  Phila.  229;  In  re  topped  to  deny  the  existence  of  the 

Deveaux,  54    Ga.    673  ;  In  re   St.  corporation  in  a  suit  by  its  corpor- 

Louis  Institute,  27  Mo.  App.  633.  ate  name.    McLaughlin  v.  Citizens' 

3  Redwine  v.  Gate  City  Loan  Building.  Loan  and  Savings  Asso- 
and  Building  Association,  54  Ga.  ciation.  62  Ind.  264.  But  the  limi- 
474  ;  Mechanics'  Building  Associa-  tation    imposed   by  the    constitu- 


26  BUILDING    AND   LOAN   ASSOCIATIONS.         Cll.  III. 

Sec.  20— The  Charter. 

Where  a  corporation  is  not  incorporated  by  a  special  act 
of  the  legislature,  the  articles  of  association  tiled  with  and 
approved  by  the  proper  officer  or  court,  where  approval  is 
necessary,  are  usually  denominated  the  "  charter  "  as  distin- 
guished from  its  by-laws,  either  then  or  afterwards  adopted.1 

Sec.  21 — When  Life  of  Corporation  Begins. 

The  life  of  the  corporation  dates  from  its  organization, 
and  not  from  the  time  it  begins  to  do  business.2  A  statute 
provided  that  "  the  existence  of  the  corporation  shall  date 
from  the  time  of  filing  the  charter,"  and  provided  for  select- 
ing the  board  of  directors  for  the  first  year  before  the 
charter  was  iiled,  it  was  held  that  it  could  do  business  before 
all  the  shares  were  subscribed  for.3  Persons  cannot  consti- 
tute themselves  a  corporation  by  merely  signing  articles  of 
association  in  proper  form ;  they  must  at  least  be  filed  with 
the  officer  authorized  to  accept  and  file  or  record  them.4 
Articles  filed,  which  are  so  fatally  objective  by  reason  of 
not  complying  with  the  statute  in  its  essential  require- 
ments, will  not  constitute  those  signing  them  a  corporation.5 
Thus  if  the  statute  requires  the  stockholders  to  sign  the 
articles  of  association,  a  signing  merely  by  the  directors 
will  not  be  sufficient.6     And   so   all  conditions   precedent 

tion  of  a  Society  on  the  officers,  do  etc.,  Association,  22  Kan.  624  ;  See 

not  apply  to  third  persons  dealing  Columbia    Bottom    Levee    Co.   v. 

with  ii  who  ;ire  not  aware  of  an}'  Meier,  39  Mo.  53  ;  People  t\  Bowen. 

restrictions    upon     the    apparent  30  Barb.  24. 

powers  of  such  officers;  Sucks  v.  i  Abbotts.  Omaha  Smelting,  etc., 

Duckworth,    etc.     Ass'n.,    6    Ohio  Co.,  4  Neb.  414;  Chillis  v.   Smith, 

Dec.  254  ;  s.  C.  1  Ohio  N.  P.  214.  55  Barb.  45. 

1  O'Brien  v.  Cummings,    13  Mo.  5  Fifth  Baptist  Church  v.  Balti- 
i.    197;    Bergman    v.  St.    Paul,  more,  etc.,  R.  R.  Co.,  4Mackey,43  ; 

etc.,  ttion,   29    Minn.    275;  McCalliont?.  Hibernian,  etc.,  Soci- 

.  13  N.  W.  Rep.  L20;  Cahallt?.  ety,  70  Cal.  163;  s.  c.  12  Pac.  Rep. 

Citizens  Association,  G1   Ala.  2:!2 ;  114;   People  v.  Selfridge,   52  Cal. 

In  re  Deveaux,  54  Ga.  <■■  !.  :'>:;i  ;  New  York  Cable  Co.  v.  Mayor. 

2  Hanna  v.   International  Petro-  KM  N.Y.I. 

i  Co.,  23  ohi,.  Si.  622;  Palmer       "  Yalk  r.  Crandall,  1   Sandf.  Ch. 
?'.  I  iawrence,  5  Sandf,  161.  1 79. 

i  j     v.   Citizens    Building,        It  has  been  held  that  a   failure 


§2 


99 


INCORPORATION. 


27 


required  by  the  statute  must  be  complied  with ;  although 
conditions  merely  directory  need  not  be,  before  the  corpora- 
tion springs  into  existence.1 

Sec.  22— Substantial    Compliance    with    Statute   Nec- 
essary. 

A  substantial  compliance  with  the  statute  is  all  that  is 
necessary  in  the  formation  of  a  corporation  ;  a  literal  com- 
pliance is  not  necessary.2 

Sec.  23 — Claiming  More  than  Allowed  by  Statute. 

If  more  power  is  claimed  in  the  articles  of  association 
than  is  allowed  by  statute,  the  excess  will  be  void  and  the 
remainder  stand.3  If  there  be  a  conflict  between  the  statute 
and  the  articles  of  association,  the  provisions  of  the  statute 
must  prevail ;  and  a  by-law  passed  in  pursuance  of  the 
statute,  although  in  conflict  with  the  articles,  will  be 
valid.4 


to  record  a  charter,  as  a  statute  re- 
quires, will  not  render  the  associa- 
tion void.  West  Harrisburg  Loan 
and  Building  Association  v.  Mor- 
genthal,  2  Pears.  343. 

1  Attorney-General  v.  Honchett, 
42  Mich.  436 ;  Heiring  v.  Adams, 
etc.,  Mf.  Co.,  81  Ky.  300;  Moke- 
lunne,  Hill,  etc.  Co.  v.  Woodbury, 
14  Cai.  424. 

That  article  must  first  be  re- 
corded ;  see  Indianapolis,  etc.. 
Mining  Co.  t>.  Herkimer,  40  Ind. 
142  ;  Cresswell  v.  Oberly,  17  Bradw. 
281  ;  Johnson  v.  Crawfordsville, 
etc.,  R.  R.  Co.,  11  Ind.  280:  and 
that  publication  of  notice  of  incor- 
poration is,  see  Claggv.  Hamilton, 
etc.,  Co.,  61  la.  121. 

2  Ex  parte  Spring  Valley  Water 
Co.,  17  Cal.  176  ;  People  v.  Cheese- 
man,  7    Col.    376  ;   Thompson    v. 
People,  23  Wend.  537  ;  Hughes  % 
Antietam  Mfg.   Co.,   34  Md.  316 
Bigelow  v.   Gregory,   73  111.  197 


Choir  Insurance  Co.  v.  Cram.  43 
N.  H.  641  ;  Lord  v.  Essex  Building 
Association,  37  Md.  320 ;  In  re 
Deveaux.  54  Ga.  673. 

A  defective  incorporation  may 
be  corrected,  and  it  will  then  be- 
come a  de  jure  association  from  the 
date  of  the  first  attempted  organi- 
zation. Spining  v.  Home  Building 
and  Savings  Association,  28  Ohio 
St.,  483;  See  Hagerman  v.  Ohio, 
etc.,  25  Ohio  St.  186. 

3  Albright  V.  Lafayette,  etc.,  As- 
sociation, 102  Pa.  St,  411  ;  People 
v.  Cheeseman.  7  Colo.  376  ;  Eastern 
Plank  Road  Co.  v.  Vaughn,  14  N. 
Y.  546. 

4  Booz's  Appeal,  109  Pa.  St,  592  : 
S.  C.  16  W.  N.  Cas.  365. 

If  less  be  claimed  than  the  stat- 
ute allows,  the  corporation  is  not 
for  that  reason  invalid.  People  v. 
Proctor,  140  N.  Y.  549  ;  35  N.  E. 
Rep.  979;  46  Amer.  &  Eng.  Corp. 
Cor.  494  ;  24  L.  R.  A.  57. 


28  BUILDING  AND   LOAN   ASSOCIATIONS.  Cll.  III. 

Sec.  24— Specifying  Powers. 

The  articles  of  association  must  specify  the  object  of  the 
corporation,  in  that  respect  following  the  statute.1  A  fail- 
ure to  state  the  purpose  for  which  organized  will  render 
the  organization  void.2  Its  object  cannot  be  cited  by 
parol  evidence.3  If  the  incorporators  employ  the  language 
of  the  statute  specif}Ting  for  what  purposes  corporations 
may  be  created  under  it,  it  will  be  presumed  that  the}T  in- 
tended to  create  a  corporation  of  the  same  general  nature 
and  with  the  same  general  powers  granted  by  the  statute.4 
Yery  general  specifications  of  the  object  of  the  incorpora- 
tion is  sufficient.5 

Sec.  25 — Place  of  Business. 

Where  an  officer  or  a  court  must  first  approve  or  pass 
upon  the  sufficiency  of  the  validity  of  the  articles  of  asso- 
ciation, and  the  statute  require  the  town  or  city  to  be 
stated  in  which  its  principal  place  of  business  would  be 
located,  articles  that  merely  state  that  the  proposed  cor- 
poration's principal  place  of  business  would  be  in  a  certain 
county  should  be  rejected.6  But  where  it  was  required 
that  the  articles  specify  the  "  place  out  of  the  state  "  where 
it  was  proposed  to  carry  on  part  of  its  business;  and  also 
"state  the  name  of  the  town  and  county  in  which"  the 
principal  part  of  its  business  was  to  be  carried  on  "  within 
the  state,"  it  was  held  that  merely  designating  a  district 
outside  of  the  state  was  sufficient,  if  the  name  of  the  town 
and  county  was  given  within  the  state.7 

Sec.  26— Amendments  of  Articles. 

If  the  State  does  not  provide  that  the  articles  of  associa- 

i  West  v.  Hullskin  Prairie  Ditch-  sity,  13  Kan.  320;  Peoples.  Beach, 

ing  Co.,  32   In  I.   138 ;   O'Reiley  v.  19  Hun,  259. 

Kankakee  Valley  Draining  Co.,  32  6  People  v.  Beach,  supra;  Attor- 

Irnl.  169.  ney-General  v.  Lormer,  supra.  See 

-  Attorney-General  v.     Lormer,  State  v.    Central  Ohio,  etc.,  Asso- 

59  Mich.  157.  ciation,  29  Ohio  St.  399. 

b  People  v.  Self  ridge,  53  Cal.  331;  B  Harvie  v.   McGregor,   29    Cal. 

Halletl  v.  Balloner,  33  Barb.  537.  124. 

1  Whetstonev.   Ottawa   Cniver-  '  People  v.  Beach,  19  linn. 


§  27.  INCORPORATION.  29 

tion  may  be  amended,  or  if  the  articles  themselves  contain 
no  provision  for  their  amendment,  then  they  cannot  be 
amended  unless  every  stockholder  consents  to  such  amend- 
ment,1 unless  the  State  points  out  the  manner  in  which  the 
amendment  shall  be  made,  then  such  amendment  must  be 
executed  with  all  the  formalities  of  the  original  articles,  and 
be  in  the  same  manner  made  a  matter  of  public  record.2  If 
there  be  no  power  to  amend  the  articles  of  association  ex- 
cept by  unanimous  consent,  and  an  amendment  is  made  in 
that  manner,  the  effect  of  the  amendment  is  to  create  anew 
corporation  from  the  time  the  amendments  are  filed  in  the 
proper  office.3 

Sec.  21 — Recording  Articles. 

If  the  State  requires  the  articles  of  association  to  be  filed 
in  some  public  office  for  record  before  the  incorporators  can 
exercise  the  powers  of  a  corporation,  then  until  that  is  done 
there  is  no  corporation,  and  the  would-be  incorporators  if 
they  undertake  to  transact  business  as  a  corporation  will  be 
personally  liable.4  Where  a  duplicate  must  be  filed  in  a 
record  office,  then  until  such  duplicate  is  filed  there  is  no 
corporation  created ; 5  and  by  a  duplicate  is  not  meant  a 
copy.  In  such  an  instance  the  articles  must  be  executed  in 
duplicate.6     The  statute,  however,  may  provide  that  the  as- 

1  Barton  v.  Enterprise  Loan  and  the  necessity  of  filing  a  written  ao 
Building  Association,  114  Ind.  226 ;  ceptance  of  the  provisions  of  a  new 
s.  c.  16  N.  E.  Rep.  486  ;  5  Amer.  and  general  statute  ;  see  Wohlford 
St.  Rep.  608  ;  Bergmans.  St.  Paul,  v.  Citizens'  Building,  Loan  and 
etc.,  Association,  29.  Minn.  275;  Savings  Association  Ind.  ; 
s.  c.  13  N.  W.  Rep.  282  ;  Sullivan  S.  c.  40  N.  E.  Rep.  694. 

v.  Jockens  Building  and  Loan  As-  4  Bigelow  v.  Gregory,  73  111.  197  ; 

sociation,  70  Miss.  99;  s.  c.  12  So.  Iudianapolis,   etc.,  Mining  Co.   v. 

Rep.  590  ;  46  Amer.  &  Eng.  Corp.  Herkimer,   46  Ind.    142 ;    Hurt  v. 

Cor.,  494.     See  Hekelnkaemper  v.  Salisbury,   55  Mo.   310;  Childs  v. 

German  Building  Association,  22  Hurd,  32  W.   Va.   66 ;  s.  C.   9  So. 

Kan.  549.  Rep.  362  ;  Kaiser  v.  Savings  Bank, 

2  Day  v.  Mill  Owners'  Mutual  Fire  56  la.  104. 

Insurance  Co.,  75  la.  694;  s.  c.  78  5  Indianapolis,  etc.,  Mining  Co. 

N.  W.  Rep.  118 ;  Wood  v.  Union  v.   Herkimer,   46  Ind.   142  ;   Cass- 

Gospel  Church,  etc.,  Association,  well  v.    Oberly,    17    Bradw.   281 ; 

63  Wis.  9.  Hurt  v.  Salisbury,  55  Mo.  311. 

3  Matter  v.  New  York  Cable  R.  6  Williamson  v.  Kokomo,  etc., 
R.   Co.,  109  N.  Y.   32.     Touching 


30  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  III. 

sociation  shall  be  a  corporation  before  the  articles  are  filed 
of  record,  although  it  may  also  require  that  they  be  recorded 
and  inflict  a  penalty  on  the  incorporate  officers  for  not  hav- 
ing them  recorded.1  If  filed  in  the  proper  office  the  corpo- 
ration does  not  fail  because  the  officers  recorded  them  in 
the  wrong  book.2  If  the  articles  be  filed  for  record  stealth- 
ily and  without  the  consent  of  and  contrary  to  the  agree- 
ment among  the  incorporators,  it  has  been  held  that  there 
is  no  corporation  created,  although  the  statutes  provide  that 
from  the  date  of  the  filing  of  similar  articles  the  association 
shall  be  deemed  incorporated.3 

Sec.  28 — Name. 

Every  corporation  must  have  a  name ;  for  by  that  only 
can  it  be  known.  This  name  is  usually  designated  in  the 
charter  or  articles  of  association.  In  many  jurisdictions  it 
is  not  necessary  for  a  corporation  when  bringing  suit  to 
aver  that  it  is  a  corporation,  if  the  name  is  such  as  is  used 
by  corporations,  or  if  it  indicate  that  it  is  a  corporation  ; 
and  the  same  is  true  when  the  corporation  is  sued.4 

Sec.  29 — Banking  Powers. 

Advancing  money  as  loans  to  its  members  by  a  building 
association  is  not  banking  within  the  meaning  of  the  Ohio 
statute  forbidding  all  corporations  except  certain  ones  to  en- 
gage in  banking.5  So  a  constitutional  provision  providing 
that  "  No  act  of  the  General  Assembly  authorizing  associa- 
tions with  banking  powers,  shall  take  effect  until  it  shall  be 

Association,  89  Ind.  390  ;  Baker  v.  The  use  of  the  word  "National" 

Nell',  ?:;  I  ml.  OS.  in  the  corporate  name  of  a  building 

1  In  re  Shakopee  Mining  Co.,  37  and  loan  association,  is  not  a  viola- 
Minn,  ill  ;  s.  o.  33  N.  W.  Rep.  219;  tion  of  Rev.  St.  U.  S.  Sec.  5243, 
Barrod    v.    Earner,    32    Wis.     102.  prohibiting  its  use  by  banking  cor- 

See  also  Gran  by  Mining,  etc.,  Co.  porations.     Lomb  u  Pioneers'  Sav- 

v.  Richards,  95   Mo.   100;   Walton  ings  and  Loan  Co.   (Ala.),  17  So. 

v.  Riley,  85  Ky.  413  ;  s.  c.  3  S.  W.  Rep.  070. 

Rep.  (in.).  If  a  contract  is  entered  into  with 

-  Walton  v.  Riley,  supra.  a  corporation  by  a  name  not  its 

■"■  Eticker  v.    Larkin,   37    Bradw.  own,  the  contract  for  that  reason 

625.  is  not  void. 

'Odd  Fellows'  Building  Associa-  G  Forrest  City,   etc.,  Association 

tion  v.  Bogan,  88  Ark.  201.  v,  <  lallagher,  25  Ohio  St.  208. 


§  30.  INCORPORATION.  31 

submitted  to  the  people  *  *  *  and  be  approved  by  a 
majority  of  all  the  electors  voting  at  such  elections,"  does  not 
apply  to  a  State  authorizing  a  building  association  to  receive 
deposits.1  The  taking  by  a  building  and  loan  association  of 
a  member's  note  in  excess  of  the  amount  loaned,  no  part  of  1 1 1<  ■ 
loan  being  retained,  is  not  a  discount  proceeding  within  the 
Texas  constitution  prohibiting  the  creating  of  corporations 
with  banking  or  discounting  privileges.2 

Sec.  30— Irregular  and  De  facto  Corporations. 

Where  officers  of  a  corporation  are  pursuing  the  evident 
objects  of  the  corporation,  it  will  be  presumed  that  they 
are  rightfully  in  office,  and  that  all  necessary  steps  have 
been  taken  to  authorize  them  to  act  for  the  incorporation. 
This,  however,  is  a  mere  rule  of  presumption.3  And  if  a 
charter  has  been  granted,  those  acting  under  it  will  be  pre- 
sumed rightfully  so  acting,  and  only  the  State  can  question 
their  authority  so  to  do.4  If  persons  have  acted  as  a  corpo- 
ration for  a  long  time,  then  only  the  State  can  question 
their  authority,5  especially  so  when  rights  have  been  ac- 
quired under  the  supposition  that  a  valid  corporation  had 
been  created  or  formed.6  The  validity  of  its  corporate  ex- 
istence cannot  be  litigated  collaterally-  Its  invalidity  can 
only  be  litigated  by  a  direct  proceeding  brought  by  the 
State.7  Thus  a  junior  mortgagee  cannot  defeat  a  senior 
mortgagee  by  impeaching  collaterally  the  corporate  exist- 

1  Dearborn  v.  Northwestern  Sav-  Greene  v.  Dennis,  6  Conn.  293  ;  s.  c. 
ings  Bank,  42  Ohio  St.  617  ;  Bates  16  Am.  Dec.  58  ;  Sword  v.  Wicker- 
v.  People's  Saving  and  Loan  Asso-    sham,  29  Kan.  740. 

ciation,  42  Ohio  St.  655  ;  13  Wkly  «  Hagerstown    Turnpike    Co.   v. 

L.  Bull.  396.  Creeger,  5  Harr  &  John.  122  ;  s.  C. 

2  Sweeney  v.  El.  Paso  Building,  9  Am.  Dec.  495  ;  All  Saints  Church 
etc.,  Association^  S.W.  Rep.  290.  v.  Lovett,  1  Hall.  N.  Y.  191. 

3  Selma,  etc.,  R.  R.  Co.  v.  Tipton,  7  Toledo,  etc.,  R.  R.  Co.  v.  John- 
5  Ala.  787  ;  s.  c.  39  Am.  Dec.  344.  son,  49  Mich.  148  :  John   r.  Farm- 

4  Oar  River  Navigation  Co.  v.  ers'  Bank,  2  Blackf.  367 ;  s.  c.  20 
Neal,  3  Hawks,  520  ;  Atlantic,  etc.,  Am.  Dec.  119:  Chester  Glass  Co. 
R.  R.  Co.  v.  Johnston,  70  N.  C.  348;  V.  Dewey,  16  Mass.  94  :  s.  C.  8  Am. 
Elizabeth  City  Academy  v.  Lind-  Dec.  128  ;  Trustees  v.  Hill,  6  Cow. 
sey,  6  Ired.  L.  476  ;  s.  C.  45  Am.  23 ;  s.  c.  16  Am.  Dec.  429  ;  Grays 
Dec.  500.  v.    Turnpike    Co.,    4    Rand.    578; 

5  White  v.   Slate,   69   Ind.   273;  Selma,  etc.,  R.  R.  Co.  v.  Tipton,  5 


32  BUILDING   AND   LOAN   ASSOCIATIONS.  CI).  III. 

ence  when  the  first  mortgage  was  given.1  "  To  be  a  corpora- 
tion de facto,  it  must  be  possible  to  be  a  corporation  de  jure, 
and  acts  done  in  the  former  case  must  be  legally  authorized 
to  be  done  in  the  latter,  or  they  are  not  protected  or  sanc- 
tioned by  the  law.  Such  acts  must  have  an  apparent  right."  2 
Thus  a  corporation  attempted  to  be  organized  under  an  un- 
constitutional law  is  not  a,  de facto  body.3  If  there  be  a  law 
authorizing  the  incorporation  of  such  a  company,  then  mere 
irregularities  in  forming  the  association  will  not  enable  any 
one,  except  the  State,  to  attack  its  validity.4  Such  irregu- 
larities may  be  cured,  even  as  against  the  State,  by  subse- 
quent recognition  of  the  corporation  as  such  by  the  legisla- 
ture,5 and  lapse  of  time  of  several  years  will  preclude  the 
State  from  questioning  the  rightfulness  of  the  organization, 
especially  after  property  rights  under  the  defective  organ- 
ization have  been  acquired.6  A  failure  on  the  part  of  the 
incorporators  to  sign  the  application  for  a  charter  will  not 
render  the  incorporation  invalid,  when  permission  to  act  as 
a  corporation  has  been  received  from  the  court.7  Nor  can  a 
member  set  up  as  a  defence  that  he  has  not  himself  sub- 
scribed the  articles  of  association ;  8  for  by  becoming  an 
owner  of  stock,  each  owner  becomes  a  member.9 

Ala.  787  ;  S.  c.  39  Am.  Dec.  344 ;  as  partners.     Eaton  v.  Walker,  76 

Aurora,  etc.,  R.   R.   Co.   v.   Law-  Mich.  579  ;  s.  c.  43  N.  W.  Rep.  638. 

renceburgh,  56Ind.  80  ;  New  Haven  4  East    Norway,   etc.,   Lutheran 

Wire    Co.    Cases,   57    Conn.    352 ;  Church  v.  Froislie,  37  Minn.  447 ; 

S.  C.  16  Atl.  Rep.  393 ;  5  L.  R.  A.  S.  c.    35  N.   W.    Rep.    260 ;  Moke- 

300.  lumne,  etc.,  Co.  v.  Woodbury,  14 

1  Williamson  v.  Kokomo  Build-  Cal.  424  ;  Heald  v.  Owen,  79  la. 
ing  and  Loan  Fund  Association,  23 ;  Tarbell  v.  Page,  24  111.  46 ; 
89  Ind.  389.  Baker  v.  Neff,  73  Ind.  68. 

2  Everson  v.  Ellingson,  67  Wis.  6  Basshor  v.  Dassel,  34  Md.  503. 
634  ;  DeWitt  v.  Hastings,  40  N.  Y.  6  State  v.  Bailey,  19  Ind.  452. 
Supr.    Ct.    463;  Snyder  v.   Stude-  7  Workingman's  Building  Asso- 
baker,  19  Ind.  462  ;  Krutz  v.  Paola  ciation  v.  Coleman,  89  Pa.  St.  428. 
Town  Co.,  20  Kan.  397.  8  Concordia  Savings,  etc.,  Asso- 

8  Green  v.  Graves,  1  Doug.  (Mich.)  ciation  v.  Reed,  93  N.  Y.  474  ;  S.  c. 

351  :   lliirllnul,  r.   Britain,  2  Doug.  4  Amer.  &  Eng.  Corp.  Cas.  175; 

(Mich.)  191  ;  States. How.  IMich.  Pattison  v.  Albany  Building  and 

51  '.  Loan  Association,  63  Ga.  373. 

Tin    incorporators  or  stockhold-  9  Building  Association  v.  Robin- 

<  r    of  such  a  corporation  are  liable  son,  46  Leg.  Int.  5. 


§31. 


INCORPOIl  ATI  ON. 


33 


Sec.  31— Estoppel  to  Deny  Corporate  Existence. 

Any  one  who  enters  into  a  contract  with  a  corporation, 
in  which  it  is  described  by  its  corporate  name,  by  such  con- 
tract admits  that  it  is  a  corporation  and  estops  himself  from 
thereafter  denying'  its  legality  whenever  such  contract  is 
litigated  in  the  courts.1  This  is  especially  true  when  it 
is  sought  to  foreclose  a  mortgage  given  by  him  to  the  cor- 
poration for  money  loaned  to  him.2  Nor  can  a  junior 
mortgagee  defeat  a  senior  mortgagee,  by  showing  that  the 
corporation  to  which  the  senior  mortgage  was  executed, 
was  defectively  organized,  if  it  be  a  de facto  corporation.3 

Nor  can  a  member  of  the  association,  even  though  he  be 
not  a  borrower,  question  the  legality  of  the  organization  of 


A  person  who  joins  a  building 
association  solely  to  borrow,  never- 
theless becomes  a  member.  Setliff 
v.  North,  etc.,  Ass'n.  (Tenn.  Ch.) 
39  Sw.  Rep.  546. 

A  mortgagor  cannot  claim  that 
he  is  not  a  borrower,  simply  be- 
cause his  application  for  member- 
ship was  made  through  the  secre- 
tary, and  his  bid  for  the  loan  was 
not  signed,  as  required  by  its  by. 
laws.  Batz  v.  Equitable,  etc.,  So- 
ciety, 65  111.  App.  529. 

1  Jones  v.  Cincinnati  Type  Foun- 
dry Co. ,  14  Ind.  89  ;  McLaughlin 
v.  Citizens'  Building  Associations, 
62  Ind.  264;  Mechanics'  Building 
Association  v.  Stevens,  5  Duer,  676  ; 
Lord  v.  Essex  Building  Associa- 
tion, 37  Md.  320  ;  Becket  v.  Union- 
town  Building  Association,  88  Pa. 
St.  211  ;  West  Winsted  Savings 
Bank,  etc.,  v.  Ford,  27  Conn.  282  ; 
Albright  v.  Lafayette  Building 
and  Savings  Association,  102  Pa. 
St.  411 ;  Hoboken  Building  Asso- 
ciation v.  Martin,  13  N.  J.  Eq. 
428; 

Payette  v.  Free  Home  Building, 
etc.,  27  111.  App.  307;  Williamson 
v.  Kokomo  Building  and  Loan 
3 


Fund  Association,  89  Ind.  389; 
Cohall  v.  Citizens,  etc.,  Associa- 
tion, 61  Ala.  232  ;  People's  Saving 
Bank,  etc.,  Association  v.  Collins, 
27  Conn.  145 ;  Winget  v.  Quincy 
Building,  etc.,  Association,  128  111. 
67  ;  S.  c.  21 N.  E.  Rep.  12  ;  25  Amer. 
&  Eng.  Corp.  Co.'s,  652  ;  Hagerman 
v.  Ohio,  Building  and  Savings  As- 
sociation, 25  Ohio.  St.  186 ;  Lucas 
v.  Greenville  Building  and  Saving 
Association,  22  Ohio  St.  329 ;  La 
Societe  Canadienne  v.  Lapointe,  5 
Montreal  Sup.  Ct.  59  ;  City  Bank 
v.  Allen,  1  N.  S.  W.  L.  R.  179. 

2  Almon  v.  Fairbanks,  10  N.  S. 
407 ;  Johnston  v.  Elizabeth  Build- 
ing and  Loan  Association,  104  Pa. 
St.  394 ;  s.  c.  41  Leg.  Int.  233 ;  14 
W.  N.  Cas.  244  ;  32  Pitts.  Lep.  460  ; 
La  Societe  Canadienne  v.  Lapointe, 
5  Montreal  Sup.  Ct.  59  ;  Bates  v. 
People's  Saving  and  Loan  Associa- 
tion, 42  Ohio  St.  655  ;  S.  c.  14  Wkly. 
L.  Bull,  396 ;  Massey  v.  Citizens, 
etc.,  Association  22  Kan.  624;  Co- 
hall  v.  Citizens,  etc.,  Association, 
61  Ala.  232. 

s  Williamson  v.  Kokomo  Build- 
ing and  Loan  Fund  Association ,  89 
Ind.  389. 


34  BUILDING    AND   LOAN    ASSOCIATIONS.         Cll.  III. 

the  corporation.1  Nor  can  an  officer  of  the  association  do 
so  when  indicted  for  stealing  from  it  or  embezzling  its 
funds.2  Perhaps,  however,  a  person  dealing  with  an  alleged 
corporation  where  no  statute  authorized  its  formation,  or 
the  statute  was  unconstitutional,  would  not  be  estopped 
to  deny  its  incorporation  or  the  validity  of  its  organiza- 
tion.3 But  persons  who  have  dealt  with  a  corporation, 
knowing  its  fraudulent  character,  cannot  question  the 
validity  of  its  organization.4  When,  however,  the  corpora- 
tion has  expired,  or  reached  the  limit  of  the  time  for  which 
it  was  organized,  neither  a  stockholder  nor  one  who  has 
contracted  with  it  is  estopped  to  deny  its  corporate  ex- 
istence.5 So  if  the  charter  of  the  corporation  has  been  for- 
feited by  an  act  of  forfeiture  before  the  commencement  of 
the  suit,  one  contracting  with  it  is  not  estopped  to  show 
that  it  is  not  then  a  corporation.6  Xor  is  the  corporation, 
or  those  appearing  for  it,  estopped  to  set  up  that  it  has 
ceased  to  be  a  corporation,  whether  that  corporation  has 
expired  by  limitation  or  forfeiture.7  The  corporation  can- 
not deny  its  existence,  except,  as  we  have  seen,  it  may  deny 
its  continuing  existence  at  the  time  suit  was  brought.8 

1  Mechanics'  Building  and  Loan    10  Ind.  178 ;  Dobson  v.  Simonton, 
Association   v.    Minnick,  1   Kulp.     86  N.  C.  492. 

513  ;     Dutchess   Cotton    Manf.    v.  6  Jones  v.  Bank  of  Tennessee.  8 

Davies,  14  Johns.  238  ;  s.  c.  7  Am.  B.  Mon.  122 ;  Krutz  v.  Paola  Town 

Dec.  459.  Co.,  20  Kan.  397. 

2  Shinn    v.    Commonwealth,    73  That  there  must  be  a  judicial 
Va.  899.  declaration  of  forfeiture  first,  see 

8  Harriman  v.  Southam,  16  Ind.  St.  Louis  Gas  Light  Co.  v.  City  of 

190;    Heaston   v.  Cincinnati,  etc.,  St.  Louis,  84  Mo.  202  ;  affirming  11 

R.  R.  Co.,  16  Ind.  275  ;  Swartwout  Mo.  App.  55  ;  Miller  v.  Coal  Co.,  31 

r.    Michigan,   etc.,   R.   R.  Co.,  24  W.  Va.  836;  s.  c.  8  S.  E.  Rep.  600. 

Mich.    389;   Eaton  v.    Walker,   76  7  Greely  v.  Smith,  3  Story,  057  ; 

Mich.  579  ;  S.  c.  43  N.  W.  Rep.  638.  Foster  v.  Essex  Bank,  16  Mass.  244. 

4  Cochran   v.  Arnold,  58  Pa.  St.  Meikel  v.    German  Saving    Fund 

399;    Patterson     v.    Albany,    etc.,  Society,  16  Ind.  181. 

ociation,  68  End.  37 3  ;  Charles  8  Southern   Bank  v.  Williams,  25 

River  Bridge  v.  Warren  Bridge,  7  Ga.    534;    Ewing  v.   Robeson.    15 

Pick.  371.  Ind.  26;  Callender  v.   Painesvill.-, 

eSturges  v.  Vanderbilt,  73  X.  V.  etc.,  R.  R.  Co.,  11  Ohio  St.  516; 

884;  Grand    Rapids    Bridge  Co.  v.  United  States  Express  Co.  v.  Red- 

Prange,  35  Mich.  400 ;  34Am.Rep.  bury,  31   III.  459;    McCullough  v. 

585;  Ensey  v Cleveland,  R.  R.  Co. ,  Talladgr   Insurance   Co.,  46  Ala. 


INCORPORATION. 


35 


Sec. 32 — Foreign  Building  Associations. 

A  foreign  building  and  loan  association,  having  some  of 
the  features  of  the  building  and  loan  associations  organized 
under  the  laws  of  North  Carolina,  but  having,  in  addition, 
power  to  raise  funds  by  issuing  interest  and  dividend  bear- 
ing stock,  to  buy  and  sell  property  in  general,  and  to  act 
as  agent  and  trustee  for  the  investment  of  funds,  is  not  en- 
titled to  exercise  the  special  powers  and  privileges  of  such 
organizations  in  that  state.1 

376  :  DeWitt  v.  Hastings,  40  N.  Y. 
Supr.  Ct.  463. 

It  has  been  held  that  a  corpora- 
tion organized  for  an  illegal  pur- 
pose cannot  enforce  its  contracts, 
and  it  may  be  attached  when  it 
brings  suits  upon  them,  Lincoln 
Building  Association  v.  Galem,  7 
Neb.  173.  But  see  Oregonian  Ry. 
Co.  v.  Oregon  Ry.  Co.,  23 Fed.  Rep. 
233  ;  Town  of  Searcy  v.  Yarnell,  47 
Ark.  269 ;  s.  c.  1  S.  W.  Rep.  319 ; 
when  the  contract  itself  is  not 
illegal. 

Touching  the  right  of  the  State  to 
restrain  a  building  association  pro- 
ceeding in  violation  of  its  charter, 
see  State  v.  Amer.  Savings  and 
Loan  Association,  64  Minn.  349 ; 
s.  c.  67  N.  W.  Rep.  1. 

1  Meroney  v.  Atlanta  National 
Building  and  Loan  Association,  116 
N.  C.  882 ;  s.  c.  21  S.  E.  Rep.  924. 
See  also  Southern  Building  and 
Loan  Association  v.  Harris  98  Ky. 
41  ;  32  S.  W.  Rep.  261  ;  New  York, 
etc.,  Ass'n  v.  Slaughter,  17  Pa.  C.  C. 
66  ;  Pollock  v.  Caroline,  etc.,  Ass'n 
(S.  C),  29  S.  E.  Rep.  77  ;  Turner?-. 
Interstate,  etc.,  Ass'n  (S.  C),  27 S. 
E.  Rep.  947  ;  Equitable,  etc. ,  Ass'n 
v.  Hoffman  (S.  C),  27  S.  E.  Rep. 
692 ;  Building  and  Loan  Ass'n  v. 
Griffin  (Tex.),  39  S.  W.  Rep.  656. 


But  see  Rhodes  v.  Missouri,  etc., 
Co.,  63  111.  App.  77. 

Upon  the  principles  of  comity,  a 
building  association  of  one  state 
may  exercise  within  another  state 
the  general  powers  conferred  by 
the  charter  and  permitted  by  the 
laws  of  the  state,  if  the  doing  so 
does  no  violence  to  the  laws  or 
public  policy  of  such  other  state. 
Freie  v.  Fidelity,  etc.,  Union,  66 
111.  App.  152;  affirmed,  46  N.  E. 
Rep.  784 ;  s.  c.  166  111.  128.  See 
Baltimore  B.  &  L.  Ass'n  v.  Titlow, 
19  Pa.  C.  C.  518  ;  Pryse  v.  People 
B.  L.  &  S.  Ass'n  (Ky.)  41  S.  W. 
Rep.  574. 

A  shareholder  and  borrower  in  a 
foreign  association  cannot  defend 
in  a  suit  to  foreclose  his  mortgage, 
on  the  ground  that  it  had  not  com- 
plied with  the  local  statute,  if  it 
had  done  so  when  he  applied  for 
his  loan,  although  he  had  had  the 
right  to  apply  long  before  he  did 
for  the  loan.  Illinois  B.  &  L. 
Ass'n  v.  Walker  (Tenn.)  42  S.  W. 
Rep.  191.  Even  though  no  com- 
pliance has  been  so  made,  yet  a 
court  of  equity  will  not  cancel  the 
mortgage  until  the  loan  be  paid. 
New  York,  etc.,  Ass*n  v.  Cannon 
(Tenn.)  41  S.  W.  Rep.  1054. 


CHAPTEE  IV. 

MEMBERSHIP. 

Sec.  33.  Acquisition. 

34.  Who  may  Acquire  Membership. 

35.  Infants. 

36.  Married  Woman. 

37.  Status  of  Husband. 

38.  Personal  Representatives  Continuing  Membership — Will. 

39.  Heirs  Succeeding  to  Member's  Rights. 

40.  Corporations  as  Stockholders. 

41.  Subscription  for  the  Purpose  of  Securing  Loan. 

42.  Depositors  as  Members. 

43.  Society  may  be  Estopped  to  Deny  Membership. 

44.  Person  Estopped  to  Deny  Membership. 

45.  Evidence  of  Membership. 

46.  Inspection  of  Books. 

Sec.  33 — Acquisition. 

There  is  nothing  peculiar  about  the  acquisition  of  mem- 
bership in  a  building  association.  It  does  not  differ  from 
the  acquisition  of  membership  in  any  other  corporation,  nor 
does  the  fact  that  a  member  becomes  a  borrower  change  his 
relationship  as  a  member  to  the  association ;  he  is  still,  as  we 
shall  see,  a  member.  Not  infrequently  the  charter  or  a  by-law 
requires  any  one  desiring  to  become  a  member  to  sign  such 
charter,  or  the  articles  of  association  or  such  by-laws ;  but  that 
is  only  directory,  for  if  a  person  becomes  the  owner  of  stock  he 
becomes  a  member,  and  cannot  escape  liability  on  that 
ground.1  This  may  be  also  put  upon  the  ground  of  estoppel ; 
for  having  enjoyed  the  benefit  of  membership  he  cannot  be 
heard  to  deny  that  he  signed  the  by-laws,  especially  if  that 
was  occasioned  by  his  own  neglect.2    Nor  is  it  necessary, 

1  Building  Association  v.  Robin-    N.  Y.  474 ;  s.  C.  4  Amer.  &  Eng. 
:  on,  46  Leg.  Int.  5  ;  Concordia Sav-    Corp.  Cas.  175. 
ing,  etc.,  Association  v.  Read,  93        2  Parker  v.   United  States,  etc., 

3G 


§  35. 


MEMBERSHIP. 


37 


that  a  certificate  of  membership  be  issued  to  the  person  sub- 
scribing for  the  stock  ;  it  is  sufficient  if  he  has  entered  into 
a  contract  to  take  the  stock  which  is  binding  upon  him,  or 
has  enjoyed  the  rights,  privileges  and  emoluments  of  a 
stockholder  with  the  consent  of  the  corporation.1  In  order 
to  participate  in  the  corporate  meetings  it  is  not  necessary 
that  a  member  have  a  certificate  of  membership.2  Nor  is  it 
even  necessary  for  the  corporation  to  have  tendered  a  sub- 
scriber a  certificate  of  membership  in  order  to  maintain  an 
action  against  him  for  assessments  on  his  share,3  even  when 
the  action  is  brought  by  creditors  of  the  association. 


Association,  19  W.  Va.  744  ;  Spear 
v.  Crawford,  14  Wend.  20  ;  s.  c.  28 
Am.  Dec.  513  ;  Beckett  v.  Houston, 
33  Ind.  393  ;  Strong  v.  Wheaton,  38 
Barb.  616 ;  Burr  v.  Wilcox,  22  N. 
Y.  551 ;  Cole  v.  Ryan,  52  Barb.  168  ; 
Sckaeff er  v.  Missouri  Insurance  Co. , 
46  Mo.  248  ;  Chaffin  v.  Cummings, 
37  Me.  76 ;  Sagory  v.  Dubois,  3 
Sandf.  Ch.  466  ;  Contra,  Busey  v. 
Hooper,  35  Md.  15  ;  s.  c.  6  Am. 
Rep.  350. 

1  Butler  University  v.  Scoonover, 
114  Ind.  381 ;  S.  c.  16  N.  E.  Rep. 
642  ;  5  Am.  St.  Rep.  627  ;  Chase  v. 
Merrimac  Bank,  19  Pick.  564. 

2  Beckett  v.  Houston,  32  Ind. 
393  ;  McComb  v.  Barcelone  Apart- 
ment Association,  31  N.  Y.  St.  Rep. 
325  ;  s.  C  10  N.  Y.  Supp.  546  ;  Mc- 
Comb v.  Cordona  Apartment  As- 
sociation, 31  N.  Y.  St.  Rep.  334; 
S.  C.  10  N.  Y.  Supp.  552. 

3  Chester  Glass  Co.  v.  Dewey,  16 
Mass.  94 ;  s.  c.  8  Am.  Dec.  128 ; 
Miller  v.  Wild  Cat  Gravel  Road 
Co.,  52  Ind.  58  ;  Burr  v.  Wilcox,  22 
N.  Y.  551  ;  Albany,  etc.,  R.  R.  Co. 
v.  McCormick,  10  Ind.  499  ;  s.  c.  71 
Am.  Dec.  337  ;  Heaston  v.  Cincin- 
nati, etc.,  R.  R.  Co.,  16  Ind.  275; 
S.  C.  79  Am.  Dec.  430. 

5  Spear  v.  Crawford,  14  Wend. 
20 ;  s.  c.  28  Am.  Dec.   513 ;  Web- 


ster v.  Upton,  91  U.  S.  65 ;  Haze- 
let  v.  Butler  University,  84  Ind. 
230. 

In  a  suit  to  foreclose  his  mort- 
gage, a  mortgagor  cannot  claim 
that  he  is  not  a  member,  simply 
because  his  application  for  mem- 
bership was  made  through  the  sec- 
retary, and  his  bid  for  the  loan  was 
not  signed  by  him,  as  required  by 
the  by-laws,  and  so  invoke  the 
usury  laws  of  the  state.  Bates  v. 
Equitable,  etc.,  So.,  65  111.  App. 
529. 

A  certificate  from  an  association 
for  money  deposited  with  it,  which 
states  that  it  is  convertible  into 
stock  on  payment  of  the  regular 
membership  fees,  with  the  reserva- 
tion of  the  right  to  call  it  in  at  any 
time,  constitutes  the  holder  a  mere 
creditor  and  not  a  member.  Groh- 
mann  v.  Brown,  68  Mo.  App.  630. 
See  also  Kimball  v,  Davis,  52  Mo. 
App.  194. 

Where  a  statute  provides  that 
the  term  ' '  member  of  a  corpora- 
tion" shall  include  every  person 
having  a  right  to  vote  at  a  meeting 
for  the  election  of  directors,  a 
member  of  a  building  association 
who  is  in  arrears  does  not  lose  his 
membership,  although  a  special 
statute  provides  that  he  is  not  en- 


38  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  IV. 

Sec.  34 — Who  may  Acquire  Membership. 

Any  one  capable  of  binding  himself  b}^  contract  is  capa- 
ble of  binding  himself  by  a  subscription  for  stock.  This 
does  not,  however,  determine  his  capacity  to  own  stock,  as 
we  shall  hereafter  see,  as  in  the  case  of  infants  or  married 
women.  An  alien  friend  to  the  country  in  which  the  cor- 
poration is  formed  may  own  its  stock.1 

Sec.  35 — Infaiits. 

An  infant  may  become  a  shareholder,  but  he  is  not  any 
more  bound  by  his  contract  of  subscription  than  is  any 
other  contract  he  may  attempt  to  bind  himself  to  perform.2 
He  cannot,  however,  keep  the  benefit  accruing  from  holding 
his  stock  and  at  the  same  time  insist  on  exemption  from 
liability  for  assessments  made  thereon.3  Until  he  disaffirms 
his  subscription,  regularly  made,  he  is  a  member  of  the  as- 
sociation.4 The  association  may,  however,  refuse  to  accept 
a  minor  as  a  member,  either  upon  original  subscription,  or 
when  a  transfer  is  made  to  him.5  If  his  stock  be  forfeited 
for  nonpayment  of  dues,  he  cannot  complain.6  If  he  sub- 
titled to  vote  ;  for  the  reason  that  corporation  with  power  to  partici- 
the  statute  does  not  state  that  the  pate  in  the  conduct  of  its  affairs." 
term  "  members  "  shall  include  no  Grohmann  v.  Brown.  68  Mo.  App. 
one  except  a  person  having  a  right  630  ;  Kimball  v.  Davis,  52  Mo.  App. 
to  vote.  Bunker  v.  Steel,  43  N.  Y.  194. 
Supp.  346.  There  may  be  a  joint  ownership 

1  Regina  v.  Arnaud.  9  Ad.  &  El.     of  stock.     Dennison  v.  Jeffs,  65  L. 
(N.  S.)  806  ;  s.  C.  11  Jur.  279  ;   16  L.     J.   Ch.  435  ;  s.  c.  [1896]  1  Ch.  611  ; 
J.  L.  B.  50  :  Magdalena  Steam  Navi-    74  L.  T.  270 ;  44  W.  R.  476. 
gation  I  !o.  v.  Martin,  2 El.  &  El.  94.        2  Dublin,  etc.,  R.  R.Co.v.  Black, 

"  The  organization  is  in  fact  and  8  Exch.  181;  Newry,  etc.,  R.  R. 
in  law  a  partnership  with  corporate  Co.  v.  Coombe,  3  Exch.  565  ;  Mon- 
ri-ht-.  in  winch  every  stockholder    umental    Building  Association  v. 

naber."  ///  re  National  Sav-  Herman,  33  Md.  128. 
ing Loan  and  Building  Association,  3  Cork,  etc.,  R.  R.  Co.  v.  Caze- 
9  \V.  N.  Cas.  79;  Bee  Brownlie  v.  nove,  10  Ad.  &  El.  (N.  S.)  935; 
1,'u  ell,  I-.  R.  8  Lpp.  Cas. 835 ;  S. C.  London,  etc.,  R.  R.  Co.  v.  Mc- 
18  L.  T.  881  ;  17  .J.  P.  757  :  King  v.  Michael,  5  Exch,  114. 
International,  etc.,  Onion,  L70  III.  '  In  /•<■  Nassau  Phosphate  Co.,  2 
L75S.  <•.  18  X.  E.  Rep.  677.  Ch.  Div.  610. 

The  word  "  stockholder  "  means       B  Symon's  Case,  L.  R.  5  Ch.  298. 
a    member  who  has  a  direct  firiM.ii-         '"■  Donin  ?\  McNally.  7  Leg.  News. 
oialinten   I  in  the  business  of  the    860;  s.  c.  I  Montreal  Supr.  Ct.,  21. 


§  37.  MEMBERSHIP.  39 

scribes  when  an  infant,  he  may  ratify  his  subscription  on 
attaining  full  age ;  and  paying  installments,  after  his 
majority,  upon  such  stock,  and  acting  as  an  officer  thereof, 
is  a  ratification.1 

Sec.  36— Married  Women. 

A  married  woman  cannot  become  a  member  of  a  corpora- 
tion, nor  bind  herself  to  pay  dues,  fines  or  a  loan.  If  she 
borrow  money  from  the  association  on  the  assumption  that 
she  is  a  member  under  an  attempted  subscription,  it  can- 
not be  foreclosed  except  for  so  much  money  as  she  actually 
received  and  used  in  the  improvement  of  her  separate  estate. 
The  statute  providing  that  fines  and  premiums  of  a  building 
association  should  not  be  deemed  usurious  does  not  apply 
to  a  loan  by  such  an  association  to  a  married  woman.2 
This  disability  has,  however,  been  removed  in  many  states 
by  enabling  a  married  woman  to  bind  herself  by  contract ; 3 
and  in  Georgia  she  is  liable,  the  same  as  any  other  person, 
for  dues  and  fines  on  stock  she  holds.4 

Sec.  37 — Status  of  Husband. 

While  a  married  woman,  at  common  law,  cannot  bind 
herself  by  a  subscription  furnished  in  a  building  association, 
yet  if  her  husband  joins  with  her  he  will  be  bound,  and  he 
also  will  be  bound  by  any  personal  obligation  she  may  give 
for  money  borrowed  by  her  in  which  he  joins.5     If  an  un- 

1  Whittingham  v.  Murdy,  60  L.  Building  Association  v.  Mixell,  84 
T.  Rep.  956  ;  Under  the  English  Act  Pa.  St.  313  ;  S.  c.  34  Leg.  Int.  266  ; 
for  winding  up  of  a  Building  As-  Tanner's  Appeal,  95  Pa.  St.  118 ; 
sociation,  (37  &  38  Vict.  c.  42  S.  32)  Dilzer  v.  Beethoven  Building  As- 
an  infant  sign  the  agreement  for  a  sociation,  103  Pa.  St.  86;  s.  c.  15 
dissolution.  Dennison  v.  Jeffs,  Phila.  344 ;  39  Leg.  Int.  383  ;  Wifr- 
[1896J  1  Ch.  611 ;  s.  c.  65  L.  J.  Ch.  ters  v.  Sowles,  38  Fed.  Rep.  700. 
435  ;  74  L.  T.  275  ;  12  T.  L.  R.  251  ;  3  City  Building,  etc., Association 
44  W.  R.  476.  v .  Jones,  32  S.  C.  308  ;  s.  C.  10  S.  E. 

2  Wolbach  v.    Lehigh    Building  Rep.  1079. 

Association,  4  W.  N.  Cas.  157  ;  s.  C.  4  Goodrich  v.  Atlanta  National 

34  Leg.  Int.   265  ;  84  Pa.  St.  211 .  Building  and  Loan  Association,  96 

Salter  Building  Association  v.  Rice,  Ga.  803  ;  s.  c.  22  S.  E.  Rep.  585. 

8  W.  N.  Cas.  12;  S.  C.  37  Leg.  Int.  5  Wiggins' Appeal,  100  Pa.   155  ; 

146 ;  Good  Hope  Building  Associa-  S.  C.  12  W.  N.  Cas.  209  ;  39   Leg. 

tions  v.  Steele,  11  W.  N.  Cas.  204 ;  Int.  589. 
S.    c.    39    Leg.    Int.    70 ;    Juniata 


40 


BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  IV. 


married  woman  subscribe  for  shares  and  then  marry,  her 
husband,  at  common  law,  may  claim  them  as  his  own.1  So 
where  a  woman  has  money  on  deposit  at  interest  with  a 
building  association,  and  afterwards  marries,  without  any 
agreement  in  the  nature  of  a  settlement  to  her  separation, 
her  husband  has  a  right  to  recover  such  money,  although  it 
has  been  previously  paid  to  his  wife  during  their  coverture. 
A  deposit  by  her  after  marriage  is  in  the  same  position. 
Notice  to  him  of  an  intention  to  pay  her  will  not  protect 
the  society.2  If  she  has  taken  stock  in  her  husband's 
name,  then  such  stock,  at  least,  is  liable  to  forfeiture  for 
the  non-payment  of  dues  thereon  or  premium  bid  for 
loans.3 

If  a  loan  be  made  to  her  husband  she  cannot  deposit  the 
recovery  of  the  amount  due  on  a  foreclosure  of  a  mortgage 
given  to  secure  it  by  alleging  her  coverture.4 


i  Luard's  Case,  1  De  Gex  F.  &  J. 
533  ;  Burlinson's  Case,  3  De  Gex  & 
Sin.  18;  Sadler's  Case,  Id.  36; 
White's  Case,  Id.  157  ;  Ex  -parte 
Hatcher,  12  Ch.  Div.  284. 

2  Griffiths  v.  Victorian  Perma- 
nent, etc.,  Society  L.  R.,  6  Vict. 
(Australian)  259. 

3  Good  Hope  Building  Associa- 
tion v.  Steel,  39  Leg.  Int.  70  ;  S.  C. 
15  Phila.  181. 

4  Luzerne  Building  Association 
v.  McDermott,  2  Kulp.  203. 

A  husband  bought  shai'es  in  his 
own  name  out  of  monies  belong- 
ing to  liis  wile.  He  gavenotice  to 
the  society  that  he  intended  to 
transfer  the  shares  to  her,  but  not 
thai  they  were  paid  for  out  of  her 
own  monies.  Nearly  two  years  af- 
terwards he  obtained  payment  of 
1  he    monies   from    I  lie   society,  and 

on  being  asked  for  the  certificates 

at    the  time  of  the  payment,  he 

a  rea  onable  excuse  for  t  heir 

non-production,    with    a    promise 


that  they  should  be  produced  the 
next  day.  The  wife,  who  had  all 
along  held  the  certificates,  brought 
an  action  against  the  society  for 
payment  of  the  monies,  but  the 
court  held  that  payment  had  al- 
ready been  made  to  the  person 
legally  entitled,  without  notice, 
actual  or  constructive,  of  the 
plaintiff's  claim,  and  that  she  was 
not  entitled  to  succeed  against 
the  society  ;  Nolloth  v.  Simplified 
Building  Society,  53  L.  T.  859  ;  S.  C. 
34  W.  R.  73  ;  2  T.  L.  Rep.  97. 

A  married  woman  may  sign  the 
instrument  of  dissolution  for  her 
husband,  under  the  English  Build- 
ing Society's  Act ;  Dennison  v. 
Jeffs  [1896],  1  Ch.  611  ;  S.  c.  65  L. 
J.  Ch.  435;  74  L.  T.  270;  12  T.  L. 
R.  251.  The  court  refused  to  fol- 
low the  Scottish  case  of  Second 
Edinburgh  and  Leith  Building 
Society  v.  Aitken,  19  Rettie,  603; 
s.  c.  29  Scot.  L.  R.  456. 


§  38.  MEMBERSHIP.  41 

Sec.  38 — Personal  Representative  Continuing  Member- 
ship—Will. 

It  is  quite  clear  that  the  personal  representative  of  a  de- 
ceased member  cannot  continue  the  membership  unless  some 
statute  or  his  testator's  will  authorizes  him  so  to  do.  "  The 
nature,  purpose,  incidents  and  liberties  of  membership  in  the 
association,"  said  the  Supreme  Court  of  Alabama,  "  exclude 
the  hypothesis  that  an  executor  or  administrator,  unless  it 
be  an  executor  having  authority  by  the  will  of  the  testator, 
can  employ  the  assets  in  his  hands  for  administration  in  the 
continuance  of  membership  in  the  association.  These  assets 
are  devoted  by  law  primarily  to  the  payment  of  debts, 
and,  after  the  payment  of  debts,  to  distribution  to  the  next 
of  kin,  in  case  of  intestacy,  or,  if  there  be  a  will,  to  distri- 
bution as  it  may  appoint.  The  line  of  the  duty  and  author- 
ity of  the  personal  representative  is  distinctly  marked,  and 
it  corresponds  precisely  to  the  accomplishment  of  these 
purposes.  The  object  of  the  association,  expressed  in  first 
article  of  the  constitution,  is  '  the  accumulation  of  a  fund 
by  the  monthly  subscriptions  or  savings  of  the  members 
thereof  to  assist  them  in  procuring  for  themselves  such  real 
estate  as  they  may  deem  desirable.'  There  is  no  power  in 
a  personal  representative,  in  the  absence  of  express  testa- 
mentary provision,  to  employ  the  assets  either  in  invest- 
ments or  for  accumulations.  An  inseparable  incident  for 
membership  is  the  right  to  anticipate  stock  by  obtaining  an 
advance  thereon.  Such  advance  cannot  be  obtained  unless 
security  by  mortgage  of  real  estate  is  furnished  the  associa- 
tion. Borrowing  money  is  not  a  power  or  duty  of  a  per- 
sonal representative,  and  to  the  real  estate  of  his  intestate 
or  testator  he  has  no  title  which  could  be  conveyed  by  mort- 
gage. When  the  clause  of  the  constitution  referring  to  the 
continuance  of  membership,  in  the  event  of  the  death  of  a 
member  who  has  taken  an  advance  on  stock,  is  read,  it  seems 
self-evident,  that  it  is  the  heir,  or  the  devisee  only,  who  is  in- 
vested with  the  privilege  of  continuing  the  membership."  1 

1  Montgomery,  etc.    Association    in  his  will,  to  continue  the  mem- 
v.  Robinson,  69  Ala.  413.     The  tes-    bership.     /*/. 
tator  may  authorize  his  executors, 


42  BUILDING  AND   LOAN   ASSOCIATIONS.  Ch.  IV. 

But  where  the  administrator  of  the  deceased  has  the  power  to 
elect  to  carry  out  a  loan  he  must  perform  the  contract  of 
his  decedent  if  he  so  elects.1 

In  January,  1864,  a  non-borrowing  member  died  intestate. 
No  administrator  was  appointed  until  June,  1807.  In  that 
interval  his  shares  were  in  arrears,  and  in  consequence  the 
society,  in  November,  1805,  declared  the  shares  forfeited, 
and  carried  the  amount  thereof  to  the  credit  of  the  profit 
and  loss  account.  After  the  society  had  been  wound  up.  or 
Avas  supposed  to  have  been  wound  up,  and  the  assets  dis- 
tributed, letters  of  administration  were  obtained,  and  the 
administrator  applied  to  the  society  to  be  admitted  as  a 
member  thereof,  but  was  refused.  It  was  held  that  the  pro- 
ceedings of  the  society  to  forfeit  the  shares  in  the  absence 
of  a  personal  representative  was  illegal ;  that  they  could  not 
do  so  any  more  than  they  could  proceed  at  law  to  enforce 
payment  of  the  calls;  that  the  administrator  was  entitled  to 
relief,  and  that  the  lapse  of  time  between  the  attempted 
forfeiture  of  the  shares  and  the  procuring  of  the  letters  was 
no  answer.     No  rule  of  the  society  covered  this  point.2 

1  Licking  County  Saving,  etc.,  Contract,  13  Rep.  218;  s.  c.  [1895] 
Association  v.  Bebout,  29  Ohio  1  Ch.  663  ;  69  L.  J.  Ch.  427  ;  73  L. 
St.  252;  Snider's  Estate.  34  Leg.  T.  411 ;  43  W.  R.  417;  2  Monson,  257. 
Int.  49.  See  Knox  v.  Shepherd,  2  See  also  In  re  Bolton  Benefit  Loan 
L.  T.  Rep.  (N.  S.)  351  :  Kelsall  v.  Society  v.  Booth,  12  Ch.  Div.  679 ; 
Tyler,  25  L.  J.  Exch.  153  :  s.  c.  30  s.  c.  49  L.  J.  Ch.  39  ;  28  W.  R.  164; 
J.  P.  150;  11  Exch.  513;  26  L.  T.  In  re  South  London  Fish  Market 

.  226.     See  the  case  of  Thorne  Co.,  39  Ch.  Div.  324  ;  s.  c.  00  L.  T. 

v.  Thorne,  63  L.  J.  Ch.  38  ;  s.  c.  69  68  ;  37  W.  R.  3. 

L.  T.                                3;  (1893);  3  Under  a  bequest  of  "  money  and 

Ch.  196;  8  Rep.  282.  valuables"  deposits  in  a  building 

2  Glass   v.    Eope,    L6  (Irani  Ch.  society  will  pass. 

420;  affirming,    II  Grant  Ch.  484.  Cameron    v.   Hunter,   L.    TJ.    17 

Thai  shares  are  personal  properly.  Vict.  (Austr.)  217.     "Ifurtherbe- 

and   go   to  the  administrator,  see  queath  all  the  remainder  of  money 

1          ■■-.  Hope,  16  <irani  Ch.  420.  and  valuables  that  1  possess  to  the 

p  rsonal  representatives  of  aforesaid  E.  M.  which  is,  or  may 

m     -I  member  are  nol   mem-  be,  in  the  National  Bank  in  Fitz- 

of  the  society,  under  the  Eng-  roy,  and  which  is  in  the  English, 

Building  Society's  Acl  (31   &  Scottish  and  Australian  Chartered 

i't.  < '.  42,  §32)   for  the  pur-  Bank,  Fitzroy,  and   in  the  Savings 

po  e  of  the  instrument  of  dissolu-  Bank,  Melbourne,  and  in  the  event 

tion.     ///   re   Bowling  &   Welby's  of  the  aforesaid  E.  M.'s  death  the 


§  41.  MEMBERSHIP.  43 

Sec.  39 — Heirs  Succeeding  to  Member's  Bights. 

Occasionally  it  is  provided  that  the  heirs  of  a  deceased 
member  shall  succeed  to  his  rights  and  be  substituted  in  his 
stead;  in  which  event  the  administrator  or  executor  of  the 
deceased  has  no  authority  over  the  stock  of  the  deceased 
member.1 

Sec.  40 — Corporations  as  Stockholders. 

It  would  seem  pretty  clear  upon  reason  that  one  building- 
association  cannot  become  a  member  of  another  association ; 
for  that  would  be  wholly  a  perversion  of  the  object  of  such 
associations  or  societies.  But,  nevertheless,  it  has  been  held 
that  one  corporation  may  become  a  member  of  a  building 
association,  if  no  statute  prevent  it,  for  the  purpose  of  bor- 
rowing money.2 

Sec.  41 — Subscription  for  the  Purpose  of  Securing  a 
Loan. 

The  mere  fact  that  the  object  of  the  subscriber  is  to  secure 

a  loan  does  not  any  the  less  make  him  a  member  of  the 

association.3 

property  to  be  equally  divided  be-  insurance  agency,  commission  and 
tween  my  two  daughters."  At  his  brokerage  business,  and  such  other 
death  he  had  no  money  in  any  of  things  as  are  incidental  to,  and 
the  specified  banks,  but  his  entire  necessary  in,  the  management  of 
personal  estate  consisted  of  depos-  that  business,"  has  no  power  to 
its  in  various  building  societies,  subscribe  to  the  stock  of  a  build- 
It  was  held  that  the  words  "  which  ing  association.  Mechanics',  etc., 
is,  or  may  be,  in  the  bank,"  were  Association  v.  Meriden  Agency 
descriptive  and  not  restrictive,  Co.,  24  Conn.  159. 
and  did  not  limit  its  previous  be-  3  Mechanics'  and  Workingmen's 
quest,  and  money  in  building  soci-  Mutual  Savings  Bank  and  Building 
ties  passed.     Id.  Association   v.    Wilcox,    24   Conn. 

1  Montgomery  Mutual  Building  147.  See  also  In  re  Mutual  Aid 
and  Loan  Association  v.  Robinson,  Permanent  Benefit  Building  So- 
69  Ala.  413.  ciety,  29  Ch.  Div.  182;  s.  c.  54  I,. 

2  Kadish  v.  Garden  City,  etc.,  J.  Ch.  493  ;  52  L.  T.  40G  ;  33  W.  R. 
Association,  151  111.  531;  s.  c.  38  575;  Setliffu.  North  Nashville,  etc., 
N,  E.  Rep.  236;  26  Ch.  Leg.  News,  Ass'n  (Tenn.  Ch.)  39  S.  W.  Rep. 
258;  affirming,  47  111.  App.  602.  546;  see  Bates  v.  Equitable,  etc., 
See  also  Union  Building  Loan  As-  So. ,  65  III.  App.  529;  Reynolds  v. 
sociation  v.  Masonic  Hall  Associa-  Georgia  State,  etc.,  Ass'n  (Ga.)  29 
tion,  29  N.  J.  Eq.  389.     A  corpora-  S.  E.  Rep.  187. 

tion  authorized  ' '  to  do  a  general 


44  BUILDING   AND   LOAN    ASSOCIATIONS.  Ch.  IV. 

Sec.  42 — Depositors  as  Members. 

It  has  been  decided  that  depositors  are  not  shareholders  in 
the  association.1  But  they  may  virtually  be  members  upon 
the  principle  of  estoppel.  Thus,  where  an  individual  de- 
posited money  with  a  building  association  for  the  purpose 
of  making  himself  eligible  as  a  borrower,  and  also  received 
a  loan,  he  was  held  estopped,  in  an  action  by  the  association 
to  recover  the  money  advanced,  from  denying  that  he  was 
in  fact  a  depositor  therein.2  So  where  an  association,  with 
out  any  authority  from  a  by-law  or  statute,  had  received  de- 
posits and  then  failed,  it  was  held  that  the  association  was 
estopped  to  say  that  they  were  not  its  creditors  ;  and  they 
were  paid  before  the  members  of  the  association  were  paid.3 
But  where  advanced  members  had  been  discharged,  it  was 
held  that  the  depositors  were  bound  by  the  rules  of  the 
society,  which  relieved  such  advanced  members  from  liability 
to  contribute  to  the  losses  of  the  society.4 

Sec  43 — Society  may  be  Estopped  to  Deny  Membership. 

A  society  may  estop  itself  to  deny  the  claim  of  a  person 
that  he  is  a  member  of  the  association.  Thus  where  the 
effect  of  a  foreclosure  was  a  forfeiture  of  the  stock  of  the 
borrowing  member,  but  notwithstanding  this  it  claimed  and 
received  dues  on  such  stock  after  the  decree  of  foreclosure 
and  sale  thereunder  of  the  land  mortgaged,  it  was  held  that 

1  Turner    B;iu-Verein    v.   Wood-  may  likewise  become  a  member 

burn,  27  Wklv.  L.  Bull.  409  ;  Grob-  for  tbe  purpose  of  obtaining  aloan, 

mann  v.  Brown,  68  Mo.  App.  G30  ;  who  is  called  a  borrowing  mem- 

Kimball  v.  Davis,  52  Mo.  Api>.  194.  ber."    Rosenthal  on  Building  As- 

Notwitbstanding  this,  it  has  been  sociations,  Sec.  40. 

said:  "There  are   two  classes  of  "  Bates  v.  People's,  etc. ,  Associa- 

members— depositors  and  borrow-  tion,  42  Ohio  St.  655. 

ers.     Generally  the  membership  is  3  Criswell's  Appeal,  100  Pa.  488  ; 

soughl   For  the  purpose  of  making  Grohmann  v.  Brown,  68  Mo.  App. 

a    afe  deposit  of  the  small  surplus  630. 

earnings  of  persons,  who  otherwise  '  lii  re  Victoria  Permanent  Bene- 

wouldhaveto  keep  this  surplus  at  fit    I'.uililin.^  Society,  L.  K.  '.)  Kq. 

hand  where  il  is  an  afe  and  Liable  605;  s.  c.  39  L.  J.  Ch.  628;  18  W. 

to  be  expended.    These  are  called  R.  967  ;  22  L.  T.  (N.  S.)  777. 
members.      A    person 


§  44.  MEMBERSHIP.  45 

the  association  could  not  deny  the  right  of  membership  ex- 
isting after  such  decree  of  foreclosure.1  This  was  a  case 
where  the  association  itself  accepted  the  payments.  But 
where  two  directors  of  twelve  accepted  stock  payments 
under  like  circumstances,  and  their  act  was  disavowed  at 
the  next  meeting,  it  was  held  that  the  association  was  not 
bound  by  such  payments,  and  could  deny  the  claim  of  mem- 
bership set  up  by  reason  thereof.2 

Sec.  44 — Person  Estopped  to  Deny  Membership. 

So  a  person  entering  into  the  relationship  of  a  member  in 
fact  with  the  association  may  be  estopped  to  deny  that  he 
is  a  member.  Such  is  an  instance  where  the  provisions  of 
a  charter  requires  all  members  of  the  association  to  sign  it 
and  provides  that  a  loan  should  be  made  to  no  other  per- 
sons than  members.  En  such  an  instance  a  borrower  cannot 
set  up  that  he  is  not  a  member  by  reason  of  his  failure  to 
sign  the  charter.3  Yet  where  the  mortgage  contained  a 
recital  that  the  borrower  owned  a  certain  number  of  shares, 
and  it  was  prepared  by  the  society's  solicitor  and  not  read 
by  the  borrower,  it  was  held  that  he  was  not  estopped  by 
such  recital,  he  being  ignorant  of  it  when  he  signed  the 
mortgage.4 

Sec.  45 — Evidence  of  Membership. 

The  stock-book  kept  by  the  corporation  is  prima  facie 
evidence  of  membership.  As  we  have  seen,  it  is  conclusive 
evidence  of  the  membership  of  stock  upon  the  inspectors  of 
election  when  a  dispute  arises  over  the  right  to  vote  certain 
stock.     But  in  a  proper  instance  it  may  be  shown  by  parol 

1  North  American  Building  As-  Association,  19  W.  Va.  744  ;  Lock- 
sociation  v.  Sutton,  35  Pa.  St.  463.  wood  v.  Robbins,  Clev.  Rep.  101 ; 
See  also  Lime  City  Building,  Loan  Reynolds  v.  Georgia  State,  etc., 
and  Saving  Association  v.  Black,  Ass'n.  (Ga.),  29  S.  E.  Rep.  187  ; 
136  Ind.  544;  s.  C.  35  N.  E.  Rep.  Concordia  etc.,  Ass'n  v.  Read  93 
829.  N.  Y.  474. 

2  Card  v.  Carr,  1  C.  B.  (N.  S.)  *  In  re  Victoria  Permanent  Bene- 
197  ;  s.  c.  26  J.  J.  C.  P.  113.  fit  Building  Investment  and  Free- 

3  Howard  Mutual  Loan  and  Fund  hold  Land  Society  L.  R. ,  9  Eq. 
Association  v.  Mclntire,  3  Allen  597  ;  s.  c.  18  W.  R.  565  ;  22  L.  T. 
571 ;  Parker  v.  United  States,  etc.,  N.  S.  855. 


46  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  IV. 

who  is  the  actual  owner.1  A  stockholder  may  show  by 
parol,  in  an  action  against  a  building  association  for  money 
alleged  to  have  been  loaned  it  by  him,  that  a  certifi- 
cate of  stock  received  by  him  from  the  association  was 
issued  to  him  not  as  a  stockholder  but  merely  to  evidence 
the  loan.2 

Sec.  46 — Inspection  of  Books. 

Every  stockholder,  by  reason  of  his  holding  stock,  has  a 
right  to  inspect  the  books  of  the  corporation,  when  sought 
at  the  proper  time,  independent  of  any  statute  giving  him 
the  privilege.3  Where  a  statute  confers  the  right  upon  a 
stockholder  to  examine  the  books  of  the  corporation,  and 
does  not  attach  any  condition  to  his  exercise  of  such  right, 
he  has  the  absolute  right  to  make  the  inspection  without 
assigning  any  reason  whatever  for  his  action.4  In  such  an 
instance  it  is  no  defence  to  say  that  the  stockholder  claim- 
in  o-  the  ri^ht  to  make  the  examination  is  hostile  to  the  com- 
pany's  interests.5  But  where  a  statute  gave  a  stockholder 
the  rifht  to  examine  the  books  at  all  reasonable  times,  it 
was  held  that  he  must  state  to  the  officers  for  what  pur- 
pose he  desired  to  make  the  inspection ;  and  that  he  could 
not  maintain  a  mandamus  to  secure  the  inspection  unless  he 

i  Chaffin  v.   Cummings,  37  Me.  S.  C.  6  So.  Rep.  88 ;  26  Am.  &  Eng. 

76 ;  Dobinson  v.   Hanks,   16  Sim.  Corp.  Cas.  127 ;  6  Rail  &  Corp.  L. 

407;  s.  C.  39  Eng.  Ch.  Rep.  406;  12  J.  88  Mutter  v.  Eastern,   etc.,  R. 

L.  T.  (O.  S.)  238 ;  German  Union,  R.  Co.  L.  R.  38  Ch.  Div.  92  ;  s.  c. 

etc.,  Association,  v.  Senchmeyer,  36  W.  R.  401  ;  57  L.  J.  Ch.  615  ;  59 

50  Pa.  St.  67.  L.  T.  (N.  S.)  117 ;  State  v.  Sports- 

8  Wild  v.  Western  Union  Build-  men's,   etc.,   Association,    29  Mo. 

ing  and   Loan  Association,  60  Mo.  App.  326;  Mitchell  v.  Rubber,  Re- 

A  pp.  200.  claiming  Co.,  (N.  J.)  ;  24  Atl.  Rep. 

*Cockburn    v.    Onion    Bank,  13  407  ;  States.  St.  Louise,  etc.,  R.  R. 

La.  Lnn.289;   Ranger  v.  Champion  Co.,   29  Mo.   App.   301;    Lyon  v. 

Cotton  Press  Co.,  51  Fed.   Rep.  61;  American  Screw  Co.,  supra. 
Lyon  v.   American  Screw  Co.,  in       5  State  v.  St.   Louis,  etc.,  R.  R. 

R.   I.    172;  3.  0.    17    AH.    Rep.  61;  Co.,   29  Mo.   App.   301;    State   v. 

Commonwealth    v.    Phcenix    Iron  Sportsmen's,  etc.,  Association,  29 

Co.,  105   Pa.  St.   lll;s.c.51    Am.  Mo.   App.   326 ;  People  v.    Pacific 

Rep.  I    I  :  J3  \mrr.  L.  Reg.  388;  38  Mail  Steam  Ship  Co.,  50  Barb.  280; 

(  vllt .  L.  J.  524.  S.  C.  ::l    How.  Pr.   193;  3  Abb.  Pr. 

•  Fo  ter  r.  White,  86  Ala.  467;  (N.  S.)  364. 


§  46.  MEMBERSHIP.  47 

had  so  stated  the  purpose  to  the  officers,  and  he  must  also 
allege  the  purpose  in  the  petition  for  the  writ  so  that  the 
court  could  judge  of  its  reasonableness.1  A  statute  confer- 
ring the  right  to  make  the  examination  within  a  certain 
period  after  a  corporate  election  does  not  exclude  the 
authority  of  the  courts  to  compel  the  officers,  upon  a  proper 
showing,  to  allow  an  inspection  after  such  period  of  time  has 
expired.2  A  corporation  cannot  deprive  a  stockholder  of  his 
right  of  inspection  on  the  plea  that  the  books  contain  other 
matters  which  he  has  no  right  to  inspect  or  know,  and  that 
an  inspection  would  enable  him  to  obtain  such  other  infor- 
mation.3 The  right  of  inspection  may  be  regulated  by  a  by- 
law, it  would  seem.4  It  will  not  be  allowed  for  speculative 
purposes  nor  for  the  gratification  of  curiosity,5  nor  will  it 
be  granted  where  its  exercise  would  result  in  great  incon- 
venience and  hindrances  in  the  conduct  of  the  business  of 
the  corporation.6  It  involves  the  right  to  take  copies  and 
make  memoranda  and  extracts  of  such  portions  of  the 
record  as  pertains  to  such  stockholder's  rights  and  inter- 
ests.7 The  stockholder  has  the  right  to  make  the  inspection 
by  an  agent  or  by  an  attorney,  or  by  an  expert,8  but  he 
must  conduct  the  examination  in  a  peaceable  manner,  and 

i  Reginar.  Wilts,  etc.,  Canal  Co..  Co.   L.  R.,  38  Ch.  Div.  92  ;  Rex  v. 

3  Ad.  &  El.  477;  Regina  v.  Grand  Merchants,'  etc.,  Co.,  2  B.    &  Ad. 

Canal  Co.,  1   Ir.  L.  Rep.  337  ;  See  115  ;  Rex  v.  Lucas,  10  East.  235  ;  In 

Langelier    v.    Laroche    L.     R.,    3  re  Burton,  etc.  Co. ,  31  L.  J.  Ch.  62  ; 

Quebec,  239.  Martin  v.  W.  J.  Johnston  Co.,  62 

3  People  v.  Eadie,  133  N.  Y.  573  ;  Hun,  557 ;  s.  c.  42  N.  Y.  St.  Rep. 

s.  c.  30  N.  E.  Rep.  1147  ;  affirming,  409  ;  17  N.  Y.  Supp.  133  ;  11  Rail.  & 

18  N.  Y.  Supp.  53;  s.  c.  53  N.  Y.  Corp.  L.  J.  122;  Bronwer  v.  Cotheal, 

St.  Rep.  649.  10  Barb.  216 :  S.  c.   5   N.  Y.  562 ; 

3  People  v.  Pacific  Mail  Steam-  Contra,  Commonwealth  v.  Empire 

ship  Co.,  supra.  Pass.  R.  R.  Co.,  134  Pa.   St.  2:57; 

*  Cockburn  v.   Union   Bank,   13  s.  c.  19  Atl.    Rep.  629  ;  7  Rail.    & 

La.  Ann.  289 ;  State  v.  St.  Louis,  Corp.  L.  J.  470. 

etc.,  R.  R.  Co.,  29  Mo.  App.  301.  8  Hide   v.  Holmes.  2   Moll.  372  ; 

5  People    v.     Walker,    9    Mich.  State  v.  Bienville  Oil  Works  Co., 

28  La.  Ann.  204:  Foster  v.  White, 

6  4  Commonwealth  v.  Phoenix  86  Ala.  407  ;  s.  c.  6  So.  Rep.  88  ;  26 
Iron  Co.,  105  Pa.  St.  Ill;  S.  C.  51  Am.  &  Eng.  Corp.  Cas.,  127;  6 
Am.  Rep.  184.  Rail.  &  Corp.  L.  J.  88. 

7  Mutter  v.  Eastern,  etc.,  R.  R. 


48 


BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  IV. 


the  court,  in  granting  an  order  to  inspect  the  books,  may 
provide  that  if  the  inspection  be  not  conducted  in  a  peaceable 
manner  the  person  making  it  shall  be  guilty  of  contempt.1 
If  a  company  has  been  created  in  another  state,  yet  it  may 
be  compelled  to  allow  an  inspection  of  its  books  in  the 
state  where  they  are  situated  at  the  demand  of  the  stock- 
holders, although  such  books  are  not  in  the  home  state  of 
the  corporation.2 


1  William  v.  Prince  of  "Wales, 
etc.,  Co.,  33Beav.  338. 

2  Swift  v.  State,  7  Houst,  (Del.) 
338  ;  s.  c.  6  Atl.  Rep.  856. 

We  take  the  following  from  a 
note  to  the  case  of  Stettauer  v. 
New  York,  etc.,  Co.,  43  N.  J.  Eq. 
46  (S.  c.  24  Cent.  L.  S.  365);  "An 
inspection  will  not  be  allowed  to 
gratify  mere  idle  curiosity  ;  People 
v.  Walker,  9  Mich.  328;  nor  be- 
cause some  of  the  books  are  neces- 
sarily kept  in  another  State,  where 
the  main  office  is,  in  violation  of  a 
statute  of  Connecticut ;  Pratt  v. 
Meriden  Cutlery  Co. ,  35  Conn.  36  ; 
See  Sykes's  case,  10  Beav.  162  Ervin 
v.  Oregon  R.  Co.,  22  Hun  (N.  Y), 
566 ;  Cain  v.  Pullen,  34  La.  Ann. 
511;  nor  to  fish  out  a  defence; 
Birmingham  Co.  v.  White,  1  Ad. 
&  El.  (N.  S.)  282;  Imperial  Gas 
Co.  v.  Clarke,  7  Bing.  95 ;  See 
Hoyt  v.  Amer.  Ex.  Bank,  1  Duer 
(N.  Y.),  652;  Shoe  and  Leather 
Asso.,1'.  Bailey,  17  Jones  &  Sp.  (N. 
Y.  385;  nor  upon  an  allegation 
of  belief  that  the  company's  af- 
fairs are  being  conducted  im- 
properly and  the  officers  unduly 
chosen,  and  alleging  mismanage- 
ment in  some  particulars  not  af- 
fecting petitioners,  nor  then  in 
dispute;  Rex  v.  Merchant  Tailors' 
Co.,  2  Barn.  &  A<1.  115  ;  norto fur- 
nish materials  to  the  other  side  for 
a  new  trial;  Pratt  v.  Goswell,  9  C. 
B.  (N.  B.)  706;  nor    to  ascertain 


whether  petitioners  would  better 
accept,  with  the  other  sharehold- 
ers, what  was  offered  her  for  her 
holding  in  an  old  company,  which 
was  being  wound  up,  rather  than 
proceed  with  an  arbitration  ;  Re 
Glamorganshire  Banking  Co.,  28 
Ch.  Div.  620  ;  nor  to  establish  jus- 
tification in  an  action  against  the 
petitioner  for  libel,  imputing  in- 
solvency to  the  company  and  with 
the  accounts,  and  on  other  grounds; 
Reg.  v.  Grand  Canal,  1  Ir.  L.  Rep. 
337 ;  nor  where  the  petition  does 
not  specify  the  particular  books 
asked  for  and  the  object  of  the 
petitioner  in  making  the  applica- 
tion to  the  officers,  and  also  to  the 
court ;  Reg.  v.  London  &  St.  Cath- 
erine's Docks  Co.,  44  L.  J.  (Q.  B.) 
4  ;  See  Hunt  v.  Hewitt,  7  Ex.  236  ; 
Pepper  v.  Chambers,  7  Ex.  226  f 
New  England  Iron  Co.  v.  New 
York  Loan  Co.,  55  How.  Pr.  (N. 
Y.)  351;  Central,  etc.,  R.  Co.  v. 
Twenty-third  St.  R.,  53  How.  Pr. 
(N.  Y.)  45;  Commissioners  v. 
Lemly,  85  N.  C.  341  ;  Walker  v. 
Granite  Bank,  44  Barb.  (N.  Y.)  39  ; 
nor  whether  certain  allegations  in 
the  applicant's  affidavit  are  true  ; 
nor  whether  he  lias  documents  in 
his  possession  relating  to  the  mat- 
ter in  issue.  Rayner  v.  Alnusen, 
15  Jur.  1060." 
The  fact  that  the  society  took 

tlir lays   to  consider  and  secure 

legal  advice  as  to  whether  a  mem- 


CHAPTEK  V. 

GOVERNMENT   OF    BUILDING   ASSOCIATIONS. 

Sec.  47.  Repository  of  Supreme  Power. 

48.  Place  of  Holding  Meetings  and  Doing  Business. 

49.  Assembling  for  a  Corporate  Election — Notice. 

50.  The  Quorum. 

51.  Right  to  Vote. 

52.  Conduct  of  an  Election. 

53.  Number  of  Votes  a  Stockholder  may  Cast. 

Sec.  47 — Repository  of  Supreme  Power. 

The  membership  of  the  association,  in  a  convention  duly 
assembled,  have  the  supreme  power  of  the  association,  sub- 
ject to  its  charter  and  the  laws  of  the  state.1  In  this  re- 
spect it  does  not  differ  from  any  other  kind  of  corporation. 

Sec.  48— Place  of  Holding  Meetings  and  Doing  Business. 

A  corporation  can  have  only  one  domicile,  not  two  or 
more  ;  2  so  that  it  cannot  be  created  by  two  states,  for  it 
must  have  its  domicile  in  one  or  the  other  of  them,  and 
not  in  both.3     In  such  instances,  there  is  a  corporation  in 

ber  had  the  right  to  inspect  the  See  Grimes  v.  Harrison,  28  L.   J, 

books  is  not  a  denial  of  his  right  to  Ch.  823;  s.  C.  33  L.  T.  (O.  S.)  115; 

make    the    examination.      Lange-  5  Jur.  (N.  S.)  528;  26  Beav.  435;  23 

Her  v.  Laroche  L.  R.,  3  Quebec,  J.  P.  421,  and  In  re  Kent  Benefit 

239.  Building  Society,  1  Dr.  &  Sm.  417; 

The  general  corporation  laws  for  S.  C.  7  Jur.  (N.  S.)  1045;  30  L.  J. 

the  inspection  of  corporate  books  Ch.  785;  4  L.  T.  610;  9  W.  R.  686. 

applied  to   building    associations.  2  Bank  of  Augusta  v.   Earle,  13 

Buker  v.   Steele,  43  N.  Y.  Supp.  Pet.  519  ;  Rece  v.  Newport  News, 

346.  etc.,  Co.,  32  W.  Va.  164;  s.  C.  9  S. 

1  Hagerman    v.   Ohio    Building  E.  Rep.  212. 

and  Savings  Association,  25  Ohio  3  Ohio,  etc.,  R.  R.  Co.  v.  Wheeler, 

St.  186  ;  Morton  Gravel  Road  Co.  1    Black.    286 ;  Farnum  v.   Black- 

v.  Wysong,  51  Ind.  4;  Carroll  v.  stone,  Canal  Co.,  1  Sumn.  46  ;  Cov- 

Mullanphy  Savings  Bank,  8    Mo.  ington  etc.  Bridge  Co.  v.  Mayer,  31 

App.    249 ;    Martin    v.     Nashville  Ohio  St.  317. 
Building  Association,  2  Coldw.  418  ; 

4  49 


50  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  IV. 

each  state.1  That  domicile  or  residence  "  is  necessarily 
where  it  exercises  corporate  functions.  It  dwells  in  the 
place  where  its  business  is  done.  It  is  located  where  its 
franchises  are  exercised."  2  They  cannot  establish  agencies 
for  the  transaction  of  their  business  at  any  other  place  than 
that  fixed  by  their  charters  or  articles  of  association  for 
the  residence.3  They  have  not  perambulatory  powers.4  If 
a  corporation  migrates  from  one  state  to  another,  and 
transfers  the  whole  of  its  business,  including  its  personnel,  it 
does  not  carry  its  attributes  of  incorporation  with  it,  and 
the  stockholders  form  nothing  but  a  partnership.5  The 
stockholders  cannot  hold  a  corporation  meeting  beyond  the 
boundaries  of  the  state  where  it  is  incorporated  ; 6  but  the 
corporation  may,  through  its  agents,  enter  into  binding  con- 
tracts beyond  the  state  boundaries.7  So  its  directors  may 
meet  beyond  the  boundaries  of  the  state  and  there  transact 
business.8  They  may  even  execute  a  mortgage  in  another 
state  upon  land  situated  in  the  home  state  and  owned  by 
the  corporation.9  And  if  no  place  for  the  meeting  of  the 
annual  or  special  meeting  of  the  stockholders  is  prescribed  in 
its  charter  or  by-laws,  or  in  a  statute,  the  officers  authorized 
to  call  such  meeting,  or  to  give  notice  thereof,  may  specify 
where  it  shall  be  held.10     In  such  an  instance  the  board  of 


1  Ta  re  St.  Paul,  etc.,  R.  R.  Co.,  But  see  Merrick  v.  Van  Santvoord, 
36  Minn.  85;  Clark  r.  Barnard,  108  34  N.  Y.  208;  reversing,  38  Barb. 
U.  s.    136  :  Railroad  v.  Harris.  12  574. 

Wall.  65;  Racine,  etc. ,  R.  R.  Co.  v.  6  Miller  v.  Ewer,  27  Me.  509  ;  s.  c. 

ters'  Loan  and  Trust  Co.,  -It)  46    Am.    Dec.    619;  Freeman    v. 

111.  331.  Machias,    etc.,   Co.,   38    Me.   345; 

2  Bristol  v.  Chicago,  etc.,  R.  R.  Franco-Texan  Land  Co.  v.  Laigle, 
Co.,  15  111.  136;  New  Albany,  etc.,  59  Tex.  339. 

R.  ];.  Co.  v.  Haskell,  LI  Ind.  301.  7  Lane  v.  Bank,  9Heish,  419. 

8  Attorney-General    v.    Oakland  8  McCall   v.    Byram,   Mf.  Co.,  6 

Co.  Bank,  I  Walk.  Ch.  (Mich.)  90  ;  Conn.  428.     But  not  if  a  statute 

People   v.   Oakland   Co.     Bank,    1  prohibits    their    meeting    abroad. 

(Mich.)  1 1  ill. 's  v.  Parish,  I  I  N.  J.  Eq.  380. 

'Underwood     v.     Waldron,     12  9  Galveston  R.  R.  Co.  v.  Cowdrey, 

Mich.    78  :    People   v.   Ti                •  1 1  Wall.  159. 

Wend.  '.'1 1.  "' ( lorbettu.  Wood-wan  I,  5  Sawy. 

Ward.    106    Mass.  58.  108. 


§   49.  GOVERNMENT.  51 

directors  may  fix  a  place,  and  the  officers  issuing  the  call 
must  comply  therewith.1 

Sec.  49 — Assembling  for  a  Corporate  Election — Notice. 

Mandamus  lies  to  compel  the  officers  to  call  a  corporate 
meeting  where  they  are  required  by  statute  or  the  by-laws 
so  to  do.2  If  the  charter  prescribe  annual  elections  for  the 
selection  of  officers,  but  docs  not  designate  when  they  shall 
be  called,  leaving  the  question  to  the  officers,  then  such  officers 
cannot  prolong  the  existence  of  their  own  tenure  by  refusing 
to  call  an  election  until  near  the  end  of  the  year  in  which  it 
should  be  called.3  The  fact  that  the  charter  or  a  statute 
prescribe  that  the  annual  elections  shall  be  held  at  such  a 
time  and  place  as  the  by-laws  shall  prescribe  does  not  pre- 
vent the  corporation  holding  an  election  at  the  first  assem- 
blage of  the  stockholders  after  it  is  incorporated  and  before 
any  by-laws  have  been  adopted.4  The  election  may  be  held 
on  Sunday,  at  least  that  of  a  benevolent  corporation.5  The 
person  authorized  to  call  a  special  election  must  make  the 
call,  and  no  one  else  can  do  so.6  If  called  by  an  officer  not 
empowered  to  do  so,  all  the  proceedings  held  thereat  are 
void.7  But  the  directors  may  call  a  special  meeting  of  the 
stockholders,  although  they  have  prescribed  by  a  by-law 
that  the  president  or  secretary  must  do  it.8  No  corporate 
business,  which  the  stockholders  must  transact,  can  be  per- 
formed unless  at  a  corporate  meeting  duly  assembled,  even  if 
a  majority  of  such  stockholders  be  present  and  all  consent 

1  Commonwealth  v.  Smith,  45  5  People  v.  Young  Men's,  etc.; 
Pa.  St.  59.  Society,  65  Barb.  357. 

That  the  action  of  a  corporate  6  Reily  v.  Oglebay,  25  W.  Va.  36, 

meeting  held  beyond  the  state  can-  Bethany  v.  Sperry,  10  Conn.  200; 

not  be   collaterally  attached,   see  Goulding  v.  Clark,  34  N.  H.  14S  ; 

Humphrys    v.    Mooney,   5     Colo.  Ashuelot  R.  R.  Co.  v.  Eliot,  57  N. 

282.  H.  397. 

2  American  Railway  Frog  Co.  v.  7  Reilly  v.  Oglebay,  25  W.  Va. 
Haven.  101  Mass.  398;  s.  c.  3  Am.  36;  Contra,  only  irregular,  Cham- 
Rep.  377.  berlain   v.   Painsville,  etc.,   R.   R. 

3Mattu    v.   Primrose,    23     Md.  Co.,  15  Ohio  St.  225  ;  Walworth  v. 

482.  Brackett,  9S  Mass.  98. 

4  Boston,  etc.,  Mf.  Co.  v.  Moring,  8  Citizens'  Insurance  Co.  v.  Sort- 

15  Gray,  211.  well,  8  Allen,  217. 


52  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  V. 

to  it.1  The  same  is  true  of  a  directors'  meeting.2  To 
constitute  a  special  meeting  a  valid  one,  due  notice 
thereof  must  be  given  in  accordance  with  the  by-laws  or 
charter  ;  all  the  members  must  be  notified.3  Of  course  this 
does  not  apply  to  stated  meetings,  unless  the  by-laws  or 
charter  require  the  notice  to  be  given.4  If  a  by-law  or  the 
charter  prescribe  the  manner  in  which  the  notice  shall  be 
given,  that  method  must  be  pursued,  even  to  the  contents  of 
the  notice  where  the  state  charter  does  not  prescribe  them.5 
If  no  method  of  giving  notice  is  prescribed  by  the  charter 
or  by-laws,  then  it  would  seem  that  personal  notice  to  each 
stockholder  must  be  given.6  From  these  decisions  it  may  be 
gathered  that  the  notice  must  be  issued  by  the  person 
having  authority  to  issue  it ; '  that  it  must  contain  the  time 
and  place  of  holding  the  meeting  unless  the  charter  or  a  by- 
law fix  them ;  and 8  must  contain  a  statement  of  the  busi- 
ness to  be  transacted.9  But  if  all  those  entitled  to  notice 
appear  at  a  meeting  and  without  objection  from  any  one  all 
proceed  to  transact  the  business  of  the  corporation,  the 
right  to  notification  is  waived  and  the  business  transacted  will 
be  valid.8  If  a  single  member  not  having  voted  objects,  no 
business  can  be  transacted.9     "Where  a  by-law  or  the  charter 

1  German  v.  Evangelical  Congre-    People  v.  Bachelor,  22  N.  Y.   128  ; 
gation  v.  Pressler,  14  La.  Ann.  799.     Atlantic    Mutual  Fire    Insurance 

2  Dispatch  Line  v.   Bellamy  Mf.     Co.  v.  Sanders,  36  N.  H.  252. 

Co.,  12  N.    H.   205;  S.  c.   37  Am.  s  Hunt  v.  School  District,  14  Vt. 

Dec.  203  ;  Elliott  v.  Abbott,  12  N.  300  ;  s.  c.  39  Am.   Dec.  225 ;  Stow 

H.   549;    S.  C.   37   Am.    Dec.   227;  v.  Wyse,  7  Conn.  214 ;  s.  c.  18  Am. 

Pierce  v.    New   Orleans   Building  Dec.  99. 

Co.,  9  La.  397  ;  8.  C.  29  Am.  Dec.  6  Stow  v.  Wyse,  7  Conn.  214;  s.  c. 

448  :  Harrington  v.  Liston  District  18  Am.  Dec.  99. 

Tp.,  47  la.  11.  '  Sampson  v.  Bowdoinham,  etc., 

Rex  v.  May.  5  Burr.2681;  Kyn-  Corporation,  36  Me.   78;  Little  v. 

aston   V.    Mayor   of  Shrewsbury,  2  Merrill,    10   Pick.    543;  Merritt   v. 

sn.    L051;  Res   v.    Bill,  4  B.  &  C.  Fairis,  22  111.  303. 

141 ;  Smyth  v.  Darley,2B.  L.  Cas.  B  Judah  v.  American,  etc.,Insur- 

Im  thia  lasl  case  it  was  held  ance  Co.,   4  Ind.   333;   People  v. 

thai  tin-  omission  to  notify  a  single  l.ntohelor,  22  N.   Y.    128;  Jones  V. 

corporator   rendered   fli<'   election  Milton  Turnpike  Co.,  7  Ind.  547; 

\.,i<l.     Loubat   y.    Leroy,   15   Abb.  Musgravev.  Nevinson,  1  Str.  584 ; 

N.  C.  II:  B.  C.  65  How.  Pr.  888.  s.  c.  2  Ld.  Ray m.  1358. 

1  Warner  v.  Mower,  II  Vt,  885;  °  Rex  v.  May,  5  Burr.  2681. 


§  50.  GOVERNMENT.  53 

prescribe  the  length  of  time  for  which  the  notice  must  be 
given,  that  by-law  or  charter  must  be  complied  with,  or  all 
business  transacted  at  the  meeting  thus  imperfectly  called 
will  be  voidable.1  The  notice  need  not  state  the  object  of 
the  meeting  when  such  meeting  is  an  annual  one.2  So  it  is 
not  necessary  to  state  in  a  call  for  a  special  meeting  the 
object  of  such  meeting,  if  only  ordinary  routine  business  is 
to  be  transacted ; 3  but  the  object  must  be  stated  when  ex- 
traordinary business  is  to  be  transacted.4  No  business  can 
be  transacted  at  a  special  meeting  except  that  specified  in 
the  notice,  unless  all  entitled  to  notice  are  present  and  unan- 
imously consent  to  enter  upon  and  transact  business  other 
than  that  specified.5  If  a  meeting  has  been  regularly  con- 
vened, those  present  may  adjourn  it  to  another  day  and 
upon  such  adjourned  day  transact  all  the  business  they 
could  have  transacted  on  the  day  from  which  an  adjourn- 
ment was  taken,  without  any  further  notice  being  given.6 

Sec.  50 — The  Quorum. 

Those  who  actually  assemble  upon  a  call  of  a  stockholders' 
meeting  or  at  a  stated  meeting  thereof,  constitute  a  quorum, 
and  the  majority  of  that  quorum  may  transact  business  of 
the  corporation,"  unless  a  statute  prescribes  a  different  rule.8 
A  mere  plurality,  however,  cannot  bind  the  corporation ; 
as  in  the  case  where  there  are  three  candidates  for  the  same 
office,  no  one  of  whom  receives  a  majority  vote  of  those 

i  United    States    v.     McKelden,  L.  Cas.  418 ;  Smith  v.  Law,  21  N. 

Mac  Arthur  &  Mackey  (D.  C.)  162.  Y.   296;    Schoff  v.    Bloomfield,    8 

2  Warner  v.  Mower,  11  Vt.  385  ;  Vt.  472  ;  State  v.  Bonnell,  35  Ohio 
Granger  v.  Original,  etc.,  Co.,  50  St.  10. 

Cal.  678  ;  s.  C.  9  Am.  Corp.  Cas.  27.  The  officials  calling  the  meeting 

3  Savings  Bank  v.  Davis,  8  Conn,  cannot  adjourn  it  to  another  day. 
191.  Hardenburg  v.  Farmers'  etc. ,  Bank, 

4  Atlantic  Delaine  Co.  v.  Mason,  3  N.  J.  Eq.  68. 

5  R.  I.  463  ;  People's  Mutual  Insur-  7  Craig    v.     First     Presbyterian 

ance  Co.  v.  Westcott.  14  Gray,  440.  Church,  88  Pa.  St,  42  :  Everel  t    v. 

5  Machell  v.  Nevinson,  2  Ld.  Smith,  22  Minn.  53  ;  Field  r.  Field, 
Raym.  1355 ;  St.  Louis  v.  Withans,  9  Wend.  305. 

90  Mo.  646  ;  s.  c.  16  Mo.  App.  247.  8  Brown  v.  Pacific  Mail   Steam- 

6  Rex  v.  Carmarthen,  1  Maule  &  ship  Co.,  5  Blatchf.  525  ;  Columbia 
S.  696  ;  Scadding  v.   Lorent,  3  H.     Bottom  Co.  v.  Meier,  39  Mo.  53. 


54  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  V. 

present.  In  such  an  instance  there  is  no  election.1  Stock- 
holders at  a  meeting  who  do  not  vote  are  bound  by  the 
result.2 

Sec.  51 — Right  to  Vote. 

T7here  a  charter  was  granted  to  certain  named  persons, 
"  and  their  associates,"  it  was  held  that  such  persons  could  hold 
an  election  without  first  associating  any  others  with  them.3 
The  usual  test  of  the  right  of  a  stockholder  to  vote  is  the 
stock-book  of  the  association,  showing  who  holds  stock.4 
The  executor  of  a  deceased  stockholder  is  entitled  to  vote 
his  decedent's  stock,  on  proof  of  his  office  ; 5  and  in  such  a  case 
there  need  be  no  transfer  on  the  books  of  the  association  to 
him.6  So  may  a  surviving  partner,  at  least  until  the  part- 
nership business  is  closed  up ; "  and  also  a  trustee  holding 
stock  in  his  name  for  others.8  If  stock  stand  in  the  names 
of  two  jointly  they  must  agree  how  the  vote  shall  be  cast, 
else  they  cannot  vote.9  The  pledgor  of  shares  has  the  right 
to  vote  them,  unless  they  have  been  transferred  on  the 
books  to  the  pledgee.10  But  the  corporation  cannot  vote  its 
own  stock  assigned  to  it  on  a  pledge  for  a  loan  or  the  like  ; n 
for  thereby  the  officers  voting  such  stock  might  succeed  in- 
keeping  themselves  perpetually  in  office.  A  trustee  who 
holds  the  stock  for  the  benefit  of  the  corporation  may,  ho  w- 

1  State  v.  Wilmington.  3  Harr.  s  Ex  parte,  Baker,  6  Wend.  509. 
(Del.)  294;  Ellsworth  Woolen  Mf.  9  In  re  Pioneer's  Paper  Co.,  36 
Co.  r.  Faunce,  79  Me.  440  ;  s.  c.  10  How.  Pr.   Ill ;    Dennison  v.  Jeffs, 
Atl.    Rep.   250;    I   New  Eng.  Rep.  [1896]  1  Ch.  611  ;  s.  c.  65  L.  J.  Ch. 
679.  435  :    IIL.T.  270  ;  44  W.  R.  476. 

2  State  v.  Chute,  34  Minn.  135.  l0  Scholfield  v.    Union    Bank.   2 
■■■  I  [ugh  s  v.  Parker,  19  N.  H.  181 ;  Cranch.  C.  C.  115  :  Ex  parte  Will- 
see  Lechmere  Bank  v.  Boynton,  11  cocks,   7    Con.   402;    s.  u.  17    Am. 
Cush.  369.  Dec.  525;  Hoppin  v.  Buffum,  9  R. 

■'  Boppin  r.  Buffum,  9  R.  I.  513;  I.  513;  s.  c.  11  Am.  Rep.  291  ;  Mc- 

B.  c.   II    Am.    Rep.   291 ;  State  v.  Henry  v.  Jewett,  26  Hun,  453. 
Ferris,  1 2  I  lonn.  560  ;  Peoples.  Rob-        "  McNeely  v.  Woodruff,  13  N.  J. 

inson,  64  Cal.  878.  L.  352;  Ex  parte  Holmes,  5  Con. 

///   re  Cape  May,  etc.,  Co.,  51  435;  Ex  parte  Willcocks,  7  Con. 

N.  .1.  L.  7^  :  s.  o.  L6  Atl.  Rep.  101.  402;  s.  c.  17  Am.  Dec.  525;  Wood- 

•  Tn  re  North  Shore  Ferry  Co., 63  ruff  v.  Dubuque,  etc.,  R.  R.  Co., 

Barb.  556.  -'<>  Fed.  Rep.  91. 

i  All- n  r.  Bill,  16 Cal.  118. 


§  52.  GOVERNMENT.  55 

ever,  vote  it.1  In  the  absence  of  a  statute  or  a  valid  by- 
law, a  shareholder  cannot  authorize  some  one  else  to  vote 
his  shares  by  proxy.2  The  corporation,  without  any  statu- 
tory provision,  may  authorize  by  a  by-law  the  voting  of 
shares  by  a  proxy  duly  given.3  Even  though  it  be  given  for 
a  valuable  consideration,  a  proxy  may  be  revoked  by  the 
person  giving  it,  or  by  his  assignee  duly  registered  on  the 
books  of  the  association.4  If  the  charter  or  a  statute  pro- 
vide that  a  vote  may  be  cast  by  proxy,  the  corporation  by 
a  by-law  cannot  deprive  the  owner  of  such  right,  or  so 
encumber  it  as  to  render  it  practically  worthless.5  Stock- 
holders may  be  represented  at  a  meeting  at  which  action  is 
taken  to  increase  the  assets,  in  pursuance  of  a  notice,  given 
by  an  officer  of  the  state,  calling  a  meeting  of  the  stock- 
holders for  that  purpose.6  Courts  will  grant  an  injunction 
to  prevent  the  voting  for  a  proposition  ultra  vires  to  the 
corporation.7  A  non-resident  stockholder  may  vote  his 
stock ; 8  even  so  may  a  foreign  executor  on  producing  an 
exemplified  copy  of  his  letters.* 

Sec.  52 — Conduct  of  an  Election. 

If  any  statute  prescribes  the  method  or  mode  of  conduct- 

1  Brewster  v.  Hartley,  37  Cal.  15  ;  6  Broadwell,  v.  Inter-Ocean 
s.  c.  99  Am.  Dec.  237 ;  Union  Sav-  Homestead  and  Loan  Association, 
ings  Association  v.  Seligman,  92  161  111.  327  ;  s.  c.  43  N.  E.  Rep.  1067. 
Mo.  635  ;  s.  c.  15  S.  W.  Rep.  630.  '  Campbell  v.  Poultney,  6  Gill  & 

2  Phillips  v.  Wickham,  1  Paige,  J.  94 ;  Webb.  v.  Ridgely,  38  Md. 
590.  365  ;  Busey  v.  Hooper,  35  M<1.  27  ; 

3  State  v.  Tudor,  5  Day,  329  ;  s.  c.  Pfaff  v.  Kensington  Building  As- 
5  Am.  Dec.  162 ;   Commonwealth  sociation,  6  W.  N.  Cas.  349. 

v .  Detwiller,  131  Pa.  St.  614 ;  7  L.  Touching     distinctions    on    this 

R.    A.   357  ;  47   Leg.    Int.    144 ;  20  point,  see  Woodruff  v.  Dubuque, 

Pitts  L.J.  (N.  S.)378;  18  Atl.  Rep.  etc.,  R.  R.  Co..  30  Fed.  Rep.  91; 

990;  People  v.  Crowley,  69  111.  195  ;  and  Converse  v.  Hood,  149  Mass. 

Contra,  Taylor  v.  Griswold,  14  N.  471  ;  s.  c.  21  N.  E.  Rep.  878. 

J.  L.  222;  s.  c.  27  Am.  Dec.  33;  8  Detwiller    v.     Commonwealth, 

People  v.  Twaddell,  18  Hun,  427 ;  131  Pa.  St.  614  :  s.  C.  25  W.  X.  C. 

see  Smith  v.  Smith,  3  Desau  (S.  C),  329,   47   Leg.   Int.    144  ;   Common- 

557.  wealth  v.  Hemingway,  131  Pa.  St. 

4  Reed  v.  Bank,  6  Paige,  337.  614  ;  s.  C.  7  L.  R.  A.  360  ;  25  W. 

5  In  re  White  v.  N.  Y.  Agricul-  Mas.  337  ;  18  Atl.  Rep.  962. 

tural  Society,  45  Hun,  580;  S.  C.        9  In  re  Cape  May,  etc.,  Co.,  51 
10  N.  Y.  St.  Rep.  594.  N.  J.  L.  78  ;  s.  c.  Atl.  Rep.  191. 


5t>  BUILDING   AND    LOAN    ASSOCIATIONS.  Ch.  V. 

ing  an  election,  that  method  must  be  substantially  followed 
to  render  it  valid  ;  but  if  there  be  no  such  statute,  then  it 
may  be  regulated  by  a  by-law  duly  adopted.1  If  a  statute 
prescribes  the  appointment  of  three  inspectors,  an  election 
held  where  only  two  are  appointed  will  be  valid.2  When 
the  inspectors  are  appointed  by  an  officer  not  authorized  to 
do  so,  the  election  held  by  them  will  be  void  ; 3  but  not  so 
when  the  corporators  take  it  upon  themselves  to  make  the 
appointment.4  A  shareholder  who  is  a  candidate  may  serve  as 
an  inspector.5  If  the  right  of  a  member  to  vote  be  chal- 
lenged the  inspectors  must  determine  his  right  from  an 
inspection  of  the  books  closed,  and  cannot  make  inquiries 
outside  thereof.6  If  a  proxy  offered  is  regular  in  form,  and 
apparently  the  act  of  the  stockholder,  the  inspectors  must 
receive  the  vote  it  represents,  and  cannot  enter  upon  an 
inquiry  touching  whether  or  not  it  is  a  forgery."  If  the 
vote  be  by  ballot,  then  the  ballot  as  voted  must  be  counted 
and  the  intention  of  the  person  voting  it  cannot  be  inquired 
into.8  If  two  ballots  be  cast  folded  together,  both  must  be 
rejected.9  And  if  three  directors  are  to  be  elected  and  a 
ballot  is  cast  with  four  names  upon  it,  it  must  be  rejected.10 
A  vote  cast  for  an  ineligible  person  is  thrown  away,  and  such 
vote  cannot  be  counted  in  determining  how  many  ballots 
were  cast.11 

i  Commonwealth   v.  Wcelper,   :i  382  ;  Peoples  Tibbetts,  4  Cow.  358. 

s.  &   ];.  29;  S.  <'.  8   Am.  Dec.  628;  T  ///  re  Cecil,  36  How.   Pr.    177  ; 

State  '■.  Tudor,  ~>  Day,  329  ;  s.  c.  ■">  Tn  re  St.  Lawrence  Steamboat  Co., 

Am.   Dec.  162;  Commonwealth    v.  44  N.  J.  L.  529. 

Detwiller,  131    Pa.  St.  614  ;  s.  c.  25  A    person  holding  a   proxy  who 

\Y.  NT.  Cas.  329;   IT  Leg.   Int.   Ill:  acquiesces  in  a    decision  that   he 

20    Tin-.  I..  .1.  (N.S.)  378;  7  L.  R.  cannot    vote  will  he  held  to  have 

A.  357 ;  18  Atl.  Rep.  990.  consented  to  such  a  decision.    State 

-  In  re  Excelsior  Fire  Insurance  /•.Chute.  :'.!  Minn.  135;  S.  C.  24  N. 

Co..  16  A hh.  Pr.  8.  W.  Rep.  253. 

pie  v.  Peck,  M  Wend.  604  ;  -  Lonbat  v.  Le  Roy,  15  Abb.  Pr. 

.'I      \im.    Dec.    101.      See  Slate    /\        I  X.    S.  )     II. 

Merchant,  ■■'>  <  >hio  St.  251.  9  People  v.  Seaman.  .".  Denio,  409. 

'•  Tn  re  Wheeler,  2  Abb.  Pr.  361.;  l0  People  v.  Loomis,  8  Wend.  396. 

Ex  parte  Willcocks,  7  Cow. 402  stale  y.  Thompson,  27  Mo.  365. 

s.  c.  17  Am.  Dec.  525.  "  See  2  Burr,  1021, note.   But  see 

'■l,i   re   Long   Island    R.    h\,    19  Tn  re  St.  Lawrence  Steamboat  Co., 

Wend.  87;  People  v.  Kip.   I  Cow.  I4N.  J.L.529. 


£  53.  GOVERNMENT.  57 

Sec.  53 — Number  of  Votes  a  Stockholder  may  Cast. 

It  is  a  general  rule  that  in  joint  stock  corporations  a 
stockholder  may  cast  a  vote  for  each  share  of  stock  he  owns. 
But  such  is  not  the  rule  in  building  and  loan  associations. 
In  such  institutions  a  member  of  the  association  has  only 
one  vote,  whether  he  own  one  or  any  number  of  shares. 
This  limitation  has  been  established  by  a  custom  arising  out 
of  the  peculiar  construction  of  these  societies.1  No  doubt 
the  charter,  or  even  a  by-law,  of  the  association  may  provide 
a  different  rule  ;  such  as  giving  more  votes  for  each  share  of 
stock  held.2 

i  There  is  no  direct  adjudication  48  L.  J.  Ch.  341 ;  40  L.  T.  353  ;  47 

on  this  point,  but  see  State  v.  Roh-  W.  R.  433. 

liffe  (N.  J.  L.),  19  Atl.  Rep.  1099,  2  A  member  may  hold  any  nuni- 

where  the  practice  seems  to  have  ber  of  shares.     Morrison  v.  Glover, 

been  recognized.     See  also  Cutbill  19  L.  J.  Ex.  20,  25 ;  4  Exch.  430 ; 

v.  Kingdom,  1  Exch.  494:  s.  c.  17  14  L.  T.  (O.  S.)  204;  14  L.  P.  84; 

L.  J.  Exch.  177,  and  hire  Horbury  Murray  v.   Scott,  9  App.   Cas.   p. 

Bridge  Coal  Co.,  11  Ch.  Div.  109;  519. 


CHAPTEK  VI. 

OFFICERS,    THEIR    POWERS    AND    LIABILITIES. 
Sec.    54.  Usual  Officers. 

PRESIDENT. 

Sec.    55.  President's  Election — Resignation. 

56.  Proving  President's  Official  Character. 

57.  Power  to  Bind  Association. 

58.  Acts  in  Manifest  Violation  of  his  Duty. 

59.  Acting  for  Another  or  for  Himself. 

60.  Implied  Powers — Two  Theories. 

61.  Proof  of  Power  to  Act. 

62.  Custom,  Usage  or  Habit  of  Acting  Enlarging  his  Powers. 

63.  How  he  should  Execute  Contracts. 

64.  Discharging  Duties  of  Other  Officers. 

65.  Declarations  and  Admissions. 

66.  Notice  to  President  on  Effecting  Corporation. 

67.  Liability. 


68.  Compensation. 

69.  Nature  of  Office. 


VICE-PRESIDENT. 


SECRETARY. 

70.  Status. 

71.  Length  of  Office. 

72.  ( lustodian  of  Seal. 

7:;.  Keeper  of  Corporate  Records. 

71.  Medium  of  <  lommunication  with  the  Public. 

75.  Power  to  Bind  Corporation. 

76.  Notice  to,  AN'  Inn  not  Binding  on  Corporation. 
;;.  Transfers  of  Stock. 

78.  Liability  on  Bond. 

79.  <  lompensation. 

TREASURER. 

st).  Elections— Status— Duties. 

81.  Power  to  Contract  for  Association. 

83.  Settlement  of  Debts    Release  of  Claims. 

88.  Power  to  Bring  Suit  or  Confess  Judgment. 

E  I.  Liability  on  Bond. 

58 


§  54.  OFFICERS — PRESIDENT.  59 

ATTORNEY. 

85.  Appearance  of  Association  by  Attorney. 

86.  Who  may  Employ. 

87.  Eetainer  and  Authority. 

ACTUARY  OR  SURVEYOR. 

88.  Officers. 

DIRECTORS. 

89.  Essential  to  Association — Tenure  of  Office. 

90.  Election. 

91.  Right  to  Vote  at  an  Election. 

92.  Proof  of  Acceptance  of  Office — Resignation. 

93.  Defacto  Directors,  and  the  Validity  of  their  Acts. 

94.  Must  Act  together. 

95.  Individual  Director's  Powers. 

96.  Voting  by  Proxy. 

97.  Majority  Rule — Quorum. 

98.  Presumption  Concerning  Acts  of  Board. 

99.  Ratification  of  Act  Performed  by  Less  than  Majority. 

100.  Board  Contracting  with  One  of  its  own  Number. 

101.  President  Counts  as  a  Director. 

102.  Accidental  Meetings. 

103.  Meetings  Outside  of  State. 

104.  Board  Must  be  Duly  Assembled — Notice. 

105.  Directors  Cannot  Delegate  Powers. 

106.  Directors'  General  Powers. 

107.  General  Obligations  of  Directors — Liability. 

108.  Contracts  with  Corporation. 

109.  Liability  of  Directi us. 

110.  Liability  in  Particular  Instances  of  Building  Associations. 

111.  Association  may  Sue  its  Director  for  Losses  Incurred. 

112.  Liability  of  Directors  to  Creditors. 

113.  Director's  Compensation. 

TRUSTEES. 

114.  Nature  of  Office. 

OFFICERS,    THEIR    POWERS    AND    LIABILITIES. 

Sec.  54 — Usual  Officers. 

The  usual  officers  of  a  building  association  are :  (1)  Pres- 
ident ;  (2)  Yice-President ;  (3)  Secretary ;  (4)  Treasurer ; 
(5)  Board  of  Directors ;  (6)  Trustees,  occasionally ;  to  which 
may  be  added ;  (7)  Attorney  or  Solicitor.  The  authority, 
power  and  liability  of  each  one  of  these  several  officers  will 
be  discussed.1 

1  The  rule  which  governs  the  ing  association,  who  knows  of  the 
dealings  of  a  depositor  in  a  build-    limitations  imposed  by  the  consti- 


60  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  V. 

PRESIDENT. 

Sec.  55— President's  Election— Resignation. 

The  President  is  the  presiding  officer,  not  only  of  the  Board 
of  Directors  of  a  building-  association ;  but  also  of  its  stock- 
holders at  their  general  meeting.  Unless  a  statute,  or  the 
charter  or  the  by-laws,  require  him  to  be  elected  by  the  share- 
holders, he  is  elected  by  the  Board  of  Directors.  As  a 
member  of  the  Board  of  Directors  he  is  entitled  to  vote  upon 
all  questions  coming  before  it,  including  the  question  who 
shall  be  his  successor  ;  and  if  a  successor  to  him  be  elected  at 
a  meeting  of  which  he  has  had  no  notice,  the  election  will  be 
void.1  He  cannot  resign  his  office  so  it  will  be  effectual,  it 
has  beea  held,  until  his  resignation  has  been  accepted  by 
the  Board  of  Directors.2 

Sec.  56 — Proving  President's  Official  Character. 

To  establish  the  official  character  of  the  president  it  is 
sufficient  to  prove  that  he  acted  in  that  capacity  in  the 
affairs  and  dealings  of  the  society.3  And  if  an  unauthorized 
person  act  as  president,  the  society  may  so  ratify  and  adopt 
his  act  that  it  will  be  bound  by  it.4  This  is  especially  true 
where  the  society  avails  itself  of  the  benefit  of  a  contract 
made  for  it  in  its  name  by  a  person  at  the  time  unauthorized 
to  bind  it.5  Where,  however,  evidence  of  this  kind  cannot 
be  resorted  to,  it  must  be  shown  that  he  is  president  de  jure  y 
and  this  proof  may  be  made  by  parol  or  by  thebooksof  the 
•iai  ion.6 

tution  on  the  officers,  do  not  apply  49  N.  Y.  Supr.  St.  Rep.  715;  s.  c. 

as  againsl   these  persons  who  are  21  N.  Y.  Supp.  764  :  15  Daly,  ■V-)~. 
not  aware  of  any  restrictions  upon        8  Cahill  v.    Kalamazoo    Mutual 

the  apparent  powers  of  such  offi-  [nsurance  Co.,  2    Doug.    (Mich.) 

S:n-lis   /•.    Duckworth,   He,  124 ;  s.  C.  43  Am.  Dec.  \'u. 
ii    6   Ohio    l»i'-.    354;    s.    c.    I        *  Blackman  v.    Branch  Bank,  8 

Ohio  X.  I'.  ".'I  I.  Ah.  103. 

i  State  v.  Smith,  15  Ore.  98 ;  s.  C.        B  Kennedy   v.   Cotton,  28  Barb. 

!  I   Pac.   Rep.  814  ;  Jordoin  v.  Die  59. 

!  Lower  C.  Jur.  825.  '''  Cr:i\\  ford    v.    Branch    Bank,    7 

2  Duranl  Land  [mprovemenl  Co.  Ala.  205, 

V.  Tli'. i, i   .,n    I  |..ii    tun    Eled  ri<-   '  '<>., 


§  58.  OFFICERS — PRESIDENT.  61 

Sec  57— Power  to  Bind  Association. 

Within  the  scope  oi'  his  authority  the  acts  of  the  presi- 
dent in  the  management  of  its  business  are  the  acts  of  the 
society.1  Acts  outside  the  corporate  business  do  not  bind 
the  society.2  Any  contract  which  is  partly  for  himself  and 
partly  for  the  association  will  not  bind  the  latter,  unless  the 
rights  of  innocent  persons  be  involved  ;  for  he  must  act 
wholly  for  the  association  in  order  to  bind  it.3  So,  if  a 
certain  matter  has  been  referred  to  the  board  of  directors  he 
cannot  usurp  their  authority  and  bind  the  association  with 
reference  to  such  matters.4  If  he  have  no  power  to  make  a 
contract  with  reference  to  a  certain  subject,  he  has  no  power 
to  affirm  a  contract  made  by  his  predecessor  with  reference 
to  that  subject.5  Where  he  has  power  to  enter  into  a  con- 
tract and  bind  his  association,  he  has  the  relative  power  to 
release  a  party  to  the  contract  or  substitute  another  in  his 
stead.6 

Sec.  58— Acts  in  Manifest  Violation  ot  His  Duty. 

An  act  which  is  manifestly  in  violation  of  his  duty  will 
not  bind  his  association;  and  all  persons  dealing  with  him 
are  chargeable  with  notice  of  his  lack  of  authorit}^  in  such 
instances.7  Such  would  be  an  instance  of  the  waiver  of  the 
performance  of  the  terms  of  the  contract  entered  into  by 
the  board  of  directors.8     And  this  is  especially  true  if  he  be 

1  Topeka  Primary  Association  v.  4  Third  Avenue  R.  R.  Co.  v. 
Martin,  39  Kan.  750  :  s.  c.  18  Pac.     Ebling,  12  Daly,  99. 

Rep.   941  ;  Kenton  Insurance  Co.  5  Lyndon    Mill  Co.    v.    Lyndon 

v.  Bowman,  84  Ky.  430 ;  s.  C.  1  S.  Literary,  etc.,    Institute,    63    Vt. 

W.   Rep.   717  ;    Marlatt  v.    Levee  581  ;  s.  c.  25  Am.  St.  Rep.  783  ;  22 

Steam  Cotton  Press  Co.,    10   La.  Atl.  Rep.  575. 

583  ;  s.  C.  29  Am.  Dec.  468  ;  Siebe  6  Indianapolis  Rolling  Mill  Co.  v. 

v.  Joshua  Hendy  Machine  Works,  St.  Louis,  etc.,  R.  R.  Co.,  26  Fed. 

86  Cal.  390 ;  Lancaster  County  v.  Rep.  140. 

Cheraw,  etc.,  R.  R.  Co.,  28  S.  C.  »  Brouwer  v.  Appleby,  1  Sandf. 

135.  158  ;  Brouwer  v.  Hill,  lSandf.  629  ; 

2  Alpena  National  Bank  v.  Green-  Spyker  v.  Spence,  8  Ala.  333. 
baum,  80  Mich.  1  ;  S.  C.  44  N.  W.  8  Dawes  v.    North   River  Insur- 
Rep.  1123.  ance  Co.,  7  Cow.  462.     See  contra, 

3  First  National  Bank  v.  Gifford,  Haynes  v.  American  Popular  Life 
47  la.  575  ;  Claflin  v.  Farmers',  etc.,  Insurance  Co.,  3  Jones  &  Sp.  266. 
Bank,  25  N.  Y.  293. 


62  BUILDING  AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

personally  interested.1  lie  cannot  by  collusion  loan  out  the 
funds  of  the  association  to  a  known  irresponsible  party ; 2 
nor  can  he  (even  with  the  consent  of  the  secretary)  with- 
draw funds  from  the  custody  of  the  treasurer,  and  deposit 
them  elsewhere.3 

Sec.  59— Acting  for  Another  or  for  Himself, 

His  association  is  not  bound  by  a  contract  where  he 
clearly  acts  as  the  special  agent  of  a  third  person 
and  not  as  an  agent  of  the  association.4  Nor  is  his 
association  liable  where  he  acts  for  himself  and  not  for 
it.5  His  corporation  is  not  bound  for  money  he  borrowed, 
and  gave  his  individual  note,  even  though  such  money  was 
borrowed  for  the  benefit  of  the  association  and  so  actually 
used ;  evidence  to  show  an  undisclosed  principal  being  in- 
admissible, because  it  would  be  a  violation  of  the  statute  of 
frauds,  the  promise  of  such  a  collateral  contract  must  be  in 
writing  to  be  binding  upon  it.6 

Sec.  60— Implied  Powers — Two  Theories. 

Two  theories  prevail  with  reference  to  the  right  of  those 
dealing  with  the  president  of  an  association  to  presume  he 
has  authority  to  bind  his  association  with  reference  to  the 
particular  transaction.  First.  The  president  of  a  business 
corporation  has  the  authority  of  a  general  agent  for  the 
purpose  of  binding  it  by  contracts  made  within  the  ordi- 
nary scope  of  its  business  ;  and  a  person  dealing  with  him, 

1  Gallery  v.  National   Exchange  Mich.  1 ;  s.  c.  44  N.  W.  Rep.  1125; 

Bank.  II    Mich.    L69 ;  S.  C.  32  Am.  First  National  Bank  v.  Bennett,  33 

Rep.  I  19.  Midi.  520. 

-  I'n  1    National    Bank  v.  Reed,  °  Wisconsin,  etc.,  Bank  v.  Filer, 

36    Mich.   263;    Bank    of    United  83   Mich.   496 ;  s.  c.  80  Mich.  67; 

Statesu.  Dunn,  6  Pet.  51 ;  Bankof  Hall  v.   Auburn  Turnpike  Co.,  27 

Metropoli      v.    Jones,   8    Pet.    12;  Cal.  255 ;  s.  c.  85  Am.  Dec.  75. 

Eodge  v.  First  National   Bank,  22  6  Bauman  v.  Manistee  Salt,  etc., 

Gratt.  51.  Co.,  94  Mich.  363;  s.  c.  53  N.  W. 

8  Citizens' Savings  &  Loan  Asso-  l>V|>.   1113;  Arnkens  v.   Rouse,   26 

ciation  v.  Ruhl,  55  [11.  A.pp.  65.  Ohio   L.  J.  221  ;  Tradesmen's  Na- 

1  St.    Nicholas  Insurance  ''<>.   v.  tional  Bank  v.  Manhattan  Lumber 

Ho                   w.    150;    Alpena  Na-  Co.,  L8  N.  Y.  Supp.  920. 
tional     Bank    v.    Greenbaum,   80 


§60. 


OFFICERS — PRESIDENT. 


63 


in  the  absence  of  notice  to  the  contrary,  has  the  right  to 
act  upon  that  assumption.1  Second.  The  president  has  no 
implied  authority,  by  virtue  of  his  office,  to  act  as  the  agent 
of  his  corporation,  but  derives  his  power,  like  other  agents, 
from  the  board  of  directors,  who  wield  the  powers  of  the 
corporation  and  exercise  an  original  rather  than  a  delegated 
power,  or  he  derives  it  from  the  corporation  itself.  In  all 
such  instances,  when  his  authority  is  challenged,  he  must 
show  a  delegation  of  power  from  the  directors  or  from  the 
corporation  itself  in  express  terms  or  such  as  may  be  im- 
plied from  the  habit  of  acting  with  their  apparent  consent.2 


1  Marlatt  v.  Levee  Steam  Cotton 
Press  Co.,  10  La.  583  ;  s.  C.  29  Am. 
Dec.  468  ;  Chicago,  etc.,  R.  R.  Co. 
v.  Boone  County,  44  111.  240  ;  Voris 
v.  Renshaw,  49  111.  425  ;  Moser  v. 
Kreigh.  49  111.  425;  Chicago,  etc., 
R.  R.  Co.  v.  Coleman.  18  111.  297  ; 
s.  c.  68  Am.  Dec.  544 ;  Sparks  v. 
Dispatch  Transfer  Co.,  104  Mo. 
531  ;  s.  C.  24  Am.  St.  Rep.  351  ; 
Richmond,  etc.,  R.  R.  Co.  v.  Snead, 
19  Gratt.  354  ;  s.  C.  100  Am.  Dec. 
670  ;  Dougherty  v.  Hunter,  54  Pa. 
St.  380  ;  Steamboat  Co.  v.  Mc- 
Cutcheon,  13  Pa.  St.  13  ;  Smith  v. 
Smith,  62  111.  493  ;  Bambrich  v. 
Campbell,  37  Mo.  App.  460  ;  Ceeder 
v.  Load.  &  Sons  Lumber  Co.,  86 
Mich.  541  ;  S.  C.  24  Am.  St.  Rep. 
134 ;  Griffins  v.  Land  Co. ,  3  Phila. 
447 ;  Siebe  v.  Joshua  Hendy  Ma- 
chine Works,  86  Cal.  390  ;  Lancas- 
ter Co.  v.  Cheraw,  etc.,  R.  R.  Co., 
28  S.  C.  134 ;  Topeka  Primary  As- 
sociation v.  Martin,  39  Kan.  750  ; 
s.  c.  18  Pac.  Rep.  941 ;  Kenton  In- 
surance Co.  v.  Bowman,  84  Ky. 
430  ;  s.  c.  1  S.  W.  Rep.  717  ;  Ex 
parte  Sargeant,  17  Vt.  425 ;  Car- 
roll v.  Cone,  40  Barb.  220. 

As  an  illustration  it  may  be 
stated  that  if  a  corporation  is  en- 
gaged in  the  manufacture  and 
sale  of  a  certain  article,  it  will  be 


presumed  that  its  president  has 
authority  to  make  sales  of  that 
article  in  the  ordinary  course  of  its 
business.  Horton  Ice  Cream  Co.  v. 
Merritt,  63  Hun,  628  ;  s.C.  17  N.  Y. 
Supp.  718. 

2  Holbrook  v.  Fanquier,  etc., 
Turnpike  Co.,  3  Cranch  C.  C.  425  ; 
Wait  v.  Nashua  Armory  Associa- 
tion, 23  Atl.  Rep.  (N.  H.)  77  ;  14  L.  R. 
A.  356  ;  34  Cent.  L.  J.  119  ;  Mount 
Sterling,  etc.,  Turnpike  Road  Co. 
v.  Looney,  1  Met.  550  ;  s.  c.  71  Am. 
Dec.  491  ;  First  National  Bank  v. 
Kimberlands,  16  W.  Va.  555; 
Hodge  v.  First  National  Bank,  22 
Gratt.  51  ;  Brooklyn  Gravel  Road 
Co.  v.  Slaughter,  33  Ind.  185  ;  West- 
ern R.  R.  Co.  v.  Bayne,  11  Hun, 
166 ;  Bacon  v.  Mississippi  Insur- 
ance Co.,  31  Miss.  116;  Walworth 
County  Bank  v.  Farmers'  Loan, 
etc.,  Co.,  14  Wis.  325;  Westerfield 
v.  Radde,  7  Daly,  326  ;  Mahone  i\ 
Manchester,  etc.,  R.  R.  Co.,  Ill 
Mass.  72;  S.  C.  15  Am.  Rep.  9; 
Titus  v.  Cairo,  etc.,  R.  R.  Co.,  37 
N.  J.  L.  98  ;  Dawes  v.  North  River 
Ins.  Co.,  7  Cow.  462  :  Marine  Bank 
v.  Clements  :;  Bosw.,  600  :  Farmers' 
Bank  v.  McKee,  2  Pa.  St.  318  : 
Westcott  r.  Atlantic  Silk  Co.,  3 
Met.  282. 

This  rule  would  limit  the  func- 


64  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

Under  ikejlrst  theory  the  president,  as  we  have  said  in  the 
note,  has  power  to  make  sales,  in  the  ordinary  course  of  the 
business,  of  commodities  in  which  it  deals  ; 1  to  employ  at- 
torneys to  defend  and  prosecute  ordinary  litigation  of  the 
corporation  ; 2  to  transfer  negotiable  paper  in  the  ordinary 
course  of  business,  and  for  that  purpose  to  indorse  it  and 
thereby  bind  the  company ; 3  to  purchase  chattels  used  in 
the  ordinary  course  of  its  business,4  and  to  give  the  note  of 
the  corporation  in  payment;5  to  so  acknowledge  a  debt 
as  to  take  it  out  of  the  statute  of  limitations ; 6  to 
secure  a  debt  due  the  company,  even  by  a  convey- 
ance of  land  to  himself;7  to  authorize  a  broker  to 
sell  certain  stock  which  the  company  has  taken  to 
secure  a  loan  ; 8  and  to  assign  mortgages  payable  to  him- 
self given  by  shareholders  to  secure  the  payment  of 
their  respective  shares.9  Under  the  second  theory  the 
president  of  a  corporation  has  no  power  to  bind  the 
corporation,  that  a  note  shall  be  given  up  at  its 
maturity  without  payment ; 10  to  agree  to  an  agreement 
whereby  in  order  to  secure  his  release  as  an  indorser,  the 
security  of  a  debt  due  his  company  will  be  impaired ; u  to 

tions  of  a  president  to  presiding  4  Sparks    v.   Dispatch   Transfer 

over  the  directors  and  stockholders  Co.,  104  Mo.  531 ;  S.  C.  24  Am.  St. 

at  their  respective   meetings,  and  Rep.  351 ;  12  L.  R.  A.  714 ;  15  S. 

limit  his  power  to  deal  with  the  W.  Rep.  417  ;  34  Am.  &  Eng.  Corp. 

public  to  the  extent  he  is  especially  Cas.  373. 

empowered.      Lyndon  Mill  Co.  v.  5  Richmond,  etc.,   R.  R.  Co.  v. 

Lyndon   Literary,   etc.,  Institute,  Sneed,  19  Gratt,  354  ;  s.  c.  100  Am. 

63  Vt,  581  ;  s.  c.  25  Am.   St.  Rep.  Dec.  670. 

783  ;  22  Atl.  Rep.  575  ;  Steam  Boat  6  Morgan  v.  Merchants'  Bank,  13 

<  !o.  v.  McCutcheon,  13  Pa.  St.  13.  Lea,  234. 

1  Borton  Ice  Cream  Co.  v.  Mer-  7  Brown  v.  Mechanics,  etc.,  Na- 

ritt,  03   Hun,   628;  s.  c.   17  N.  Y.  tional  Bank,  58  Hun,  610,  mem.; 

S,,,,,,.  7 is.  s.  C.  18  N.  Y.  Supp.  861 ;  35  N.  Y. 

-  Wei  berbee  v.  Fitch,  117  111.  67  ;  St.  Rep.  665. 

American  Insurance  <  '<>.  '■.  <  takley,  8  Sistare  v.  Best,  16  Hun,  611. 

'.i  Paige,  196  ;  S.  C.  38  Am.  Dec.  561  «  Yalk  v.  Crandall,  1  Sandf.  179. 

Reno  Water  Co.  v.  Leete,  \7  Nev.  l0  Brouwer  v.  Applehy,  1  Sandf. 

1 58. 

;  Howland  /■.  Myer,  :;  N.  Y.  290;  "  Gallery  v.    National  Exchange 

Palmer  v.  Nassau  Bank,  78  [11.380;  Bank,  41  Mich.  169;  s.  c.  32  Am. 

Irwin  v.  Bailey,  8  Biss.  528;  Caryl  Rep.  149. 
v.  McElrath,  :;  Sandf.  176. 


§60. 


OFFICERS PRESIDENT. 


65 


stay  an  execution  held  against  a  debtor  of  the  company  by 
using  its  name  ;J  to  bind  the  corporation  by  acts  done  for 
himself  personally  ; 2  to  make  a  contract  for  the  purchase 
of  materials  to  repair  the  company's  buildings  ; 3  to  make  an 
affidavit  of  local  prejudice,  in  order  to  secure  the  removal  of 
a  cause  of  action  to  the  United  States  courts  ; 4  to  change 
contracts  authorized  by  the  directors  after  they  have  been 
made;5  to  make  admissions  which  will  release  the  maker  of 
a  note  given  to  the  association  ; 6  to  accept  an  order  on  a 
third  person  in  satisfaction  of  a  note  held  by  the  company ;  7 
to  convey  real  estate  owned  by  it ; 8  to  commence  an  action 
on  behalf  of  the  corporation,  or  to  appear  for  it,  in  court  and 
thereby  bind  it  by  the  result  of  the  litigation  ; 9  to  confess  a 
judgment  against  the  corporation ; 10  to  give  the  power  of 
attorney  to  confess  a  judgment;11  to  sell  the  company's 
lands  ; 12  to  make  an  assignment  of  the  company's  property 

1   Pick.    215 


1  Spyker  v.  Spence,  8  Ala.  333. 

2  Smith  v.  Los  Angeles,  etc.,  As- 
sociation, 78  Cal.  289  ;  Wisconsin, 
etc.,  Bank  v.  Filer,  83  Mich.  496  ; 
s.  c.  80  Mich.  67  ;  Hall  v.  Auburn 
Turnpike  Co.,  27  Cal.  255  ;  s.  c.  87 
Am.  Dec.  75. 

3  Lyndon  Mill  Co.  v.  Lyndon  Lit- 
erary, etc.,  Institute,  63  Vt.  581  ; 
s.  c.  25  Am.  St.  Rep.  783. 

4Mahone  v.  Manchester,  etc.,  R.  R. 
Co.,  Ill  Mass.  72  ;  s.  c.  15  Am.  Rep. 
9. 

5  Western  R.  R.  Co.  v.  Bayne,  11 
Hun.,  166. 

6  Hodge  v.  First  National  Bank, 
22  Gratt.  51. 

7  First  National  Bank  v.  Kimber- 
lands,  16  W.  Va.  555. 

8  Leggett  v.  New  Jersey  Manufac- 
turing Co.,  1  N.  J.  Eq.  541  ;  s.  c.  23 
Am.  Dec.  728. 

9  Ellsworth  Woolen  Manufactur- 
ing Co.  v.  Fance,  79  Me.  440  ;  s.  c. 
10  Atl.  Rep.  250  ;  Globe  Works  v. 
Wright,  106  Mass.  207  ;  Markey  v. 
Mutual  Benefit  Insurance  Co.,  102 
Mass.  78 ;  White  v.  Westport  Cotton 

5 


Manufacturing    Co., 
s.  c.  11  Am.  Dec.  168. 

10  Thew  v.  Porcelain  Manufactur- 
ing Co.,  5  S.  C.  415;  Adams®.  Cross- 
wood  Printing  Co.,  27  111.  App.  313; 
Joliet  Electric  Light  Power  Co.  v. 
Ingalls,  23  111.  App.  45;  Stokes  v. 
New  Jersey  Pottery  Co. ,  46  N.  J.  L. 
237. 

11  Stokes  v.  New  Jersey  Pottery 
Co.,  supra.  If  the  power  is  given 
under  seal,  the  seal  implies  prima 
facie  authority  to  execute  the  instru- 
ment, which  may  be  disproved. 
Parker  v.  Receiver,  49  N.  J.  L.  465. 
If  the  president  be  authorized  to 
purchase  property  and  execute  an 
obligation  for  the  payment  of  the 
debt,  he  has  authority  to  insert  in 
the  obligation  a  power  of  attorney 
to  confess  judgment  on  it.  McDon- 
ald v.  Chisholm,  131  111.  273;  s.  c. 
23  N.  E.  Rep.  596;  affirming  S.  C. 
30  111.  App.  176. 

12  Fitzbugh  v.  Franco-Texas  Land 
Co.,  81  Tex.  306;  s.  c.  36  S.  W.  Rep. 
108 ;  Stokes  v.  New  Jersey  Pottery 
Co.,  46  N.  J.  L.  237. 


(36 


BUILDING   AND   LOAN   ASSOCIATIONS 


Ch.  VI. 


for  the  benefit  of  its  creditors;1  to  consent  to  the  appoint- 
ment of  a  receiver;2  to  release  a  debt  due  the  company, 
much  less  give  away  its  assets  ;3  to  relieve  against  a  forfeit- 
ure of  shares  for  non-payment  of  dues  ; 4  to  bind  the  corpora- 
tion by  a  promissory  note,  when  not  given  for  a  debt  he  was 
authorized  to  create  ;5  to  borrow  money  and  bind  the  com- 
pany for  its  payment, even  if  used  in  its  business;6  to  dis- 
pose of  the  notes  belonging  to  the  association,7  or  to  do  any 
act  which  will  have  the  effect  of  overturning  or  revoking  an 
action  of  the  directors.8 


Sec.  61 — Proof  of  Power  to  Act. 

The  power  of  the  president  to  act  and  bind  the  association 
may  be  shown  to  have  been  conferred  by  an  oral  vote  of  the 
board  of  directors  or  stockholders.9  So  it  may  be  circum- 
proved  by  parol.10  So  the  authority  to  act  may  be  shown  by 
stances  alone.11 

1  Hoyt  v.  Thompson,  5  N.  Y.  32n ; 
Walworth  County  Bank  v.  Farmers' 
Loan,  etc.,  Co.,  14  Wis.  325;  Gibson 
v.  Goldthwaite,  7  Ala.  281;  8.  c.  42 
Am.  Dec.  592;  Luse  v.  Isthmus 
Transit  R.  R.  Co.,  6  Ore.  125;  s.  c. 
25  Am.  Rep.  506;  Usher  v.  Sutton, 
31  Kan.  286. 

-  Walters/'.  Anglo-American  Mort- 
gage, etc.,  Co.,  50  Fed.  Rep.  316. 

aOlney  v.  Chadsey,  7  R.  I.  234; 
Bank  of  United  States  v.  Dunn,  6 
JVt.  51  ;    PottS  V.    Wallace,   146  U.   S. 

689;  Thompson    v.    McKee,  5  Dak. 
172;  8.  c.  37  N.  W.  Rep.  367. 

4   Weeks  V.   Silver    Islet,   etc.,   Min- 
ing Co., 55  X.   V.  Supr.  Ct.  1;  s.  c.  8 
N.    Y   St.    Rep.    L10.     But  see    In 
dianapolis  Rolling  Mill  v.  St.  Leone, 
etc.,  R.  R.  Co.,  L20  U.  8.  256. 

•  \\<  Cull   i    b         Moss,  5   I  )eni<>, 

Cattron   '-.    Firsl    Universalist 

Society,  46  la.    106;  see  Richmond, 

R.     R.    (!<>.    r.   Sliced,    I!)  ( Iratt. 

LOO  Am.  Dec.  670. 

8  Life,    etc.,    Insurance   ( '<>.   r.    Me- 

chanii     Fire  Insurance  <  k>.,  7  Wend. 


31 ;  Hyde  v.  Larkin,  35  Mo.  App, 
365.  This  last  act  holds  that  he  can- 
not assign  the  matter  of  the  company 
for  the  loan. 

7  First  National  Bank  v.  Lucas,  21 
Neb.  280. 

8  Madison  Insurance  Co.  v.  Griffin, 
3  Ind.  277;  Tradesmen's  National 
Bank  v.  Manhattan  Lumber  Co.,  18 
N.  Y.  Supp.  920. 

A  court  cannot  presume  that  the 
president  and  secretary  had  author- 
ity to  join  in  the  execution  of  an 
instrument  stating  thai  a  person  who 
had  made  a  note  to  their  building 
association  was  acting  for  a  third 
person  in  so  doing,  and  declaring 
such  note  to  be  the  obligation  of 
such  party.  Novak  ».  Vypomocny, 
etc.,  Ass'n,  68  111.  A  pp.  (182. 

9  Clark  v.  Pratt,  17  Me.  55. 

11  Bank  of  United  States  v.  Dan- 
didge,  L2  Wheat.  64;Magill«.  Kauff- 
man,  I  S.  &  R.  317;  s.  c.  8  Am.  Dec. 

11  Fifth  National  Bank  ».  Navassa 
Phosphate  Co.,  119  N.  V.  256;  s.  c. 


§  63.  OFFICERS — PRESIDENT.  67 

Sec.  62 — Custom,  Usages  or  Habit  of  Acting — Enlarging 
His  Powers. 

If  the  public  perceive  the  president  of  an  association  habit- 
ually exercising  certain  powers  belonging  to  it,  and  no  steps 
are  taken  to  publicly  restrain  him,  they  have  a  right  to  rely 
upon  his  authority  to  act  in  other  instances  of  the  same 
character,  and  the  corporation  will  be  bound  to  any  one  inno- 
cently relying  and  acting  upon  the  appearances  thus  held  out.1 
Thus,  if  he  has  repeatedly  borrowed  money  and  given  the 
obligation  of  the  company  for  it,  authority  to  secure  a  fur- 
ther loan  may  be  inferred.2  And  the  same  is  true  of  the 
indorsement  and  execution  of  notes,3  and  of  drawing  checks 
to  pay  debts  of  the  association.4 

Sec.  63 — How  lie  should  Execute  Contracts. 

In  order  to  escape  personal  liability,  the  president  of  an 
association,  executing  a  contract  of  such  association,  should 
execute  it  with  appropriate  words,  showing  that  it  is  the 
contract  of  the  association,  and  not  that  of  himself;  and 
his  merely  adding  to  his  signature  his  official  title  will  not 
relieve  him  from  personal  liability  upon  it.5     A  distinction, 

23  N.    E.    Rep.    77;    McDonald    v.  Co.    v.    Fitzgerald,     137  U.    S.    98; 

Chisholm,  131  111.  273;  s.  c.  23  N.  E.  s.  c.  11  Sup.  Ct.  Rep.  36. 

Rep.  596;  Sparks  v.  Dispatch  Trans-  4  Fulton  Bank  v.  New  York,  etc., 

fer  Co.,  104  Mo.  531;  s.  c.  24  Am.  Co.,  4  Paige,  127;  Neifer  v.  Bank  of 

St.  Rep.   351 ;  Cahill  v.  Kalamazoo  Knoxville,  1  Head.  162. 

Mutual    Insurance    Co.,    2    Dong.  5  Sturdivant  v.  Hall,  59  Me.  172; 

(Mich.)  124;  s.  c.  43  Am.  Dec.  457;  s.  c.  8  Am.  Rep.  409;  Burlingame  v. 

Brown  v.  Donnell,  49  Me.  421;  s.  c.  Brewster,   79  111.   515;  s.   c.  22  Am. 

77  Am.  Dec.  266.  Rep.  177;  Hays  v.  Crutcher,  54  Ind. 

1  Olcott  v.  Tioga  R.  R.  Co.,  40  260;  Tannett  v.  Rocky  Mountain 
Barb.  179;  Sherman  Center  Town  National  Bank,  1  Colo.  278;  9  Am. 
Co.  v.  Swigart,  43  Kan.  292;  s.  c.  19  Rep.  156;  Towne  v.  Rice,  122  Mass. 
Am.  St.  Rep.  137 ;  Ceeder  v.  Loud  &  67 ;  Bank  v.  Cook,  38  Ohio  St.  442 ; 
Sons'  Lumber  Co.,  86  Mich.  541;  Scott  v.  Baker,  3  W.  Va.  285;  Pent z 
S.  c.  24  Am.  St.  Rep.  134;  49  N.  W.  v.  Stanton,  10  Wend.  271  ;  S.  C.  25 
Rep.  575;  Fitzgerald,  etc,.  Construe-  Am.  Dec.  558;  Savage  v.  Rix,  9  1ST. 
tion  Co.,  v.  Fitzgerald,  137  U.  S.  98.  II.  263;  Dutton  ».  Marsh,  L.  R.  6  Q. 

2  Martin  ».  Niagara  Falls  Paper  B.  361;  Brunswick-Balke-Collender 
Manufacturing  Co.,  44  Hun,  130;  Co.  v.  Boutell,  45  Minn.  21;  s.  c.  47 
Spengler  v.  Butterfield,  6  Colo.  356.  N.  "W.  Rep.  261;  Eaile  v.  Pierce,  32 

3  Fitzgerald,     etc.,     Construction  Md.  327;  s.  c.  3  Am.  Rep.  139;  Boyd 


68  BUILDING   AND   LOAN    ASSOCIATIONS.  Cll.  VI. 

however,  must  be  drawn  between  the  signatures  of  officers  to 
the  contracts  of  their  banks  evidenced  by  commercial  paper; 
for  this,  by  usage,  the  officer  is  not  bound,  although  he  sign 
or  indorse  a  note  in  his  own  name,  adding  his  official  title.1 
But  in  the  case  of  an  ordinary  corporation,  a  deed  describing 
the  grantors  as  a  corporation,  but  signed  by  its  president  in 
his  own  name  and  with  his  own  seal,  is  not  the  deed  of  the 
corporation,  but  the  president's  own  private  deed.2  This 
case,  however,  seems  to  be  not  at  one  with  more  recent 
authorities.3  If  he  execute  a  contract  without  authority,  he 
will  be  personally  bound  for  its  performance.4 

Sec  64 — Discharging  Duties  of  Other  Officers. 

Where  a  statute,  or  the  charter,  or  a  by-law,  requires  a 
particular  officer  to  perform  a  certain  thing,  the  president 
cannot  usurp  such  officer's  authority  and  perform  it.  Thus, 
the  president  cannot  authenticate  an  instrument  which  a 
statute  requires  the  secretary  to  authenticate.4  And  a  by- 
law giving  "  the  general  charge  and  direction  of  the  business 
of  the  company,  as  well  as  all  matters  connected  with  the 
interests  and  objects  of  the  corporation,"  does  not  empower 
him  "to  do  an  act  which,  by  another  by-law,  is  expressly 
given  to  a  separate  committee."5 

Sec.  05 — Declarations  and  Admissions. 

Where  a  president  of  an  association  has  authority,  either 
as  a  special  or  general  agent  of  the  association,  to  do  a  cer- 
tain act  or  acts,  he  has  authority  to  bind  the  corpora- 
lion  by  his  declarations  and  admissions.6     Thus,  if  he  have 

v,  Johnston,  89  Tenn.  284;  s.  c.  14  Supp.  234;  47  N.   Y.  St.  Rep.  576; 

8.  W.  Rep.  804.  Fitch  c.  Cunningham,  42  Hun,  590, 

i  Slate    Bank    ».  Fox,  :}  Blatchf.  mem.;  s.  c.  ION.  Y.  St.  Rep.  17. 

481;  Folger   v.  Chase,    L8  Pick.  63;  5  Twelfth  Street   Market   Co.   v. 

Houghton  '.   First  National   Bank,  Jackson,  102  Pa.  St.  269. 

26  Wis.  668;  s.  o.  7  Am   Rep.  107.  See  a  case  where  a  president  was 

-  Hutch  i\  Barr,  1  Ohio,  890.  held  competent  to  act  as  secretary  of 

'■'■  Episcopal  Church  v.  Varian,  28  a  meeting  of  shareholders  of  a  cor- 

Barb.  644;  Olcottfl.  Tioga R.R.  Co.,  poration.      Budd    v.    Walla    Walla 

40Barb.  L79;  Elites.  Puteif er,  4  Al-  Printing,  etc., Co.,  2  Wash. Ty.  847. 

len,  165.  6  Bullock  v.   Consumers'  Lumber 

li Mi,  v.  Campbell,  20  N.  Y.  Co.  (Gal.),  81  Pac.  Rep.  367. 


§  67.  OFFICERS — PRESIDENT.  69 

power  to  execute  a  deed,  lie  has  power  to  point  out  the 
boundaries  of  the  land  conveyed,  and  thereby  bind  the 
corporation.1 

Sec.  66 — Notice  to  President  as  Affecting  Corporation. 

Notice  to  the  president  of  anything  pertaining-  to  the  duties 
of  his  office,  or,  where  he  acts  as  an  agent,  of  anything  per- 
taining to  his  agency,  is  notice  to  the  corporation,  and  will 
bind  it.  Thus,  the  oral  resignation  of  a  director  made  to 
him,  who  had  incapacitated  himself  for  the  office  by  a  sale  of 
all  his  stock,  is  notice  to  the  company.2  If,  however,  the 
notice  affects  him  in  his  private  capacity,  and  his  personal 
interest  is  opposed  to  that  of  the  company,  then  such  notice 
is  not  notice  to  the  company,  and  it  is  not  affected  by  it.3 

Sec.  67— Liability. 

The  president  of  a  corporation  is  liable  to  third  persons 
for  losses  sustained  by  them  in  dealing  with  it  on  the  faith 
of  his  misrepresentations  concerning  its  financial  condition.4 
So,  too,  he  is  liable  for  any  misrepresentation  of  facts  form- 
ing a  material  inducement  for  entering  into  the  contract.5 
But  he  is  not  liable  for  the  acts  of  other  officers  of  the  cor- 
poration.6 In  the  management  of  the  affairs  of  the  associa- 
tion he  must  exercise  reasonable  care  and  diligence  to 
preserve  the  assets  and  prevent  losses.7  He  must  not  seek 
to  make  a  personal  benefit  for  himself  out  of  the  powers 

1  Holmes  v.  Turner's  Falls  Lum-  v.  Wcare,  79  la.  678;  s.  c.  44  N.  W. 
ber  Co.,  150  Mass.  535;  s.  c.  23  N.  E.     Rep.  915. 

Rep.  305.  5  Clark  r.  Dunham  Lumber  Co.,  86 

2  Briggs  v.    Spaulding,  141  U.  S.     Ala.  220;  5  So.  Rep.  560. 

232;  s.  c.  5  Bkg.  L.  Jr.  41;  10  Rail.  e  Long  r.  Citizens'  Bank,  8  Utah, 

&  Corp.  L.  J.  62;  11  Sup.  Ct.  Rep.  104;  s.  c.  29  Pac.  Rep.  878. 

985.  7  Sullivan  v.  Lewiston  Institute  of 

3  Barnes  v.  Trenton  Gas  Light  Co.,  Savings,  56  Me.  507;  "Williams  v.  Mc- 
27  N.  J.  Eq.  33;  see  Winchester  v.  Kay,  46  K  J.  Eq.  25;  s.  c.  18  Atl. 
Baltimore,  etc.,  R.  R.  Co.,  4  Md.  Rep.  824;  Davis  v.  Memphis  City 
231.  R.  R.  Co.,  22 Fed.  Rep.  883;  Briggs 

*  Tyler  v.   Savage,  143  IT.   S.  79;  v.  Spaulding,  141  U.  S.  132;  s.  c.  11 

s.  c.  12  Sup.  Ct.  Rep.  340;  King  v.  Sup.  Ct.  Rep.  895;  10  Rail.  Corp.  L. 

Davis,  16  N.  Y.  Supp.  427;  61  Hun,  J.  62. 
427;  41  N.  Y.  St.  Rep.  898;  Hubbard 


70  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 

conferred  upon  him  by  the  corporation,  but  must  exercise 
them  for  its  benefit  in  the  utmost  good  faith.1  He  cannot 
speculate  in  claims  against  the  association ;  and,  if  he  buy 
them  up  and  make  a  profit  out  of  them,  he  must  account  for 
the  profits,  not  only  to  the  shareholders  but  also  to  the  cred- 
itors.2 He  cannot  use  the  corporate  funds  for  his  own  bene- 
fit ;  and  any  creditor  receiving  them  with  notice  of  their 
origin  will  be  liable  to  the  association  for  the  amount 
received.3  If  he  receive  property  in  satisfaction  of  a  debt 
due  the  corporation,  the  property  will  be  held  by  him  in 
trust ;  and  he  cannot  claim  it  as  his  own.4  This  does  not 
prevent  him,  however,  from  entering  into  contracts  with  the 
association  where  everything  is  open  and  fair  and  nothing 
concealed.5  He  may  advance  money  to  the  corporation,  even 
though  it  be  insolvent  to  his  knowledge,  and,  by  contract 
entered  into  before  or  at  the  time  of  advancement,  secure  to 
himself  a  preference  over  its  other  creditors.6  If  he  become 
interested  with  a  customer  of  the  association  and  allow  him 
a  loan  upon  insufficient  security,  he  will  be  personally  liable 
for  any  loss  sustained.7  If  he  convert  the  property  of  the 
association  to  his  own  use,  he  will  be  liable,  just  as  any 
other  agent  of  the  association  would  be.8  But  he  is  not 
liable  upon  ultra  vires  contracts  of  the  corporation,  although 
he  entered  into  them  on  its  behalf.9 

Sec.  68 — Compensation. 

The  President  is  always  a  member  of  the  Board  of  Direc- 
tors, and,  like  them,  he  is  not  entitled  to  compensation  for 
his  services,  unless  some  statute,  or  thecharter  or  bylaws  of 
the  association,  or  a  contract  with  the  association  to  which 

1  Thomas  v.    Sweet,  37  Kan.  183;  °  Bank  Commissioners  v.  St.  Law- 

s.  c.  11  Pac.  Rep.  545.  rence  Bank,  8  Barb.  436;  Sanders  v. 

-hi.  Page,    11    Colo.  518;  s.  c.   19  Pac. 

:;  Reed   '.    Hank  of  Newburgh,  6  Rep.   468a;  Bush  v.  Wadsworth,  60 

377.  Mich.  255. 

1  Markley   v.    Rhodes,   59  la.  ~>7;  7  Oakland  Bank  v.  Wilcox,  60  Cal. 

ilso   VVarner   v.    .McMullin,    131  12(>;  First  National  Bank  v.  Heed,  36 

870;  is  Ail.  Rep.  L056,  Mich.  263. 

Bradley  v.   Williams,  8  Hughes,  H  Hays  v.  Kenyon,  7  11.  I.  136. 

Murray    r.    Valid. -rl.ilt  ,89  Barb.  B  Hol1    V.    WiiHidd   Bank,  25  Fed. 

140.  Hop.  812. 


§  69.  OFFICERS— VICE-PRESIDENT.  71 

his  own  vote  was  not  essential,  has  provided  it  for  him. * 
If  he  perforin  the  service,  a  subsequent  contract  for  com- 
pensation cannot  be  enforced  against  the  association.2  If  a 
corporation  become  insolvent,  a  valid  claim  cannot  be 
enforced  against  it  for  the  president's  salary,  by  the  directors, 
even  though  a  by-law  ante-dating  insolvency  provides  that  he 
shall  have  such  compensation  as  the  board  of  directors  shall 
determine.3  The  board  of  directors  fix  his  salary,  usually, 
without  the  aid  of  his  vote.4  But  he  may  claim  pay  for 
services  that  are  clearly  outside  the  scope  of  his  duties  as 
president,  although  there  be  no  contract  touching  them.5 

VICE-PRESIDENT. 

Sec.  69— Nature  of  Office. 

The  vice-president  acts  in  place  of  the  president  when  the 
latter  dies  or  is  absent  so  that  he  cannot  perform  his  duties, 
or  resigns.  The  same  presumption  prevails  touching  the 
validity  of  his  acts  as  does  that  concerning  the  acts  of  his 
superior.  Thus  if  he  execute  a  deed  in  the  name  of  the 
corporation  it  will  be  presumed  that  he  had  authority  to 
do  so,  the  same  as  if  the  president  had  executed  it.6  If  the 
directors  be  authorized  to  elect  a  vice-president,  it  is  not 
necessary  that  a  by-law  create  the  office  or  provide  for  his 
election.7 

1  Citizens'  Bank  v.   Elliott,  55  la.         5  Bartlett  v.  Mystic  Biver  Corpo- 

104;  s.  c.  39  Am.  Bep.  167:  Martin-  ration,  151  Mass.  433;  s.  c.  24  K  E. 

dale«.  Wilson-Cass  Co.,  134  Pa.  St.  Bep.  780;  Toponce  v.  Corinne  Mill, 

348;  26  W.  K  Cas.  48;  19  Atl.  Bep.  etc.,  Co.,  6  Utah,  439;  s.  c.  24  Pac. 

680 ;  19  Am.  St.  Bep.  706.  Bep.  534 ;  Outterson  v.  Fonda  Lake 

2Martindale  v.  Wilson-Cass   Co.,  Paper  Co.,  49  N.  Y.   St.  Bep.  556; 

supra;  Ellis  v.  Ward,  137  111.  509;  s.  c.  20  N.  Y.  Supp.  980. 
s.  c.  25  N.  E.  Bep.  530;  McAvity  v.        It  lias  been  held  that  the  guaran- 

Lincoln  Pulp,  etc.,  Co.,  82  Me.  504;  teeing  of  the  corporation's  paper  is 

s.  c.  20  Atl.  Bep.  82;  Wood  v.  Lost  not  such  extra  services  or  entitles  the 

Lake,  etc.,  Co.,  23  Ore.  20;  s.  c.  37  president  to  compensation  therefor. 

Am.  St.  Bep.  651 ;  23 Pac.  Bep.  848.  Leavitt  v.    Beers.    II.    .V    D.    Supp. 

3  McAvity  v.  Lincoln  Pulp,    etc.,  221.     But  see  the  Indianapolis,  etc., 

Co.,  supra.  B.   B.   Co.   v.   Hyde,   122  Ind.  188; 

*  Ward  v.   Davidson,  89  Mo.  445;  s.  c.  23  N.  E.  Bep.  706. 
s.   c.    1   S.    W.    Bep.   846;  Butts  v.        6  Smith  r.  Smith,  62  111.  493. 
Woods,  37  N.  Y.  317;  Jones  v.  Mor-        7  Colman  v.  West  Virginia  Oil,  etc., 

rison,  31  Minn.  140.  Co.,  25  W.  Va.  148. 


72  BUILDING    AND    LOAN    ASSOCIATIONS.  Cll.  VI. 

SECRETARY. 

Sec.  70— Status. 

The  secretary  of  a  building  association  is  an  officer  of  the 
corporation  and  not  an  officer  of  the  board  of  directors.1 
He  is  not,  however,  "  an  employee  "  nor  a  "  servant  "  within 
the  meaning  of  a  statute  creating  a  preference  in  favor  of 
the  wages  of  a  servant  or  employee  of  a  corporation.2 

Sec.  71— Length  of  Office. 

He  holds  his  office  until  his  successor  is  duly  elected,  if 
the  by-laws  do  not  provide  a  different  rule.3  If  a  by-law  pro- 
vide that  the  directors  may  remove  him  at  pleasure,  he 
accepts  the  office  with  a  view  that  such  officers  may  exer- 
cise this  power  ;  and  if  they  do,  he  cannot  recover  damages 
because  of  the  fact  that  his  term  of  office  is  cut  shorter  than 
what  it  would  otherwise  have  been.4 

Sec.  72 — Custodian  of  Seal. 

The  secretary  is  the  custodian  of  the  corporate  seal,  unless 
a  statute  or  the  by-laws  provide  otherwise ;  and  if  he  affix  it 
to  a  paper  the  presumption  is  that  he  acted  in  pursuance  of 
an  authority  duly  given  him.5 

Sec.  73 — Keeper  of  Corporate  Records. 

The  secretary  of  a  corporation  is  the  proper  person  to 
keep  its  records  ;  and  therefore  the  proper  witness  by  whom 
to  identify  such  records,  its  books  and  papers. 6  He  may  use 
force  to  protect  and  retain  possession  of  them,  without 
being  guilty  of  an  assault  and  battery,  not  using  unnecessary 
force.7  lb-  is  not  an  insurer  of  the  safety  of  the  records, 
but    only    ;i    bailee   for   hire;  and  if  he  exercise  the  care 

i  Ehrenzeller  o.  Union  ('anal  Co.,  Co.,  118  N.  Y.  484:  s.  c.  29  N.  Y. 

1  Rawle,  181.  St.  Rep.  !M4;23  N.  E.  Rep.  806;  7 

a  Wells    /-.    Southern    Minnesota  L.  R.  S.  82. 
i:    i;  ('...,  I  McCrary,   l*;  Coffin  v.        6  Evans  v.  Lee,  11  Ncv.  194. 

i  olds,  ::7  N.  V.  cm.  a  Smith  v.  Natchez  Steamboat  Co., 

» South  Bay  Meadow  Dam  Co.  z>.  I  How.  (Miss.)  47!). 
<■          80  Me.  547.  7  Ilcminway     ».     Ilcminway,     58 

»D0U    I  Merchants' Insurance  Conn.  -1-1:5 ;  s.  c.  19  Atl.  Rep.  766. 


§  75.  OFFICERS  — SECRETAKY.  73 

required  of  the  latter,  he  will  not  be  liable  if  they  be  lost  or 
destroyed.1 

Sec.  74 — Medium  of  Communication  with  the  Public. 

The  secretary  is  the  agent  through  whom  the  corporation 
communicates  with  the  public,  and  upon  whose  official  state- 
ments the  public  may  rely.2  If  he  execute  an  obligation  of 
the  corporation,  it  is  prima  facie  the  act  of  the  company, 
and  its  execution  must  be  denied  under  oath  if  the  plea  of 
noii  est  factum  is  to  be  relied  upon.3 

Sec.  75 — Power  to  Bind  Corporation. 

The  secretary  has  no  inherent  power  to  bind  his  corpora- 
tion,4 although  it  may  become  liable  by  ratification  of  his 
acts.5  He  cannot  bind  the  corporation  by  a  "due-bill"  in 
consideration  of  the  surrender  of  his  stock  ;6  nor  bind  it  by 
a  written  acknowledgment  that  a  certain  sum  is  due  the  in- 
dividual to  whom  it  is  given ; 7  nor  release  a  debtor  of  a  cor- 
poration under  an  authority  to  renew  a  note  he  owed  it ; 8 
nor  assign  an  account  tbe  association  holds;9  nor  compro- 
mise a  disputed  claim ; 10  nor  sign  a  draft  against  the  corpo- 
ration's funds.11  He  may  be,  however,  especially  authorized 
to  do  all  these  things.  But  he  cannot  bind  the  society  by 
the  acceptance  of  the  payment  of  dues  or  interest  contrary 
to  the  provisions  of  the  by-laws,12  unless  the  practice  of  the 
society  has  been  different  from  that  prescribed  by  the  by- 

1  Mowbray  «.  Antrin,  123  Ind.  24 ;  8  Moshannon  Land  &  Lumber  Co. 
s.  c.  23  N.  E.  Rep.  858.  v.  Sloan,  109  Pa.  St.  532;  s.  c.  7  Atl. 

2  Columbia  Insurance  Co.  v.  Mason-     Rep.  102. 

heimer,  76  Pa.  St,  138.  9  Read  v.  Buffum,  79  Cal.  77;  s.  c. 

But  see  British  Mutual  Banking  21  Pac.  Rep.  555;  12  Am.  St.  Rep. 
Co.  v.  Charnwood  Forest  R.  R.  Co.,     131. 

L.  R.  18  Q.  B.  Div.  714;  s.  c.  56  L.         I0  Delta  Lumber  Co.  v.  Williams, 
J.  Q.  B.  449;  35  W.  R.  590.  73  Mich.  86;  s.  c.  40  N.  W.  Rep.  940; 

3  Frye  v.  Tucker,  24  111.  180.  5  Rail.  &  Corp.  L.  J.  139. 

4  Williams  v.  Chester,  etc. ,  R.  R.  u  First  National  Bank  v.  Hogan, 
Co.,  5  E.  L.  &  Eq.  497.  47  Mo.  472. 

5  Fawcett  v.  New  Haven  Organ  12  Morrow  v.  James,  4  Mackey,  D. 
Co. ,  47  Conn.  224 ;  New  England  In-  C.  59.  This  was  a  case  where  the  by- 
surance  Co.  v.  DeWolf ,  8  Pick.  56.       laws  required  payment  of  dues  to  be 

6  Gregory  v.  Lamb,  16  Neb.  205.       made  at  general  stated  meetings  '» 

7  Sears  v.  Illinois  Wesleyan  Uni-  and  it  was  held  that  he  could  not 
versity,  28  111.  183.  bind  the  association  by  accepting 


74  BUILDING   AND   LOAN   ASSOCIATIONS.         Ch.  VI. 

laws,  and  he  had  followed  that  practice.1  He  cannot  bind 
the  society  by  payments  that  should  be  made  to  the  treas- 
urer, according  to  the  by-laws.2  He  cannot  bind  the  society 
contrary  to  its  will ;  nor  by  his  contract  beyond  the  scope 
of  his  functions,  nor  by  a  contract  ultra  vires.  Of  course, 
the  assent  of  the  association  to  one  of  his  contracts  may  be 
inferred,  where  he  had  prior  thereto  been  making  similar 
contracts  on  its  behalf  and  it  had  received  the  benefit  of 
them.3  An  agreement  between  a  secretary  and  the  surety 
of  a  borrower  that  the  latter  should  be  released  in  a  certain 
contingency,  is  not  binding  upon  the  societ}',  if  there  be  no 
evidence  to  show  that  the  agreement  was  made  with  the 
knowledge  of  its  officers,  or  that  the  board  of  directors  had 
authorized  him  to  enter  into  the  agreement,  or  that  his  dec- 
larations were  made  in  the  course  of  the  business  he  was 
authorized  to  transact,  and  that  the  contingency  had  arisen.4 
But  if  the  arrangement  of  the  transaction  be  left  with  the 
society,  it  will  be  bound.5  If  the  secretary  agree  with  the 
borrower  to  insure  the  premises  being  mortgaged,  the  asso- 
ciation will  be  bound.6  The  mere  fact  that  he  has  the  books 
of  the  society  in  his  charge,  will  not  render  his  declaration 
binding  on  the  society  to  the  effect  that  only  a  certain 
amount  is  due  on  such  mortgage.7  Nor  will  the  society  be 
them  at  other  times.  VanWagen-  Loan  Association,  95  Pa.  St.  101. 
en  v.  Genesee  Falls,  etc.,  Asso.,  See  also  Novak  v.  Vypomocny, 
88  Hun,  4.'5 ;  s.  c.  84  N.  Y.  Supp.  etc.,  Ass'n,  68  111.  App.  682.  If  he 
491,  <>s  X.  Y.  S.  Rep.  498.  *  accept  a  note  in  settlement  of  ar- 

Haverson  v.  Cole,  6  W.  R.  17.  rearages,  the  association  cannot 
Prairie  State  Loan  and  Building  As-  afterwards  deny  his  power  to  agree 
sociation  v. Gorrie,  64  [11.  App.  325;  to  an  extension,  Dreschler  v.  Ful- 
affirmed,  170  111.  240  ;  48  N.  E.  Rep.  ham,  Colo  ;  S.  C.  52  Pa.  Rep. 
1016.    The  rules  required  the  sec-    685. 

retary  to  receive  payment  only  in        5 Jones  v.  National  Building  As- 
oonjunction  with  the  treasurer  and    sociation,  94  Pa.  St.  215. 
one  of  the  trustees,  bul  in  practice        6  Chicago    Building    Society    v. 
he  alone  received  them;  and  pay-    Cro well,  65  111.  453. 
Mr  1,1   to  liim  alone  was  held  bind-       7  Johnston  v.  Elizabeth  Building 
in ■■  on  the  society.  :  1 1 1 « I  Loan  Association,  104  Pa.  St. 

-  Browne   v.  Sanders,  20  I).   C.    394.     But  see  London  &  County, 

455;  :-.  c.  20  Wash.  L.  Rep.  277.  etc.,  So.  v.  Angell,  65   L.  J.  Q.  B. 

Chicago    Building    Society  v  .     194;  and  Harvey  v.  Muncipal  Per- 

Crowell,  65  III.  453.  manent,  etc.,  So,,  53  L.J.  Rep.  Ch. 

•(,.,      r.  Citizens'  Building  and     1126;  s.  c.  L.  R.  26  Ch.  Div.  273. 


§76. 


OFFICERS — SECRETARY. 


75 


bound  by  his  statements  how  many  payments  will  be  neces- 
sary to  extinguish  a  mortgage;  for  that  is  only  a  mere  mat- 
ter of  opinion.1  His  power  to  receive  money  for  the  asso- 
ciation cannot  be  implied  from  the  fact  that  lie  had  on  other 
and  previous  occasions  received  money  from  members  and 
paid  it  over  at  the  weekly  meetings,  where  the  by-laws 
provide  that  all  payments  must  be  made  to  tin;  treasurer.2 
He  has  no  power  to  release  a  shareholder's  liability  on  his 
bond  given  for  a  loan,  and  the  shareholder  is  bound  to  know- 
that  fact.3  Where  the  directors  of  a  building  association 
authorize  its  secretary  to  place  lands  (of  which  the  secretary 
was  mortgagee)  in  the  hands  of  an  auctioneer  for  sale,  it  was 
held  that  he  had  no  authority  to  withdraw  the  land  from 
sale  without  a  resolution  of  the  directors  to  that  effect.* 


Sec.  76 — Notice  to,  when  not  Binding  on  Corporation. 

Where  the  secretary  and  treasurer  of  a  building  associa- 
tion were  authorized  to  make  loans  without  the  sanction  of 
a  board   of   directors,  and  he  loaned  money  to  a  married 


1  Hammerslough  v.  Building, 
Loan,  etc.,  Association,  79  Mo.  80; 
Lake  v.  Security  Loan  Association, 
72  Ala.  207. 

2  Van  Wagenen  v.  Genesee  Falls 
Permanent  Savings  and  Loan 
Association,  88  Hun,  43  ;  s.  c.  3-4 
N.  Y.  Supp.  491.  Nor  is  the  as- 
sociation estopped  on  the  ground 
that  the  secretaiy  gave  a  pass  book 
to  the  person  who  gave  him  the 
money  to  pay  the  association,  and 
because  on  each  occasion  the  secre- 
tary returned  it  to  him  with  an 
entry  as  to  the  date  of  the  regular 
meeting,  and  of  the  amount  given 
him  to  pay  the  association.  Id. 
See  Prairie  State  B.  &  L.  Ass'n 
170  111.  240  ;  S.  c.  48  N.  E.  Rep.  1016. 

3  Almon  v.  Busch,  R.  E.  D.  (N.  S.) 
362. 

4  Ross  v.  Victorian  Permanent 
Society,  L.  R.  Eq.,8  Vict.  (Austra- 
lia) 254. 


The  secretary  and  president  have 
no  authority  to  withdraw  funds 
from  the  custody  of  the  treasurer 
and  deposit  them  elsewhere.  Citi- 
zens' Savings  and  Loan  Association 
v.  Ruhl,  55  111.  App.  65. 

The  secretary  of  a  building  asso- 
ciation cannot  bind  his  association 
by  the  acceptance  of  a  bill  of  ex- 
change, unless  authorized  so  to  do 
by  the  board  of  directors.  Brown- 
ing v.  British  American  Friendly 
Society,  3  Low.  Can.  Jur.  306. 

But  the  association  is  liable  to 
the  stockholders  for  his  fraud  prac- 
ticed upon  them  while  performing 
his  official  duties.  Prairie  State 
Loan  and  Building  Association  v. 
Gorrie,  64  111.  App.  325  ;  Prairie 
State  Loan  and  Building  Associa- 
tion v.  Nubling,  64  111.  App.  329; 
s.  c.  48  N.  E.  Rep.  1016. 


76  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

woman,  taking  a  mortgage  on  her  land,  with  the  knowledge 
that  the  money  was  for  her  husband,  and  that  he  was  the 
real  borrower  ;  it  was  held  that  the  mortgage  was  void,  but 
the  association  was  not  affected  by  the  knowledge  of  the 
secretary  and  treasurer,  and  the  part  taken  by  them  in  the 
transaction,  when  the  power  to  loan  money  was  lodged  in 
superior  officers.1 

Sec.  77— Transfers  of  Stock. 

Beina:  the  custodian  of  the  books  and  records  of  the  asso- 
ciation,  he  has  charge  of  the  stock  or  transfer  book.  It  is 
his  duty  to  keep  this  book,  subject  to  the  control  of  the 
president  and  directors.  It  is  his  duty  to  see  that  all  trans- 
fers of  stock  are  properly  made,  either  by  the  stockholders 
themselves  or  persons  having  authority  from  them.  If 
upon  presentation  of  a  certificate  for  transfer,  he  is  at  all 
doubtful  of  the  identity  of  the  party  offering  it  with  its 
owner,  or  if  not  satisfied  with  the  genuineness  of  a  power  of 
attorney  produced,  he  can  require  the  identity  of  the  party, 
in  the  one  case,  and  the  genuineness  of  the  document  in  the 
other,  to  be  satisfactorily  established  before  allowing  the 
transfer  to  be  made.  In  either  case  he  must  act  upon  his 
own  responsibility.2 

Sec.  78 — Liability  on  Bond. 

The  by-laws  of  a  building  association  required  dues  and 
assessments  to  be  paid  to  the  secretary  at  weekly  meetings, 
;ind  also  required  him  to  give  bond  for  the  faithful  perform- 
ance of  bis  duties.  It  was  held  that  the  bond  covered  all 
money  received  by  him  in  his  official  character,  whether  paid 
at  the  time  required  or  not.3  Where  the  secretary's  bondis  ex- 
pressly conditioned  that  be  shall  faithfully  perform  the  duties 
of  his  office  so  long  as  be  shall  continue  in  office  as  secretary, 

i  Freeman    v.    Mutual    Building  Y.  286  ;  Pratt  v.  Taunton  Copper 

and  Loan  Association,  90  Ga.  L90;  Co.,  123  Mass.  110;    s.  c.  25  Am. 

B.C.  15  S.  E.  Rep.  758.  Rep.  87;  SewaU  v.  Boston  Water 

^Telegraph  I  '■-.  y.  Davenport,  97  Power  Co.,  4  Allen,  277;  s.  c.  81 

U.  S.    ::<;'.);    Pollock    <•.    National  Am.  Dec.  701. 

Bank,  7   N.    Y.   :.'7t;  s.  c.   57    Am.  8Tylerv.  The  Old  Post  Associa- 

Dec.  520 ;  Weaver  v.  Barden,  49  \.  I  ion,  87  [nd.  323. 


§  78.  OFFICERS — SECRETARY.  77 

the  fact  that  he  was  appointed  by  a  board  of  directors  elected 
for  only  one  year  will  not  limit  the  liability  of  his  sureties 
to  that  year,  if  his  appointment  be  general  and  unlimited, 
and  no  duration  of  his  term  is  fixed  by  statute  or  in  the 
by-laws  of  the  corporation.1  The  by-laws  of  the  association 
enter  into  and  form  a  part  of  his  bond  where  it  is  conditioned 
that  he  "  do  all  things  required  of  him  by  the  by-laws  of  said 
corporation  which  may  be  now  in  force,  or  which  may  be 
hereafter  enacted  by  "  the  corporation.2  But  the  sureties 
on  his  bond  are  not  liable  for  the  misappropriation  by  him 
of  moneys  belonging  to  borrowers,  which  has  been  secured 
by  note  and  mortgage  to  the  association  and  placed  upon 
special  deposit  with  him  in  bags  marked  with  the  borrow- 
er's name,  and  subject  to  their  call.3  The  secretary  of  a 
building  society  employed  a  private  clerk  to  transact  the 
business  of  the  society.  The  directors  had  drawn  checks 
from  time  to  time,  which  were  handed  over  to  this  clerk 
by  them  and  with  the  knowledge  of  the  secretary,  for 
the  purpose  of  being  paid  by  him  to  the  withdrawing  mem- 
bers ;  but  instead  of  being  so  applied  they  were  misappro- 
priated by  the  clerk.  It  was  held  that  the  secretary  was 
responsible  for  the  acts  of  his  clerk  to  whom  he  had  en- 
trusted the  moneys,  in  the  same  manner  and  to  the  same 
extent  as  if  the  directors  had  placed  the  moneys  in  his  own 
hands,  and  he  himself  had  handed  them  over  to  his  clerk.4 

1  Humboldt  Savings  and  Loan  tary.  Shinn  v.  Commonwealth,  73 
Society  v.  Wennerhold,  81  Cal.  528  ;    Va.  899. 

Metropolitan  Loan  Association  v.  The  sureties  of  a  secretary  are 

Esche,  75  Cal.  513.  not  liable    for  money    paid   him 

2  Humboldt  Savings  and  Loan  which  under  the  rules  ought  not  to 
Society  v.  Wennerhold,  supra.  have  been  paid  him  ;  and  it  makes 

3  Id.  no  difference  that  for  years  such 

4  In  re  Mutual  and  Permanent  had  been  the  practice  of  the  secre- 
Benefit  Society,  48  J.  P.  54.  If  he  tary,  acting  under  a  resolution  of 
forms  the  design,  either  before  or  the  managing  committee  to  re- 
at  the  time  of  the  receipt  of  a  check,  ceive  moneys  of  the  society,  even 
to  appropriate  it  to  his  own  use,  although  the  sureties  had  notice, 
even  with  the  intent  of  returning  Sperry  v.  Dransfield,  2  N.  Z.  L. 
the    amount  thereof,  he  will    be  Rep.  319. 

guilty    of  larceny,   although    the        A  tender  of  a  mortgagor  in  a  for- 
check  be  payable  to  him  as  secre-    eign  building  association  is  prop- 


78  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

Sec.  79 — Compensation. 

In  order  to  recover  for  his  services  it  is  not  necessary  that 
a  secretary  show  an  express  contract  with  his  company  for 
compensation.1  And  herein  the  rule  differs  from  that  relat- 
ing to  the  president,  vice-president,  or  a  director,  who  must 
show  an  express  contract  entered  into  before  the  services 
were  rendered.  If  a  salary  has  once  been  provided  for  an 
office  it  continues  until  abrogated,  notwithstanding  change 
in  the  corporation  take  place,  even  though  there  be  a  con- 
solidation with  another  company.2  For  extra  services  he  is 
not  entitled  to  extra  pay,  if  the  salary  was  fixed  when  he 
accepted  the  office,  even  though  such  extra  service  were  not 
in  contemplation  at  that  time.3  If  the  company  become  in- 
solvent, he  is  not  preferred  to  its  general  creditors.4  If  all 
the  business,  property  and  franchise  of  the  corporation  be 
sold  (with  his  consent)  his  right  to  further  compensation  is 
at  an  end.5  If  his  salary  be  fixed,  by  resolution  when 
elected,  at  so  much  per  month,  the  corporation  may  change 
the  amount,  even  though  he  were  employed  for  a  year.6  He 
cannot  audit  and  pay  his  own  claim  against  the  association.7 
If  a  by-law  of  the  association  authorize  the  board  of  direc- 
tors to  discharge  the  secretary  at  any  time,  they  may  do  so 
even  though  he  have  a  contract  with  the  association  for  a 
definite  period  of  time ;  for  he  contracts  with  reference  to 
this  by  law.8  A  verbal  agreement  to  pay  for  his  services  is 
sufficient  to  enable  him  to  recover  them  without  showing  a 
written  agreement  or  one  of  record.9     If  his  employment  is 

erly  made  to  the   local  secretary  5  Long  Island  Ferry  Co.  v.  Ter- 

and   treasurer  of  such  association,  bell,  48  N.  Y.  427. 

Smith  v.  Old  Dominion,  etc.,Ass'n,  c  Bennett  v.  St.  Louis  Car  Roof- 

>!<;  S.   E.    Rep.    10;  s.  c.  119  N.  C.  ing  Co.,  23  Ms.  App.  587. 

257.  7  Peterborough    R.    R.    Co.,   v. 

1  Smith  ''.  Long  fsland  R.  R.  Co.  Wood,  61  N.  H.  418. 
L02  X.  V.  190;  reversing.  :,.'.)  Hun,  8  Douglass  v.   Merchants'  Insur- 
es, ance  Co.,  118  N.  Y.  484;  S.  C.  23  N. 

-  Rodney  u.  South  R.  R.  Associa-  E.   Rep.   803;    7  L.  R.  A.  822;  44 

tion,  ::  X.  Y.  St.  Rep.  564  ;  s.  C.  11  Bun,  629,  mem.  :  9  N.  Y.  St.  Rep. 

Daly,  70.  302. 

hi-  v.  Chartiers,  25  Pa.  St.  337.  9Outterson  v.  Fonda  Lake  Paper 

1  Poole   v.   Wesl     Poinl     Butter,  Co.,  49  X.  V.  St.  Rep.  556;  s.  c.  20 

etc.,   V.ssociation,  80  Fed.  Rep.  513.  X.  Y.  Supp.  980. 


§  80.  OFFICERS — TREASURER.  79 

entered  on  record  on  the  corporation's  books,  still  it  may  be 
shown  by  parol  that  they  were  not  to  begin  unless  certain 
things  were  brought  to  pass  and  that  they  did  not  come  to 
pass.1  If  a  by-law  provide  that  his  compensation  shall  be 
iixed  by  the  board  of  directors,  he  will  be  bound  to  accept, 
such  an  amount  as  they  decide  to  give  him,  even  though  he 
has  already  performed  services.2  If  the  directors  have  the 
power  to  select  a  secretary,  they  have  the  power  to  fix  the 
amount  of  his  salary,  unless  some  statute  or  by-law  deprive 
them  of  that  power ;  or  place  it  elsewhere.3  If  the  appoint- 
ment be  irregular,  yet  that  will  not  deprive  him  of  his  right 
to  the  salary  if  the  association  have  willingly  accepted  the 
services  which  he  has  rendered  them;4  but  it  is  not  liable 
if  it  has  contested  his  right  to  the  office,  he  thrusting  his 
services  upon  it.5  If  the  association  enter  upon  a  business 
prohibited  by  law,  he  is  not  entitled  to  pay  for  services 
thus  rendered  when  it  was  violating  the  law.6 

TREASURER. 

Sec.  80 — Election — Status — Duties. 

The  treasurer  is  usually  elected  by  the  board  of  directors, 
unless  the  statute,  or  charter  or  by-laws  provide  differently. 
A  director  may  be  elected  to  the  office  of  treasurer.7     He  is 

1  Sears  v.  Kings  Co.  Elevated  R.        The  directors  have  no  power  to 

R.  Co.,  152  Mass.  151;  S.  C.  25  N.  E.  fix  or  enlarge  the  compensation  of 

Rep.  98  ;  Delano  v.  Smith  Charities,  the  secretary,  and  take  from  loan 

138  Mass.  63.  or  working  funds,  other  than    as 

2 Eagle,  etc.,Manf.  Co.  v.  Browne,  provided  by  the  charter,  money  to 

58  Ga.    240 ;  Pfeiffer   v.  Lansberg  pay  him  for  extra  service.     Loan 

Brake  Co.,  44  Mo.  App.  59.  &  Protection  Ass'n  v.  Holland ,  63 

3  Waite  v.  Windham,  etc.,  Co.,  111.  App.  58. 

37  Vt.  608.  An  undertaking  to  pay  an  officer 

4  Waite  v.  Windham,  etc.,  Co.,  an  exh-a  fee  or  sum  beyond  that 
36  Vt.  18.  fixed  by  the  charter  is  not  binding 

5  Waterman  v.  Chicago,  etc.,  R.  upon  the  corporation,  although 
R.  Co.,  139  111.  658;  32  Am.  St.  extra  services  have  been  rendered. 
Rep.  228  ;  29  N.  E.  Rep.  689  ;  34  111.  Id. 

App.  268.  '  In  re  Corporation  Officers,  3  Pa. 

■  Dudley  v.  Collier,  87  Ala.  431  ;     C.  C.  188. 
s.  c.  13  Am.  St.  Rep.  55  ;  27  Am.  & 
Eng.  Corp.  Cas.  440  ;  6  Rep.  304. 


80  BUILDING   AND   LOAN   ASSOCIATIONS.  CI).  VI. 

the  proper  person  to  have  custody  of  the  association's  funds, 
and  the  board  of  directors  cannot  deprive  him  of  their  cus- 
tody. The}?-  may  be  restrained  from  so  doing  at  the  suit  of 
a,  shareholder.1  Unless  he  have  a  special  agreement  with 
the  association,  he  should  keep  its  funds  separate  from  his 
own,  and  pay  them  out  or  turn  them  over  upon  all  proper 
demands.2  If  he  pay  over  the  funds  of  the  association  on 
ultra  vires  contracts,  but  pursuant  to  proper  directions,  he 
will  not  be  personally  liable  for  them.3 

Sec.  81 — Power  to  Contract  for  Association. 

Unless  the  by-laws,  a  statute,  or  the  charter  empower  him 
so  to  do,  the  treasurer  has  no  authority  to  enter  into  a  con- 
tract on  behalf  of  the  association  and  bind  it  thereby.  Not 
even  to  borrow  money  on  its  credit.4  But  where  a  building 
association  had  become  insolvent  and  made  an  assignment 
for  benefit  of  its  creditors,  the  treasurer  was  held  to  be 
entitled  to  be  reimbursed  as  a  general  creditor  for  moneys 
paid  by  him  on  orders  drawn  upon  him  before  the  assign- 
ment, for  which  the  assignee  had  refused  to  allow  him 
credit  in  the  settlement  of  his  account  as  treasurer.5  So 
when  he  has  advanced  dues  of  members  credited  in  his 
account,  the  creditors  may  reimburse  him  therefor.6  But 
if  he  make  payment  out  of  his  pocket,  for  a  purpose  author- 
ized by  the  directors,  although  not  within  the  corporate 
powers,  he  cannot  recover  of  the  corporation  if  it  refuse  to 
reimburse  him.7 


i  Pearson  v.  Tower,  55  N.  H.  215.  150  Mass.  207  ;  s.  c.  22  N.  E.  Rep. 

S.-.-   Citizens'   Savings    and    Loan  020;  5  L.  R.  A.  641 ;  28  Amer.  & 

4,880.  v.  Etuhl,  55  111.  A|»|).  (15.  Eng.  Corp.  Cas.  579. 

2  Second    Avenue    R.    R.  Co.   v.  •>  <  ihristian's  Appeal,  102  Pa.  St. 

Colman,  '-'I  Barb.  300.  184. 

■Holmes    V.    Willanl,    125   N.  Y.  ,;  I  la  nnony  Building  Association 

75:  s.   c.  25   N.   E.    Rep.    1083;  II  v.  Goldbeck,  13  W.  N.  Cas.  24. 

L.   R.  A.  170;  Grimes  V.  Earrison,  7  In    re    Kent  Benefit  Building 

.1.  Ch.828:  8.C.88  L.  T.  Rep.  Society,  30  L.  J.  Ch.  785;  4  L.  T. 

115;  5  Jur.  (N.  8.)  528  ;  20  Beav.  Rep.  (N.  S.)  610;  1  D.  &  S.  417;  7 

185;  28  J.  P.  421.  Jur.  (N.  S.)  1045;  9  W.  R.  685. 

<  Crafl  v.  South  Boi  ton  14.  R.  Co., 


§  84.  OFFICERS — TREASURER.  81 

Sec.  82 — Settlement  of  Debts — Release  of  Claims. 

The  treasurer  has  no  power  to  settle  a  claim  the  associa- 
tion holds  against  an  individual ;  nor  to  settle  a  claim  such 
person  holds  against  the  association.1  Nor  can  he  execute 
a  binding  release  of  a  liability  to  the  association.2  Thus  he 
cannot  release  a  claim  for  a  loss  on  a  policy  in  favor  of  the 
association.3  Nor  can  he  assign  a  mortgage  given  the  asso- 
ciation to  secure  a  debt  due  it ; 4  nor  to  assign  a  note  due  it.5 

Sec.  83 — Power  to  Bring  Suit  or  Confess  a  Judgment. 

The  treasurer  of  an  association  has  full  power  to  bring  and 
maintain  a  suit  to  collect  money  of  the  association,  without 
any  previous  order  of  the  board  of  directors  so  to  do.6  But 
he  has  no  power  to  confess  a  judgment  against  his  corpora- 
tion.7 

Sec.  84 — Liability  on  Bond. 

The  sureties  of  a  treasurer  are  liable  upon  the  bond  they 
sign,  although  he  does  not  sign  it.8  He  cannot  accept  any- 
thing else  in  payment  of  dues  or  fines  than  money,  and  the 
acquiescence  of  executive  officers  cannot  excuse  him.  "  The 
executive  officers  or  directors  of  this  corporation  had  no 
authority,"  said  the  court,  "  to  set  aside  the  constitution 
and  by-laws,  or  change  the  duties  of  the  treasurer  as  therein 
prescribed,  nor  can  they  by  their  unauthorized  acts  relieve 


1  Brown  v.  Weymouth,  36  Me.  The  cases  in  this  section  apply 
414 ;  State  Bank  v.  United  States  to  instances  where  no  by-law  or 
Pottery  Co. ,  34  Vt.  144.  statute  empowered  the  treasurer 

2  Dedham  Institute  for  Savings  to  perform  such  acts. 

v.  Slack,  6  Cush.  408.  6  Bristol  County  Savings  Bank  v. 

3  Carver  Co.    v.    Manufacturers  Keary,  128  Mass.  98. 
Insurance  Co.,  6  Gray,  214.  7  Stevens  v.  Carp  River  Iron  Co., 

i  Jackson  v.  Campbell,  5  Wend.  57    Mich.   427 ;    24     N.    W.    Rep. 

572.  160. 

5  Holden  v.  Upton,  134  Mass.  177  ;  8  Wilkes  v.  Clement,  9  U.  C.  Q.  B. 

Holden    v.   Hoyt,    134  Mass.    181.  339;  See  Farmers  and  Mechanics' 

See  also  Com.  v.  Reading  Savings  Building  Society  v.   Langstaff,   9 

Bank,  133  Mass.  16 ;  s.  c.  43  Am.  U.  C.  Q.  B.  183. 
Rep.  495. 
6 


82  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 

the  sureties,  from  their  responsibility  to  the  corporations  re- 
presenting all  the  members  or  stockholders,  for  a  breach  of 
the  laws  of  the  association."1  One  of  the  rules  of  a  build- 
ing society  provided  for  an  annual  audit  of  accounts,  and 
that  after  the  auditing  and  signing  of  the  accounts  the 
treasurer  should  not  be  considered  answerable  for  mistakes, 
omissions,  or  errors  afterwards  found  in  the  accounts.  It  was 
held  that  though  the  audited  accounts  must  be  received  as 
prima  facie  evidence,  the  rule  afforded  no  protection  against 
the  right  of  the  members  to  impeach  the  accounts  on  the 
ground  of  fraud.2  Where  it  appeared  that  the  accounts  had 
not  been  audited  according  to  a  statute,  it  was  held  that  the 
treasurer  could  show  that  his  accounts  had  been  treated  by 
the  society  as  settled  accounts.3  If  a  treasurer  serves  with- 
out compensation,  he  is  a  gratuitous  bailee,  and  as  such  is 
liable  only  for  gross  negligence.  His  official  position  and 
designation  do  not  in  any  degree  enlarge  his  liability  as  such 
bailee.  If  he  gives  a  bond  for  the  faithful  performance  of 
his  duties,  he  is  only  bound  to  perform  them  in  regard  to 
the  bailment,  and  his  duty  as  such  bailee  is  not  changed  by 
the  bond.  Where  the  by  laws  required  all  allowances  to  be 
made  by  the  board  of  directors  and  the  warrants  to  be 
signed  by  the  president  and  attested  by  the  treasurer ;  it 
was  held  that  the  treasurer  might  pay  the  warrant  thus 
signed  and  that  he  is  not  guilty  of  negligence  in  so  doing, 
even  if  no  allowance  for  it  had  been  made.  So  where  the 
secretary  was  the  active  manager  of  the  association,  and  it 
was  customary  to  pay  the  money  to  hitn  for  the  withdraw- 
ing members,  it  was  held  that  it  would  not  be  considered 
negligence  <>n  the  part  of  the  treasurer  to  pay  the  money  to 
him  forthe  withdrawing  members  upon  orders  duly  signed 


1  People's  Building  and  Loan  As-  is  the  rule  for  making  the  assess- 

sociation    v.    Wroth,  43   N.  J.   L.  ment. 

rO;  Mueller  v.  Cohen,  27  Ohio  I,.. I.  -  llolgate  v.  Shutt,  L.  R.  27  Ch. 

853.  Div.  Ill  ;  s.  c.  53  L.  J.  Ch.  774;  51 

In   il„.    in  t    case    ii    was    also  L.  T.  133 ;  32  W.  R.  773. 

held  thai  where  fines  and  dues  .-ire  '■'■  llolgate  v.  Shutt  L.  R.  28  Ch. 

m, i  actually  received  by  the  treas-  Div.  Ill;  s.  c.  54  L.  J.  Ch.  436 ;  51 

urer,  i  be  damage  sustained  I  bereby  L.  T.  07:5 ;  49  J.  P.  228. 


§  84.  OFFICERS — ATTORNEY.  83 

by  the  president  and  attested  by  the  secretary.1  If  he 
deposit  the  funds  of  the  association  in  a  proper  bank  to  its 
credit  he  will  not  be  liable  if  the  bank  fail  or  is  robbed,  he 
using-  ordinary  care  in  selecting-  a  bank.2  And  the  same  is 
true  where  the  board  of  directors  direct  him  where  to 
deposit  the  funds.  Where  he  gives  bond,  holding  at  the 
time  a  definite  term,  the  obligation  of  the  bond,  being  in 
general  terms  conditional  for  the  good  behavior  of  the 
officer,  it  will  not  extend  beyond  such  definite  term.  "  To 
enlarge  the  responsibilities  of  sureties  in  the  bond  there  must 
be  express  words  in  the  conditions  extending  the  time  beyond 
the  fixed  term  of  the  office.  It  is  not  enough  that  the  recital 
should  be,  so  long  as  he  shall  continue  in  office,  or  until  a 
successor  shall  be  appointed ;  if  the  office  is  annual  or  lim- 
ited, the  surety  will  not  be  prejudiced  by  a  failure  to  ap- 
point, according  to  the  requirement  of  the  law  or  rule  which 
regulates  such  appointment.  His  intention  to  assume  a 
further  and  continuing  liability  must  be  found  in  the  words 
of  the  bond.  It  is  not  a  matter  for  inference,  but  for  ex- 
position. The  surety  is  only  bound  according  to  the  words 
and  the  intentions  expressed  in  his  bond."  But  words  in 
the  bond  providing  that  it  shall  be  in  force  during  the  time 
the  treasurer  "  shall  continue  in  the  said  office,  whether  of 
the  present  term  for  which  he  has  been  duly  elected,  or  of 
any  succeeding  terms  to  or  for  which  he  may  be  elected," 
continue  the  obligation  of  the  bond  so  long  as  the  treasurer 
continues  to  serve.3 

ATTORNEY. 

Sec.  85 — Appearance  of  Association  by  Attorney. 

If  an   association   appear  in  a  suit  by  attorney,  it  will 

i  Hibernia  Building  Association  214;  2  P.  C.  315  ;   38  L.   J.   P.   C. 

v.  McGrath,  32  W.  N.  Cas.  233  ;  s.  C.  35.    Foster  v.  Essex  Bank,  17  Mass. 

154  Pa.  St.  296 ;  26  Atl.  Rep.  377.  479. 

Mowbray  v.  Antrim,  123  Ind.  24  ;  3  People's  B.  &  L.  Asso.  v.  Wroth, 

s.  c.  23  N.  E.  Rep.  858.  43  N.  J.  L.  70. 

2  Walker  v.    British    Guarantee  On  the  assignment  of  a  treasurer 

Association,  21  L.  J.  Q.  B.  257  ;  16  the  society  is  not  entitled  to  pref- 

Jur.  885 ;  16  J.  P.  582  ;   19  L.  T.  erence.     Ex  parte  Bailey,  5  D.  G. 

(O.  S.)   87;  Giblin  v.  M'Mullen,  17  Mac.  &  G.  380;  S.  C.  18  Jur.  988; 

W.  R. ;  21  445  ;  L.  T.  Rep.   (N.  S.)  23  L.  J.  Bank.  36. 


84  BUILDING   AND   LOAN    ASSOCIATIONS.  Ch.  VI. 

be  presumed  that  the  attorney  thus  appearing  was  duly 
authorized  to  represent  the  association.1  So  if  the  attorney 
appearing  dismiss  the  suit,  it  will  be  presumed  that  he  had 
authority  so  to  do,  and  proof  of  express  authority  is  not 
necessary.2 

Sec.  86— Who  may  Employ. 

The  managing  officers  of  a  corporation  may  employ  coun- 
sel to  protect  or  secure  the  interests  of  the  corporation 
without  authority  from  the  governing  board.3  Thus  the 
president  can  do  so,4  or  the  treasurer.5  Additional  counsel 
may  be  employed,  even  though  the  general  attorney  have 
assigned  to  him  a  stated  salary  under  provisions  of  the  by- 
laws or  a  statute.6  And  payment  for  services  rendered 
under  a  contract  with  the  corporation  not  under  seal  will 
not  be  a  misapplication  of  the  corporate  funds.7 

Sec.  87 — Retainer  and  Authority. 

His  employment  need  not  be  under  the  seal  of  the  cor- 
poration.8 His  consent  to  a  judge's  order  referring  a  matter 
to  arbitration  is  binding  on  the  corporation,  even  though  his 
employment  be  not  under  seal.9     When  employed,  his  ad- 

1  State  Bank   v.  Bell,  5  Blackf.  4  Id.;    Savings    Bank,    etc.,   v. 
127  ;   Brookville  Insurance  Co.  v.  Benton,  2  Met.  (Ky.)  240. 
Records,  5  Blackf.   170  ;    Bridgton  5  Western   Bank  v.  Gilstrap,  45 
v.  Bennett,  23  Me.  422.  Mo.  419 ;  Root  v.  Olcott,  42  Hun, 

2  Union    Manufacturing    Co.   v.  536. 

Pitkin,  14  Conn.  174.  6  Bank  of  Alabama  v.  Martin,  4 

Strictly  speaking,  the  solicitor  of  Ala.  615. 

an  English  Building  Society  is  not  7  Regina  v.  Priest,  15  Jur.  554; 

one  of  the  officers,  but  he  may  so  s.  c.  20  L.  J.  Q.  B.   (N.  S.)  17  ;  1 

act  as  the  financial  agent  as  to  Eng.  L.  &  Eq.  250. 

make   himself  an  officer.      In  re  8  Regina  v.  Priest,  15  Jur.  554 ; 

Liberator       Permanent      Benefit  s.  c.  20  L.J.  Q.  B.  (N.  S.)  17;  1 

Building  Society,  71  L.  T.  Rep.  406  Eng.  L.  &  Eq.  250. 

(1895).  9  Faviellr.  Eastern  Counties  R. 

;  American  InsuranceCo.  v.  Oak-  R.  Co.,  2  Exch.  344;  s.  c.  17  L.  J. 

lev,  9  Paige, 496;  B.C.  88  Am.  Dec.  Exch.  297.    See  Hall  v.  Norwalk 

561  ;  Afumfordv.  Bawkins, 5 Denio,  Eire  Insurance  Co.,  57  Conn.  105; 

855 ;  Southgate  v.  Atlantic,  etc.,  s.  c.  17  Atl.  Rep.  356. 
It.    R.   Co.,   61    Mo.   89;    Western 
Bank  v.  Gilstrap,  45  Mo.  419. 


§  87.  OFFICERS — ATTORNEY.  85 

missions  in  court  are  binding  upon  the  corporation.1  lie 
may  give  notice  for  summary  proceedings  provided  by 
statute.2  His  representation,  although  fraudulent,  made  to 
a  person  about  purchasing  shares  of  stock,  concerning  the 
condition  of  the  association,  are  not  binding  upon  it,  and 
are  not  admissible  to  show  that  the  purchaser  relied  upon 
them.3  He  cannot  bind  the  association  outside  of  the 
scope  of  his  authority.  Thus  an  applicant  for  a  loan  repre- 
sented to  the  association's  attorney  that  he  could  make  the 
searches  incident  to  the  examination  of  the  title  more 
quickly  than  any  one  else ;  and  he  induced  the  clerk  of  the 
county  recorder  to  issue  a  certificate,  omitting  one  mortgage 
on  each  of  the  properties,  assuring  the  clerk  that  these  mort- 
gages were  paid.  The  loan  was  made,  but  these  omitted 
mortgages  swept  away  the  property.  It  was  held  that  the 
attorney  of  the  association  could  not  bind  it  by  authority 
given  him  by  the  applicant  for  the  loan,  such  an  act  not 
being  within  the  scope  of  his  powers ;  that  the  applicant 
was  not  the  agent  of  the  association  so  as  to  affect  it  with 
knowledge  of  the  prior  mortgage  ;  and  that  the  recorder 
was  liable  for  the  loss.4  The  attorney  cannot  bind  the 
society  by  placing  on  record  a  mortgage  the  directors  have 
rejected  ; 5  nor  cancel  a  mortgage  without  their  authority.6 
The  secretary  of  an  association  directed  a  debtor  of  it  to 
pay  what  he  owed  to  its  attorney,  and  the  latter  accepted 
payment  by  check  of  the  debtor's  agent,  who  then  had  the 
money  on  hand  but  afterwards  became  insolvent,  the  at- 
torney retained  the  check  until  after  insolvency  intervened. 
It  was  held  that  as  between  the  debtor  and  the  association, 
the  latter  must  stand  the  loss.7 

1  Municipality  No.  2  v.  Orleans  5  Conway  v.  Log  Cabins  Perma- 
Cotton  Press,  18  La.  122 ;  36  Am.  nent  Building  Association,  52  Md. 
Dec.   624;    Troy  Turnpike  Co.   v.     137. 

McChesney,  21  Wend.  296.  6  Tradesman's  Building  and  Loan 

2  Curry  v.  Bank,  8  Port.  (Ala.)  Association  v.  Thompson,  31  N.  J. 
360.  Eq.  536 ;  s.  c.  32  N.  J.  Eq.  133. 

3  Burnes  v.  Pennell,  2  H.  L.  Cas.  7  Kilpatrick  v.  Home  Building 
497.  and  Loan  Association,  119  Pa.  St. 

*  Peabody    Building    and    Loan    30  ;  s.  c.  12  Atl.  Rep.  754. 
Association  v.  Houdman,  89  Pa.  St.        A.  borrowed  money  of  one  asso- 
261.  ciation  to  pay  off  another  mort- 


86  BUILDING   AND   LOAN    ASSOCIATIONS.         Ch.  VI. 

The  association  is  liable  to  pay  for  his  services.1  A  charge 
made  to  each  applicant  for  a  loan  for  the  purpose  of  paying 
the  attorney  of  the  association  does  not  render  the  transac- 
tion usurious  or  illegal.2 

ACTUARY  OB    SURVEYOR. 

Sec.  88— Officers. 

The  actuary  is  an  officer  to  apportion  profits  and  losses, 
and  to  assist  in  the  preparation  of  literature  and  perform 
such  other  duties  as  the  directors  may  require.  But  few 
associations  have  such  an  officer.  The  officer  who  makes 
the  valuation  of  properties  upon  which  prospective  loans 
are  to  be  made  is  called  in  England  the  surveyor.  Theoret- 
ically he  is  an  expert  in  values.  He  is  bound  to  exercise 
the  same  care  as  the  attorney  of  the  association  ;  and  if  he 
grossly  and  carelessly  overvalue  property,  whereby  a  loss 
occur  to  the  association,  he  will  be  personally  liable.3 

DIRECTORS. 

Sec.  89— Essential  to  Association — Tenure  of  Office. 

Statutes  or  charters  almost  universally,  if  not  quite,  pro- 
vide the  office  of  director  and  the  mode  of  tilling  it.     But  if 

gage,  and  an  order  was  drawn  to  2  Hopkins  v.  Baker,  2  P.  &  H. 
his  order;  he  indorsed  it  to  a  (Va.)  110;  Hoboken  Building  As- 
solicitor,  with  whom,  by  custom  of  sociation  v.  Martin,  13  N.J.  Eq. 
the  association,  borrowers  were  428  ;  Smith  v.  Wolf,  55  la.  555. 
compelled  to  treat.  The  solicitor  3  If  the  surveyor  make,  negli- 
paid  a  surplus  to  A.,  retaining  gently,  an  over-valuation  of  prop- 
enough  to  satisfy  the  mortgage,  erty,  and  thereby  the  society  is  led 
which  1  if  agreed  to  do.  Themort-  into  making  too  high  a  loan  and 
gage  was  not  satisfied,  and  the  soli-  incurs  a  loss,  he  will  be  liable  for 
citor  absconded  with  the  money,  the  loss.  Moneypenny  v.  Hart- 
Leaving  two  mortgages  against  the  land,  1  Cas.  &  P.  353;  S.  C.  2  Ibid. 
property.  It  was  held  that  the  378.  But  in  such  a  case  he  must 
solicitor  acted  as  the  agent  of  the  be  acting  for  and  on  behalf  of  the 
association,  and  that,  it  innst  hear  society  and  not  on  behalf  of  the 
the  loss.  Cunningham  v.  Mutual,  borrower.  Le  Lievre  v.  Gould,  4 
.tc..  \.8s'n,  6  Pa.  Diet.  Rep.  99.  Rep.  274;  s.  c.  [1893]  1  Q.  B.  491; 
1  Thompson  v.  Sullivan,  38  S.  C.  62  L.  J.  Q.  B.  353;  58  L.  T.  620 ;  41 
684  ;  s.  c.  22  Amer.  &  Eng.  Corp.  W.  R.  468;  57  J.  P.  484. 
Cas.  615. 


§  89.  OFFICERS — DIRECTORS.  87 

no  statute  were  to  do  so  the  association  would  have  the  in- 
herent power  to  create  the  office,  fill  it  and  provide  for 
future  vacancies  therein.1  And  if  an  association  were  to 
organize  and  provide  that  no  directors  should  be  elected 
until  its  principal  work  was  performed,  a  court  of  equity 
would,  upon  proper  application,  order  an  election  to  be 
held,  regardless  of  the  fact  that  the  appointed  time  had  not 
arrived.2  When  elected  the  directors  hold  their  offices 
until  their  successors  are  elected,  whether  or  not  a  statute 
or  by-law  so  provide.3  This  rule  applies  to  a  director  elected 
to  fill  an  unexpired  term  of  a  predecessor.4  A  mere  failure 
to  elect  directors  at  the  appointed  time  does  not  work  a  dis- 
solution of  the  society.  "  The  stockholders  compose  the  cor- 
poration, and  a  mere  failure  to  elect  officers  at  the  time 
designated  will  not  work  a  dissolution,  nor  will  this  court, 
in  an  action  by  the  corporation  against  its  debtor,  look  into 
the  regularity  or  validity  of  the  election  of  the  corporate 
officers.  That  question  cannot  be  thus  tried  collaterally. 
Where  the  fact  of  an  indebtedness  is  established,  a  very 
clear  case  should  be  made  out  to  enable  the  debtor  to 
escape  liability  on  the  ground  that  the  association  has  ceased 
to  exist."  5  A  statute  providing  that  an  omission  to  elect 
officers  shall  work  a  certain  forfeiture  has  no  application 
where  the  vacancies  are  occasioned  by  a  judgment  of  ouster.'5 
A  by-law  providing  that  the  directors  shall  serve  one  year 
"  or  "  until  their  successors  are  elected  will  be  construed  to 
mean  that  they  shall  serve  one  year  "  and  "  until  their  suc- 
cessors are  elected.7  If  the  charter  or  a  statute  fix  the 
tenure  of  office  of  director,  it  cannot  be  enlarged  by  the 
board  by  a  by-law,  nor  can  it   be    restricted  against    the 

1  Hurlbut  v.   Marshall,  62  Wis.  5  Hoboken  Building  Association 
590  ;  s.  c.  22  N.  W.  Rep.  852.  v.  Martin,  2  Beas  (N.  J.)  Eq.  427. 

2  Terwilliger  v.   Great  Western  6  People    v.   Fleming,    59    Hun, 
Telegraph  Co.,  59  111.  249.  518  ;  s.  c.  37  N.  Y.  St.  Rep.  157  ;  13 

3  People  v.  Runkle,  9  Johns.  147  ;  N.  Y.  Supp.  715. 

Foot  v.  Prowse,  1  Str.  625  ;  Vernon  7  Chemical    National     Bank    v. 

Society  v.  Hills,  6  Cow.  23  ;  S.  c.  16  Colwell,  132  N.  Y.  250  ;  s.  c.  30  N. 

Am.  Dec.  429  ;  Hunter  v.  Sun  Mu-  E.  Rep.  644  ;  14  Daly,  361 ;  14  N.  Y. 

tual  Insurance  Co.,  26  La.  Ann.  13.  St.  Rep.  682. 

4  Huguenot  National    Bank    v. 
Studwell,  6  Daly,  13. 


88  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

wishes  of  a  majority  of  the  shareholders,  even  though *  a 
statute  confer  all  the  power  of  the  association  upon  the 
directors,  except  the  power  to  increase  its  capital.2  If  some 
of  the  members  of  the  board  disqualify  themselves  by 
transferring  their  shares  of  stock,  an  election  of  an  entire 
new  board  will  be  illegal.3 

Sec.  90— Election. 

Directors  are  elected  by  the  stockholders  at  their  annual 
meetings,  usually,  or  at  such  time  and  place  as  the  statute, 
by-laws,  or  charter  may  fix.  They  may  be  elected  at  a 
called  meeting  if  the  statute,  charter,  or  by-law  so  provide  ; 
but  that  meeting  must  be  called  by  the  officers  authorized 
to  make  the  call.4  If  a  by-law  provide  that  the  board  of 
directors  call  such  a  meeting  upon  demand  made,  a  demand 
upon  each  director  separately  is  sufficient,  and  a  demand 
upon  the  board  as  such  is  not  necessary.5  A  de  facto  officer 
is  competent  to  make  the  call,  and  the  persons  elected  will 
be  directors  dejure.6  If  the  proper  officer  or  board  refuse 
to  make  a  call  for  an  election  where  a  statute  or  bylaw  require 
it,  he  may  be  compelled  to  do  so  by  mandamus,  even  though 
the  election  was  required  to  be  held  on  a  certain  day,  at  the 
suit  of  a  stockholder.7  The  directors  have  no  power  what- 
ever to  lill  vacancies  in  their  own  board.8  But  a  statute 
may  confer  upon  the  board  such  powers.  If  it  do,  and  only 
;i  minority  of  the  board  remain  in  office,  such  minority 
cannot  fill  the  vacancies.9  In  the  absence  of  a  provi' 
siou  in  a  statute  or  in  the  by-laws  fixing  a  day  for  the 
election,  notice  of  the  time  and  place,  even  the  very  hour, 

1  Elkins  v.  Camden,  etc.,  R.  R.  Barb.  697  ;  People  v.  Cummings,  72 
Co.,  :;<;  X.  -J.  Km-  467.  N.  Y,  4133. 

2  Nathan  v.  Tompkins,  *2  Ala.  Perhaps  no  previous  demand  for 
437;  S.  <-.  'J  S<>.  Rep.  747.  an  election  is  necessary.     Id. 

I<l.     Of   course    an   election  to  s  Kearney  V.    Andrews,  10  N.  J. 

till  the  vacancies  would  not  be  in-  Eq.  70;  Moses  v.  Tompkins,  84  Ala. 

valid.  618;  s.  c.  4  So.  Rep.  703;  4  Rail  & 

1  State  v.  Pettineli,  10  Nev.  141.  Corp.  L.  .J.  2(i.s  ;  21  Am.  &  Eng. 

»Statev.  Wright,  LONev.  167.  Corp. Cas. 634. 

'■  Smith  v.  Erb.,  1  (iill  (M<1.)  487.  9  Moses  v.  Tompkins,  supra. 

"  People  v.  A  Lbany  I  [ospital,  01 


§90. 


OFFICEltS — DIRECTORS. 


89 


must  be  given  to  the  stockholders,  unless  they  all  be  present 
and  consent  to  the  election.1  Merely  fixing  the  day  of 
election  by  the  by-laws  is  not  a  fixing  of  the  time  and 
place.2  If  notice  of  the  time  and  place  be  required  to  be 
given  at  a  regular  meeting  of  the  board  of  directors,  notice 
given  several  hours  before  they  meet  will  be  invalid.3 
It  is  not,  however,  a  sufficient  cause  to  challenge  an 
election  by  a  stockholders'  meeting,  that  the  board  of 
directors  calling  it  were  irregularly  convened.4  Elections 
held  upon  days  subsequent  to  that  provided  for  in  the 
statute  or  by-laws  are  valid,  for  such  provisions  are  only 
directory  and  not  mandatory.5  If  the  stockholders  meet 
and  organize,  a  majority  of  them  cannot  then  withdraw, 
meet  elsewhere  and  proceed  to  hold  an  election.6  If  a 
statute  or  the  charter  or  a  by-law  require  the  election  to  be 
held  within  the  state,  it  cannot  be  held  without ;  and  the 
old  directors  will  have  a  better  title  to  the  office  than  those 
elected  at  such  a  meeting.7  Those  elected  in  the  case 
of  an  ordinary  building  association  must  receive  a  ma- 
jority   of    all    the     persons    present     and     voting;8     for 


1  San  Buenaventure  Mining,  etc., 
Co.  v.  Vassault,  50  Cal.  534  ;  Brown 
v.  Electric  Mining,  etc.,  Co.,  22 
Pitts.  L.  Jr.  (N.  S.)  343. 

It  is  however,  not  necessary  that 
all  should  vote  for  the  successful 
candidate. 

2  Id. 

3  Dahl  v.  Palache,  68  Cal.  248 ; 
s.  c.  9  Pac.  Rep.  94. 

4  Browne  v.  La  Trinidad  L.  N., 
37  Ch.  Div.  1  ;  S.  C.  57  L.  J.  Ch. 
292;  SSL.  T.  (N.  S.)  137. 

All  who  participate  in  an  irreg- 
ularly convened  or  illegal  election 
are  hound  hy  it.  Handley  v.  Stutz, 
139  U.  S.  417 ;  Henderson  v.  Bank 
L.  R.  40  Ch.  Div.  170  ;  s.  c.  8  Rail. 
&Corp.  L.  J.  213. 

5Beardsley  v.  Johnson,  121 N.  Y. 
224 ;  s.  C.  24  N.  E.  Rep.  380  ;  30  N. 
Y.  St.  Rep.  691 ;  affirming,  1  N.  Y. 
Supp.  608 ;  s.  c.  16  N.  Y.  St.  Rep. 


773  ;  Nashua  Fire  Insurance  Co.  v. 
Moore,  55  N.  H.  48;  Hughes  v. 
Parker,  20  N.  H.  58 ;  Vernon  So- 
ciety v.  Hills,  6  Cow.  23  ;  s.  c.  16 
Am.  Dec.  429 ;  Hicks  v.  Borough 
of  Lanceston,  1  Rolle  Abr.,  514 
pi.  6. 

6  In  re  Argus  Printing  Co.,  1  N. 
D.  434  ;  s.  c.  48  N.  W.  Rep.  347  ;  26 
Am.  St.  Rep.  639  ;  12  L.  R.  A.  781. 

See  on  adjourned  meetings.  ///  re 
Newcomb.  18  N.  Y.  Supp.  16  ;  s.  C. 
42  N.  Y.  St.  Rep.  442  :  and  In  re 
Chenango  Mutual  Insurance  Co., 
19  Wend.  635. 

7  Hodgson  v.  Duluth.  etc.,  R.  R. 
Co.,  46  Minn.  454;  s.  C.  49  N.  W. 
Rep.  197. 

8  People  v.  Albany,  etc.,  R.  R. 
Co.,  55  Barb.  344  ;  s.  c.  7  Abb.  Pr. 
(N.  S.)  265  ;  38  How.  Pr.  228  ;  Ells- 
worth Woolen  Manufacturing  Co. 
v.  Faunce,  79  Me.  440  ;  s.  C.  10  Atl. 


90 


BUILDING  AND   LOAN   ASSOCIATIONS.  Ch.  VI. 


in  these  associations  each  member,  regardless  of  how 
many  shares  he  may  hold,  is  entitled  to  only  one  vote. 
Yotes  for  persons  ineligible  to  hold  the  office  are  thrown 
away.1  Courts  of  Equity  have  no  jurisdiction  over  corpo- 
ate  elections,  there  being  ample  jurisdiction  over  such  mat- 
ters in  courts  of  law  by  mandamus.2  The  right  of  persons 
exercising  the  powers  of  directors  may  be  tested  by  quo 
warranto? 


Sec.  91 — Right  to  Tote  at  an  Election. 

Every  stockholder  has  an  inherent  right  to  vote  for  di- 
rectors ;  and  this  is  on  the  ground  that  he  is  part  owner  of  the 
property  of  the  corporation  and  interested  in  it  to  that  extent, 
the  same  as  if  he  were  sole  owner  thereof.4  A  shareholder 
cannot  sell  his  shares  and  reserve  the  right  to  vote ;  for  he 
thereby  deprives  the  owner  of  the  power  to  exercise  this  in- 
herent right.5  One  merely  holding  dummy  shares,  however, 
cannot  vote.6     If  the  shares  vest  in  his  personal  representa- 


Rep.  250  ;  In  re  Argus  Printing 
Co.,  1  N.  D.  434 ;  s.  c.  12  L.  R.  A. 
781  ;  9  Rail  &  Corp.  L.  J.  347  :  26 
Am.  St.  Rep.  039. 

i  Horton  v.  Wilder,  48  Kan.  222  : 
S.  c.  29  Pac.  Rep.  500. 

2  Owen  v.  Whitaker,  20  N.  J.  Eq. 
122;  Peoples.  Peck.  11  Wend. 604; 
s.  c.  27  Am.  Dec.  104;  Mozley  v. 
Alston,  1  Phil.  Ch.  790;  Attorney 
General  v.  Clarendon,  17  Ver. 
491  :  Ogden  v.  Kip,  6  Johns.  Ch. 
L60;  Mickles  v.  Rochester  City 
Bank,  11  Paige,  118  ;  s.  c.  42  Am. 
Dec.  103 :  Bartt  v.  Harvey,  32 
Barb.  55;  s.  c.  10  Abb.  Pr.  330;  19 
How.  Pr.  '.'  15  :  People  v.  Albany, 
etc.,  R.  R.Co.,57  N.  Y.  161  ;  Payn- 
ter  v.  Clogg,  9  Phila.  480. 

Instances  may  arise,  however, 
calling  for  the  exercise  of  a  conrl 
of  equity's  jurisdicl  ion.  I  Earl  t  v. 
II;,.  ey,  82  Barb.  55;  8.  0.  10  Abb. 
Pi  \\  S.)  380  ;  Lovetl  v.  German 
Reform  Church,  12  Barb.  67  ;  Peo- 


ple v.  Albany,  etc.,  R.  R.  Co.,  55 
Barb.  344;  s.  c.  7  Abb.  Pr.  (N.  S.) 
2G5  ;  38  How.  Pr.  228  ;  Johnston  v. 
Jones,  23  N.  J.  Eq.  216  ;  Nathan  v. 
Tompkins,  82  Ala.  437 ;  S.  c.  19 
Am.  &  Eng.  Corp.  Cas.  336 ;  2  So. 
Rep.  747  ;  2  Rail  &  Corp.  L.  J.  315  ; 
Tunis  v.  Hestonville,  etc.,  R.  R. 
Co.,  149  Pa.  St.  70  ;  s.  c.  15  L.  R.  A. 
665;  21  Atl.  Rep.  88;  affirming  1 
Pa.  Dist.  Rep.  207  ;  Gowen's  Ap- 
peal, 10  W.  N.  Cas.  85. 

8Taggart  v.  Perkins,  73  Mich. 
303 ;  s.  c.  41  N.  W.  Rep.  426 ;  Peo- 
ple v.  Maynard,  15  Mich.  463. 

4  Commonwealth  v.  Dalzell,  152 
Pa.  St.  217 ;  S.  c.  25  Atl.  Rep.  535 ; 
34  Am.  St.  Rep.  640 ;  reversing,  1 
Pa.  Dist.  Rep.  657;  s.  c.  23  Pitts. 
L.  J.  N.  S.  67. 

s  Moses  v.  Scott,  84  Ala.  608  ;  s.  c. 
I  S...  Rep. 742. 

•■  Stewart  v.  Mahoney  M.  Co.,  54 
Cal.  149. 


§  91.  OFFICERS — DIRECTORS.  91 

tives  on  the  death  of  a  shareholder,  the}'  may  vote  at  a  proper 
election;  but  if  there  be  more  than  one  such  representative 
they  must  all  agree  how  the  vote  shall  be  cast,  or  they  will 
lose  the  right  to  vote.1  A  pledgor  of  stockholding  the 
legal  title  thereto,  has  the  right  to  vote  it  as  against  the 
owner's  claim  ;2  and  so  has  a  borrower,  although  he  has  as- 
signed his  stock  to  the  association  as  collateral  for  the 
loan.3  So  if  a  corporation  hold  shares  of  stock  in  a  build- 
ing association,  such  corporation  has  a  right  to  vote.4  The 
motive  of  a  shareholder  in  casting  his  vote  cannot  be  in- 
quired into,  even  though  it  be  a  purely  personal  one.5  If 
there  be  no  statute  or  provision  in  the  charter  or  in  the 
by-laws,  providing  for  the  casting  of  votes  by  proxy  it  can- 
not be  done.6  Provisions  are  often  adopted  allowing  voting 
by  proxy.7 

Sec.  92 — Proof  of  Acceptance  of  Office — Resignation. 

In  order  to  hold  a  person  liable  as  a  director  it  is  neces- 
sary to  show  an  acceptance  of  the  office  on  his  part ;  but 
this  may  be  done  by  showing  such  a  state  of  affairs  as  to 
"warrant  the  inference  that  he  had  accepted.8  If  a  board  of 
directors  sue  as  directors  and  not  as  a  corporation,  they 
must  prove  that  they  were  elected  and  accepted  the  office.9 

1  Tunis  v.  Hestonville,  etc.,  R.  R.  7  So.  Rep.  108  ;  7  L.  R.  A.  605  ;  16 
Co.,  149  Pa.  St.  70;  S.  c.  24  Atl.  Am.  St.  Rep.  81  ;  Clark  v.  Central, 
Rep.  88;  15  L.  R.  A.  665;  affirm-  etc.,  Co.,  50  Fed.  Rep.  338;  s.C.  15 
ing,  1  Pa.  Dist.  Rep.  135.  L.  R.  A.  683. 

2  Mechanics' Building  and  Loan  5  Bjorngaard  v.  Goodhue  County- 
Association,  v.  Conover,  14  N.  J.  Bank,  4!)  Minn.  483;  s.  c.  52  X.  W. 
Eq.  19  ;  State  v.  Smith,  15  Ore.  98  ;  Rep.  48  ;  In  re  Lafferty's  Estate,  2 
s.  c.  14  Pac.  Rep.  814.  Pa.  Dist.  Rep.  215. 

3  Id.  6  Craig    v.     First    Presbyterian 

4  State  v.  Rohlffs  (N.  J.),  19  Atl.  Church,  88  Pa.  St.  42  ;  Perry  v. 
Rep.  1099  ;  Davis  v.  United  States  Tuscaloosa  Cotton  Seed  Oil  Mill 
Electric,  etc.,  Co.,  77  Md.  35  ;  s.  c.  Co.,  93  Ala.,  364  ;  s.  c.  9  So.  Rep. 
25  Atl.  Rep.  982.  217. 

One  corporation  cannot  purchase        "  State  v.  Rohlffs,  (N.  J.),  19  Atl. 

a  majority  of  the  stock  in  another  Rep.  1099. 

corporation    and  then  absorb  it ;        8  Blake  v.  Bayley,  16  Gray,  531. 
equity  will  prevent  its  voting  the        9  Phelps  v.  Lyle,  2  Per.  &  D.  314  ; 

stock  it  holds.     Memphis,  etc.,  R.  s.  C.  10  Ad.  &  El.  113  ;  3  Jur.  479. 
R.  Co.  v.  Woods,  88  Ala.  630  ;  s.  c. 


92  BUILDING  AND   LOAN   ASSOCIATIONS.  Ch.  VI. 

It  may  also  be  shown  that  he  declined 'the  office  before  ac- 
ceptance, and  thus  escaped  liability.1  If  he  resign  he  need 
not  do  so  by  a  formal  instrument.  He  may  do  so  orally  to 
the  president  of  the  corporation,  at  least  if  the  act  is  ac- 
companied by  the  sale  of  his  shares  disqualifying  him  from 
holding  the  office.2  If  he  become  a  bankrupt,  he  need  not 
resign,  but  may  continue  to  hold  the  office.3 

Sec.  93— De  facto  Directors,  and  tlie  Validity  of  tlieir 
Acts. 

Although  the  directors  be  only  de  facto  and  not  dejun 
officers  of  the  association,  yet  their  acts  will  be  so  far  valid 
as  not  only  to  bind  the  association  but  all  persons  who  deal 
with  them,  even  the  shareholders.4  If  an  officer  be  elected 
by  a  less  number  than  the  charter  requires  he  is  a  de  facto 
officer,5  so  if  elected  at  a  meeting  held  outside  the  state;6 
so  if  ineligible  to  the  office  by  reason  of  the  fact  that  he 
holds  no  stock.7  But  a  director  who  has  abandoned  the 
office,  especially  for  a  considerable  length  of  time,  cannot 
serve  as  a  director,  and  his  acts  are  void,  he  not  even  being 
an  officer  de  facto?  If  de  facto  directors  elect  a  president. 
his  title  cannot  b.e  impeached  on  that  ground.9     So  thoir 

1  A ust in*s  Case,  L.  R.  2  Eq.  433;  6  Ohio,  etc.,  R.  R.  Co.  v.  Mc- 
Fulto.'!  Bank  v.  New  York,  etc.,  Pherson,  35  Mo.  13;  s.  c.  86  Am. 
Can.  Co.,  4  Paige,  127.  Dec.  128. 

2  Briggs  v.  Spaulding,  111  U.  S.  7  San  Jose  Savings  Bank  v.  Sierra 
132;  Chemical  National  Bank  v.  Lumber  Co.,  63  Cal.  179  ;  Delaware 
Colwell,  132  N.  Y.  250;  S.  C.  30  N.  etc.,  Canal  Co.  v.  Pennsylvania 
E.  Rep.  644  :  13  X.  V.  St.  Rep.  876;  Coal  Co..  21  Pa.  St.  131  ;  Crawford 
reversing,  29  X.  V.  St.  Rep.  726;  9  v.  Powell,  2  Ld.  Raym.  1013  ;  s.  c. 
X.  V.  Supp.  288.  1  W.  Black.  229. 

Mflas  Haul,  r.  Gardner,  8  Biss.  8  Orr  Water  Ditch  Co.  v.  Reno 

537.  Water  Co.,  17  Nev.  166  ;  Bartholo- 

I  lall  v.  <  !arey,  5  I  ra.  239;  CahiU  mew  v.  Bentley,  1  Ohio  St.  07. 

V.    Kalamazoo    Mutual     Insurance  9  People   V.    Hills,    1     Lans.    202. 

Co.,  '-'   Doug.  (Mich.)   124  ;  s.   <•.  43  See  also,  Atlantic,  etc.,  R.  R.  Co. 

Am.    Dec.    157;   Despatch   Line  v.  v.  Johnston,  70  N.  C.  348. 

Bellamj  Manf.  Co.,  12  N.   E.205;  See  also  where  an  act  of  a  defacto 

s.  c  :;?   A iti.   Dec.  208;  Rockville,  board  was  impeached.    Lebanon, 

etc.,  Turnpike  Road  v.  Van  Ness,  2  etc.,  Gravel  Road  Co.  v.  Adair,  85 

Cranch  C.  C.  449.  hid.  244. 

Baird  v.  Bank  of  Washington, 
11  S.  &  R.  411. 


§94. 


OFFICERS — DIRECTORS. 


!>:; 


acts  are  binding  on  all  the  stockholders.1  Their  contracts 
for  and  on  behalf  of  the  association  are  binding  upon  both  the 
association  and  the  person  with  whom  they  enter  into  them.2 
A  de  facto  director  incurs  the  same  liability  as  a  de  jure 
director.3  If,  however,  he  has  resigned  the  office,  lie  will 
not  be  liable,  although  his  resignation  has  not  been  ac- 
cepted 4 

Sec.  94— Must  Act  Together. 

In  all  matters  involving  a  policy  or  judicial  discretion,  the 
board  of  directors  cannot  delegate  their  authorit}',  and 
they  must  act  together  as  a  board  and  not  individually.  A 
majority  cannot  bind  the  corporation  by  their  individual 
names ;  they  must  come  together  in  consultation,  and  act 
by  what  is  the  equivalent  of  a  resolution.5  An  act  other- 
wise valid,  but  which  is  not  binding  on  the  corporation,  can- 
not be  satisfied  "  by  individual  consent  of  a  majority  of  the 
board." 6  Thus  a  deed  of  a  corporation  signed  by  every 
member  of  the  board  of  directors  is  invalid  if  it  was  not 


1  Boardman  v.  Keystone  Stand- 
ard Watch  Co.,  8  Lane.  L.  Rev.  25; 
Rockville,  etc.,  Turnpike  Co.  v. 
Van  Ness,  2  Cranch  C.  C.  449; 
Ohio,  etc.,  R.  R.  Co.  v.  McPherson, 
35  Mo.  13  ;  s.  c.  86  Am.  Dec.  128 ; 
Thames  Haven  Dock,  etc.,  Co.  v. 
Hall,  3  Eng.  Ry.  Cas.  441. 

2  Wilson  v.  Kings  County  Ele- 
vated R.  R.  Co.,  114 N.  Y.  487;  s.  c. 
21  N.  E.  Rep.  1015  ;  24  N.  Y.  St. 
Rep.  81  ;  6  Rail.  &  Corp.  L.  J.  324 ; 
40  Alb.  L.  J.  346. 

3  Halstead  v.  Dodge,  51  N.  Y. 
Supr.  169  ;  Newcomb.  v.  Reed,  12 
Allen,  362 ;  Squires  v.  Brown,  22 
How.  Pr.  35  ;  Pearsons  v.  Wheeler, 
55  N.  H.  41 ;  Steam  Engine  Co.  v. 
Hubbard,  101  U.  S.  188. 

4  Chandler  v.  Hoag,  5  T.  &  C. 
197  ;  S.  c.  2  Hun,  613. 

A  member  of  a  building  associa- 
tion is  charged  with  notice  that 
its  charter  prohibits  the  directors 


alone  from  making  contracts  in 
behalf  thereof.  Citizens'  Savings, 
Building  and  Loan  Associations, 
55  111.  App.  65. 

5  Cammeyer  v.  United  German 
Lutherian  Churches,  2  Sandf .  Ch. 
186  ;  Ross  v.  Crockett,  14  La.  Ann. 
823.  But  see  In  re  Bonellis  Tele- 
graph Co.,  12  Eq.  246  ;  s.  c.  40  L. 
J.  Ch.  567  ;  19  W.  R.  1022. 

6  First  National  Bank  v.  Drake, 
35  Kan.  564 ;  s.  c.  11  N.  W.  Rep. 
445 ;  57  Am.  Rep.  193  ;  Junction 
R.  R.  Co.  v.  Reeve,  15  Ind.  236  ; 
McCortle  v.  Bates,  29  Ohio  St.  419  ; 
s.  c.  23  Am.  Rep.  758  ;  Edgerly  v. 
Emerson,  23  N.  H.  555 ;  s.  c.  55 
Am.  Dec.  207 ;  Harrington  v.  Dis- 
trict Township,  47  la.  11  ;  First 
National  Bank  v.  Christopher,  40 
N.  J.  L.  435 ;  s.  c.  29  Amer.  Rep. 
262  ;  In  re  Marseilles  R.  R.  Co.  L. 
R.  7  Ch.  161. 


9-1 


BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 


authorized  by  a  resolution  adopted  at  some  meeting  of  the 
board.1  Likewise  the  individual  declarations  of  the  directors 
does  not  bind  the  association.2 

Sec.  95 — Individual  Director's  Powers. 

An  individual  director,  when  not  duly  appointed  agent  for 
that  purpose,  has  no  authority  as  a  director  to  bind  his  cor- 
poration,3 even  though  he  own  a  majority  of  its  shares.4 
Nor  can  he  bind  it  by  his  declarations,  nor  by  a  construction 
put  upon  its  contracts.5  Where  two  directors,  but  not  con- 
stituting a  quorum,  were  present  at  an  interview  between  a 
contractor  and  the  corporation's  agent,  for  a  particular  pur- 
pose, it  was  held  that  this  was  no  evidence  of  the  assent  of 
the  corporation  to  an  arrangement  made  by  the  agent  which 
exceeded  his  powers.6 

Sec.  96— Voting  »y  Proxy. 

A  director  cannot  vote  at  a  board  meeting  by  proxy.     It 


1  Baldwin  v.  Canfield  26  Minn. 
43.  See  also  Butler  v.  Cornwall, 
22  Conn.  335  ;  D'Arcy  v.  Tamar, 
etc.,  R.  R.  Co.  L.  R.,  2  Exch.  158  ; 
s.  C.  2  Hurl  &  C.  463 ;  36  L.  J. 
Exch.  (N.S.)  37;  14  W.  R.  96,  In  re 
County  Life  Insurance  Co.,  L.  R. 
5  Ch.  288. 

2  Cannon  River  Manf.  Associa- 
tion v.  Rogers,  51  Minn.  388 ;  s.  c. 
53  N.  W.  Rep.  759. 

That  usage  may  change  all  this, 
see  Bank  of  Middlehury,  v.  Rut- 
land, etc.,  R.  R.  Co.,  30  VI,  l.V.t, 
and  Waite  v.  Windham  County 
Mining  Co.  37  Vt.  608. 

8  Chicago,  etc.,  R.  R.  Co.  v. 
James,  22  Wis.  L94  ;  National  Bank 
v.  Norton,  1  Hill.  572;  Hartford 
Bank  v.  Hart,  3  Daj  (Com)  491  ;  s. 
\ni.  Dec.  274  Shackelford  v. 
New  Orleans,  etc.,  R.  R.  Co.,  37 
Miss.  202 ;  Harper  y.  <  ialhoun,  7 
How.  (Miss.)  208  ;  Filon  v.  Miller 
Brewing  <'o.,  r>  N.  Y.  Supp.  ■">;  ; 
s.  <■.  38  N.  Y.  St.  Rep.  en'.';  Bank 


of  Healdsburg  v.  Bailhache,  65 
Cal.  327 ;  Browning  v.  Hinkle,  48 
Minn.  544 ;  s.  c.  31  Am.  St.  Rep. 
691  ;  51  N.  W.  Rep.  605 ;  Cascade, 
etc.,  Insurance  Co.  v.  Journal  Pub. 
Co.,  1  Wash.  452;  s.  C.  25  Pac. 
Rep.  331 ;  Doyle  v.  Mizner,  42  Mich. 
332 ;  Lockwood  v.  Thunder  Bay 
River  Boom  Co.,  42  Mich.  536; 
Deadrick  v.  Wilson,  8  Baxt.  108  ; 
Kupfer  v.  Soutli  Parish,  12  Mass. 
185. 

4  Allemong  v.  Simmons,  124  Ind. 
L99;  s.  c.  23  N.  E.  Rep.  768. 

&  Hartford  Bridge  Co.  v.  Granger, 
4  Conn.   142. 

6  Barcus  v.  Hannibal,  etc. ,  Plank 
Road  Co.,  26  Mo.  102.  See  also 
Waite  v.  Windham  County  Mining 
Co.,  36  Vt.  18. 

Of  course  a  director  may  act  as 
agent  of  a  corporation,  when  au- 
thorized by  the  board  to  do  so,  and 
biinl  it  by  his  contract.  Goodwin 
r.  I  'nion  Screw  Co.,  34  N.  H.  378  ; 
N.ilional   Security  Bank  v.   Cush- 


§  97.  OFFICERS — DIRECTORS.  95 

is  his  duty  to  attend  the  board's  meeting  and  consult  with 
his  fellow  directors ;  and  to  allow  him  to  vote  by  proxy 
would  be  to  allow  him  to  evade  such  duty.1 

Sec.  97 — Majority  Rule — Quorum. 

Unless  some  statute  or  a  by-law  provide  otherwise,  a 
majority  of  all  the  directors  may  rule  the  corporation;  and 
a  less  number  than  that  are  incompetent  to  transact  busi- 
ness.2 It  takes  a  majority  of  all  the  directors  to  constitute 
a  quorum.3  Thus  where  there  were  five  directors  provided 
for  by  statute,  and  at  a  meeting  only  two  were  present  and 
one  Avhose  resignation  had  been  accepted  at  a  previous 
regular  meeting,  it  was  held  that  they  could  not  transact 
business.4  A  statute  which  declares  that  at  any  regular 
meeting  a  majority  of  those  present  shall  be  competent  to 
transact  the  business  of  the  corporation,  does  not  authorize 
a  minority  to  act.5  Where  a  majority  of  the  directors  have 
assembled,  a  majority  of  that  majority  may  transact  business 
and  bind  the  corporation.6  If  the  affairs  of  a  corporation 
are  intrusted  to  the  management  of  not  less  than  a  fixed 
number  of  directors,  then  it  is  not  bound  by  the  act  of  a 
fewer  number,  although  that  number  constitutes  a  majority 
of  them.7     Any  business  transacted  by  a  board  of  directors 

man,  121  Mass.  490;  Holmes  v.  Mo.  App.  555;  Edgerly  v.  Emer- 
Board  of  Trade,  81  Mo.  137.  son,  23  N.   H.  555  ;  s.  C.    55  Am. 

1  Craig    Medicine    Co.    v.    Mer-    Dec.  207. 

chants'  Bank,  59  Hun,  561 ;  14  N.  Y.  4  Wickersham  v.  Crittenden,  93 

Supp.  16  ;  36  N.  Y.  St.  Rep.  923.  Cal.  17  ;  s.  c.  28  Pac.  Rep.  788. 

2  Attorney-General  v.  Abbott  5  Ex  parte  Willcocks,  supra. 
154  Mass.  323  ;  s.  C.  28  N.  E.  Rep!  6  Id.  ;  Cotton  v.  Davis,  1  Stra. 
346  ;  13  L.  R.  S.  251  ;  Booker  v.  53  ;  Buell  v.  Buckingham,  16  la. 
Young,  12  Gratt.  303 ;  Wells  v.  284 ;  s.  C.  85  Am.  Dec.  516  ;  Foster 
Rahway,  etc.,  Co.,  19  N.  J.  Eq.  v.  Mullanphy  Planing  Mill  Co.,  92 
402 ;  Despatch  Line  v.  Bellamy  Mo.  79 ;  s.  c.  4  S.  W.  Rep.  260 ; 
Manf.  Co.,12N.  H.  205;  s.  c.  37  Despatch  Line  v.  Bellamy  Mf.  Co., 
Am.  Dec.  203;  Cram  v.  Bangor,  12  12  N.  H.  205;  S.  c.  37  Am. "Dec. 
Me.  354.  203;  Cross  v.  Fisher  [1892]  1  L.  R. 

3  Ex  parte  Willcocks,  7  Cow.  477 ;  S.  C.  06  L.  T.  448 ;  8  L.  T. 
402  ;  S.  C.  17  Am.  Dec.  525  ;  People  R.  230  ;  56  J.  P.  372. 

v.  Walker,  2  Abb.  Pr.  425;  s.  c.  23  '  Carel  v.  Carr,   1   C.  B.  (N.  Y.) 

Barb.  304  ;  Hax  v.  Davis  Mill  Co.,  197  ;  S.  c.  2S  L.  T.  124  ;  26  L.  J.  C. 

39  Mo.  App.  453  ;  St.  Louis  Coloni-  P.  113  ;  Bottomley's  Case,  L.  R.  16 

zation  Association  v.  Hennessy,  11  Ch.  Div.  681. 


96  BUILDING   AND   LOAN    ASSOCIATIONS.  Ch.  VI. 

when  less  than  a  majority  are  present  is  void  ; l  nor  can  less 
than  a  majority  change  the  terms  of  a  valid  contract  pre- 
viously entered  into  by  a  board  having  a  majority  present 
when  it  was  executed.2  If  there  be  a  vacancy,  that  vacancy 
must,  however,  be  counted  in  determining  the  number  neces- 
sary to  constitute  a  quorum.3  But  if  a  member  be  dis- 
qualified to  hold  the  office,  yet  he  may  be  counted  for  the 
purpose  of  obtaining  a  majority  ;  ami  if  it  is  only  by  count- 
in^  his  vote  that  a  measure  is  carried  bv  a  maiority  of  those 
present,  still  the  act  will  be  valid,4  unless  it  be  a  transaction 
in  which  he  is  personally  interested.5  If  a  statute  prescribe 
the  number  of  directors  and  give  them  power  to  adopt  such 
by-laws  as  they  should  adjudge  necessary,  the  board  may 
adopt  a  by-law  prescribing  what  number  should  constitute  a 
quorum,  though  that  number  in  fact  be  less  than  a  majority 
of  their  number.6  If  more  directors  be  elected  than  the 
statute,  charter  or  by-laws  authorizes,  still  their  acts  will  be 
valid,  unless  the  stockholders  attack  them.7 

Sec.  98 — Presumption  Concerning  Acts  of  Board. 

"  "When  the  act  purports  to  be  the  act  of  the  board,  it  may 

1  Coryell  v.  New  Hope,  etc.,  Co.,  6  Hoyt  v.  Thompson,  5  N.  Y.  320. 
9N.  J.Eq.  457;  Ex  parte  Morrison,  7  Hax  v.  Davis  Mill  Co.,  39  Mo. 
11  Jur.  719  :  Junction  R.  R.  Co.  v.     App.  453. 

Reeve,  15  Ind.  236.  The   board    of  directors  cannot 

2  Tennessee,  etc.,  R.  R.  Co.  v.  expel  one  of  their  number.  State 
East  Alabama  R,  R.  Co.,  73  Ala.  v.  Ohio,  etc.,  R.  R.  Co.,  6  Ohio  C. 
426.  C.  414. 

3  Rex  v.  Devonshire,  1  B.  &  C.  That  usage  may  change  the  ma- 
G09.  jority  rule,  see  Lyster's  Case,  L. 

I  f    the   Board  of  Directors    au-  R.  4  Eq.  233 ;  Lane  v.  Brainard,  30 

thorize  a  committee  to  enter  into  Conn.  56.     So  when  the  words  of 

a  contract,  at  least  a  majority  of  the  charter  are  doubtful.     Rex  v. 

thai   com  in  it  t<M-    must  execute   it.  Varlo,  Cowp.  248. 

Curtis    v.     Portland,    59  Me.   483;  And  see  Longmont  Supply  Ditch 

Boward      v.      Marine      industrial  Co.  v.  Coffman,  11  Col.  551;  s.  c. 

School,   78    Me.    230;    Damon    v.  19  Pac.  Rep.  508. 

Granby,    '-'    Pick.    345.      Bui    Bee  A  committee  delegated  to  per- 

Wellfl  v.  Gates,  Is  Barb.  554.  form  an  act,  may  do  so  by  a major- 

1  Satterlee    V.   San    Francisco,    23  ity  of  its  members.     State?'.  Jersey 

Cal.  814;  Smith   v.    Los   A.ngeles,  City,  27  N.  J.  L.  493.    ButseeCorn 

\     ociation,  78  Cal.  289.  Exchange    Bank    v.    Cumberland 

■  Loubal  v.  Leroy,  15  Abb.  N.  C.  Coal  Co.,  1  Bosw.  436. 
14. 


§  99.  OFFICERS— DIRECTORS.  97 

be  presumed  that  it  was  the  act  of  the  majority  until  the 
contrary  be  shown." 1  It  will  be  presumed  that  the  meeting 
at  which  a  resolution  was  adopted  was  regularly  called,2 
especially  if  the  record  recite  that  due  notice  was  given.8 
This  presumption  even  extends  to  and  upholds  the  validity 
of  an  election.4  If  all  the  members  of  the  board  must  con- 
sent to  a  certain  order,  and  that  order  be  entered  on  the 
books  of  the  association,  it  will  be  presumed  that  all  con- 
sented to  it.5  Where  the  statute  required  the  meetings  to 
be  held  in  the  counting-room  of  the  association,  and  the 
record  recited  that  it  was  held  at  the  dwelling-house  of  the 
general  superintendent  of  the  association,  it  was  decided 
that  the  presumption  was  that  the  association's  counting- 
room  was  in  the  dwelling-house.6 

Sec.  99— Ratification  of  Act  Performed  by  Less  than  a 
Majority. 

Any  resolution,  not  otherwise  illegal,  adopted  by  a  board 
of  directors  when  a  less  number  than  a  quorum  was  present 
may  be  adopted  and  ratified  at  a  subsequent  meeting  of  the 
board  when  a  proper  majority  is  present.7  And  if  the  board 
subsequently  act  upon  such  resolution  and  the  thing  author- 
ized by  it  is  performed,  it  cannot  thereafter  be  repudiated.8 

1  Despatch  Line  v.  Bellamy  Mf.        4  Blancharcl  v.  Dow,  32  Me.  557. 
Co.,  12  N.   H.   205;  S.  c.    37  Am.        5  Lexington  v.  Headley,  5  Bush. 
Dec.  203 ;  Com.  v.  Woelper,  3  S.  &    508. 

E.  29  ;  s.  c.  8  Am.  Dec.  628.  6  McDaniels  v.  Flower  Brook  Mf. 

Consenting  to  a  measure  as  a  Co.,  22  Vt.  274. 

director  will  not  estop  such  a  direc-  It  will  be  presumed  that  a  clerk 

tor  to  afterwards  dissent  as  a  stock-  of    an    association    accepted    the 

holder.     Mowbrey  v.  Indianapolis,  office  where  he  is  present  when 

R.  R.  Co.,  4  Biss.  78.  elected,  and    recorded    the   vote. 

2  Sargent    v.   Webster,   13    Met.  Delano    v.    Smith  Charities,    138 
497  ;  Chase  v.  Tuttle,  55  Conn.  455;  Mass.  63. 

s.  C.  3  Am.  St.  Rep.  64  ;    12  Atl.  7  Hanson  v.  Dexter,  36  Me.  516 ; 

Rep.  874  ;  s.  c.  46  Am.  Dec.  743;  Atlantic,   etc.,   Insurance    Co.    v. 

Chouteau  Insurance  Co.  v.  Holmes,  Sanders,   36  N.   H.   252;    Contra, 

68  Mo.  601  ;  s.  c.  30  Am.  Rep.  807  ;  Price  v.  Grand  Rapids,  etc.,  R.  R. 

Wells  v.   Rodgers.  60  Mich.  525;  Co.,  13  Ind.  58. 

s.  c.  27  N.  W.  Repr.  671.  8  Samuel  v.  Holladay,  1  Woodw. 

3  Granger    v.   Original    Empire,  400. 
etc.,  Co.,  59  Cal.  678  ;  s.  c.  9  Am. 
Corp.  Cas.  27. 

7 


98  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 

But  where  a  secretary  of  a  corporation  had  his  salary  fixed 
at  a  meeting  when  his  vote  was  necessary  for  that  purpose, 
it  was  held  that  a  subsequent  approval  of  the  minutes  of 
that  meeting  could  not  be  construed  into  an  approval  of  the 
amount  fixed,  for  it  would  be  presumed  that  the  approval 
was  only  of  the  regularity  of  the  minutes.1 

See.  100 — Board  Contracting  with  one  of  its  own  Num- 
ber. 

A  member  of  the  board  of  directors  contracting  with  it 
must  be  regarded  as  a  stranger  ;  and  if  his  vote  is  necessary 
to  constitute  the  number  essential  to  a  majority,  the  contract 
is  illegal  and  void.2  "Where  three  constituted  the  board,  one 
being  the  president,  a  contract  with  the  latter  by  the  other 
two  was  held  valid.3 

Sec.  101 — President  Counts  as  a  Director. 

The  president  need  not  be  present  at  a  meeting  of  the 
board  of  directors,4  but  if  he  be  present  he  counts  as  a  mem- 
ber of  the  board  where  the  by-law  or  statutes  requires  him  to 
be  a  director.5 

Sec.  102— Accidental  Meetings. 

Business  transacted  at  what  may  be  called  "accidental 
meetings  "  is  void  ;  by  which  is  meant  where  a  majority  of 
the  board  get  together  at  a  time  not  fixed  by  the  statutes  or 
by-laws  for  a  meeting,  without  notice,  and  undertake  to 
transact  business.6     Unless  all  the  directors  be  notified  of  a 

i  Davis  Mill  Co.  v.  Bennett,  39  Willard,  5  Mass.  80;  s.  c.  4  Am. 

Mo.  App.  160.  Dec.  39;  Gilmore  v.  Pope.  5  Mass. 

2  Davis   Mill   Co.  v.  Bennett,  39  491;  Berks,  etc.,  Turnpike  Road  v. 

Mo.  App.460;  VanHook  y.Somer-  Myers,  6  S.  &  R.  12;  s.  c.  9  Am. 

ville  Manf.  Co.,  5   N.  J.   Eq.   137:  Dec.   402;    Gordon  v.   Preston,   1 

Miner  v.  Belle  tale  [ce  <  '•>..  93  Mich.  Watts.  385  ;  s.  c.  26  Am.  Dec.  75. 
53  N.  W.  Rep.  '-'is.  *Sargeant  v.  Webster,  13   Met. 

»Buell   v.    Buckingham,    16    [a.  197 ;  S.  C.  46  Am.  Dec.  743. 
.■-I               ,   lm.Dec.516;  Foster       B  Bank  of  Maryland    v.    Ruff,  7 

[ullanphy  Planing  Mills  Co.,  92  Gill  &  J.  448  ;  Glen's  Falls  Paper 

Mo.  79;  3.C.  1  S.  W.  Rep.  260  ;  <  !ity  ( !o.  V.  White,  18  Hun,  214. 
<»f  St.  l.ouis  v.  Alexander,  23  Mo.       6  Despatch   Line  v.  Bellamy  Mf. 

ter  Turnpike  Co.   v.  Co.,   12   X.  H.  205;  s.  c.  37  Am. 


§  104.  OFFICERS — DIRECTORS.  99 

special  meeting,  the  acts  of  the  board  are  not  binding  on 
the  corporation.1 

Sec.  103— Meetings  Outside  of  State. 

Meetings  held  outside  of  the  state,  if  duly  called,  are 
valid  ;  and  business  then  transacted  cannot  for  that  reason 
be  impeached.2 

Sec.  104 — Board  must  be  duly  Assembled — Notice. 

Before  a  board  of  directors  can  transact  business  binding 
on  the  corporation,  it  must  be  duly  assembled.3  Thus  if  a 
statute  require  the  president  to  call  a  meeting,  and  if  there 
be  more  than  two  directors,  such  directors  cannot  call  a 
meeting  so  long  as  there  be  a  president.4  A  notice  for 
stated  meetings  is  not  necessary  where  the  by-laws  fix  the 
time  and  place.5  All  the  members  must  be  notified,  when 
notice  is  required,6  but  all  need  not  be  present.7  The 
object  of  the  meeting  need  not  be  stated,  especially  for 
ordinary  transactions.8  The  notice  should  be  received 
personally,  or  left  at  the  director's  usual  place  of  residence, 
unless  a  statute  or  bylaw  provide  differently.9      Directors, 

Dec.    203  ;    Hoyt    v.   Bridgewater  Pac.  Rep.  153 ;  Reilly  v.  Oglebay, 

Copper  Mf.  Co.,  6  N.  J.  Eq.  253;  25  W.  Va.  36;  Smith  v.  Dorn,  96 

Hillyer  v.   Overman,    etc.,  Co.,  6  Cal.  73  ;  s.  c.  30  Pac.  Rep.  1024. 

Nev.  51.     Contra,  State  v.  Smith,  4  Smith  v.  Dorn,  supra. 

48  Vt,  266.  5  state  v_  Bonnell,  35  Ohio  St.  10 ; 

1  Gordon  v.  Preston,  1  Watts.  "Warner  v.  Mower,  11  Vt.  385  ;  Pike 
385 ;  S.  C.  26  Am.  Dec.  75 ;  Stow  v.  Co.  v.  Rowland,  94  Pa.  St.  238 ; 
Wyse,  7  Conn.  214 ;  s.  c.  18  Am.  Doyle  v.  Mizner,  42  Mich.  332  ; 
Dec.  99  ;  Despatch  Lineu.  Bellamy  State  v.  Ferguson,  31  N.  J.  L.  107. 
Mf.  Co.,  supra.;  Lockwood  v.  Me-  6  Commonwealth  v.  Cullen,  13 
chanics'  National  Bank,  9  R.  I.  308  ;  Pa.  St.  133 ;  S.  C.  53  Am.  Dec.  450. 
s.  c.  11  Am.  Rep.  253.  7  Story  v.  Furman,  25  N.  Y.  214. 

2  Ohio,  etc.,  R.  R.  Co.  v.  Mc-  8  Savings  Bank  v.  Dove's,  8  Conn. 
Pherson,  35  Mo.  13  ;  s.  c.  86  Am.  191. 

Dec.  128  ;  Wood  Hydraulic,  etc.,  That    the    directors     may     dis- 

Co.  v.  King,  45  Ga.  34 ;  Wood  v.  regard  a  by-law  they  themselves 

Boney,       N.  J.         ;  s.  C.  21  Atl.  have  enacted  concerning  notice, 

Rep.   574;    McCall  v.   Byram  Mf.  see  Samuel  v.  Holladay,  1  Woodw. 

Co.,  6  Conn.  428  ;  Arms  v.  Conant,  400. 

36  Vt.  744.  9  Bank  of  Little  Rock  v.  McCar- 

3  Thompson  v.  Williams,  76  Cal.  thy,  55  Ark.  473 ;  18  S.  W.  Rep. 
153  ;  s.  C.  9  Am.  St.  Rep.  187  ;  18  759  ;  29  Am.  St.  Rep.  60. 


100 


BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 


however,  out  of  the  state  need  not  be  notified.1  "Where  a 
regular  meeting  adjourns  over  to  an  adjourned  meeting  all 
the  absentees  must  be  notified  of  such  adjourned  meeting.2 

Sec.  105 — Directors  Cannot  Delegate  Power. 

In  all  matters  involving  personal  trust  or  discretion,  the 
board  of  directors  cannot  delegate  their  powers.3  Thus  the 
association  cannot  delegate  to  an  agent  the  power  to  sell 
land  it  owns  upon  such  terms  and  for  such  a  price  as  he 
deems  best.4  Nor  can  the  directors  delegate  power  to  an 
officer  of  the  corporation  to  make  assessments  on  the  stock 
of  the  shareholders.5  But  the  board  has  the  power  to 
delegate  mere  ministerial  power.6  Thus  they  may 
authorize  the  president  to  borrow  money,  and  execute 
the  note  of  the  corporation  for  it.7  They  may  appoint 
one  of  their  own  members  agent  to  perform  minis- 
terial duties.8  But  the  board  cannot  invest  an  agent  with 
the  permanent  and   supreme  control  of   the   corporation ; 

1  Chase  v.  Tuttle,  55  Conn.  455  ; 
s.  c.  12  Atl.  Rep.  874 ;  3  Am.  St. 
Rep.  64. 

If  all  be  not  notified,  the  proceed- 
ings will  be  void.  Doernbecher  v. 
Columbia  City  Lumber  Co.,  21  Ore. 


4  Gillis  v.  Bailey,  supra.  Contra, 
Burrill  v.  Nahant  Bank,  2  Met.  163  ; 
s.  c.  35  Am.  Dec.  395  ;  Whitney  v. 
Union  Trust  Co.,  65  N.  Y.  576; 
Burr  v.  McDonald,  3  Gratt,  215. 

5  Ex  parte  Winsor,  3  Story,  411 ; 
573 ;  S.  C.  28  Pac.  Rep.  899  ;  28  Silverhook  Road  v.  Greene,  12  R. 
Am.  St.  Rep.  766  ;  11  Rail  &  Corp.     I.  164  ;  s.  c.  7  Repr.187. 


L.  J.  153. 

2  Thompson  v.  Williams,  76  Cal. 
153  ;  18  Pac.  Rep.  153  ;  9  Am.  St. 
Rep.  187. 

The  notice  calling  the  meeting 
must  be  reasonable.  Ex  parte 
Smith,  ::'.»  Ch.  Div.  546;  s.  c.  58  L. 
.1.  (h.  l;;|  .  60  L.  T.  97;  4  T.  L.  R. 
466,  712. 

;  Gillia  v.  Bailey,  21  N.  II.  149; 
Despatch  Line  v.  Bellamy  Mf.  Co., 
12  N.  II.  805;  s.  c  87  Am.  Dec. 
20:;-,  Tippets  v.  Walker,  l  Mass. 
505;  Female  Orphan  Asylum  y. 
Johnson,  48  Me.  180;  In  re  Leeds 
Banking  Co.  L.  U.  1  Ch.  A  pp.  561  ; 
I  Mm.  (N.  8.)  855;  14L.T.  (N.S.) 
717. 


That  the  board  of  directors  of  a 
building  association  may  make 
such  a  levy,  see  Wohlford  v.  Citi- 
zens' Building  Loan  Association, 
140  Ind.  662  ;  S.  c.  40  N.  E.  Rep. 
694. 

6  Northampton  Bank  v.  Pepoon, 
11  Mass.  288;  Spear  v.  Ladd,  11 
Mass.  94 ;  Stevens  v.  Hill,  29  Me. 
133. 

7  Fleckner  v.  Bank  of  United 
States,  8  Wheat,  338  ;  Ridgeway 
v.  Farmers'  Bank,  12  S.  &  R.  256  ; 
B.  C.  14  Am.  Dec.  681. 

8  Merrick  v.  Reynolds,  etc.,  Co., 
101  Mass.  381. 


§  106.  OFFICERS — DIRECTORS.  101 

and  it  may  be  doubted  if  the  stockholders  themselves  can  do 
so.1  They  may,  however,  contract  through  a  committee  of 
their  own  members.2  But  if  a  duty  be  imposed  upon  the 
president  of  the  association,  the  board  cannot  shift  it  to 
another  person.3  Authority  conferred  upon  a  committee 
to  convey  real  estate,  includes  authority  to  execute  a  proper 
deed  and  attach  the  seal  of  the  corporation  to  it.4  If  a 
committee  be  authorized  to  collect  a  claim,  it  may  bring 
suit  in  the  name  of  the  corporation  for  that  purpose,  and  of 
course  employ  an  attorney  if  necessary.5  If  the  committee 
exceed  their  powers,  but  the  board  of  directors  acquiesce  in 
their  action,  the  corporation  will  be  bound.6  But  if  a 
material  fact  has  been  concealed,  and  the  board  has  not 
been  guilty  of  negligence  in  not  discovering  it,  the  corpora- 
will  not  be  bound  by  a  seeming  acquiescence  of  such  board. ~ 

Sec-  106 — Directors'  General  Powers. 

The  directors,  if  there  be  no  restrictions  in  the  charter,  or 
statute  or  by-laws,  have  all  the  authority  of  the  corporation 
itself  in  the  conduct  of  its  ordinary  business.8  But  the 
stockholders  cannot  commit  any  authority  to  the  directors 
not  given  by  the  charter  of  incorporation  or  a  statute,  and 

1  Queen  v.  Second  Avenue  Ry.  6  St.  Louis  Domicile,  etc.,  Asso- 
Co.,  14  How.  Pr.  281  ;  3  J.  &  S.  ciation  v.  Augustin,  2  Mo.  App. 
154  ;  Flagstaff  Silver  Mining  Co.  v.  123.  As  to  arbitration,  see  Mur- 
Patrick,  2  Utah,  304.  dock  v.   Blesdell,    106  Mass.   370  ; 

2  Berks,  etc. ,  Co.  v.  Myers,  6  S.  Fryeburg  Canal  v.  Frye,  5  Me.  38. 
&  R.   12  ;   S.  C.  9   Am.    Dec.   402  ;  6  McNeil  v.   Boston  Chamber  of 
Palmer    v.   Gates,   3    Sandf.    137  ;  Commerce,  154  Mass.  277  ;  s.  c.  28 
Sheridan    Electric    Light    Co.   v.  N.  E.  Rep.  245. 

Chatham  National  Bank,   127   N.  7  Wardell  v.  Union  Pacific  R.  R. 

Y.  517  ;  s.  c.  28  N.  E.  Rep.  467  ;  40  Co.,  4  Dill.  330. 

N.  Y.  St.  Rep.  311  ;  Union  Pacific  Members  of  committees  are  per- 

R.  R.  Co.  v.  Chicago,  etc.,  R.  R.  sonally  liable  for  losses  occasioned 

Co.,  51  Fed.  Rep.  309.  by  their  negligence.     Williams  v. 

3  Weidenfeld  v.  Sugar  Run.  R.  McKay,  46  N.  J.  Eq.  25  ;  S.  c.  18 
Co.,  48  Fed.  Rep.  615.  Atl.  Rep.  824. 

That  the    delegation    of  power  8  Bank  v.   Rutland,  etc.,   R.    R. 

will  not  be  presumed,  see  Tippets  Co.,  30  Vt.  159  ;  Stevens  v.  Davi- 

v.  Walker,  4  Mass.  595.  son,  18  Gratt.  819  ;  S.  C.   98  Am. 

4  Burrill  v.  Nahant  Bank,  2  Met.  Dec.  692. 
163  •  s.  c.  35  Am.  Dec.  395. 


102  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

their  vote  to  do  so  is  a  nullity.1  The  public  have  a  right  to 
assume  that  the  directors  have  all  the  power  conferred  upon 
them  by  the  charter  or  governing  statute,  and  if  a  by-law, 
adopted  by  the  stockholders,  curtail  that  power,  a  person 
dealing  with  the  corporation  will  not  be  bound  by  the  by- 
law unless  it  be  actually  brought  to  his  notice.2  Neither 
can  a  by-law  confer  power  upon  the  board  of  directors  when 
the  charter  has  placed  the  particular  power  in  the  member- 
ship of  the  corporation.3  And  power  given  to  a  corpora- 
tion in  its  charter  to  adopt  by-laws  touching  "  the  time, 
manner,  and  terms,"  upon  which  a  certain  act  may  be  done 
will  not  authorize  it  to  adopt  a  by-law  in  contravention  of 
the  general  law  of  the  state.4  The  management  of  the  busi- 
ness of  a  corporation  is  confined  to  the  directors,  unless  the 
charter  or  a  statute  place  it  elsewhere,  and  they  cannot  be 
deprived  of  that  right  by  the  stockholders,6  nor  can  the  stock- 
holders instruct  them.  ]STor  can  the  stockholders  join  an- 
other officer  with  them  nor  compel  them  to  act  with  one  not 
a  director.6  The  directors  in  such  matters  may  disregard 
the  will  of  the  stockholders.7  But  the  stockholders  may 
t  im  ns; tct  business  at  its  regular  meetings  which  is  of  an  ex- 
traordinary character,  such  as  the  board  of  directors  have 
no  power  to  exercise ;  and  if  they  do  attempt  to  exercise 
it  the  stockholders  may  ratify  their  acts  by  the  mere 
adoption    of    them.8     The  directors,    without   the   consent 

i  Wyman    v.     Hallowell,     etc.,  5  W.  &  S.  233  ;  Dayton,  etc.,  E.  R. 

Bank,    14  Mass.    58  :  s.    c.    7  Am.  Co.  v.  Hatch,  1  Disney,  84. 

Dec.  194;  Salem  Hank  v.  Glouces-  6  Charlestown  Boot,  etc.,  Co.  v. 

ter  Bank,  17  Mass.  1  ;  S.  c.  9  Am.  Dnnsmore,  60  N.  H.  85  ;  Cann  v. 

Dec.  111.  Eakins,  23  N.  S.  475. 

2  Union  Mutual  Fire  Insurance  7  Commonwealth  v.  St.  Mary's 
Co.  V.  kVyser,  32  N.  II.  313;  S.  C.  Church,  0  S.  &  R.  508;  German 
64  Am.  Dec.  375;  Campbell  v.  Evangelical  Congregation  i\  Press- 
Merchants'    [nsurance  Co.,   37   N.  ler,  14  La.  Ann.  811  ;  Union  Turn- 

II.  II  ;  s.  c.  72  Am.  Dec  324  ;  Sul-  pike  Co.  v.  Jenkins,  1  Caines,  881. 
livan   v.   Triunfo  Gold,  etc.,  Co.,  8  Forbes  v.  San  Rapal  Turnpike 
28  <  '.i I.  Co.,  50  Cal.  340;  Eureka  Iron,  etc., 

;  /•:./■    parte    Winsor,    8     Story,    Works  v.  Basnahan,  60  Mich.  332 ; 

III.  Burr  v.  McDonald,  3  Gratt.  215; 
4  Seneca  County  Bani  v.  Lamb,    Union  Pacific  R.  R.  Co.  v.  Chicago, 

26  Barb.  595.  etc.,  R.  R.  Co.,  51  Fed.  Rep.  309; 

'■  Dana  r.  I'.ank  of  United  States,     S.  <\  -17  Fed.  Rep.  15,  affirmed. 


§  106.  OFFICERS — DIRECTORS.  103 

of  the  stockholders  have  no  power  to  increase  the 
capital  stock  of  the  corporation.1  And  this  is  true  even 
if  the  charter  vests  all  the  powers  of  the  corporation  in  the 
board.2  Nor  can  the  directors  reduce  the  capital  stock.8 
Not  having  the  power  to  change  the  charter  of  their  cor- 
poration,4 the  board  of  directors  have  no  power  to  apply  to 
the  legislature  for  a  change  in  that  instrument,  and  if  they 
do  the  corporation  will  not  be  bound  by  such  amendments 
when  made.5  Nor  can  the  board  of  directors  by  indirection 
increase  the  stock  of  the  association ; 6  nor  make  a  general 
assignment  of  the  assets  of  the  association  to  pay  its  debts.7 
If  the  association  has  power  to  borrow  money,  the  board  of 
directors  may  do  so,8  and  they  may  secure  such  debt  by  as- 
signing mortgages  and  bonds  given  to  the  association.9 
They  have  authority  to  levy  an  assessment  on  stock  when  it 
is  necessary  to  equalize  the  several  stockholders  of  a  build- 
ing association.10  They  cannot  give  away  the  assets  of  a 
corporation  ;n  but  the}r  have  the  power  to  compromise  dis- 
puted claims.12  They  cannot  use  the  funds  of  the  associa- 
tion to  defend  or  prosecute  the  rights  of   an  individual.13 

1  Railway  Co.  v.  Allerton,  18  8  Fleckner  v.  Bank  of  United 
Wall,  233  ;  Gill  v.  Balis,  73  Mo.  States,  8  Wheat.  338  ;  Ridgway  r. 
424.  Farmers'  Bank,  12  S.   &  R.    25(5 ; 

2  Id. ;  Heath  v.  Erie  R.  R.  Co.,  8  s.  c.  14  Am.  Dec.  681  ;  Tripp  v. 
Blatch.  347.  Swanzey  Paper  Co.,  13  Pick.  291. 

3  Percy  v.  Millaudon,  8  La.  568  ;  9  North  Hudson,  etc.,  Associa- 
Hartridge  v.  Rockwell,  R.  M.  tion  v.  First  National  Bank,  79 
Charlt.  260.  Wis.  31  ;  s.  c.  11  L.  R.  A.  845  ;  47 

4  Starks  v.   Burke,   9   La.    Ann.  N.  W.  Rep.  300 

341.  10  Wohlford  v.  Citizens'  Building 

5  Marlborough  Mfg.  Co.  v.  Smith,  Loan  Association,  140  Ind.  662;  s.  C. 
2  Conn.  579  ;  State  v.  Adams,  44    40  N.  E.  Rep.  <;<>4. 

Mo.  570  ;  Zabriskie  v.  Hackensack,  n  Bedford  R.  R.  Co.  v.  Bowser, 

etc.,R.  R.  Co.,  18  N.  J.  Eq.   178;  48  Pa.  St.  29;  Frankfort  Bank   v. 

s.  c.  90  Am.  Dec.  617  :  Boisdere  v.  Johnson.  24  Me.  490. 

Citizens'  Bank.  9  La.  506  ;  s.  c.  29  12  People  v.  Lowe,  117  N.  Y.  175  ; 

Am.  Dec.  453.  s.  c.  22  N.  E.  Rep.  1016  ;  31  Amer. 

6  Finley,  etc.,  Co.  v.  Kurtz,  34  &  Eng.  Corp.  Cas.  249  ;  reversing, 
Mich.  89.  47  Hun,  577. 

7  Bank  Commissioners  v.  Bank  13  Harbison  v.  First  Presbyterian 
of  Brest,  Har.  Ch.  (Mich.)  106.  Society,  46  Conn.  529  ;  s.  c.  33  Arn. 
Contra,  Merrick  v.  Trustees,  etc.,  Rep.  34. 

8  Gill  (Md.)  59. 


104  BUILDING   AND   LOAN    ASSOCIATIONS.  Cll.  VI. 

Their  contracts  will  not  be  set  aside  for  mere   errors   of 
judgment.1 

Sec.  107— General  Obligation  of  Directors— Liability. 

Directors  are  regarded  as  trustees  of  the  stockholders  and 
are  governed  by  principles  applicable  to  trustees  in  general.2 
They  must  exercise  their  powers  for  the  benefit  of  the  com- 
pany, and  act  in  the  utmost  good  faith.     They  cannot  deal 
with  the  corporate  funds  and  property  for  their  private  gain. 
They  cannot  deal  for  themselves  and  the  corporation  at  the 
same  time ;  and  they  must  account  for  all  profits  made  by 
the  use  of  the  company's  assets  and  for  moneys  made  by  a 
breach  of  trust 3     A  director  cannot  become  interested  ad- 
versely to  the  interests  of  the  association.4     If  he  act  openly, 
however,  and  to  the  full  knowledge  of  the  shareholders,  he 
may  retain  such  profits  as  he  has  been  able  to  make  out  of 
his  position  by  the  use  of  his  own  funds  ;  the  rule  that  he 
must  account  for  all  profits  made  by  him  by  reason  of  his 
official  position  applying  only  to  secret  profits.5     He  must 
account  for  all  bribes  or  gratuities  he  has  received  to  affect 
his  official  action.6     He  cannot  conduct  his  private  litigation 
at  the  corporate  expense.7 

i  Jesup  r.  Illinois,  etc.,  R.  R.  Co.,  Branch  Bank    v.    Collins,  7    Ala. 

.  Rep.   483  :  Arapahoe  Cattle,  95. 

etc.,  Co.  v.  Stevens,  13  Colo.  534;  *  Brewster  v.   Stratman,   4  Mo. 

s.  c.  22  Pac.  Rep.  823.  App.  41  :  Attaway  v.  Third  National 

8Robinson    v.    Smith,   3    Paige,  Bank,   93  Mo.    485;    reversing   15 

222;  s.  C.  2!  Am.  Dee.  212  :  Simons  Mo.  App.  578. 

/■.  Vulcan  Oil  and    Mining  Co.,  Gl  5  Hedges  v.  Paquett,  3  Ore.  77; 

Pa.  St.  202  ;  S.  C.  100  Am.  Dec.  628;  Cavendish-Bentinck  v.  Fenn,  L.  R. 

Cook  v.    Berlin    Mill  Co.,  43  Wis.  L2  App.  Cas.  652. 

433;  Koehler  v.  Black,  etc.,  River  ''Metropolitan  Bank  v.  Heiron, 

K.   (;.   Co.,  2    Black.   215;  Choteau  L.  R.  5  Exch.  Div.  319;  S.  C.  31 

,-.    Allen,   70   Mo.   290;    Briggs  v.  Moak.  717  ;  Bliss  v.   Matteson,  45 

Spaulding,  111  U.  S.  132.  N.  Y.22;  Simons  v.  Vulcan  Oil  and 

BWardr.  D.im'Uoii,  s'.t  Mo.  115  ;  Mining  Co.,  61  Pa.   St.   202  ;  S.   C. 

Wardell  v.  Railroad  Co.,  103  U.  S.  LOO    Am.    Dec.    628;    Gaskell    v. 

651;    Stevens  v.    Will.ml.   43   Vt.  Chambers,  28  Beav.  368 -j  Weston's 

692  ;  Sj  kes'8<  lase,  L.  R.  L8  Eq.  255  ;  <  iase  L.  R.,  10  Ch.  Div.  579 ;  Bent 

i  Percy   v.  Millaudon,  8  La.  568;    R.  R.  Co.   v.  Vanderbilt,  5  Hun, 
[art,  (La.)  (N.  8.)  68;  Erie    128. 


§  108.  OFFICERS — DIRECTORS.  105 

See.  108 — Contracts  with  Corporation. 

If  there  be  a  quorum  of  other  directors,  and  they  act  in 
good  faith,  they  may  enter  into  a  contract  for  the  corpora- 
tion with  one  of  their  own  number.1  And  even  though  a 
majority  of  them  be  interested  in  the  contract,  it 
is  not  void  per  se,  but  only  liable  to  be  set  aside  in  a  proceed- 
ing brought  for  that  purpose.2  The  better  rule  seems  to  be 
that  such  contracts  will  be  upheld  where  it  is  shown  that  it 
is  fair  and  just,  and  made  for  the  benefit  of  the  corporation  ; 
but  it  will  be  more  closely  scrutinized  than  the  ordinary 
contracts.3  Indeed  it  may  be  said  that  such  contracts  will 
be  very  closely  scrutinized  before  they  will  be  enforced 
against  the  corporation.4  "  It  is  a  general  rule  that  a  director, 
trustee,  or  executive  officer  of  a  corporation  is  without  power 
to  bind  it  or  its  shareholders  by  a  contract  authorized  b}r  or 
entered  into  with  himself  and  for  his  individual  benefit. 
But  if  the  contract  so  entered  into  is  in  all  respects  just  as 
between  the  parties,  and  all  the  shareholders  and  directors 
or  trustees  are  competent  to  assert  and  with  full  knowledge  of 
the  terms  of  the  contract,  do  assert  and  direct  that  it  be  made, 

v.  Priest,  86  Mo.  475  ;  affirming  10  Blaikie,  1  Macq.  H.  L.  (Sc.)  461 ; 
Mo.  App.  557;  Bent  v.  Lewis,  15  s.  c.  1  Pat.  App.  (Sc.)  119;  Hoff- 
Mo.  App.  40.  578  ;  Eden  v.  Rids-  man  Steam  Coal  Co.  v.  Cumber- 
dales  Ry.  Land,  etc.,  Co.,  Q.  R.,  23  land,  etc.,  Co.,  16  Md.  456 ;  s.  c.  77 
L.  B.  Div.  368.  Am.  Dec.  311  ;  Wilbur  v.  Lynde, 

1  Smith  v.  Skeary,  47  Conn.  47  ;  49  Cal.  290  ;  s.  c.  19  Am.  St.  Rep. 
Barnes  v.  Brown,  80  N.  Y.  527  ;  645.  Pickett  v.  School  District,  25 
Pneumatic  Gas  Co  v.  Berry,  113  U.  Wis.  551  ;  s.  c.  3  Am.  Rep.  105. 

S.  322;  Barr  v.  Pittsburgh  Plate  3  Hallam  v.  Indianola  Hotel  Co., 

Glass  Co.,  51  Fed.  Rep.  33  ;  Ger-  56  la.  178  ;  s.  c.  9  N.  W.  Rep.  Ill  ; 

man  American  Seminary  v.  Kiefer,  Combination  Trust  Co.  v.  Weed,  2 

43  Mich.  105.  Fed.    Rep.  24  ;  Rogers    v.    Danby 

2  Bassett  v.  Monte  Cristo,  etc.,  Universalist  Society,  19  Vt.  187  ; 
Co.,  15Nev.  293;  Thomas  v.Brown-  Appeal  of  Hammond,  123  Pa.  St. 
ville,  etc.,  R.  R.  Co.,  109  U.  S.  522  ;  503  ;  s.  c.  16  Atl.  Rep.  419  ;  Thomas 
reversing,  2  Fed.  Rep.  877.  v.  Sweet,  37  Kan.  183  ;  s.  c.  14  Pac. 

Tbere  are  a  line  of  cases  which  Rep.  545. 

holds  that  all  contracts  of  a  direc-  4  Choteau  v.  Allen,  70  Mo.  290  ; 

tor  with  his  corporation  are  abso-  Conyngham's  Appeal,   57  Pa.   St. 

lutely  void  ;    but  the    weight    of  474  ;  Trust  Co.  v.  Weed,  14  Phila. 

authority  in  this  country  is  the  422. 
other  way.     Aberdeen  R.  R.  Co.  v. 


106 


BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 


it  is  binding  on  the  corporation,  and  cannot  be  avoided  by 
its  shareholders  or  by  persons  who  subsequently  become  its 
creditors."1  Nor  can  a  director  be  a  secret  partner  in  con- 
tracts between  his  corporation  and  a  third  person.2  A  di- 
rector may  loan  money  to  his  corporation,  even  though  it 
be  in  failing  circumstances,  and  may  take  from  it  security, 
even  a  mortgage  on  its  property ;  but  such  transactions  are 
always  open  to  close  scrutiny  when  an  attempt  is  made  to 
recover  the  money  loaned,  or  the  contract  is  otherwise 
drawn  in  question.3  If  the  directors,  in  order  to  secure 
needed  money  for  the  corporation,  guarantee  the  note  of 
the  corporation,  they  may  secure  themselves  against  loss  by 
taking  a  mortgage  on  the  corporate  property.4  If  they  ad- 
vance money  to  pay  expense  bona  fide  incurred  by  them, 
they  are  entitled  to  be  reimbursed  for  the  outlay,5  even  often 
in  preference  to  preferred  creditors  or  stockholders.6  So,  if 
everything  be  paid,  a  director  may  purchase  of  his  corpora- 
tion property  owned  by  it  ;7  but  when  assailed  he  has  the 
1  Welch  v.  Importers'   etc.,  Na-    Farmers', etc..  Bank  v.  Downey,  53 


fcional  Bank,  122  N.  Y.  177;  s.  c. 
25  X.  E.  Rep.  269  ;  33  N.  Y.  St.  Rep. 
452  ;  8  Rail.  &  Corp.  L.  J.  475 ; 
Batelle  v.  N.  W.  Cement,  etc.,  Co., 
37  Minn.  89  ;  S.  c.  33  N.  W.  Rep. 
327  :  Stewart  v.  St.  Louis,  etc.,  R. 
R.  Co.,  41  Fed.  Rep.  736  ;  Skinner  v. 
Smith,  134  N.  Y.  249  ;  S.  C.  31  N.  E. 
R  p.  '.ill  ;  affirming,  iO  N.  Y.  St. 
Rep.  81  ;  S.  C.  56  Hun,  437. 

2  European,  etc.,  R.  R.  Co.  v. 
Poor,  59  Mo.  277  ;  Thomas  v. 
Brownsville,  etc.,  R.  R.  Co.,  2  Fed. 
Rep.  877  ;  S.  C.  1  McCray,  392  ; 
Weston's  Case,  L.  R.  LO  Ch.  Div. 
579;  Gilman,  etc.,  R.  R.  Co.  v. 
Kelly,  77  Dl.  136  ;  Pod  v.  Russell, 
36  End.  60  ;  s.  c  in  Am.  Rep.  5. 

;  1 1  ill. mi  v.  [ndianola,  1 1  < >( <  1  Co., 

.  L78  ;  8.  C.  9  N.  W.  Rep.  Ill  : 

I,    r.    Milh-r,  130    III.  162  :  8.  C. 

E.  Rep.  U64  \  i;    \m.  St.  Rep. 

291;  Mullanphy  Savings  Banh    v. 

Schott,  185  III.  685  ;  8.  C.       N.    E. 

Rep.         ;    25    Am.    SI.    Rep.    401  ; 


Cal.  466 ;  s.  C.  31  Am.  Rep.  62  ; 
Ward  v.  Salem  St.  R.  R.  Co.,  108 
Mass.  332  ;  Baker  v.  Harpster,  42 
Can.  511  ;  s.  C.  22  Pac.  Rep.  415 ; 
McMurrtry  v.  Montgomery  Masonic 
Temple  Co.,  86  Ky.  206'.  s.  c.  5  S. 
W.  Rep.  570;  Gorder  v.  Platts- 
mouth  Canning  Co.,  36  Neb.  548; 
s.  c.  54  N.  W.  Rep.  830. 

4  Hopson  v.  ^Etna  Axle  and 
Spring  Co.,  50  Conn.  597;  Taylor 
County  Court  v.  Baltimore  etc., 
R.  R.  Co.,  35  Fed.  Rep.  101  ;  Addi- 
son v.  Lewis,  75  Va.  701  ;  Graves  v. 
Mono  Lake  Hydraulic  Mining  Co., 
81  Cal.  303 ;  s.  c.  22  Pac.  Rep.  665  ; 
Richardson  v.  Green,  133  U.  S.  30. 
///  re  German  Mining  Co..  4  De 
Gex.  M.  &  G.  19;  s.  c.  27  E.  L.  & 
Eq.  158. 

6  Ulster  R.  R.  Co.  v.  Banbridge 
R.  R.  Co.,L.  R.  2Ir.  Eq.  190. 

7  Beach  v.  Muller,  2:5  111.  App. 
L51 ;  Little  Rock,  etc.,  R.  R.  Co.  v. 
Page,  85  Ark.  304  Buell  v.  Buck- 


§  109.  OFFICERS — DIRECTORS.  107 

burden  to  show  that  he  paid  a  fair  price  for  it,1  though,  in 
a  case  where  he  purchased  its  debentures,  it  was  held. that  he 
need  not  pay  the  par  value,  only  the  market  value.2  He 
cannot  purchase  at  his  own  execution  sale  against  the  corpo- 
rate property,3  but  he  may  at  the  sale  of  an  executive  audi- 
tor,4 subject  to  the  right  of  the  corporation  to  demand  that 
the  sale  be  set  aside  and  a  resale  held.5  The  corporation 
may,  however,  demand  that  such  director  be  held  as  a 
trustee  of  the  property  purchased  for  its  beneiit  on  reim- 
bursing him  for  the  money  he  has  paid.6 

Sec.  109 — Liability  of  Director. 

It  is  the  duty  of  a  director  to  act  with  diligence  and  in 
good  faith ;  and  if  he  do  not,  and  loss  be  occasioned  to  his 
association,  he  will  be  personally  liable  for  the  damage  in- 
curred.7 They  are  not,  however,  liable  for  mere  errors  of 
judgment  involving  the  exercise  of  a  discretional  power  or 
authority  ;  and  in  respect  of  their  ministerial  duties,  they 
are  responsible  only  for  gross  negligence,  non-attendance, 
and  fraud  whereby  frauds  have  been  perpetuated  on  the  cor- 
poration or  its  property  wasted  or  embezzled.8     The  measure 

ingham,  16  la.  284  ;  s.  c.  83  Am.  Co.  v.  Poor,  59  Me.  277.     That  the 

Dec.  516.  director  must   show    he   bid   full 

1  Ashurst  Appeal,  60  Pa.  St.  290;  value  for  the  property,  see  In  r< 
Crescent  City  Brewing  Co.  v.  Flan-  Iron  Clay  Brich  Mf.  Co.  supra, 
ner,  44  La.  Ann.  22  ;  s.  c.  10  So.  and  Wilkinson  v.  Bauerle,  41  N.  J. 
384  ;  Hannerty  v.  Standard  Theatre  Eq.  635  ;  s.  c.  7  Atl.  Rep.  514. 
Co.,  109  Mo.  297;  s.  c.  19  S.  W.  «  Raleigh  v.  Fitzpatrick,  43 N.  J. 
Rep.  82.  Eq.  501 ;  McAllen  v.  Woodcock,  GO 

2  Campbell's  Case,  L.  R.  4  Ch.  Mo.  174;  Brewster  v.  Stratman,  4 
Div.  470.  Mo.  App.  41. 

3  Cumberland,  etc.,  R.  R.  Co.  v.  These  rules  are  not  applicable  to 
Sherman,  30  Barb.  553;  Williams  a  mere  stockholder  of  a  company. 
v.  McKay,  47  N.  J.  Eq.  25  ;  s.  c.  18  Mickles  v.  Rochester  City  Bank.  1 1 
Atl.  Rep.  824;  In  re  Iron  Clay  Paige,  118;  s.  c.  42  Am.  Dec.  103; 
Brick  Mf.  Co.,  19  Ont.  Rep.  113;  Culbertson  v.  Wabash  Navigatiun 
s.  c.  33  Am.  &  Eng.   Corp.    Cas.  Co.,  4  McLean,  544. 

277.  7  Hodges  v.  N.  E.  Screw  Co.,  1 

*  Saltmarsh    v.   Spaulding,    147  R.  I.  312;  s.  c.  53  Am.  Dec.  624; 

Mass.  224  ;  s.  c.  17  N.  E.  Rep.  316.  Bargate  v.  Shortridge,  5  H.  L.  Cas. 

sHoyle  v.  Pittsburgh,  etc.,  R.  297;  s.  c.  24  L.  J.  Ch.  457. 

R.  Co.,  54  N.  Y.  314  ;  s.  c.  13  Am.  8  Colt  r.  Woollaston,  2  P.  Wms. 

Rep.  595;    European,   etc.,  R.  R.  154;  Godbold  v.   Bank  of  Mobile, 


108 


BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 


of  a  director's  skill,  care  and  diligence  is  such  as  a  prudent 
man  exercises  in  the  conduct  of  his  own  money  affairs,  to  be 
determined  in  view  of  all  the  circumstances.1  .  Directors  are 
liable,  however,  for  suffering  the  corporate  funds  or  property 
to  be  wasted  or  lost  by  gross  negligence  or  inattention  to 
their  business.2  They  may  submit  the  affairs  of  the  associa- 
tion to  proper  officers  if  they  exercise  a  reasonable  super- 
vision over  them.3  But  if  they  turn  over  the  whole  control 
of  the  affairs  of  their  association  to  its  officers,  and  abandon 
all  supervision  over  them,  they  will  be  liable  for  losses  re- 
sulting from  the  negligence  of  such  officers  ;  for  the\T  cannot 
thus  abandon  the  affairs  of  their  corporations.4  They  must 
devote  so  much  of  their  time  to  the  affairs  of  the  corporation 
as  is  customarily  done,  and  the}7  may  submit  such  affairs  to 
proper  officers  as  is  the  custom  without  incurring  liability.5 
If  by  inattention  they  fail  to  discover  false  entries  made  in 
their  books  by  the  secretary,  and  fictitious  mortgages,  run- 
ning through  several  years,  they  will  be  personally  liable 
for  all  losses  for  money  secretly  withdrawn  and  converted 


11  Ala.  191  ;  s.  c.  46  Am.  Dec. 
211  ;  Sperring's  Appeal.  71  Pa. 
St.  11;  s.  c.  10  Am.  Rep.  684; 
Henry  v.  Jackson,  37  Vt.  4:J1  ; 
Percy  v.  Millaudon,  8  Mart.  (N.  S.) 
68  :  Steamboat  New  World  v.  King, 
it;  Bow.  4(iit ;  Wallaces.  Lincoln 
Savings  Bank,  89  Tenn.  630:  s.  c. 
L5S.  \Y.  Rep. 448;  24  Am.  Si.  Rep. 
625;  1  Banking  L.J.  249;  9  Rail 
&  Corp.  L.  J.  482. 

1  Scott  v.  Depeyster,  1  Edw.  Ch. 
513;  Corbetl  v.  Woodward,  5  Sawy. 
403;  Delar  i  >,  121  111.  241  ; 
s.  c.  12  N.  E.  Rep.  676;  2  Am.  St. 
Rep.  81  :  17  III.  A  pp.  531  ;  Savings 
Bank  v.  Caperton,87  Ky.  306;  s.c. 
8  s.  \v.  Rep.  885  ;  12  Am.  St.  Rep. 
188  ;  Bank  r.  Bill,  56  Me. 885;  s.c 
96  \m.  Dec.  470  :  Marshall  v. Far- 
mers, etc.,  Bank,  85  Va.  676 ;  8.  c. 
17  Am.  St.  Rep.  84;  8  S.  E.  Rep. 
Hun    v.  Cary,  82  N.  Y.  65; 


s.  c.  37  Am.  Rep.  546 ;  affirming, 
59  How.  Pr.  428  ;  Wallace  v.  Lin- 
coln Savings  Bank,  89  Tenn.  630  ; 
s.  c.  15  S.  W.  Rep.  448  ;  24  Am.  St. 
Rep.  625;  Overend  and  Gurney 
Co.  v.  Gibb  L.  R.,  5  H.  L.  494*; 
Turquand  v.  Marshall  L.  R.  4  Ch. 
376. 

2  Horn  Silver  Mining  Co.  v. 
Ryan,  212  Minn.  196 ;  s.  C.  44  N.  W. 
Rep.  56  ;  Hern  v.  Cary,  supra. 

3  Briggs  v.  Spaulding,  141  U.  S. 
132.  They  are  not  liable  for  the 
secret  frauds  of  such  officers.     hi. 

4  Wallace  v.  Lincoln  Savings 
Bank,  supra.;  Trustees  v.  Bos- 
seiux,  3  Fed.  Pep.  S17;  s.  c.  4 
1  [ughes,  387  ;  Ouderkirk  v.  Central 
National  Bank,  119  N.  Y.  263;  s.c. 
23  N.  E.  Rep.  875  ;  29  N.  Y.  St. 
Rep.  573. 

■■  hi. 


§  110.  OFFICERS — DIRECTORS.  109 

thereby.1  They  must,  also,  follow  the  charter  or  statutes 
applicable  to  their  association,  and  also  its  bylaws;  and  it' 
they  conduct  a  business  outside  of  their  provisions  and  Loss 
be  thereby  occasioned,  they  will  be  liable  for  it,2  unless  they 
have  acted  in  good  faith  and  upon  their  best  judgment  for 
the  interests  of  the  association.3  But  an  attempt  to  trans 
the  assets  of  the  corporation  to  another  corporation  will 
render  them  liable,  because  plainly  ultra  vires,  even  though 
they  acted  upon  the  advice  of  legal  counsel.4  Those  who 
do  not,  however,  participate  in  the  proceedings  are  not 
liable.5  So  when  they  were  impowered  to  make  loans  in  an 
amount  equal  to  only  one  half  of  the  value  of  the  real  estate 
to  be  mortgaged,  and  loaned  an  amount  clearly  in  excess  of 
one  half  of  its  value,  they  were  held  liable  for  the  loan,  they 
knowing  that  the  loan  was  excessive.6  If  the  stockholders, 
at  a  stockholder's  meeting,  approve  the  illegal  action  of  the 
directors,  the  latter  will  be  released  from  liability  to  the 
corporation ; 7  and  so  the  stockholders  may  release  the  direc- 
tors from  liability  by  mere  acquiescence  in  their  acts,  they 
having  full  knowledge  and  information  of  their  illegal  trans- 
actions or  neglect.8 

Sec.  110— Liability  in  Particular  Instances  of  Building 
Associations. 

A  rule  of  a  building  society  providing  that  a  director 
should  not  be  answerable  for,  and  might  reimburse  himself 

1  Williams  v.  McKay,  46  N.  J.  5  Movius  v.  Lee,  30  Fed.  Rep.  298  ; 
Eq.  52 ;  s.  c.  18  Atl.  Rep.  824.  sub  nom.  141  U.  S.  132  ;  24  Blatch. 

2  Citizens'  Loan   Association    v.  291  ;   Witters  v.   Sowles,   31   Fed. 
Logan,  29  N.  J.  Eq.  110  ;  Williams  Rep.  1 ;  s.  c.  24  Blatch.  332. 

v.    McKay,    siqjra. ;    Bargate     v.  e  Williams  v.  McDonald,  42  N.  J. 

Shortridge,  5  H.  L.  Cas.  297  ;  s.  C.  Eq.  392  ;  Stephens  v.  Overstolz,  43 

24  L.  J.  Ch.  (N.  S.)  457;  Moses  v.  Fed.  Rep.  771. 

Ocoll  Bank,  1  Lea,  498 ;   Brinker-  ~  Trisconi    v.    Winship,   43    La. 

hoff  v.  Bostrich,  88  N.  Y.  52.  Ann.   45  ;  S.  c.  9  So.    Rep.   29  ;    9 

3  Watts  Appeal,  78  Pa.  St.  370  ;  Raii  &  Corp.  L.  J.  469. 

Scott  v.  Depeyster,  1  Edw.  CI.  513.  s  Watts  Appeal,  78  Pa.  St.  370 ; 

See,   however,  Williams  v.  Mc-  Henry  v.  Jackson,  37  Vt.  431  ;  Un- 

Kay,  supra,  and  Dodd  v.  Wilkin-  Jerhill  v.  Santa  Barbara,  etc.,  Co., 

son,  42  N.  J.  Eq.   647 ;  s.  c.  9  Atl.  93   Cal.    300  ;    s.  C.   28  Pac.    Rep. 

Rep.  685.  1049  ;  People  v.   Ballard,  3  N.  Y. 

4  Pierson  v.   Cronk,  26  Abb.  N.  gt.  Rep.  845. 
Cas.  25. 


110  BUILDING  AND   LOAN    ASSOCIATIONS.  Cll.  VI. 

for,  any  loss  which  might  happen  in  the  execution  of  the 
powers  given  him  by  the  rules  of  the  society,  was  held  not 
to  apply  to  acts  ultra  vires  and  beyond  the  powers  which 
the  society  itself  could  confer.1  The  directors  of  a  building 
association,  having  a  large  discretion  vested  in  them  as  con- 
fidential agents,  may  properly  make  advance  on  classes  of 
securities  forbidden  to  ordinary  trustees,  and  are  not  pre- 
cluded from  making  advances  on  securities  of  a  speculative 
character  so  as  to  render  themselves  personally  liable  if  loss 
occur.2  Directors  of  a  building  society  passed  a  resolution 
authorizing  advances  to  members  on  the  securities  of  their 
shares.  An  advance  was  accordingly  made  to  a  member, 
and  the  society  incurred  a  loss  thereby.  It  was  held  that  a 
director  who  concurred  in  the  resolution,  but  was  not  a  party 
to  the  making  of  the  advance,  could  not  be  held  liable  to 
the  society  for  the  loss,  on  the  ground  that  the  advance  was 
ultra  vires,  and  was  not  attributable  to  the  illegal  resolution 
which  authorized  it ;  for  the  cause  of  the  loss  was  the  wrong- 
ful act  of  those  directors  only  who  made  the  advance.3 
"With  the  knowledge  and  consent  of  the  directors  of  a  build- 
ing society,  advertisements  were  issued  by  the  secretary 
inviting  the  public  to  lend  money  to  the  society.  The 
money  advanced  to  the  society  was  paid  to  the  secretary, 
who  then  gave  an  acknowledgment  of  the  payment,  and 
subsequently  a  receipt  was  given,  signed  by  two  of  the 
directors  on  behalf  of  the  society.  The  secretary  in  many 
cases  filled  up  the  amount  on  the  counterfoil  of  the  receipt 
book  as  considerably  less  than  the  amount  actually  received, 
though  the  receipt  itself  contained  the  right  amount.  By 
means  of  this  and  other  falsifications  of  the  books  of  the 
society,  the  secretary  was  enabled  to  appropriate  to  his  own 
use  a  Large  sum  of  money,  and  upon  his  absconding  it  was 

•  Cullerne  v.  London  and  Suburb-  s.  c.  59  L.  J.  Ch.  34;  66  L.  T.  678; 

an   Building  Society  L.   R.   25  Q.  6  T.  L.  Rep.  25. 

B.    Div.    185;  8.  C.   59  L.  J.    L.  B.  s  Cullerne  v.   London  and  Sub- 

525;  68  L.  T.  511  ;  39  W.  R.  88;  6  urban    Building  Society  L.   R.  25 

T.  L.  R.  149;  55  J.  P.  1  18.  Q.  B.  485;  s.  c.  59  L.  J.  Q.  B.  525; 

ffieldand  South  Yorkshire  63  L.  T.  511 ;  39  W.  R.  88;  6T.  L> 

Permanent    Building   Society    v.  Rep.  214, 449. 
Aizlewood,  L.  R.  44  Ch.  Div.  412; 


§  110.  OFFICERS — DIRECTORS.  Ill 

found  that  the  society  had  borrowed  a  sum  considerably  in 
excess  of  the  amount  allowed  by  its  rules.  It  was  held  that 
the  directors  were  personally  liable  for  the  amounts  ad- 
vanced by  the  society  in  excess  of  its  borrowing  powers,  as 
they  were  cognizant  of  the  course  of  business  pursued  by  its 
secretary,  and  held  him  out  to  the  public  as  their  agent, 
although  they  were  ignorant  of  the  frauds  perpetrated  by 
him.1  When  a  building  association  was  insolvent,  its  direc- 
tors, knowing  its  condition,  declared  a  dividend  out  of  the 
capital  stock.  One  of  the  directors  made  a  loan  to  the 
association.  It  was  held  that  he  could  not  receive  anything 
from  the  association,  in  the  hands  of  the  assignee,  until  all 
the  stockholders  were  paid ;  and  the  stockholders  making 
deposits  both  before  and  after  the  fraudulent  dividend  was 
declared  and  paid,  were  entitled  to  be  paid  before  the  direc- 
tor.2 The  directors  cannot  speculate  with  the  funds  or 
credit  of  the  association,  and  appropriate  to  themselves 
the  profit  of  such  speculation.  ISTor  can  they  in  making  sales 
or  purchases  for  the  company  take  advantage  of  their  posi- 
tion as  directors,  and  either  directly  or  indirectly  speculate 
upon  the  company.3  They  are  not  personally  liable  for 
losses  resulting  from  an  honest  mistake  in  estimating  the 
value  of  a  stockholder's  lands  on  which  he  obtains  a  loan, 
nor  for  a  defect  in  the  acknowledgment  of  a  mortgage, 
which  renders  it  worthless.  But  they  are  liable  for  losses 
on  loans  made  on  personal  security  of  the  stockholder,  in 
violation  of  a  by-law  limiting  the  amount  of  such  loan.4 
They  may  properly  rely  upon  the  advice  of  their  attorney 
on  the  legality  of  the  mortgagee  ;  and  if  he  were  derelict  in 
his  duty  in  that  matter  and  they  were  ignorant  of  it,  they 
are  not  chargeable  with  losses  resulting  from  his  derelic- 
tion.5    "  It  is  quite  clear,"  said  the  court  on  another  ques- 

i  Cross  v.   Fisher,  65  L.  T.  Rep.  2  Kisterbock's  Appeal,  51  Pa.  St. 

114  ;   [1892],  1  Q.  B.  467  ;  61  L.  J.  483. 

Q.  B.  609  ;  66  L.  T.  4-18  ;  40  W.  R.  a  Redmond  v,  Dickerson,  9  N.  J. 

365;    56    J.    P.    372.       A    statute  Eq.  507.. 

made  them   personally  liable   for  4  Citizens'  Building    Loan    and 

the  amount  of  loans  or   deposits  Savings  Association,  v.  Cornel,  34 

received  in  excess  of  a  prescribed  N.  J.  Eq.  383. 

limit.  5  Id. 


112  BUILDING   AND   LOAN   ASSOCIATIONS.         Ch.  VI. 

ticm,  "  that  the  defendants  ought  not  to  be  held  liable 
merely  on  the  ground  that  in  lending  the  money  of  the  asso- 
ciation on  bonds  and  its  stock,  they  were  acting  in  violation 
of  the  constitution,  and  so  exceeded  their  powers,  provided 
they  had  observed  the  provisions  of  the  by-laws  on  that  head. 
The  b}T-law  itself  is  in  violation  of  the  constitution ;  but  the 
practice,  the  by-law,  the  acquiescence,  and  also  what  was 
equivalent  to  the  advice  of  counsel,  ha.ve  excused  them  from 
the  consequences  of  their  mistake  as  to  their  powers."  1 
Speaking  farther  upon  the  liability  of  directors,  the  court 
said :  "  These  directors  served  without  pay.  They  were 
selected  by  their  fellow  stockholders  to  manage  gratuitously 
the  affairs  of  the  association  in  which  they  and  the  other 
stockholders  were  jointly  interested.  To  apply  to  them  the 
strict  rules  which  are  applicable  to  trustees  who  assume  the 
discharge  of  the  duties  of  private  trusts,  would  be  unjust. 
In  the  absence  of  fraud,  and  where  they  have  neither  derived 
nor  expected  to  derive  any  profit,  benefit  or  advantage  from 
their  management  Avhich  was  not  common  to  the  other 
stockholders  ;  when  they  have  acted  fairly,  and  have  not 
been  guilty  of  gross  neglect  or  gross  inattention,  they  should 
not  be  held  liable.  The  rule  applicable  to  mandatories  is 
sufficiently  stringent  for  such  cases,  and  is  a  reasonable  one. 
They  should  be  held  liable  only  in  case  of  fraud,  gross  neg- 
ligence or  misuse." 2     Directors  of  a  building  society  had 

1  Id.  tors  before  the    suit  was    begun 

2  Citizens'    Building    and    Loan    cannot  be  made  parties.     Rolph  v. 
ociation    v.    Corriell,  34  N.   J.     Upper   Canada    Building   Society, 

Eq.  383,  392.  In  this  case  it  was  11  Grant  Ch.  275. 
held  tliat  the  company  could  resort  That  a  loan  in  excess  of  a  by- 
t<>  a  <•■  .M 1 1  of  equity  in  order  to  law  will  make  them  liable  if  loss 
compel  its  'li rectors  to  account  for  occur.  See  Looker  v.  Wingley  L. 
a  waste  or  misappropriation  of  its  R.  9  Q.  B.  Div.  397. 
funds,  even  though  it  were  con-  For  an  instance  where  the  es- 
ceded  thai  an  adequate  remedy  at  tate  of  a  deceased  defaulting  sec- 
law  existed.  Id.  retary  was  held  liable,  and  his  so- 
A  stockholder  may  maintain  a  ciety  preferred  over  the  general 
suit  againsl  the  directors  for  such  creditors,  see  Moors  v.  Marriott  L. 
lo  i  on  behalf  of  himself  and  all  K.,  7  Ch.  Div.  543;  s.  c.  47  L.J. 
the  other  stockholders;  but  per-  Ch.  331 ;  26  W.  R.  626. 

:  ..n      v.  ho  have   ccascil   to    !»■  ililcc- 


§  110.  OFFICERS — DIRECTORS,  113 

power  to  invest  unemployed  moneys  in  the  purchase  of  free- 
holds. Having  only  £621  in  hand  they  contracted  for  the 
purchase  of  an  estate  for  £2,300,  payable  in  instalments. 
In  the  negotiations  for  the  sale,  they  held  themselves  out  as 
a  land  society,  and  they  paid  £800  on  account,  in  chocks 
signed,  by  their  order,  by  the  trustees,  who  were  not  direc- 
tors. It  was  held  that  the  directors  had  committed  a  breach 
of  trust,  and  were  liable  to  replace  the  £800  ;  that  the  vendor 
was  under  no  liability  ;  and  that  the  trustees  who  had  acted 
ministerially,  under  the  directors,  were  not  liable,  notwith- 
standing there  was  some  informality  in  the  authority  given 
them  by  the  directors.1  A  person  lent  £70  to  a  building 
society,  and  received  a  receipt  signed  by  two  of  its  directors, 
certifying  that  he  had  deposited  £700  with  the  society  for 
three  months  certain,  to  be  repaid  with  interest  after  four- 
teen days'  notice.  The  society  had  no  power  to  borrow 
money,  and  the  lender  being  unable  to  get  her  money  back 
from  the  society,  sued  the  two  directors.  It  was  held  that 
they  were  liable  to  the  lender  in  damages  for  a  breach  of 
warranty  of  authority,  they  having,  by  signing  the  receipt, 
in  effect  represented  that  they  had  authority  to  make  a 
binding  contract  of  loan  on  behalf  of  the  society,  and  so 
induced  her  to  part  with  her  money.2  A.  was  a  surveyor  of 
a  building  society,  the  object  of  which  was  to  advance  money 
to  its  members  to  enable  them  to  buy  or  build  houses,  but 
not  itself  to  buy  or  build.  By  one  of  the  rules  of  the  society, 
the  surveyor  was  to  look  only  to  the  funds  of  the  society 
for  his  compensation.  By  resolutions  at  general  meetings, 
at  which  the  directors  were  present,  the  surveyor  was  dir- 
ected to  prepare  plans  for  houses  which  the  society  was 
building,  the  compensation  being  a  percentage  upon  the 
outlay.  Upon  the  society  becoming  insolvent,  the  surveyor 
sued  one  of  the  directors.  It  was  held  that  such  surveyor 
was  bound  by  the  rules  of  the  society  to  seek  compensa- 
tion from  the  funds  of  the  society  solely.3 

1  Grimes  v.   Harrison,  26  Beav.  R.  6  Q.  B.  276  ;  40  L.  J.  Q.  B.  145. 
435  ;  s.  C.  5  Jur.  (N.  S.)  528  ;  28  L.        3  Alexander  v.  Worman.  3  L.  T. 
J.  Ch.  823.  (N.  S.)  477 ;  s.  C.  6  H.  &  N.  100  ; 

2  Richardson    v.  Williamson  L.  30  L.  J.  Exch.  198. 


114  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  VI. 

See.  Ill— Association  may  Sue  its  Directors  for  Losses 
Incurred. 

For  losses  occasioned  by  the  directors,  and  for  which 
they  are  liable,  the  association  may  sue  its  directors,  either 
by  an  action  at  law  or  suit  in  equity,  as  the  facts  may- re- 
quire for  appropriate  redress.1  If  the  unfaithful  directors 
be  still  in  control,  then  any  stockholder  may  bring  suit 
asrainst  them  in  his  own  name  for  the  use  of  all  the  stock- 
holders.2  So  the  receiver  of  the  corporation  may  sue  them, 
especially  if  it  be  insolvent.3  So  may  an  assignee  of  the 
association.4  The  statute  of  limitations  is  a  good  defense  ;5 
but  the  statute  does  not  begin  to  run  as  against  a  right  to 
recover  secret  profits  made  out  of  a  corrupt  bargain  until 
the  corporation  or  its  representative  has  received  knowl- 
edge thereof.6 

Sec.  112 — Liability  of  Directors  to  Creditors. 

If  there  is  a  de  facto  corporation,  the  directors  are  not 
personally  liable  to  the  creditors  by  reason  of  the  fact  of 
irregularities  in  its  organization;7  but  if  the  conditions  pre- 
cedent have  not  taken  place  or  arrived  which  are  necessary 
before  the  corporation  has  been  formed,  when  the  directors 
undertake  to  act  on  its  behalf,  they  will  be  personally  liable 
on  all  engagements  entered  into  on  behalf  of  the  associ- 
ation  ;8  and  so  if  directors  of  an  inchoate  association  enter 

1  Simons  v.  Vulcan  Oil  &  Mining  Y.  114;  Hayes  v.  Kenyon,  7  R.  I. 
Co..  61    Pa.  St.  202  ;  S.  C.   100  Am.     136. 

Dec.   628;    Ryan  v.   Leavenworth,  *  Shultz    v.    Christman,    6   Mo. 

etc.,  R.  R.  Co.,  21    Kan.  365;  Born  App.  338;  Grocers'  National  Bank 

Silver     Mining    Co.   v.    Ryan,    42  v.  Clark,  48  Barb.  26. 

Minn.  196;    II  N.W.  Rep.  56  ;  Smith  ■'•  Williams  v.  Halliard,  38  N.  J. 

v.  Eurd,  12  Met.  371  ;  S.  C.  46  Am.  Eq.   373.     Contra,  Ellis  v.   Ward, 

Dec.  H'.mi.  137  III.  509;   s.  c.  25  N.  E.   Rep. 

2  Craig  v.  Gregg,  83  Pa.  St.  L9  ;  530  ;  33  Am.  &Eng.  Corp.  Cas.  200. 
Evans  v.  Brandon,  53  Tex.  56.  6  Bent  v.  Priest,  86  Mo.  475  ;  af- 

Moviufi  v.  Lee,  80  Fed.  Rep.  298;  firming  10  Mo.  A.pp.  543. 

Howeu  Barney,  t5Fed.  Rep.  668;  7  Bartholomew     v.    Bentley,    1 

Stephens  v. <  >verstolz,  18  Fed.  Rep.  Ohio  St.  :)l. 

171;  Gilletl  v.  Moody,  8  N.  F.479;  B  Trust  Co.  v.  Floyd,  47  Ohio  St. 

Butterwortb  v.  O'Brien,  24    Sow.  525 ;  S.  c.  26  N.  E.  Rep.  110;  12  L. 

I-,-.    188;  Gilletl    v.   Phillips,  L8  N.  R.  A..  346;  21  Am.  St.  Rep.  846. 


§  112.  OFFICERS — DIRECTORS.  115 

into  an  engagement  on  behalf  of  the  association,  and  its  in- 
corporation is  never  completed,  they  will  be  liable  for  such 
engagement.1  So  if  they  enter  into  a  personal  obligation, 
forced  on  behalf  of  the  association,  they  will  be  personally 
liable.2  So  if  the  board  of  directors  assume  to  act  clearly 
beyond  their  powers,  and  represent  that  they  have  a  in  pic 
authority  so  to  do,  they  will  be  personally  Liable;  as  if 
they  assume  to  borrow  money,  representing  that  they  are 
authorized  to  do  so,  and  can  bind  the  association  when  they 
have  not  such  authority,  they  will  be  personally  liable.3 
And  so  they  will  be  liable  if  they  borrow  in  excess  of  the 
power  of  the  association  to  borrow.4  But  the  directors  are 
not  liable  to  creditors  of  the  association  on  the  ground  that 
they  have  mismanaged  its  business,5  even  though  they  have 
been  guilty  of  gross  neglect  of  the  corporate  affairs  and 
business,  whereby  it  was  wrecked.6  So  if  they  fraudulently 
represent  that  property  is  unincumbered  in  order  to  secure 
a  loan  upon  it,  they  will  be  personally  liable,  even  if  the 
records  of  the  county  recorder's  office  show  a  prior  incum- 
brance.7 So  they  are  personally  liable  for  false  represen- 
tations, knowingly  made,  inserted  in  prospectuses  of  as- 
sociations, made  to  induce  persons  to  join  the  association. 
Such  conduct  on  their  part  is  a  fraud,8  and  persons  have 

1  Doubleday  v.  Muskett,  4  Moore  Peters,  44  Fed.  Rep.  13  ;  s.  c.  4 
&  P.  750.  Bank.    L.   J.   48.     Not  even  to  a 

2  Pickering's  Claim  L.  R.  6  Ch.  general  depositor  of  the  director's 
525  bank.     Zinn  v.  Mendel,  9  W.  Va. 

3  Richardson  v.  Williamson  L.  580.  But  see  where  the  directors 
R.  6  Q.  B.  276.  of  a  savings  bank  were  held  liable 

4  Weeks  v.  Propert,  L.  R.  8  C.  P.  to  the  depositors  for  neglect.  Mar- 
427  ;  Solomon  v.  Penoyar,  89  Mich,  shall  v.  Farmers',  etc.,  Bank,  85 
11  :  s.  c.  50  N.  W.  Rep.  644.  Va.  676  ;  s.  c.  8  S.  E.  Rep.  586  ;  17 

But  see  Frost  Mf.  Co.  v.  Foster,  Am.  St.  Rep.  84. 

76  la.  535  ;  S.  C.  41  N.  W.  Rep.  212;  i  Clark  v.  Edgar,  84  Mo.  106  ;  s.  C. 

and  Sandford  v.  McArthur,  18  B.  54  Am.  Rep.  84  ;  12  Mo.  App.  345. 

Mon.  411.  See  Mullanphy  Bank  v.  Schott,  135 

5  Frost  Mf.  Co.  v.  Foster,  supra,  111.  655  ;  s.  c.  26  N.  E.  Rep.  640  ;  25 
Priest  v.  White,  89  Mo.  609  ;  Win-  Am.  St.  Rep.  401. 

ter  v.  Baker,  34  How.  Pr.  183  ;  s.  C.  8  Arnison  v.  Smith  L.  R.,  41  Ch. 

50  Barb.   432;  Branch  v.  Roberts,  Div.   348;  Hubbard   v.  Weare,  79 

50  Bab.  435.  la.  678;  s.  C.  44  N.  W.  Rep.  915  ; 

6  National    Exchange    Bank    v.  Kinkier  v.   Junica,   84  Tex.    116 ; 


116  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 

a  right  to  rely  upon  their  representations  without  making 
further  inquiry.1     Before,  however,  the  person  suffering  a 
damage  can  recover,  he  must  show  that  the  representations 
were  known  to  the  directors  making  them   to  have  been 
fraudulent  at  the  time  they  were  made.2     But  where  the 
plaintiff  seeks  to  be  relieved  of  a  contract  with  the  associ- 
ation, which  was  induced  by  the  representations  of  the  di- 
rectors, he  need  not  show  that  they  knew  them  to  be  false ; 
for   the   mere  fact  that  they  were    material  and  moving 
will  be  sufficient  to  annul  the  contract  they  induced  the 
plaintiff  to  enter  upon.3     So  directors  may  be  liable  if  they 
fraudulently  waste  the  assets  of  the  corporation,  not  leaving 
a  sufficient  amount  to  pay  its  creditors  ;  or  if  they  withdraw 
its  funds  for  their  own  private   benefit,  not  giving  a  suffi- 
cient security  for  their  return.4     So  if  they  declare  dividends 
Avhen  there  are  no  surplus  assets,  the  directors  are  liable  for 
the  amount  they  receive,  even  though  it  be  only  a  credit 
on  their  stock.5     And  if  a  director  has  connived  at  a  sale  of 
stock  to  an  infant,  or  to  any  persons  incapable  of  binding 
themselves  by  contract,  without  taking  proper  security  for 
paying  assessments  made  thereon,   such  director  will  be 
liable  to  any  creditor  who  has  not  been  able  to  collect  the 
amount  of  his  debt  from  the  corporation,  to  the  extent  of 
the  amount  necessary  to  pay  his  debt,  if  that  amount  does 
not  exceed  the  amount  due  on  such  stock.6 

s.  c.  19  S.  W.  Rep.  359  ;  Wester-  2  Cowley   v.   Smyth,  46  N.  J.  L. 

velt  v.  Damerest,  46  N.  J.  L.  37 ;  380 ;  s.  c.  50  Am.  Rep.  432. 

s.  c  50  Am.  Rep.  400.  3  Smith  v.  Reese  River  Co.  L.  R., 

iCottrill  v.  Crum,  100  Mo.  397;  2  Eq.  Cas.  264;  Routh  v.  Webster, 

B.  C.  13  S.  W.  Rep.  753  ;  18  Am.  St.  10   Beav.    561;    s.  c.  11  Jur.    701; 

Rep.    549.      See    also    Salmon    v.  State  Bank  v.  Andrews,  18  N.  Y. 

Richardson,  30  Conn.  360 ;  S.  C.  79  St.  Rep.  167. 

Am.    Dec.  355;  National   Bank  v.  4  Bank  of  St.  Mary's  v.  St.  John, 

Texas  Investment  Co.,  74  Tex.  421;  25    Ala.    566;    Maisch    v.    Saving 

s.  c.  12  S.  W.  Rep.  1D1  ;  South  Cov-  Fund,  5  Pliila.  30. 

iii-)..n,  etc.,  R.  R.  Co.  v.  Gest,  34  6  Gratz  v.  Redd,  4  B.  Mon.  178  ; 

Fed.  Rep.  <;~'*  ;  Burns  r.   Beck,  83  Lexington,     etc.,    R.    R.    Co.    v. 

<;.,.    171  |  s.  <\    ID  S.  E.  Rep.  121  ;  Bridges,  7   B.  Mon.  566;  s.  C.   46 

Brewster  '•.  Hatch,  122  N.  Y.  349  ;  Am.  Dec.  428. 

I.    Rep.  505;  '■>  Kail.  &  Corp.  «  Ex  parte  Wilson  L.  R.  8  Ch. 

L.  Jr.  5  .  88  N.  Y.  St.  Repr.  527  ;  19  45 ;  s.  0.  42  L.  J.  Ch.  81 ;  27  L.  T. 

Am.  St.  Rep.  408.  (N.  S.)597. 


8  113. 


OFFICERS — DIRECTORS. 


117 


Sec.  113— Directors'  Compensation. 

Unless  the  charter,  some  statute,  a  by-law,  a  resolution  or 
a  contract  give  a  director  compensation  for  his  services,  he  is 
not  entitled  to  any.1  In  building  associations  they  usually 
serve  without  compensation.  The  law  does  not  raise  an 
implied  promise  to  pay  for  the  services  of  a  director  in  any 
kind  of  a  corporation. 2  The  board  of  directors  cannot  fix 
their  own  salaries,  either  by  resolution  or  a  by-law ;  that 
must  be  done  by  the  shareholders  at  a  stockholders'  meeting, 
unless  a  statute  or  the  charter  provide  otherwise. 3  A 
resolution  of  the  board  fixing  their  salaries  is  void.  4  and 
riot  even  admissible  in  evidence  in  an  action  to  recover  for 
services  rendered.5  This  is  especially  true  where  the  resolu- 
tion has  been  adopted  after  the  services  have  been  rendered. 6 
If  a  director  be  paid  a  salary  for  his  services,  he  cannot 
recover  for  any  work  performed  which  is  purely  incidental 
to  his  office."      To  recover  for  such  services  he  must  show 

S.  c.  53  N.  W.  Rep.  218  ;  17  L.  R. 
A.  412  ;  Mallory  v.  Mallory  Wheeler 
Co.,  61  Conn.  131 ;  s.  C.  23  Atl.  Rep. 


1  American,  etc.,  R.  R.  Co.  v. 
Miles,  52  111.  174  ;  Eakins  v.  Amer- 
ican White  Bronze  Co.,  75  Mich. 
568;  s.  c.  42  N.  W.  Rep.  982; 
Burns  v.  Beck,  83  Ga.  471  ;  s.  c.  10 
S.  E.  Rep.  121  ;  Mart  in  dale  v.  Wil- 
son—Cass. Co.,  134 Pa.  St.  348  ;  s.  c. 
19  Atl.  Rep.  680  ;  19  Am.  St.  Rep. 
706 :  Wood  v.  Lost  Lake,  etc..  Co., 
23  Ore.  20  ;  s.  C.  23  Pac.  Rep.  848  ; 

37  Am.  St.  Rep.  651  ;  Brown  v.  Re- 
publican Mountain  Silver  Mines,  17 
Col.  421 ;  s.  c.  30  Pac.  Rep.  66  ;  S.  C 

16  L.  R.  A.  426. 

2  Loan  Association  v.  Stonemetz, 
29  Pa.  St.  534  ;  Pew  v.  First  Na- 
tional Bank,  130  Mass.  391  ;  Fitz- 
gerald, etc.,  Co.  v.  Fitzgerald,  137 
U.  S.  98. 

3  Gardner  v.  Butler,  30  N.  J.  Eq. 
702  ;  Ward  v.  Davidson,  89  Mo.  445  ; 
Butts  v.  Wood,  37  N.  Y.  317  ;  s.  c. 

38  Barb.  181  ;  Maux  Ferry  Gravel 
Road  Co.  v.  Branegan,  40  Ind.  361  ; 
Wickersham  v.  Crittenden,  93  Cal. 

17  ;  s.  C.  28  Pac.  Rep.  788  ;  Miner 
v.  Belle  Isle  Ice  Co.,  93  Mich.  97  ; 


4  Loan  Association  v.  Stonemetz, 
29  Pa.  St.  534. 

5  Shattuck  v.  Oakland  Smelting, 
etc.,  Co.,  58  Cal.  550. 

By  no  subterfuge  can  this  be 
overcome.  Mallory  v.  Mallory — 
Wheeler  Co.,  supra.  ;  Miner  v. 
Belle  Isle  Ice  Co.,  sujjra. 

6  Holder  v.  Lafayette,  etc.,  R. 
R.  Co.  71  111.  106  ;  s.  C.  22  Am.  Rep. 
89;  Kilpatrick  v.  Penrose,  etc., 
Co.,  49  Pa.  St.  118;  s.  c.  88  Am. 
Dec.  497  ;  State  v.  People's  Mutual 
Benefit  Association,  42  Ohio  St. 
579;  New  York,  etc.,  R.  R.  Co.  v. 
Ketchum,  27  Conn.  170  ;  Ashton  v. 
Dashaway  Association,  84  Cal.  61  ; 
s.  c.  22  Pac.  Rep.  660  ;  7  L.  R.  A. 
809. 

7  Hodges  v.  Rutland,  etc.,  R.  R. 
Co.,  29  Vt.  220;  Cheeney  v.  La- 
fayette, etc.,  R.  R.  Co.,  68  111.  570; 
S.  C.  18  Am.  Rep.  584. 


118  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  VI. 

that  they  unquestionably  are  beyond  the  range  of  his  duties 
as  a  director ; 1  and  rendered  under  such  circumstances  that 
all  persons  well  understood  they  were  to  be  paid  for. 2  Thus 
he  cannot  claim  a  reward  offered  by  the  association  for  the 
recovery  of  its  property  stolen  from  it ;  for  it  is  his  duty  to 
endeavor  to  recover  it  without  a  reward. 3  If  compensation 
has  been  voted  him  for  extra  services  he  cannot  recover  any 
more  than  that  voted,  on  the  claim  that  his  services  were 
worth  more  than  such  sum.4  If  he  performs  services  as 
president,  secretary  or  treasurer  of  his  corporation,  his 
service  for  such  service  must  be  fixed  before  he  enters  upon 
the  duties  of  such  office.5  But  there  is  no  doubt  that  he 
can  recover  for  services  rendered,  that  are  clearly  outside 
of  his  duties  as  director.6  Such  would  be  the  case  where  he 
was  appointed  agent  to  secure  subscriptions  to  stock  ; "  or 
served  by  appointment  as  the  company's  attorney. 8  Of 
course  he  may  recover  for  services  rendered  before  he  became 
a  director.9  For  services  rendered  in  organizing  the  com- 
pany one  who  afterwards  becomes  a  director  on  its  organiza- 
tion cannot  recover  for  such  services,  although  he  expected 
when  rendering  them  that  he  would  be  paid.10  If  the  directors 

iNew   York,  Co.   v.., etc    .  R.R  R.    Co.,  68  111.  570;  S.  c.  18  Am. 

Ketchum,  27  Conn.  170.  Rep.  584. 

2  Brown  v.  Republican  Mountain  8  Rogers  v.  Hastings,  etc.,  R.  R. 

Silver  Mines,  17  Colo.  421  ;  s.  C.  30  Co.,  22  Minn.  25. 

Pac.  Rep.  66.     See  Branch  Bank  v.  9  Branch  Bank  v.  Collins,  7  Ala. 

Collins,  7  Ala.  95.  95. 

Stacy  v.  Bank  of  Illinois,  5  111.  "New  York,  etc.,  R.   R.  Co.  v. 

91.  Ketchum,  27   Conn.   170;    Blatch- 

1  Bodges  v.  Rutland,  etc.,  R.  R.  ford  v.  Ross,  54  Barb.  42;  S.  c.  37 

Co.,  29  Vt.  220.  How.  Pr.  110;  5  Abb.  Pr.  (N.  S.) 

'  Bolder  v.  Lafayette,  etc.,  R.  R.  434;  Rockford,  etc.,  R.  R.  Co.   v. 

Co.,  71  111.  lite,  ;  22s.  C.Am.  Rep.  89.  Sage,  65  111.  328;  S.  c.  16  Am.  Rep. 

6  Santa  Clara  Mining  Association  587;  Franklin  Fire  Ins.  Co.  v.  Hart, 
,:   Meredith,    19  Md.  389  ;    s.  c.  33  31  M«l.  59. 

Am.    Rep.  264;    Greensboro,  etc.,  Contra,  Bell's  Gap  R.  R.  Co.  v. 

Turnpike  Co.  V.  Stratton,  120  Ind.  Christy,  79  Pa.  St.  54  ;  s.  c.  21  Am. 

194  ;  s.  c.  22  N.  E.  Rep.  247  ;  Prilli-  Rep.  39  ;  but  a  single  stockholder 

man  r.  M < -i ■  < I « •  1 1 1 i:i 1 1 ,  120   Lad.  279;  cannot  bind  the  corporation.     Tift 

B.  C.  22  N.   E.   Rep.  247;  National  v.  Quaker  City  National  Bank,  141 

Hank  r.  Elliott,  55  la.  lol  ;  s.  C.  89  I 'a.  St.  550;  s.  c.  21  Atl.  Rep.  660; 

A.m.  Rep.  107.  9  Rail  &  Corp.  L.  Jr.  420. 

7  Cheeney  v.  Lafayette,  etc.,  R. 


§  114.  OFFICERS — TRUSTEES.  119 

illegally  pay  themselves,  an  action  lies  to  recover  back  the 
amount  paid, *  and  any  stockholder,  on  refusal  of  the  board, 
may  maintain  the  action  for  himself  and  all  the  other  stock- 
holders.2 If  the  officer  is  under  bond  to  account  for  all 
funds  of  the  association  that  come  to  his  possession,  he  will 
be  liable  on  such  bond  for  the  amount  he  has  thus  illegally 
received.3 

TRUSTEES. 

Sec.  114 — Nature  of  Office. 

Trustees  are  sometimes  appointed  for  a  building  society  ; 
but  it  is  unnecessary  to  have  such  officers.  Their  function 
is  to  hold  the  title  to  such  real  estate  or  other  property  as 
the  association  may  own,  to  act  as  mortgagees  first,  and  to 
convey  or  release  the  same  by  the  orders  of  the  board  of 
directors.  They  existed  formerly  in  England  to  a  very  con- 
siderable extent,  but  now  have  been  dispensed  with.  They 
act  only  ministerially.4  If  one  die,  his  interest  rests  in  his 
successor  when  appointed  and  not  in  his  surviving  fellow 
trustees.5 

1  Smith  v.  Putman,  61  N.  H.  632.        3  Jemiery  v.  Olmstead,  105  N.  Y. 

2  Butts   v.  Wood,  38  Barb.  181 ;    654. 

s.  C.  37  N.  Y.  317;  McNaughton  v.  4  Grimes  v.   Harrison,  26  Beav. 

Osgood,  41  Hun,  109  ;  s.  c.  3  N.  Y.  435  ;  s.  C.  5  Jur.  (N.  S.)  528 ;  33  L. 

St.  Rep.  795  ;  Jones  v.  Morrison.  31  T.  Rep.  115  ;  28  L.  J.  Ch.  823. 

Minn.  140  ;    Wickersham  v.  Crit-  5  Walker  v.  Giles,  6  C.  B.  622  ;  13 

tenden,  93  Cal.  17 ;  s.  C.  28  Pac.  Jur.  588  ;  18  L.  J.  C.  P.  323. 
Rep.  788. 


CHAPTER  YII. 

BY-LAWS,  RULES  AND  REGULATIONS. 

Sec.  115.  Definition  of  a  By-law. 

116.  Differs  from  a  Resolution. 

117.  Differs  from  a  Regulation  or  Rule. 

118.  A  Law  for  the  Members  of  the  Association. 

119.  By-laws  are  a  Contract  between  a  Building  Association  and 

its  Members. 

120.  Members  Conclusively  Presumed  to  Know  By-laws. 

121.  Formalities  Required  in  Enactment. 

122.  Waiver  of  By-laws. 

123.  Retroactive  By-laws. 

124.  Construction  or  Interpretation. 

125.  Proof  of  By-laws. 

126.  Inherent  Powers  to  Enact  By-laws. 

127.  Who  Adopt, 

128.  Must  Conform  to  the  Charter. 

129.  Must  not  be  Contrary  to  the  Common  Law,  a  Statute  or  the 

Constitution. 

130.  Must  Operate  Equally. 

131.  Cannot  Disturb  Vested  Rights — Amendments. 

132.  Signing  By-laws — Amendment. 

133.  Notice  to  Members  of  Amendments  made. 

134.  Mode  of  Amendment — Who  may  Make. 

1  :;">.  Unreasonable — Oppressive — Extortionate. 

136.  Transfer  of  Shares. of  Stock. 

137.  Releasing  Shareholder  from  Liability". 

138.  Restricting  Right  to  Sue. 
13!).    Arbitration. 

1 10.  Forfeiture  of  Property— Fines. 

ill.  Fine  Must  be  Certain. 

1  I'J.  <  'units  Seldom   Interfere  with  By-laws. 

1 1:;.  Void  in  Pari     Valid  in  Part. 

144.  Regulating  Corporate  Elections. 

Sec  115— Definition  of  a  By-law. 

A  by-law  may  be  defined  as  a  rule  or  law  of  a  corporation 

for  its  government,  or  for  the  government  of  its  members 
120 


§  117.  BY-LAWS, — IiULES — REGULATIONS.  121 

and  officers,  in  the  management  of  its  affairs.  It  is  a  legis- 
lative act  of  the  corporation.  In  its  enactment  the  corpora- 
tion must  observe  the  restrictions  imposed  upon  it  by  the 
charter  or  by  a  governing  statute,  just  as  the  legislature  of 
a  state  must  observe  the  restrictions  placed  upon  it,  in  the 
enactment  of  laws,  by  the  state  constitution.1  The  term 
"  by-laws  "  is  used  to  designate  "  the  orders  and  regulations 
which  a  corporation,  as  one  of  the  legal  incidents,  has  power 
to  make,  and  which  is  usually  exercised  to  regulate  its  own 
actions  and  concerns,  and  the  rights  and  duties  of  its  mem- 
bers among  themselves." 2 

Sec.  116 — Differs  from  a  Resolution. 

A  resolution  is  directed  to  a  particular  object,  and  is  not 
necessarily  a  by-law,  although  the  latter  take  the  form  of  a 
resolution.3  The  difference  is  very  well  illustrated  by  a 
statute  which  declares  that  a  by-law  may  be  adopted  declar- 
ing a  forfeiture  for  non-payment  of  assessments  on  shares  of 
stock:  in  such  a  case  a  resolution  cannot  be  adopted  declar- 
ing that  a  particular  individual  has  forfeited  his  share  because 
of  the  non-payment  of  a  particular  assessment.4  Another 
illustration  is  where  a  statute  provides  for  the  exclusion  of  an 
officer  of  the  corporation  guilty  of  certain  conduct.  This 
must  be  done  by  a  by-law,  general  in  its  terms,  and  not  by 
a  resolution.5 

Sec.  117 — Differs  from  a  Regulation  or  Rule. 

A  by-law  also  differs  from  a  rule  of  action  or  regulation. 
Thus  a  by-law  is  more  properly  for  the  internal  affairs  of  a 
corporation,  for  its  members,  even  for  its  officers  ;  while  a 
regulation  or  rule  of  action  is  for  the  conduct  of  the  busi- 
ness with  those  not  members,  or  with  the  general  public.  6 

1  Drake  v.  Hudson  River  R.  R.  3  Drake  v.  Hudson  River  R.  R. 
Co.,  7  Barb.  508.  Co.,  7  Barb.  508. 

2  Commonwealth  v.  Turner,  1  4  Budd  v.  Multnomah  St.  R.  R. 
Cush.  493.  Co.,  15  Ore.  413 ;  s.  e.  15  Pac.  Rep. 

A  by-law  of  a  private  corpora-  655 ;  3  Am.  St.  Rep.  169. 

tion   resembles  an  ordinance  of  a  5  People  v.  Throop,  I  2Wend.  183. 

city  or  town.     Robinson  v.  Mayor,  1  6  Baltimore,   etc.,   R.    R.  Co.   v. 

Humph,    156;   s.  c.   34  Am.  Dec.  Wilkinson,  30  Md.  224,  by  way  of 

625.  illustration  only.      State  v.  Over- 


122  BUILDING   AND   LOAN   ASSOCIATIONS.       Cll.  VII. 

Sec.  118 — A  Law  for  the  Members  of  the  Association. 

A  by-law,  not  in  conflict  with  the  charter  of  the  associa- 
tion or  with  a  statute  of  the  state  or  of  the  United  States,  or 
Avith  the  state  or  Federal  constitution,  is  as  binding  upon 
members  of  the  association  as  if  it  had  been  enacted  by  the 
Legislature  of  the  state. *  And  so  is  the  association  bound 
by  its  by-laws.  As  between  itself  and  its  members,  a  course 
of  dealing  at  variance  with  its  by-laws,  for  whatever  length 
of  time  it  may  be  pursued  or  acquiesced  in,  is  of  no  validity.2 
But  a  member  of  a  mutual  insurance  company  cannot  question 
the  validity  of  the  by-laws  under  which  he  becomes  a  mem- 
ber,3 and  the  same  rule  prevails  when  a  member  of  a  building- 
association  has  received  a  benefit  under  an  invalid  by-law.4 

Sec.  119 — By-laws  as  a  Contract   between  a  Building 
Association  and  its  Members. 

The  by-laws  of  a  building  association  is  a  contract  be- 
tween it  and  its  members,  whatever  may  be  said  of  the  by- 
laws of  other  kinds  of  corporations.5  "  The  office  of  a  by- 
law is  to  regulate  the  conduct  and  define  the  duties  of  the 
members  towards  the  corporation  and  between  themselves. 
So  far  as  its  provisions  are  in  the  nature  of  a  contract,  the 
parties  thereto  are  the  members  of  the  association,  as  be- 
tween themselves;  or  the  corporation  upon  the  one  side, 
and  its  individual  members  upon  the  other."  6 

ton,  24   N.  J.  L.  43:3 ;  s.  Q.  61    Am.  52  Pac.  Rep.  328. 

Dec.  671.  2  Watson  v.  Bendigo  Permanent 

In   England    and   Australia   the  Loan  and  Building  Society  L.  R. 

by-laws   el'  a  building  association  Eq.,  10  Vict.  (Australia)  26. 

are  called  its  ••  rules."    Sec  Rosen-  3  [Mister  v.  Gerwig,  122  Ind.  567  ; 

berg  vs.  Northumberland  Building  s.  c.  23  N.  E.  Rep.  1041. 

oiation    I..   I;..  '."J   Q.  B.  Div.  *  Building   Association,    v.   Min- 

373;  s.  C.  60  L.  T.  558;  37  W.  R.  nick.  I  Kulp.  513 ;  Victoria  Build- 

368;  5T.  L.  R.  265.  ing  Association  v.  Arbeiter  Bund., 

"  Gosling   r.  Veley,  7  Ad.  &  El.  6  Wkly  L.  Bull.  823. 

(N.  S.)  406;  s.  c.  19  L.  J.  Q.  B.  135;  6  Tn  re  West  Riding  of  Yorkshire 

Cummings  v.  Webster,  43  Me.  192  ;  Permanent  Benefit  Building  Soci- 

Harrington  r.  Workingmen's   Be-  ety  L.  R.,  45  Ch.  Div.  463;  s.  e.  59 

nevolent  Association,  70  Ga.  340;  L.  J.  Ch.  823;  63  L.  T.  453;  39  W. 

McDermotl    v.   Board  of  Police,  5  R.74;  Wolfe  v.  Asso.,etc,  5S  N.  Y. 

A.bb.    I'r.     122 ;    Mechanics'    etc.,  Rep.  656. 

.  v.  Vierling,  66  III.  App.  621.  8  Flinl  v.  Pierce,  99 Mass.  68  ;  s.  c. 

Trowbridge  v.   Hamilton  (Wash.)  96  Am.  Dec.  691. 


§  122.  BY-LAWS, — RULES — REGULATIONS.  123 

See.  1*20 — Members   Conclusively   Presumed    to   Know 
By-laws. 

When  a  person  becomes  a  member  of  a  corporation  he  is 
chargeable  with  a  knowledge  of  all  the  by-laws,  and  it  is 
conclusively  presumed  that  he  has  such  a  knowledge.  Con- 
sequently it  is  not  necessary  to  prove  that  he  had  such 
knowledge  when  it  is  sought  to  enforce  a  contract  against 
him  which  he  has  entered  into  with  the  corporation.1 
Though  a  member  of  a  benevolent  society  is  induced  to  join  it 
by  an  erroneouc  publication  of  its  by-laws  in  relation  to  the 
benefits  to  be  paid  by  it,  he  is  not  entitled,  by  estoppel,  to 
benefits  in  accordance  with  the  by-laws  as  published,  but  is 
limited  to  his  rights  under  the  by-laws  as  they  actually  are.2 

Sec.  212— Formalities  Required  in  Enactment. 

If  a  statute  or  the  charter  of  the  association  prescribe  the 
method  of  enacting  by-laws,  then  that  method  in  their  enact- 
ment must.be  pursued  in  order  to  render  them  valid.3  If 
no  formalities  be  prescribed,  then  a  by-law  may  be  adopted 
by  acts  as  well  as  by  words;  such  as  a  uniform  course  of 
conduct.4  It  is  not  necessary  to  show  that  the  by-law  was 
enacted  in  writing  ;  that  may  be  inferred  from  facts  proved.' 

Sec.  122— Waiver  of  By-laws. 

The  by-laws  of  a  building  association  are  in  the  nature  of 
a  contract  between  the  members  of  the  association,  and  the 
officers  of  the  association,  in  dealing  with  its  members,  have 
no  power  to  waive  any  of  their  provisions,  unless  power  to 
do  so  has  been  expressly  conferred  upon  them.6 

1  Bauer  v.  Samson  Lodge,  102  digo  Permanent  Loan  and  Building 
Ind.  262;  s.  C.  1  N.  E.  Rep.  571;  Society  L.  R„  Eq.,  10  Vict.  (Austra- 
13  Am.  &  Eng.  Coop.    Cas„    618  ;     lia)  26. 

Presbyterian,  etc.,  Fund  v.  Allen,  3  Dunston   v.  Imperial   Gaslight 

106  Ind.  593  ;  s.  C.  7  N.  E.  Rep.  317;  Co.,  3  Barn.  &  Ad.  125. 

Buffalo  u.Webster,  10  Wend.  99;  4  Id.;  Langsdale    v.  Bonton,    12 

Arapahoe     Cattle,     etc.,     Co.     v.  Ind.  467. 

Stevens,    13    Colo.    534 ;    Susque-  5  Lockwood    v.    Mechanics    Na- 

hanna  Insurance  Co.  v.   Perrine,  tional   Bank,  9  R.  I.  308  ;  s.  c.  11 

7  Watts.  &  S.  348.  Am.  Rep.  253. 

2  Hirsch  v.  Grand  Lodge,  etc.,  56  6  Mulrey  v.  Shawmut  Mutual 
Mo.  App.  101.     See  Watson  v.  Ben-  Fire  Insurance  Co.,  4  Allen,  116; 


124 


BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  VII. 


Sec.  123— Retroaction  By-laws. 

"  A  by-law  or  regulation  means  a  rule  for  future  action. 
Ex  post  facto  laws  are  no  more  lawful  for  corporations  than 
for  states ;  all  old  by-laws,  contrary  to  the  general  principle 
of  the  common  law,  or  the  policy  of  the  state,  are  void." l 
-  The  by-laws  of  a  corporation  are  only  rules  and  regulations 
as  to  the  manner  in  which  the  corporate  powers  shall  be 
exercised.  Any  attempt  on  the  part  of  the  defendant,  by  by- 
laws or  otherwise,  to  deprive  an  unconsenting  stockholder  of 
a  right  secured  to  him  by  the  corporate  articles,  is  in  excess 
of  defendant's  authority,  or,  in  legal  parlance,  ultra  vires."  2 
Sec.  124 — Construction,  or  Interpretation. 

The  same  rules  applicable  to  the  construction  of  contracts, 
or  to  other  private  instruments,  or  to  a  statute,  are  appli- 
cable to  the  construction  or  interpretation  of  by-laws  of  a 
corporation.3  They  must  be  given  a  reasonable  interpre- 
tation.4 They  will  be  upheld  rather  than  overturned.5  But 
if  they  inflict  a  penalty  or  a  forfeiture  they  will  "be  strictly 
construed;6   and   if   their  validity  be   doubtful,  they  will 

Mich.  458 ;  Howard  v.  Savannah. 


S.  C.  81  Am.  Dec.  689;  Behler  v. 
German,  etc,  Insurance  Co.,  68 
Ind.  347  ;  Union  Mutual  Insurance 
Co.  v.  Keyser,  32  N.  H.  313  5  s.  C. 
ill  Am.  Dee.  4-1;  Clark  v.  N.  E. 
Mutual  Fire  Ins.  Co.,  6  Cusli.  342; 
53  Am.  Dec  11:  Westchester 
Fire  Ins.  Co.  v.  Earle,  33  Mich. 
;  13. 

Provisions  of  a  contract  prevail 
over  tli"  by-laws  usually ,  especially 

when    no  attention    was  called    to 

them.  Fitzgerald  v.  Equitable  Re- 
serve Fund  Life  Association,  3  N. 
Y.  Supp.  21  1  . 

Davidsou  V.  Old  Peoples  Mutual 
Society.  39  Minn.  303;  s.  c.  39  N 
W  Bep  N't;;  So  especially  where 
the  association  has  received  the 
benefit  of  I  be  contract.  CMalley 
>■.  People's,  etc.,  Associal  ton,  35  N. 
Y.  Supp.  11 ;  B.  c.  18   Misc.  Rep. 

1  People  v.  I  'ire  I  teparl  ment,  :'>! 


T.  U.  P.  Charlt.  173. 

2  Bergman  v.  St.  Paul,  etc.  Asso- 
ciation, 29  Minn.  275  ;  S.  C.  13  N. 
\Y   Rep.  120. 

By  statute,  prohibited  to  change 
effect  of  a  loan.  Hodgins  v.  On- 
tario Loan  and  Debenture  Co.,  7 
Ontario  App.  202. 

8Poulter's  Co.,  v.  Phillips,  6 
Bing.  N.  C.  614;  Hibernia  Fire 
Engine  Co.  v.  Com.,  93  Pa.  St.  26 1  : 
State  v.  Conklin,  34  Wis.  1  ;  In  re 
Dunkerson,  4  Biss.  227. 

4  Osceola  Tribe  v.  Rost.  15  Md. 
295  ;  Higgins  v.  McCrea,  116  U.  S. 
671  ,  O'Malley  v.  People,  etc.,  Am. 
92  Hun,  572  ;  s.  C.  72 N.  Y.  St.  Rep. 
289  ;  36  N.  Y.  Supp.  1016. 

■r>  Vinter's  Co.  v.  Passey,  1  Burr. 
235. 

6  Gouchenour  v.  Sullivan  Build- 
ing and  Loan  Association,  119 Ind. 
441;  S.  C.  N.  E.  Rep. 


§  126.  BY-LAWS, — RULES — REGULATIONS.  125 

rather  be  held  void  than  valid.1  "Where  the  corporation  and 
its  members  have  given  its  ambiguous  by-laws  a  uniform  and 
practical  construction,  that  construction,  as  applied  to  con- 
tracts between  the  corporation  and  its  members,  will  be 
applied  by  the  court.2  If  the  bylaws  be  ambiguous  they 
Avill  be  construed  in  favor  of"  the  members,  when  it  inflicts 
a  line  or  penalty.3 

Sec.  125 — Proof  of  By-laws. 

( Jourts  will  not  take  judicial  notice  of  the  by-laws  of  a 
corporation,  and  they  must  be  proven.4  That  proof  maybe 
made  by  the  production  of  the  originals.5  But  it  has  been 
said  that,  "We  think  it  is  not  necessary  to  prove  the  adop- 
tion of  by-lawxs  by  a  parol  vote  of  the  members  or  directors. 
The  adoption  of  by-laws  is  sufficiently  proved  by  showing 
that  they  appear  upon  the  records  of  the  corporation,  and 
have  been  uniformly  acted  upon  and  enforced  as  the  by-laws 
of  the  corporation." 6  If  no  minute  of  their  passage  has 
been  made  in  the  books  of  the  corporation,  parol  proof  is 
admissible  to  show  their  adoption.7 

Sec.  126 — Inherent  Power  to  Enact  By-laws. 

All  corporations,  unless  expressly  prohibited  by  a  statute, 
have  the  inherent  power  to  adopt  and  promulgate  by-laws 
for  their  government  and  operation.  The  mere  grant  of 
power  to  form  a  corporation  carries  with  it  this  power.8     It 

1  Mayor  of  Oxford  v.  Wildgoose,  4  Haven  v.  N.  H.  Asylum,  13  N. 

3  Lev.  294.  H.    532;  s.   c.   38   Am.    Dec.  512; 

2  McDonough  v. Hennepin  County  Lucas  v.  San  Francisco,  7  Cal.  463. 

Catholic  Building  and  Loan  Asso-  5  Sandhurst  Benefit  Building  and 

ciation,  62  Minn.  122 ;   s.  C.  64  N.  Improvement  Society  v.  Delaney, 

W.  Rep.  106.  L.  R.  3  Vict.  L.  (Australia)  234. 

But  a  course  of  dealing  cannot  6  Hagerman    v.    Ohio    Building 

change  the  interpretation  of  a  con-  Savings  Association,  25   Ohio  St. 

tract  where  there  is  no  doubt  about  186  ;  Lockwood  v.  Merchants'  Na- 

the  construction.     Watson  v.  Ben-  tional  Bank,  9  R.  I.  308  ;  s.  c.  11 

digo  Permanent  Loan  and  Build-  Am.  Rep.  253. 

ing    Society  L.    R.    Eq.,  10  Vict.  7  Harmony  Building  Association 

(Australia)    26  ;  Hirsch  v.   Grand  v.  Goldbeck,  13  W.  N.  Cas.  24  ;  s.  c. 

Lodge,  etc.,  56  Mo.  App.  101.  40  Leg.  Int.  172  ;  30  Pitts.  L.  Jr.  467. 

3  In  re  Tierney's  Estate,  8  Ir.  R.  8  Rex  v.  Westwood,  2  Dow  &  CI. 

Eg.  1.  21 ;  Martin  v.  Nashville  Building 


126  BUILDING   AND    LOAN   ASSOCIATIONS.        Cll.  VII. 

is  not  necessary  to  include  in  the  charter  power  to  enact 
by-laws ;  but  if  such  power  is  inserted  in  that  instrument, 
then  the  corporation  will  have  no  power  to  enact  by-laws 
except  such  as  is  given  by  the  charter.1 

Sec.  127— Who  Adopt. 

Unless  some  statute  authorizes  a  different  body  to  adopt 
by-laws,  only  the  stockholders  can  adopt  them  ;  for  the 
stockholders  are  really  the  corporation,  and  it  is  the  corpo- 
ration, and  not  its  officers  or  directors,  that  can  adopt  them.2 
A  by-law  adopted  by  a  board  of  directors  when  no  statute 
or  other  like  governing  provision  gives  them  power  so  to  do 
is  not  even  admissible  in  evidence.3  Statutes  often  confer 
upon  boards  of  directors  power  to  adopt  by-laws,  not  incon- 
sistent with  the  general  law  of  the  state,  nor  inconsistent  with 
its  charter  ; 4  in  which  instance,  a  majority  of  the  quorum 
present  at  a  proper  meeting  may  do  so.5  A  power,  however, 
given  to  the  board  of  directors  to  adopt  b}T-laws  does  not  pro- 
hibit the  stockholders  at  a  proper  meeting  from  also  adopt- 
ing by-laws  on  the  same  subject,  unless  the  statute  conferring 
the  power  expressly  gives  the  board  exclusive  power  over 
the  subject.6  The  power  to  adopt  also  covers  the  power  to 
amend  or  repeal.7 

Association,  2  Coldw.  418  ;  People  17  Mass.   1;    Martin    v.   Nachille 

v.   Medical  Society,  34  Barb.  o74  ;  Building  Association,  2  Coldw.  418  ; 

J  hake  v.  Hudson  River  R.  R.  Co.,  7  Bank  of  Holly  Springs  v.  Pinson, 

Barb.  508;  London   City  v.   Van-  58  Miss.  421. 

acker,  Carth.  480  ;  Mechanics',  etc.,  8  Watson    v.   Sidney,    etc.,    Co. 

Bank  v.  Smith,  19  Johns.  115.  supra. 

■  Mechanics' etc.,  Bank  v.  Smith.  4  See  Perpetual  Insurance  Co.  v. 

supra,  Child  v.  Hudson's  Bay  Co.,  Goodfellow,  9  Mo.  149. 

2  P.  Wms.  207  ;  State  v.  Ferguson,  6  Cahill  v.  Kalamazoo  Mutual  In- 

:;:;   X.   II.  424;  State  v.  Mayor,  33  surance  Co.,  2  Doug.  (Mich.)  124; 

X.  .1.  I>.  57.  s.  c.  43  Am.  Dec.  457;  Ex  parte, 

-'  i:.  ■<    v.   Westwood,  2   Dow]   &  Willcocks,  7  Cow.  402. 

CI.  21  :  .Morton  Gravel  Road  Co.  v.  c  Rex  v.  Westwood,2  Dow.  &  CI. 

51  End.  I.  Watson  v.  Sid-  21  . ;  Peoples.  Sterling  Manf.  Co.,  82 

n<      r.  Woody  Printing  ( !o.,  56  Mo.  III.  457. 

App.    L45 ;    Carroll    v.    Mullanphy  T  Schrick   v.   St.   Louis    Mutual 

Bank,   8    Mo.    App.    249;  House  Building  Co.,  34  Mo.  423. 
Salem    Bank  v.  Gloucester   Bank, 


§  128.  BY-LAWS, — RULES— REGULATIONS.  127 

Sec.  128 — Must  Conform  to  the  Charter. 

A  by-law  to  be  valid  must  not  be  contrary  to  the  charter 
of  the  association  ;  for  the  latter  is  the  constitution,  as  it 
were,  of  such  association.  If  the  by-law  does  contravene 
that  instrument  it  will  be  void.1  "  A  by-law  may  subject 
persons  to  penalties,  but  it  cannot  make  an  act  void  which 
is  warranted  by  the  original  constitution."2  Nor  can  a 
by-law  enlarge  the  powers  of  the  corporation,  no  more  than  a 
fountain  can  rise  of  its  own  accord  above  its  source.3  Thus 
if  the  charter  give  the  stockholders  power  to  elect  the  direc- 
tors of  the  corporation,  a  by-law  depriving  them  of  that 
power  is  void.4  So  if  the  charter  fix  the  salaries  of  certain 
officers,  the  corporation  cannot  change  the  amount  of  such 
salaries  by  by-laws,  although  the  charter  contain  a  clause 
authorizing  the  corporation  to  fix  salaries,  the  latter  clause 
referring  to  those  salaries  not  fixed  by  the  charter.5  The 
bylaws  must  also  conform  to  the  purpose  for  which  the  cor- 
poration was  formed  ; G  and  if  their  practical  effect  is  to 
bring  about  a  result  at  variance  with  the  object  of  the  cor- 
poration, although  in  seeming  conformity  thereto,  they  will 
be  declared  void.7 

1  Kentr.  Quicksilver  Mining  Co.,  5  Carr  v.  City  of  St.  Louis,  9  Mo. 
78  N.  Y.  159  ;  Brewster  v.  Hartley,     191. 

37  Gal.  15  ;  s.  c.  99  Am.  Dec.  237  ;  6  Martin  v.   Nashville    Building 

Presbyterian,  etc.,  Find  v.  Allen,  Association,  2  Coldw.  418  ;  Booz's 

106  Ind.  593  ;  S.  C.  7  N.  E.  Rep.  317  ;  Appeal,  109  Pa.  St.  592  ;  Parker  v. 

State  v.  Curtis,  9  Nev.  325  ;  Kear-  Fulton  Loan  and  Building  Associa- 

ney  v.  Andrews,  10  N.  J.  Eq.  70;  tion,  46  Ga.  166. 

Bergmen  v.  St.  Paul  Mutual  Build-  7  Martin  v.  Nashville,  etc.,  Assoc, 

ing  Association,  29  Minn.  275.  supra  ;  Herbert  v.  Kenton  Build- 

2  De  Hascot's  Case,  Comb.  202;  ing  and  Savings  Association,  11 
Rex  v.  Cutbust,  4  Burr.  2204.  Bush.  296;  Gordon  v.  Winchester 

3  Kolff,  St.  Paul  Fund  Exchange,  Building  and  Accumulating  Fund 
48  Minn.  215 ;  s.  c.  50  N.  W.  Rep.  Association,  12  Bush.  110 ;  Mills  v. 
1036;  Huston  v.  Reutlinger,  91  Ky.  Salisbury  Building  and  Loan  As- 
333;  s.  c.  15  S.  W.  Rep.  867;  sociation,  75  N.  C.  292 ;  Orangeville 
Brewster  v.  Hartley,  supra;  Rail-  Mutual  Savings  Fund  <V  Loan  As- 
way  Co.  v.  Allerton,  18  Wall.  233  ;  sociation  v.  Gong.  9  W.  N.  Cas.  251 . 
Great  Falls,  etc.,  Insurance  Co.  v.  If  there  be  a  variance  between  the 
Harvey,  45  N.  H.  2!)2.  articles  of  association  and  thechar- 

4  Brewster  v.  Hartley,  supra.  ter,  the  latter  prevails,  Booz's  Ap- 


128 


BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  VII. 


Sec.  129 — Must  not  be  Contrary  to  the  Common  Law,  a 
Statute,  or  the  Constitution. 

If  a  by-law  is  contrary  to  the  common  law,  it  has  been 
said,  it  is  void  ; 1  but  it  is  evident  that  there  are  limitations 
to  this  statement,  for  the  charter  may  authorize  the  adop- 
tion of  a  by-law  in  contravention  of  the  common  law.2  So 
if  a  by-law  is  in  contravention  of  a  statute  of  the  state  it  is 
void.3  Much  more  so  is  it  if  it  contravene  the  constitution 
of  the  state.4 

Sec.  130— Must  Operate  Equally. 

All  by-laws,  to  be  valid,  must  operate  alike  upon  all  per- 
sons of  the  class  for  which  they  were  intended.  "  All  cor- 
poration by-laws  must  stand  on  their  own  validity,  and  not 
on  any  dispensation  granted  to  members.  They  cannot  be 
subjected  to  any  conditions  which  do  not  apply  to  ad  alike, 
and  cannot  be  compelled  to  receive,  as  matter  of  grace,  any- 
thing which  is  a  matter  of  right ;  neither,  on  the  one  hand, 
should  there  be  personal  exemptions  of  a  general  nature 
from  any  valid  regulations  that  bind  the  mass  of  corpora- 
tors."5 Thus  a  resolution,  directed  against  the  stock  of  a 
certain  shareholder  is  void.6 
peal,  109  Pa.  St.  592;  S.  c.  16  W 
N.  ('as.  365. 

1  Huston  v.  Reutlinger,  91  Ky. 
:;;;:;  :  s.  r  15  S.  W.  Rep.  867:  Senrra 
County  Bank  v.  Lamb,  26  Barb. 
595. 

9  Goddard  v.  Merchants5  Ex- 
change, 9  Mo.  App.  290;  S.  c.  78 
Mo.  609. 

;  New  York  Protective  Associa- 
tion r.  McGrath,  5  N.  Y.  Supp.  8  , 
Wlerman  r.  International,  etc., 
i  'in, ,M,  61  III.  App.  550  ;  Bullard  y. 
Bank,  18  Wall.  589;  People  v. 
Medical  Society,  24  Barb.  570; 
Trowbridge  v.  Bamilton  |  Wash. ) 
52  Pac.  Rep.  328 :  <  lullerne  v.  Lon- 
don and  Suburban  General  Perma- 
n.  nt  Benefll  Building  Society,  L. 
l.\  J5  Q.  B.  Div.  485  :  S.  O.  29  W.  R. 
biles'  Appeal,  95  Pa.  St.  122  ; 


State  ik  Greenville  Building  Asso- 
ciation, 29  Ohio  St.  92;  State  v. 
Oberlin  Building  and  Loan  Asso- 
ciation. 35  Ohio  St.  258  ;  Rodgers  v. 
Southwestern  Mutual  Saving  Fund 
and  Building  Association,  7  W.  N. 
Cas.  95 ;  Trowbridge  v.  Hamilton 
(Wash.)  62  Pa.  St.  328. 

4  State  v.  City  of  Cincinnati,  23 
Ohio  St.  445.  A  loan  authorized 
by  a  statute,  although  in  contra- 
vention of  the  association's  by- 
laws,  is  not  ultra  vires.  Kelly  v. 
Mobile,  etc.,  Association,  64  Ala. 
501. 

6  People  v.  Young  Men's,  etc., 
Society,  41  Mich.  67  ;  Ex  parte, 
Prank,  52  Cal.  606. 

6  Budd  v.  Multnomah  Street  Ry. 
(  V).,  15  Ore,  413  ;  s.  c.  15  Pac.  Rep. 
659. 


§  131.  BY-LAWS, — RULES — REGULATION  S.  129 

Sec.  131 — Cannot  Disturb  Vested  Rights — Amendments. 

A  by-law  cannot  disturb  a  vested  right  any  more  than  a 
statute  ;  indeed  they  are,  in  this  respect,  on  the  same  plane.1 
And  although  a  corporation  has  the  power  of  amending  its 
by-laws,  yet  inasmuch  as  they  enter  into  and  form  a  part  of 
the  contracts  it  makes  with  its  members,2  they  cannot,  under 
the  guise  of  amending  its  by-laws,  impair  the  obligation  of 
such  contracts.3  Thus  a  resolution  of  the  board  of  direc- 
tors, or  an  amendment  to  the  constitution,  of  a  building 
association,  which  modifies  the  rights  of  borrowing  mem- 
bers as  to  rebate  of  interest  and  payment  of  dividends,  as 
expressed  in  their  mortgage  contracts,  is  ultra  vires.4  But 
the  right  to  amend  the  by-laws  may  be  reserved,  in  which 
event  the  members  may  be  bound.  Thus  an  advanced  mem- 
ber of  a  building  society  executed  a  mortgage  to  the  society 
that  contained  no  covenant  to  pay  any  sum  due  "  under  the 
rules  for  the  time  being "  ;  subsequently  the  rules  were 
amended,  which  imposed  a  greater  liability.  It  was  held 
that  the  mortgagor's  contract  was  one  of  membership  and 
mortgage  combined  ;  and  that,  by  virtue  of  it,  he  was  bound 
by  the  amended  rules,  so  long  as  they  were  consistent  with 
his  contract,  and  did  not  violate  any  statutory  provisions.5 

1  People  v.  Fire  Department,  31  Reid  v.  Eatonton  Mf.  Co.,  40  Ga. 
Mich.  458;  People  v.  Crockett,  9  98;  Kennebec,  etc.,  R.  R.  Co.  v. 
Cal.  112 ;  Gray  v.  Portland  Bank,  Kendall,  31  Me.  470 ;  Burlington 
3  Mass.  363.  v.  Burlington  St.  Ry.  Co.,   49  la. 

2  Sabin  v.  Senate  of  the  National  144;  Stohr  v.  San  Francisco,  etc., 
Union,  Mich.  ;s.C.  51N.W.  So.,  82  Cal.  557;  Weise  v.  San 
Rep.   202;  Pfister  v.    Gerwig,   122  Francisco,  etc.,  So.,  Id.  645. 

Ind.  567 ;  S.  C.  23  N.  E.  Rep.  1041.  *  Betz  v.  Fulton  Building  and 
In  re  West  Riding  of  Yorkshire  Saving  Association,  1  Ohio  Dec. 
Permanent  Benefit  Building  So-  42 ;  Becker  v.  Berlin  Benefit  So- 
ciety, L.  R.,  45  Ch.  Div.  463  ;  S.  c.  ciety,  144  Pa.  St.  232  ;  s.  c.  22  Atl. 
59  L.  J.  Ch.  823  ;  63  L.  T.  453  ;  39  Rep.  699 ;  Grand  Lodge  Ancient 
W.  R.  74  ;  Rodgers  v.  Southwest-  Order  of  United  Woodmen  v.  Sater, 
ern,  etc..  Association,  7  W.  N.  Cas.  44  Mo.  App.  445  ;  Bergman  v.  St. 
95;  Building  Association  v.  Jones,  Paul,  etc.,  Association,  29  Minn. 
2  Law  Times  N.  S.  (Pa.)  ,17.  275  ;  s.  c.  13  N.  W.  Rep.  120  ;  Wolfe 

3  Trustees  v.  Flint,  13  Met.  539;  v.  Conkey  Avenue    Savings,  etc., 


5  Bradbury  v.   Wild,   3    Report,     Ch.  503  ;  68  L.  T.  50  ;  41  W.  R.  361; 
195  ;  s.  c.  [1893]  1  Ch.  377  ;  62  L.  J.     57  J.  P.  68  ;  94  L.  T.  153. 
9 


130  BUILDING   AND   LOAN   ASSOCIATIONS.      Ch.  VII. 

So  a  building  society  by  its  rules  had  power  to  alter  any 
rule  by  a  specified  majority  of  its  members.  A  member 
gave  notice  of  withdrawal,  after  which  the  society  duly 
altered  its  rules  to  the  detriment  of  the  member.  It  was 
held  that  he  was  bound  by  the  rules  as  altered.1  And 
changes  may  be  made  if  a  member,  when  joining  the  society 
agrees  that  changes  may  be  made  and  that  he  will  abide  by 
them.2  If  a  by-law  permit  withdrawals  when  a  member 
joins  a  society,  he  cannot  be  deprived  of  that  privilege  there- 
after without  his  consent.8  Amendments,  however,  which 
do  not  increase  his  obligations,  but  provide  a  different  method 
of  withdrawing,  are  valid.4  But  a  resolution  of  a  building 
association  which  provides  that  the  value  of  all  stock  on 
which  a  loan  has  been  made  to  a  certain  amount  should  be 
allowed  to  such  holders  as  desire  to  redeem  cannot  be 
rescinded  to  the  prejudice  of  a  member  who  has  made 
application  to  withdraw  and  has  refrained  from  paying  hid 
monthly  dues,  acting  on  the  belief  that  his  application  had 
been  accepted.5     Yet  where,  after  the  execution  of  a  rnort- 

Association,  75  Hun,  201 ;  S.  c.  58  This  section  of  the  English  stat- 
es. V.  St.. Rep.  656;  Engelhardt  v.  ute referred  to  is  also  applicable  to 
Fifth  Ward  Permanent  Dime  Sav-  resolutions.  Christie  v.  Northern 
ing  and  Loan  Association,  148  N.  Counties,  etc.,  Society,  L.  R.  43  Ch. 
Y.  281  ;  S.  c.  42  N.  E<  Rep.  710  ;  re-  Div.  62  ;  59  L.  J.  Ch.  210  ;  61  L.  T. 
versing  5  Misc.  Rep.  518 ;  58  N.  Y.  796  ;  38  W.  R.  280. 
St.  Rep.  92 ;  25  N.  Y.  Supp.  835.  *  Hekelnkaemper     v.      German 

1  Pepe  v.  City  and  Suburb  Build-  Building  Association,  22  Kan.  549. 

ing  Society,  3    Report,  471;  S.  c.  5  Eyre  v.  Building  Association, 

|  L893]  '.'  Ch.  311  ;  62  L.  .J.  Ch.  501  ;  17  Leg.  Int.  148. 

68  L.  T.  846  ;  41  W.  R.  548  ;  follow-  Under  section  32  of  the  English 

Davies    v.    Second    Chatham  Act  of  1874,  by  an  instrument  of 

Building  Society,  61  L.  T.  Rep.  680  ;  dissolution,  it  was  held  competent 

Hekelnkaemper   v.  German,  etc.,  to  vary  the  rights  of  members  un- 

Association,  22  Kan.  549.  der  them  by  providing  that  mem- 

2Borgardsv.  Farmers' Mutual  In-  bers  who  had  given  notice  should 

Burance  Co.,  79  Mich.  140;  8.  c.  II  have  no  preference  or  priority  over 

V.  W    Rep.  856.  members  who  had  not ,  i^iven  notice 

» Holyoke,  etc.,    Association    v.  of  intending  to  withdraw.    Kemp 

Lewi..  I  Col.  A.pp.  L27;  B.C.2"i  Pac.  v,  Wright  [1894]  2  Ch.  462  ;  s.  c.  71 

Rep.   872;  Auld   v.  Glasgow,  etc.,  L.  T.  Rep.  650;  1  Manson,  308 ;  98 

Society,  12  A.pp.  Cas.   197;  s.  c.  56  L.  T.  81  ;  43  W.  R.  213;  58  J.  P. 

L.    T.    776;    35    \V.    R.   632.      Sen  5hh  ;  but  this  case  was  afterwards 

"Withdrawals.''  overruled.       Molten     r.    City     and 


§  132.  BY-LAWS, — KULES — REGULATIONS.  131 

gage  the  rules  of  a  society  were  altered  by  the  introduction 
of  a  provision  that  an  advanced  member  should  not  be 
entitled  to  redeem  his  mortgage  without  paying,  in  addition 
to  what  would  have  been  due  from  him  under  the  original 
rules,  his  proportion  of  the  loan  of  the  society  ;  it  was  held 
that  a  new  rule  imposing  a  greater  liability  in  redeeming 
than  the  old  one,  adopted  after  the  mortgage  was  executed, 
was  valid  and  bound  the  mortgagor  member.  This  was 
held  upon  the  theory  that  the  new  rule  was  not  an  alteration 
of  the  contract;  for  his  contract  was  that  he  would  pay, 
not  merely  ivhat  the  existing  rules  required — it  was  not 
confined  to  that — but  whatever  the  rules  of  the  society  for 
the  time  being  might  require  him  to  pay  as  a  member.1  So 
a  new  by-law  increasing  the  liability  to  contribute  to  losses, 
adopted  after  the  execution  of  a  mortgage,  is  valid.2 

Sec.  132 — Signing  By-laws— Amendments. 

Some  of  the  cases  seem  to  attach  more  importance  to  the 
right  of  an  association  to  make  a  change  in  its  by-laws  if  the 
member  of  the  society  complaining  has  signed  them  when 
he  became  a  member,  than  if  he  had  not  done  so.3  But  this 
seems  doubtful.  In  an  Ohio  case  it  was  said  :  "  We  do  not 
perceive  any  ground  to  maintain  that  the  constitution  and 
by-laws  are  any  more  binding,  because  signed  by  the  mem- 
bers, for  whether  signed  or  not,  they  become  the  law  of  the 

Suburban  Building  Society,  13  R.  regulations  are  mentioned  in  the 

591  ;   [1895]  2  Ch.  441  ;  64  L.  J.  Ch.  covenant  for  payment,  or  in  the 

609  ;  72  L.  T.  722  ;  44  W.  R.  12.    And  proviso  for  redemption.    Bradbury 

see  Kemp  v.  Wright  (on  appeal)  7  v.  Wild,  3R.  195  ;  s.  C.  [1893]  1  Ch. 

R.  631  ;  S.  C.   [1895]  1  Ch.  121  ;  04  377  ;  62  L.  J.  Ch.  503  ;  68  L.  T.  50 ; 

L.  J.  Ch.  59  ;  71   L.  T.  650  ;  43  W.  41  W.  R.  361  ;  57  J.  P.  68. 

R.  213  ;  59  J.  P.  133.  The  case  of  the  Re  Norwich  and 

1  Rosenberg  v.  Northumberland  Norfolk  Provident  Building  So- 
Building  Society,  22  Q.  B.  Div.  373  ;  ciety,  1  Ch.  Div.  481 ;  s.  c.  45  L.  J. 
60  L.  J.  558;  37  W.  R.  368;  51  L.  Ch.  143;  24  W.  R.  103,  turns  upon 
Rep.  265  ;  Wilson  v.  Miles  Plotting  the  particular  words  of  the  cove- 
Building  Society,  22  Q.  B.  Div.  381,  nant  for  payment,  and  the  amended 
note.  rules  ;  and  does  not  contravene  the 

2  Id.  It  is  not  necessary  to  attain  case  last  cited. 

this  end  that  the  words  "for  the  8  Borgards  v.  Farmers'  Mutual  In- 
time  being,"  in  the  mortgage,  surance  Co.,  79  Mich.  440  ;  S.  c.  44 
should  follow   where  the  rules  or    N.  W.  Rep.  856. 


132  BUILDING    AND    LOAN    ASSOCIATIONS.      Ch.  VII. 

association,  binding  upon  all  of  its  members,  until  altered 
or  amended,  and  the  circumstance  that  they  were  signed 
does  not  take  away  the  right  and  power  of  amendment, 
which  is  incidental  to  all  corporations."  1  Signing  the  by- 
laws is  not  necessary  in  order  to  become  a  member  and 
liable  to  contribute  to  the  losses,  even  though  the  by-laws  of 
the  society  require  each  member  to  sign  them  ;  for  by  pur- 
chasing the  stock  he  becomes  a  member.2 

Sec.  133 — Notice  to  Members  of  Amendments  Made. 

A  member  should  be  given  notice  of  any  by-law  amended 
in  order  to  bind  him  by  it ;  for  he  has  the  right  to  treat  the 
by-laws  given  him  on  becoming  a  member  as  the  only  by- 
laws of  the  society  until  informed  of  other  by-laws  or 
amendments.3  Thus  a  person  claimed  under  a  rule  which 
had  been  changed  and  substituted  previous  to  his  becoming 
a  member,  but  which  it  was  shown  was  substituted  by  one 
adopted  at  a  meeting  irregularly  called  ;  it  was  held  that  as 
it  was  not  shown  that  if  he  were  aware  of  the  new  rule  at 
the  time  he  invested,  that  he  would  not  be  bound  by  it.4 

Sec.  134 — Mode  of  Amendment— Who  may  Make. 

To  constitute  it  a  valid  amendment,  the  mode  or  method 
of  making  amendments  prescribed  by  the  charter  or  govern- 
ing statute  must   be  presumed.5     "Where  the   constitution 

1  Wangerien  v.  Aspell,  47  Ohio  though  unwritten,  will  control 
St.  250  ;  s.  C.  24  N.  E.  Rep.  405 ;  23  when  they  have  been  acted  upon, 
Wkly.  L.  Bull.,  380;  Parker  v.  see  Winterer  v.  Fairmount  Build- 
United  States,  etc.,  Association,  19  ing  Association,  44  Leg.  Int.  122. 
W.  Va.  744.  See  also  Concordia  A  member  of  a  building  associa- 
S.  (V  A.  A.SSO.  v.  Read  94  N.  Y.  474.  tion  is  charged  with  notice  that  its 

2  Jii  re  Saint  John  Building  So-  charter  prohibits  the  directors 
ciety,  2H  N.  B.  597  ;  Building  Asso-  alone  from  making  contracts  in 
oiationv.  Robinson,  46  Leg.  Int.  5.  behalf  thereof.     Citizens' Savings, 

8 McKenney   v.    Diamond    State  Building  and  Loan  Associations. 

Loan    Association,  8   Eoust.   557;  Ruhl,  55  111.  App.  65. 

s.  c.  18  Atl.  Rep.  905.  6  McKeown  v.  Irish  Building  As- 

1  Prevost  v.  Society  Canadienne  sociation,  5  Wkly  L.  Bull.  52. 

Francaise,  etc.,  2  Leg.  News.  412;  No  doubt  the  association  may 

Robillard  c.  Societe,  4   Leg.   News,  pre.se ri he  a  rule  for  making amend- 

188.  ments  which  will  be  binding  un- 

That      reasonable      regulations,  til  repealed. 


§  135.  BY-LAWS, — RULES — REGULATIONS.  133 

provides  that  the  members  should  have  the  right  to  alter  or 
amend  the  constitution  and  by-laws  by  a  majority  vote  at 
the  annual  meeting,  provided  that  all  the  members  had 
previous  notice  of  such  purpose  to  amend  or  alter,  the  mere 
presence  of  a  member  by  proxy  was  held  not  sufficient  to 
make  a  change  in  the  by-laws  binding  upon  him.1  Where 
the  articles  provided  for  the  management  of  its  business  by 
a  board  of  directors,  and  for  meetings  of  that  board,  but 
did  not  provide  for  meetings  of  the  corporation ;  and  the 
first  by-laws  were  adopted  by  the  directors,  the  latter  were 
held  to  have  the  power  to  amend  such  b}T-laws.2  In  the 
absence  of  any  provision  in  the  by-laws  or  charter  that  they 
shall  not  be  altered  or  amended  except  at  a  specified  time 
after  a  special  notice,  and  by  a  two-thirds  vote,  such  change 
or  alteration  can  be  lawfully  made  by  a  majority  at  any 
corporate  meeting.3 

Sec.  135 — Unreasonable, — Oppressive  Extortionate. 

A  by-law,  to  be  valid  as  between  the  members  and  the 
association,  must  not  be  unreasonable,  nor  oppressive,  nor 
extortionate.4  In  other  words,  the  corporation  must  ex- 
ercise its  powers  in  a  reasonable  manner ;  and  the  courts 
have  full  power  to  determine  whether  its  by-laws  are  reason- 
able or  unreasonable.5     But  if  a  by-law  does  not  violate  the 

1  Metropolitan  Safety  Fund  As-  Association,  14  N.  Y.  Supp.  272  ; 
sociation  v.  Windover,  137  111.  417  ;  Mathews  v.  Associated  Press.  61 
S.  C  27  N.  E.  Rep.  538  ;  affirming,  Hun,  199 ;  s.  c.  15  N.  Y.  Supp.  887  ; 
37  111.  App.  170.  Hagerman   v.  Ohio,  etc.,  Associa- 

2  Heintzelman  v.  Druids  Relief  tion,  25  Ohio  St.  186  ;  Forest  City, 
Association,  38  Minn.  138;  s.  c.  36  etc.,  Association  v.  Gallagher.  25 
N.  W.  Rep.  100.  Ohio  St.  208 ;  Citizens',  etc.,  Asso- 

3  Scanlan  v.  Snow,  2  App.  D.  C.  ciation  v.  Webster,  25  Barb.  263  ; 
137.  Shannon  v.  Howard  Building  As- 

A  court  of  equity  cannot  make  sociation,    36   Md.    383  ;    State    v. 

by-laws  for  a  corporation,  as  by  Overton,  24  N.  J.  L.  435;  s.  C.  61 

substituting  the  word  "  by-laws  "  Am.  Dec.  671. 
for  the  word  "  constitution  "  in  a        5  Commonwealth  v.  Worcester, 

provision  in  the  by-laws  that  the  3  Pick.   461  ;  St.  Louis  v.  Weber, 

constitution    may    be    altered    or  44  Mo.  547  ;  Commissioners  v.  Gas. 

amended  by  a  two-thirds  vote  at  Co.,    12    Pa.    St.    318;    St.    Luke's 

any  annual  meeting.     Id.  Church  v.  Matthews,  4  Desau,  578  ; 

4  Brady  v.  Coachman's  Benevolent  s.  c.  6  Am.    Dec.   619;    Common- 


13-1  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  VII. 

constitution  of  the  state,  a  statute,  the  charter  of  the  asso- 
ciation, the  Federal  constitution  and  laws,  or  the  common 
law,  it  will  be  allowed  to  stand  if  the  members  have  agreed 
among  themselves  to  be  governed  by  it,  even  though  the 
courts  should  come  to  the  conclusion  that  it  is  unreasonable.1 
And  if  the  charter  or  governing  statute  has  expressly 
authorized  the  adoption  of  such  a  by-law,  the  courts  cannot 
annul  it.2  Nor  would  the  courts  look  closely  into  matters 
of  judgment  where  there  may  be  a  reasonable  difference  of 
opinion,  in  order  to  determine  whether  or  not  a  by-law  is 
reasonable.3  Their  reasonable  or  unreasonableness  is  a 
question  for  the  courts  and  not  for  the  jury.4 

Sec,  136— Transfer  of  Shares  of  Stock. 

The  corporation  may  regulate  the  transfer  of  shares  of 
stock  although  it  may  not  restrain  a  transfer  beyond 
what  is  necessary  to  secure  the  rights  of  the  corporation. 
Thus  a  bylaw  providing  no  transfer  shall  be  made  so  long 
as  the  owner  is  indebted  to  the  corporation  is  valid,  although 
inconsistent  with  the  general  law  of  the  state  governing 
the  transfer  of  personal  property.5  But  a  b}r-law  requiring 
all  transfers  to  be  made  at  the  company's  office  personally, 
or  by  attorney  with  the  consent  of  the  president,  is  void.6 

wealth  v.  St.  Patrick's  Society,  2  Stockton,  2  Sawy.  108  ;   Spurlock 

Binn.  441  ;  s.  c.  4  Am.  Dec.  453.  v.  Pacific  R.  R.  Co.,  61  Mo.  319  ; 

1  Kehlenbeck  v.  Lodgeman,  10  People  v.  Crockett,  9  Cal.  112 ; 
Daly,  147  ;  Pfister  v.  Gervvig,  122  Farmers,  etc.,  Bank  v.  Wasson,  48 
Ind.  567  ;  S.  C.  23  N.  E.  Rep.  1041.  la.    339  ;  Wetherell  v.  Thirtyfirst 

2  Haynes  v.  Cape  May,  50  N.  J.  Street  Building  and  Loan  Associa- 
L.  55  ;  13  Atl.  Rep.  231  ;  District  of  tion,  (111.)  ;  39  N.  E.  Rep. 
Columbia ?\  Waggemaii,  4  MacUey,  143;  43111.  App.  509.  Theassignee, 
328.  of  an    insolvent   shareholder,   ac- 

'■'•  St.  Louis  v.  Weber,  44  Mo.  547.  cording  to  thelastcase  cited,  takes 

*  Morris,  etc.,  R.  R.  Co.  v.  Ayres,  the  shares  subject  to  the  lien  thus 

29  N.  -J.  I;.  39:!;  si)  Am.  Dec.  215.  created.     Not  so  an  innocent  pur- 

\     t<>  tc-t  imoiiv  covering  the  ne-  chaser.     Bank  v.  Lannier,  11  Wall. 

cessity  for  such  a  rule,  sec  Illinois  869. 

Central    !>'.  I.'..  Co.  V.  Whittemore,  °  Sargent  v.  Franklin  Insurance 

48  III.   120.  Co.,  8  Pick.  90;  s.  c.  19  Am.  Dec. 

Mechanics'  Hank  r.  Merchants'  30(5;  Sargent  v.  Essex  Corporation, 

Bank,    15  Mo.,  518;  B.C.  LOO  Am.  9  Pick.  202. 

Dec.  :;hs  ;  Pendergast  v.  Bank  of 


§  139.  BY-LAWS, — IiULES — REGULATIONS.  135 

Sec.  137 — Releasing  Shareholders  from  Liability. 

A  by-law  releasing  a  shareholder  from  liability  for  the 
payment  of  his  stock  in  full  and  providing  that  the  pay- 
ment of  a  certain  percentage  less  than  the  whole  shall  be 
deemed  a  payment  of  the  entire  amount  due  thereon  is  invalid 
as  against  creditors  of  the  association  ;  for  the  capital  stock 
is  a  trust  fund  for  the  creditors  which  the  association  can- 
not give  away  so  as  to  deprive  the  creditors  from  resorting 
to  it  to  collect  their  debts.1 

Sec.  138— Restricting  Right  to  Sue. 

A  by-law  restricting  the  right  of  a  member  to  bring  suit 
against  the  association  does  not  deprive  him  from  resorting 
to  a  court  of  justice  to  secure  his  rights.2  But  a  by-law  re- 
quiring a  member  to  take  certain  steps  with  the  association 
in  order  to  secure  an  adjustment  of  his  claim  before  resort- 
ing to  a  suit  is  valid,  that  not  depriving  him  of  the  right  to 
resort  to  the  courts  to  secure  his  rights.3  So  a  by-law  re- 
quiring a  member  to  bring  suit  within  a  reasonable  time 
after  the  cause  of  action  arises  is  valid,  though  much  shorter 
than  the  time  specified  by  the  statute  of  limitations.4 

Sec.  139— Arbitration. 

A  by-law,  not  in  pursuance  of  a  statute  providing  for  it, 
compelling  a  member  having  a  dispute  with  the  association 

1  Slee  v.  Bloom,  19  Johns,  456 ;  contract  may  not  pursue  the 
s.  c.  10  Am.  Dec.  273.  remedies  provided  by  law  to  col- 

The  statement  in  this  section  is  lect    it    is    not    a    good    custom, 

subject,  however,  to  the  power  of  Spears  v.  Ward,  48  Ind.  541. 

the  association    to   effect  a  valid  3  Harrington  v.  Workingmen's, 

compromise  if  there  be  a  dispute  etc.,    Association,     70     Ga.     340  ; 

touching  the  liability  of  the  share-  Bauer  v.  Samson,  Lodge,  102  Ind. 

holder  arising  out  of  his  having  262  ;  s.  C.  1  N.  E.  Rep.  571  ;  13  Am. 

taken  a  loan  to  which  his  stock  is  &  Eng.  Corp.  Cas.  618  ;  Lafond  v. 

applicable  in  satisfying  it.  Deems,  81  N.  Y.  508. 

2  Supreme  Council  v.  Garrigus,  4  Amesbury  v.  Bowditch,  etc., 
104  Ind.  133;  s.  C.  3  N.  E.  Rep.  Insurance  Co.,  6  Gray,  596;  Wil- 
818;  People  v.  National  Home  son  v.  ^Etna  Insurance  Co.,  27  Vt. 
Building  and  Loan  Association,  7  98;  Gray  v.  Hartford  Fire  Ins  Co., 
Chicago  L.  Jr.  193.     A  custom  that  1  Blatchf .  280. 

a  party  having  a  claim  due  upon  a 


136  BUILDING   AND    LOAN    ASSOCIATIONS.        CI).  VII. 

to  submit  his  controversy  to  arbitration,  is  void  ;  because  it 
deprives  a  member  of  bis  right  to  resort  to  the  courts  and 
deprives  such  courts  of  the  jurisdiction  over  the  contro- 
versy.1  And  an  agreement  on  the  part  of  the  member  on 
joining  the  association  to  submit  all  controversies  to  arbi- 
tration is  not  binding,  being  capable  of  being  broken  the 
same  as  any  other  contract.2  But  where  a  borrower  agreed 
that  in  case  of  default,  or  if  the  association  decided  to  dis- 
solve, it  should  receive  from  him  out  of  the  proceeds  of  the 
sale  of  his  property  such  a  sum  as  referees  chosen  by  both 
parties  should  determine,  it  was  held  that  the  agreement 
was  valid.3 

Sec.  140— Forfeiture  of  Property — Fines. 

Although  a  corporation  may  assess  a  certain  and  reason- 
able fine  for  a  violation  of  its  by-laws  and  collect  it,4  yet  a 
by-law  cannot  be  enforced  by  a  forfeiture  of  the  property  of 
a  defaulting  member.5  But  an  agreement  of  a  member  with 
his  association  that  unless  certain  payments  shall  be  made 
within  a  certain  time  after  they  are  due  that  he  shall  for- 
feit all  rights  in  the  association  is  valid ;  the  right  resting 
upon  an  agreement  and  not  upon  a  by-law,  and  being 
brought  about  by  his  own  voluntary  act.6  Such  a  forfeit- 
ure cannot,  however,  aside  from  an  agreement,  be  inflicted 
by  a  by-law  for  a  default  in  the  payment  of  calls  made  on 
stock.7     But  this  power  may  be  conferred  by  a  statute. 

Sec.  141 — Fine  Must  be  Certain. 

The  amount  of  the  fine  to  be  inflicted  for  a  violation  of  a 

1  State  v.  Merchants'  Exchange,  1324;  Leathby  v.  Webster,  Sayer, 

Mo.    A.pp.   '.Hi;     Middleton's    Case  252. 

Dyer,  333a.  *  Kirk  v.   Nowill,  1   T.  R.   118; 

-  Beath  v.  N.  Y.  Gold  Exchange,  London  Tobacco  Pipe  Makers  Co. 

1    A  1,1,.    Pr.  (N.  V.)    251  ;  8.  C.  38  v.  Woodroffe,  7  B.  &  C.  838. 

I  low.  Vr.  168.  6  Cahill    v.    Kalamazoo    Mutual 

;  White  r.   Mechanics'  Building  Insurance  Co.,  supra;    Beadle  v. 

iciation,  22  Gratt.  283.  Ghenango,  etc.,  Insurance  Co.,  3 

•  I  Jahill  v.  Kalamazoo  Mutual  In-  Hill,  L61. 

surance  Co.,  2  Doug.  (Mich.)  124;  7  In  re  Long  Island  R.  R.  Co.,  19 

0.  i::    \m.    I).--.  457;   Bosworth  Wend.  87;  S.  C.  82  Am.  Dec.  429; 

?•.  Burgen,  7  Mod.  459;  S.  «'.  Lutu,  Master  Stevedore's  Association  v. 


§  143.  BY-LAWS, — RULES — REGULATIONS.  137 

by-law  must  be  certain  and  so  fixed  by  the  by-law ; 2  but 
there  is  no  objection  to  providing  that  it  shall  not  exceed 
a  certain  amount,  or  shall  not  be  less  nor  more  than  certain 
named  sums.2  The  corporation,  within  the  limits  of 
such  a  by-law,  may  fix  and  determine  the  amount  of  the  fine 
and  then  collect  it  in  a  court  of  law.3 

Sec.  142 — Courts  Seldom  Interfere  with  By-laws. 

So  long  as  a  by-law  is  not  in  contravention  of  some  ex- 
press legal  prohibition,  or  contrary  to  public  policy,  courts 
will  not  interfere,  or,  at  least,  do  so  with  great  reluctance  ;  for 
they  regard  them  in  the  same  light  as  private  contracts.4 

Sec.  143— Void  in  Part,  Valid  in  Part. 

Just  like  a  statute,  and  under  the  same  rules  and  limita- 
tions, a  by-law  may  be  valid  in  part  and  void  in  part.5  The 
rule  for  holding  that  a  part  may  be  bad  and  the  remainder 
stand  has  been  stated  as  follows  :  "  Where  a  by-law  is 
entire,  each  part  having  a  general  influence  over  the  rest, 
if  one  part  is  void,  the  whole  is  void  ;  but  where  a  by-law 
consists  of  several  distinct  and  independent  parts,  though 
one  or  more  of  them  is  void,  the  rest  are  valid.  And  the 
rule  is  applicable  to  the  different  clauses  of  the  same  by-law  ; 
for  where  it  consists  of  several  particulars,  it  is,  to  all  pur- 
poses, as  several  by-laws,  though  the  provisions  are  thrown 
together  under  the  form  of  one."  6 

"Walsh,  2  Daly,  1  ;    Rosenbach   v.  Cotton  Exchange  v.  State,  54  Ga. 

Salt  Springs  Nat.  Bank,  53  Barb.  668;  Dawkins  v.  Antrobus  L.  R., 

495.  17  Cli.  Div.  615  ;  s.  c.  44  L.  T.  N.  S. 

iHuntsville  v.  Phelps,    27   Ala.  557:  29   W.    R.    511;    Lambert  v. 

55  ;  In  re  Tierney's  Estate,  8  Irish  Addison,  46  L.  T.  N.  S.  20  ;  Hnssey 

L.  T.  Rep.  29.  v.  Gallagher,  61  Ga.  86 ;  People  v. 

2  Piper  v.  Chappell,  14  Mees.  &  St.  George's  Society,  28  Mich.  261  ; 
Wels.  624.  Weatherly    v.    Medical,    etc.,   So- 

3  Master  Stevedores'  Association  ciety.  76  Ala.  567. 

v.  Walsh,  2  Daly,  1.  &  Shelton  v.  Mobile.  30  Ala.  540  ; 

4  See  Loubat  v.  Leroy,  15  Abb.  s.  c.  68  Am.  Dec.  143  ;  Rogers  v. 
N.  C.  1  ;  Olery  v.  Brown,  51  How.  Jones,  1  Wend.  237  ;  Amesbury  v. 
Pr.  92;  People  v.  Board  of  Trade,  Bowditch  Mutual  Insurance  Co..  6 
80  111.  134  ;  Lafondv.  Deems,  81  N.  Gray.  596. 

S.  507,  reversing,  1  Abb.  N.  C.  318  ;  6  Amesbury  v.  Bowditch  Mutual 
s.   c.    52   How.    Pr.  41  ;  Savannah    Fire  Insurance  Co.,  6  Gray,  596. 


138  BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  VII. 

Sec.  144— Regulating  Corporate  Elections. 

We  have  already  seen  that  a  by-law  declaring  what  shall 
constitute  a  quorum  of  the  directors  is  valid.1  So  a  by-law 
authorizing  the  president  of  the  society  to  appoint  inspectors 
at  a  general  corporate  election;  and  providing  that  no 
ticket  shall  be  counted  containing  any  marks  or  device 
upon  it,  is  valid.2  So  a  by-law  authorizing  a  stockholder  to 
vote  by  proxy  is  valid.3 

1  Hoyt  v.  Sheldon,  3  Bosw.  267  ;  that  a  statute  is  necessary  to  au- 
Hoyt  v.  Thompson,  19  N.  Y.  207.  thorize  the  adoption  of  such  a  by- 

2  Commonwealth  v.  Woelper,  3  law.  People  v.  Twaddle,  18  Hun, 
S.  &  R.  29  ;  s.  c.  8  Am.  Dec.  628.  427  ;  Philips  v.  Wickham,  1  Paige, 

3  State  v.  Tudor,  5  Day,  329;  s.  c.  590  ;  Taylor  v.  Griswold,  14  N.  J. 
5  Am. Dec.  162  ;  Peoples.  Crossley,  L.  222. 

69  111.  195.     But  it  has  been  held 


CHAPTER  VIII. 

STOCK   OF    BUILDING   ASSOCIATIONS. 

Sec.  145.  Definition  and  Description  of  Stock. 

146.  Building  Association's  Peculiar  Stock. 

147.  Advanced  Payments  on  Stock. 

148.  Prepaid  Stock. 

149.  Preferred  Stock. 

150.  Preferred  Stock  Applicable  to  Building  Associations. 

151.  Acquisition  of  Stock. 

152.  All  Stock  must  be  taken  before  Business  can  be  trans- 

acted— Waiver. 

153.  Effect  of  Fraud  on  Subscription. 

154.  Increasing  Stock. 

155.  Transfer  of  Stock. 

156.  Lien  of  Corporation  on  Shares. 

157.  Effects  Upon  Rights  of  Owners  by  Creation  of  Lien. 

158.  Nature  of  Certificate  of  Shares  of  Stock. 

159.  Formalities  of  Transfer  and  Registration. 

160.  Action  to  Compel  a  Transfer. 

161.  Action  at  Law  for  Refusal  to  Transfer. 

162.  Measure  of  Damages  for  Refusing  to  Transfer. 

163.  Lost  Certificate. 

164.  Liability  of  Company  for  Transferring  on  Forged  Power 

of  Attorney. 

165.  Liability  of  Company  to  Innocent  Purchaser  under  Forged 

Power  of  Attorney. 

166.  Pledge  of  Shares. 

167.  Enforcing  Stock  Payments  by  Suit. 

168.  Payment  of  Dues  on  Stock  not  a  Payment  on  Owner's 

Debt  to  Building  Association. 

169.  Application  of   Stock   Payments  to   Extinguishment  of 

Borrower's  Debt. 

170.  Borrower  Having  Assigned  his  Stock. 

171.  Stranger  Cannot  Compel  Application  of  Stock  Payments 

to  Debt. 

172.  Surety's  Right  to  Stock. 

173.  Attachment  or  Levy  upon  Building  Association  Stock. 

174.  Value  of  Stock  when  Applied  to  Borrower's  Debt. 

175.  Right  to  Membership  after  Foreclosure  and  Sale  of  Mort- 

gaged Security. 

139 


140  BUILDING  AND   LOAN   ASSOCIATIONS.     Cll.  VIII. 

176.  Forfeiture  of  Stock— Notice— "Waiver. 

177.  Canceling  Stock,  Association  Cannot. 

17S.  Building  Association  Purchasing  its  own  Shares. 

179.  Number  of  Shares  a  Member  may  Hold. 

180.  Fee  for  Transferring  Stock. 

181.  Dividends. 

182.  Maturity  of  Stock  Cancels  Loan — Return  of  Securities. 

183.  Loan  of  Pass-book. 

184.  Rebate  of  Interest. 

Sec.  145 — Definition  and  Description  of  Stock. 

"  Strictly  the  capital  stock  of  a  corporation  is  the  money 
contributed  by  the  corporators  to  the  stock  on  the  initiation 
of  the  corporate  enterprise."  x  Shares  of  stock  are  personal 
property,  whether  so  declared  by  a  statute  or  not.2  But 
they  are  not  goods,  wares,  or  merchandise,  within  the 
meaning  of  the  seventeenth  section  of  the  English  statute 
of  frauds,  which  requires  a  memorandum  in  writing  of  the 
sale  of  goods,  wares  or  merchandise,  when  they  exceed  a 
certain  amount  in  value.3  They  may  be  regarded  as  choses 
in  action ;  4  but  it  has  been  held  that  they  are  not 
"  moneys  "  within  the  meaning  of  a  will  creating  a  specific 
bequest.5 

Sec.  146 — Building  Association's  Peculiar  Stock. 

It  must  be  borne  in  mind,  however,  that  there  is  a  radi- 

1  Christensen  v.  Eno,  106  N.  Y.  Co.,  76  Cal.  537;  S.  c.  9  Am.  St. 

97  :  S.  C.  12  N.  E.  Rep.  648  ;  60  Am.  Rep.  245  ;  18Pac.  Rep.  658  ;  Seward 

Rep.  429.     The  court  took  occasion  v.  Rising  Sun,  79  Ind.  351  ;  Johns 

to  Bay  that  "The  word  'capital'  v.  Johns,  1   Ohio  St.   359;  Tippets 

.-ipjilied  to  corporations,    is    often  v.   Walker,  4  Mass.  595;  Allen  v. 

1     interchangedly     with     the  Pegram,  16  la.  163. 
words    -capital   stock,'   and     both        s  Humble  V.   Mitchell,  11  Ad.  & 

frequently  used  to  express  the  El.  205;  Bowlby  v.  Bell,  3  C.  B. 

•  thing  -the  property  and  as-  284;  Duncuft  v.  Albrecht.  12  Sim. 

of  the  corporation."    See  also  189;  Watson  v.  Spratley,  10  Exch. 

Burrall  v.  Bushwick,  R.  R.  Co.,  75  222.     But  see  Fine  v.  Hornsly,  2 

N.    Y.   '.Ml.  and    Fox's  Appeal,  112  Mo.  App.  61. 
Pa.  St.  887.     [t  is  improper  to  call       *Stanwood     v.     Stanwood,    17 

men-     authorized    slock     capital  Mass.  57 ;  Arnold  v.  Buggies,  1  R. 

tock  or  stock  until  it  is  subscribed  I.   165;    Denton  v.   Livingston,   9 

for    l>y    individuals.     Sturges    v.  Johns.  96. 

on,  1  I'.iss.  246.  ''  Collins  v.  Collins,  L.  R.,  12  Eq. 

a  class  r.    Hope,    16  Granl    ( !h.  455. 
420 ;  Tregear  v.    Etiwanda  Water 


§  146.  STOCK    OR    SHARES.  141 

cal  difference  in  many  of  their  characteristics  between  the 
stocks  of  an  ordinary  corporation  and  a  building  association 
or  society,  which  arises  from  the  inherent  difference  of  the 
plans  of  the  two  corporations  and  the  objects  to  be  at- 
tained. It  is  true  there  must  be  a  subscription  of  stock  to 
both,  and  in  this  they  arealike;  but  in  the  manner  of  as- 
sessments and  paying  for  the  stock  they  are  totally  unlike. 
In  an  ordinary  corporation  the  stock  is  either  paid  for  in  a 
lump  sum  or  at  some  specified  time  thereafter,  or  at  some 
time  thereafter  to  be  designated  by  the  board  of  directors, 
or  it  is  payable  in  aliquot  parts  thereof  in  such  amounts 
and  at  such  times  as  the  directors  may  fix  and  determine. 
These  are  called  assessments.  But  in  building  associations 
such  is  not  the  case.  The  object  in  the  formation  of  such 
associations  (though  often  perverted)  is  to  enable  men  of 
small  means,  usually  wage  earners  to  pay  for  stock  therein 
that  they  may  subscribe  for  in  small  amounts,  at  fixed  and 
determined  dates  or  times,  and  that  the  amounts  thus  paid 
in  shall  at  once  be  taken  up  by  the  association  and  put  to 
earning  interest  for  the  benefit  of  all  the  membership,  in- 
cluding those  thus  paying  it.  These  periods  run  through 
several  years,  in  some  instances  as  far  as  six  and  in  others 
as  long  as  fourteen,  according  to  the  plan  of  organization. 
These  debts  are  determined  beforehand,  and  a  stockholder 
knows  when  he  subscribes  just  when  he  must  pay,  how 
much,  and  how  long  his  payments  must  continue.  If  he 
continues  faithfully  to  the  end,  he  will  receive  the  full 
amount  of  his  stock,  providing  the  association  be  a  financial 
success.  Any  association  that  would  require  payment  in 
full  for  the  stock  subscribed  at  the  time  of  the  subscriptions 
could  scarcely  be  called  a  building  association  ;  for  it  would 
be  an  entire  perversion  of  the  original  object  of  such  asso- 
ciations. But  it  happens  more  often  than  not  that  a  stock- 
holder becomes  a  borrower  to  the  extent  of  the  stock  he 
has  subscribed  for ;  and  in  such  an  instance  the  character- 
istics of  a  building  association  are  more  clearly  brought 
out,  and  the  difference  between  it  and  an  ordinary  corpora- 
tion more  effectually  demonstrated.  In  such  an  instance 
the  stockholder  receives  the  par  value  of  his  stock,  as  it 


142  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  VIII. 

would  be  when  it  matured  on  all  payments  completed 
thereon,  in  advance  of  that  period,  less  the  amount  of  any 
premium  or  bonus  he  may  be  willing  to  pay  for  the  prefer- 
ence. But  he  continues  just  the  same  to  pay  the  amounts 
periodically  falling  due  on  such  stock,  just  as  if  no  loan  had 
been  made  to  him ;  and  when  his  stock  has  matured  it  is 
equal  in  value  to  the  amount  of  his  loan,  and  it  is  applied 
to  the  cancellation  of  such  indebtedness.  He  receives 
nothing  npon  his  stock  at  its  maturity  or  the  dissolution  of 
the  corporation,  for  it  has  been  paid  in  advance.  And 
herein  there  is  a  radical  difference  between  the  workings 
of  a  building  association  with  reference  to  a  stockholder 
and  an  ordinary  corporation  with  reference  to  the  stock- 
holder. If,  in  an  ordinary  corporation,  a  stockholder,  the 
owner  of  five  hundred  dollars  of  its  stock,  worth  that  at  its 
par  value,  should  borrow  that  sum  from  it,  to  be  repaid 
when  the  association  was  dissolved,  without  interest,  the 
transaction  would  somewhat  resemble  a  like  transaction 
between  a  building  association  and  one  of  its  stockholders 
borrowing  from  it ;  for  the  debt  he  owed  the  corporation 
could  be  set  off  by  it  against  the  value  of  his  stock,  and  the 
latter  would  be  cancelled  or  merged  in  such  indebtedness.1 

Sec.  147— Advanced  Payment  on  Stock. 

It  is  no  uncommon  thing  for  a  member  to  make  stock 
payments  on  his  share  not  yet  due,  if  the  association  will 
permit  it.  If  all  the  stockholders  were  to  do  this  at  the 
sin ne  time  in  the  case  of  a  terminating  society  it  would  at 
once  terminate  the  society.  No  doubt  exists  of  the  right 
of  the  association  to  do  this,  and  it  may,  and  often  does, 

1  Mercer  v.  Amber  Building  and  384  ;  Cason  v.  Seldner,  77  Va.  293  ; 

Loan  Association,  48  Leg.  Int.  277;  Peters  v.  Association,  12  Pa.  C.  C. 

s.  c.  LO  Pa.  C.  C.  51  ;  Montgomery,  102 ;  State  v.  Redwood  Falls,  etc., 

etc.,   Association    v.   Robinson,  69  Association,  45  Minn,  154 ;  s.  C.  47 

AJa.  U3.  N.  W.  Rep.  540;  10  L.  R.   A.  752 ; 

"The  owner  of  aseriesof  slock  85  Amer.  &  Eng.  Corp.  Cas.  244; 

in  a  building  and  loan   association  Latimer  v.    Equitable    Loan,  etc., 

ftre  i,,    all    intents  and    purposes  Co.,  81  Fed.  Rep.  776;  Wierman 

partners."      Maloney    v.    Real    Es-  v.   International,   etc.,   Union,  67 

taic.  etc.,  Association, SI  Mo.  App.  ill.  A.pp.  550. 


§  148.  STOCK   OR   SHARES.  143 

allow  a  moderate  rate  of  interest  upon  such  advanced  pay- 
ments, and  it  may  even  secure  a  repayment,  if  the  enter- 
prise should  fail,  of  such  proportion  of  the  prepayment  as 
may  not  have  accrued  at  the  time  of  such  failure.1  In  an 
instance  of  this  kind  where  a  member,  according  to  a  by- 
law, made  an  advanced  payment  with  a  view  to  receiving 
interest  thereon  and  being  secured  by  a  deposit  of  certain 
securities  of  the  association  with  a  trust  company,  it  was 
held,  upon  winding  up  the  association  in  the  hands  of  a 
receiver,  that  such  stockholder  could  reclaim  the  amount 
advanced  before  the  other  members,  and  to  the  extent  of 
such  amount  he  was  entitled  to  the  proceeds  of  the  securi- 
ties against  such  receiver.2 

Sec.  148 — Prepaid  Stock. 

It  is  no  uncommon  thing  for  an  association  to  issue  paid- 
up  or  prepaid  stock ;  by  which  is  meant  stock  paid  for  in 
full  when  it  is  issued,  just  like  stock  in  an  ordinary  corpora- 
tion paid  for  in  full  when  issued  to  the  holder.  The  statute 
may  provide  for  this,  or  if  it  do  not,  then  the  association 
may  do  so  under  its  general  power  to  enact  by-laws.  When 
issued,  it  is  in  fact  matured  stock,  to  be  treated  just  as  any 
other  matured  stock.  Not  infrequently  the  by-laws  of  an 
association  provide  for  a  particular  kind  of  prepaid  stock  by 
allowing  a  member  holding  ordinary  or  common  stock  to 
return  his  stock  after  a  certain  time,  and  get  a  new  certificate 
for  a  less  number  of  shares.     In  that  event  the  money  paid 

1  See,  generally,  In  re  Guardian  a  resolution  permitting  members 
Permanent  Benefit  Building  So-  who  were  debtors  to  cancel  their 
ciety  L.  R.,  23  Ch.  Div.  440 ;  and  obligations  by  paying  monthly 
People  v.  Preston,  140  N.  Y.  549  ;  dues  in  advance  a  certain  number 
s.  c.  35  N.  E.  Rep.  979  ;  Watkins  v.  of  months,  and  also  all  arrears,  of 
Workingmen's,  etc.,  Association,  which  permission  its  borrower  had 
97  Pa.  St.  514;  s.  c.  38  Leg.  Int.  not  availed  himself.  It  was  held 
333  ;  10  W.  N.  Cas.  414.  that  he  could  not  derive  any  bene- 

2  Munhall  v.  Bcedecker,  44  111.  fit  or  advantage  from  the  resolu- 
App.  131.  tion.      Watkins  v.  Workingmen's 

In    an    action     to    recover    the  Building  and  Loan  Association,  97 

amount  of  a  loan  made  to  a  mem-  Pa.  St.  514;  s.  c.  38  Leg.  Int.  •">•">". : 

ber  of  the  association  it  appeared  10  W.  N.  Cas.  414. 
that  the  association  had  adopted 


14-4  BUILDING   AND   LOAN    ASSOCIATIONS.      Cll.  VIII. 

on  the  old  shares  is  applied  to  the  new,  and  no  more  money 
is  required  until  the  money  already  paid  in  is  exhausted. 
Such  an  arrangement  is  valid.1  A  prepaid  shareholder  is 
as  much  a  member  of  the  association  as  any  other  member.2 
If  insolvency  intervene,  however,  a  member  who  holds 
paid-up  stock  is  not  entitled  to  be  classed  as  a  creditor  and 
thus  have  preference  over  the  other  stockholders.3 

Sec.  149— Preferred  Stock. 

"  Shares  conferring  on  their  holders  preferential  or  ad- 
ditional rights  not  enjoyed  by  the  holders  of  other  shares 
are  called  preference  shares  or  preferred  shares.  They 
can  only  be  created  when  the  authority  to  create  them 
is  given  by  statute  or  charter,  or  by  agreement  be- 
tween all  parties  interested."4  Unless  there  be  some  law 
authorizing  it,  the  power  to  issue  preferred  stock  rests  upon 
universal  consent  on  the  part  of  all  stockholders ;  but  this 
universal  consent  may  be  contained  in  the  articles  of  asso- 
ciation providing  for  the  issuance  of  such  shares,  adopted 
when  the  association  was  formed.5  Aside  from  a  statute,  a 
corporation  cannot  issue  preferred  stock  to  persons  loaning 
money  to  it,  in  order  to  secure  such  loans,  either  as  an  in- 
ducement to  the  making  of  the  loan  or  to  secure  it  after  it 
is  made.6  While  a  corporation  may,  at  the  outset,  before 
any  stock  is  issued,  provide  by  a  by-law  for  the  issuance  of 
preferred  stock,7  even  where  no  statute  provide  for  such 
stock,  yet  it  cannot,  after  such  subscriptions  are  made, 
divide  its  stock  into  two  classes  and  give  to  one  class  a 
preference  over  the  other,  without  unanimous  consent  of  all 
shareholders.8     Xor  can  such   power  be  exercised  under  a 

1  Fulton  v.  American  Building  N.  E.  Rep.  853  ;  reversing,  23  J.  & 
and  Loan  Association,  4G  Minn.  S.  562  ;  s.  C.  3  N.  Y.  Supp.  822  ;  In 
190;  s.  c.  48  X.  W.  Rep.  781.  re  Bridge  water  Navigation  Co.  L. 

2  Lister  v.  Log  Cabin,  etc.,  Asso-  R.,  39  Ch.  Div.  1. 

ciation,  88  Md.  115.  6  Kent  v.  Quicksilver  MiningCo., 

:;  I  [ohenshell    v.   Home  Savings,  78  N.  Y.  159.     Contra,  Westclies- 

etc,  Assn.  110  Mo.,  5(>(i ;   11  S.  W.  ter,  etc.,  R.  R.  Co.  v.  Jackson,  77 

Rep.  948.  Pa.  St.  321. 

1  Lindley's  Company  Law,  896.  7  Kent  v.  Quicksilver  Mining  Co. 

BSee  Camp) tell  i\  American    Zy-  supra. 

lonite  Co.,  122  N.  Y.  455;  s.  0.  25  8  Id. 


§  150.  STOCK   OK    SHAKES.  145 

general  power  conferred  by  statute  to  make,  alter,  or  repeal 
its  by-laws.1  A  preferred  stockholder  is  not  entitled  to 
preference  over  the  general  creditors  of  the  association,  but 
holds  his  stock  subordinate  to  their  claims.2  So  a  preferred 
shareholder,  by  the  very  terms  of  the  contract  providing 
for  its  issuance,  may  be  deprived  of  the  right  to  vote,  and 
the  acceptance  of  the  stock  will  bar  him  of  such  right.3 

Sec.   150— Preferred    Stock    Applicable    to    Building 
Association. 

There  are  few  reasons  why  a  building  association  may 
not  issue  preferred  stock,  if  the  proper  steps,  as  in  ordinary 
corporations,  have  been  taken  to  enable  it  to  do  so.  In 
speaking  upon  this  subject,  with  reference  to  such  an  as- 
sociation issuing  preferred  stock,  Sir  George  Jessel,  M.  E., 
said  :  "  Is  it  contrary  to  the  nature  of  these  societies  so 
that  it  is  impossible  to  make  a  society  with  this  kind  of 
shares  consistent  with  the  law  and  conduct  of  the  societ}7  ? 
On  that  point  I  do  not  think  it  is  the  province  of  the  judi- 
cature to  find  out  things  to  be  inconsistent  with  the 
ordinary  requirements  of  mankind,  which  the  people  them- 
selves have  not  found  out.  It  is  all  very  easy  for  people  to 
say  it  is  against  policy,  or  against  the  meaning  of  the  socie- 
ties ;  but  when  you  see  that  people  who  have  established 
the  society  do  not  think  so,  and  have  acted  on  a  contrary 
view,  it  is  very  improbable  that  it  is  contrary  to  the  nature 
of  the  society,  and  contrary  to  the  object  the  members  have 
in  view.  But,  besides  that,  I  cannot  see  any  reason  why  it 
should  be  so.  *  *  *  The  investing  members  become  so 
for  the  purpose  of  getting  more  interest  than  they  can 
get  in  the  usual  way.  Why  may  they  not  stipulate  for 
some  security  ?  "Why  may  they  not  say,  as  between  them- 
selves and  the  other  members,  '  If  this   society  comes   to 

1  Id.  Hohenshall  v.  Home  Savings,  etc., 

2  Warren  v.  King,  108  U.  S.  389  ;    etc.,  Ass'n  140  Mo.  566  ;  41  S.  W. 
S.  c.  2  Fed.  Rep.  36 ;  St.   John  v.     948. 

Erie  R.  R.  Co.,  22  Wall.  136 ;  s.  C.  3  Miller  v.   Ratterman,  47   Ohio 

10  Blatchf.  271  ;  In  re  London  In-  St.  141 ;  s.  C.  23  Oh.  L.  Jr.  416 ;  24 

dia  Rubber  Co.    L.  C.  5  Eq.  519 ;  N.  E.  Rep.  496. 
io 


146  BUILDING   AND  LOAN  ASSOCIATIONS.     Cb.  VIII. 

grief,  recollect  that  we  shall  be  paid  first.     It  is  only  in  that 
case.     If  this  society  is  prosperous,  everybody  is  paid,  and 
paid  handsomely.'     "Why  shall  they  not  say,  '  We  will  put 
our  money  down  ;  we  will  start  your  society,  and  get  you 
money  which  shall  be  advanced  to  your  building  members 
or   buying  members  who  want  house  property,  on  these 
terms  ;  viz.,  if  we  put  our  money  down  in  hard  cash,  if  the 
society  does  not  turn  out  prosperously  we  shall  be  repaid  I ' 
There  does  not  appear  to   me  to  be  anything  against  the 
constitution  of  the  society  in   such  an  agreement ;  on  the 
contrary,  it  may  enable  societies  to  be  established   which 
otherwise  could  not  be  set  going  at  all.     Again,  is  it  con- 
trary to  the  constitution  of  such  society  that  members  shall 
pay  the   instalments  in  advance  %    I  say  clearly  not.     The 
more  money  you  get  from  the  investing  members  the  more 
money  you  have  ready  to  advance  to  the  borrowing  mem- 
bers,   and  the  more  rapidly  you  would  bring  your  society 
to  an  end,  if  the  society  is  established  without  a  fixed  pe- 
riod.    It  seems  to  me  there  is  no  reason  why  the  judicature 
should  say  that  these  arrangements     *     *     *     are  illegal 
because  they  are  contrary  to  the  policy  on  which  these  so- 
cieties are  founded."  1     A  similar  result  was  reached  in  New 
York.     No  statute  of  that  State  required  the  stock  to  be 
paid  for  in  instalments  as  they  fell  due,  but  there  was  a 
statutory  requirement  that  the  certificate  should  set  forth 
"  the  amount  of  each  share  "  and  "  the  monthly  or  weekly 
dues  per  share."     There  was  no  statutory  provision  for  paid- 
up  or  preferred  stock,  but  a  statute  directed  that  certain 
unit  ins  should  be  inserted  in  the  certificate  of  incorpora- 
tion.    This  certificate  might  also,  besides  the  directory  pro- 
visions, contain  kw  such  other  provisions  not  inconsistent  with 
law  as  shall   be  necessary   for  the  convenient  and  effective 
transaction  of  its  business."     A   mandate  was  brought  to 
compel  an  officer  to  approve  :i   certificate  of  incorporation 
providing    for  preferred     and     income   stock,  as    well    as 

1  In  re  Guardian  Permanent  Ben-  Murray  v.  Scott  L.  R.,9App.  Gas. 

Lefil   Building  Society  I..  K.  28  Ch  519;  s.  c.  53  L.  J.  Ch.  745;  5]  L. 

hiv.  440;  s.  c.  52  L  .1.  <'l,.s;,;  ;  is.  T.  462;  33  W.  R.  173. 
L.  T.  i::i  ;  82  W.  R.  178.    See  also 


§  150.  STOCK   OR   SHARES.  147 

for  instalment  stock.  The  court  declared,  as  did  the  Engl  ish 
court,  from  which  we  have  just  made  a  quotation,  that 
"a  certificate  which  did  not  provide  for  the-  payment 
of  monthly  or  weekly  dues  by  any  member  of  the  cor- 
poration who  wanted  to  pay  in  that  way  would  undoubtedly 
be  a  departure  from  the  law."  The  court  also  declared 
that  no  provision  ought  to  be  inserted  in  the  certifier  I  <• 
which  would  prevent  persons  of  limited  means  from  acquir- 
ing homes  and  accumulating  savings  thereunder.  After 
making  these  declarations  the  court  proceeded  to  say : 
"  This  certificate  provides  for  shares  of  $100  each,  and  for 
monthly  dues  of  fifty  cents  on  each  share.  The  general 
scheme  is  that  the  dues,  fees,  penalties,  and  all  other  income 
of  the  corporation  shall  go  into  a  common  fund,  and  from 
this  fund  annual  dividends  are  to  be  made,  which  are  to  be 
applied  upon  the  shares  of  stock  until  they  are  fully  paid 
for.  Dues  may  be  paid  in  advance  with  the  assent  of  the 
directors,  and  upon  such  advance  payments  the  directors 
may  allow  a  rebate  or  discount  at  such  rate  per  annum,  for 
the  payment  in  advance,  as  they  shall  from  time  to  time 
prescribe.  Such  payments,  instead  of  being  contrary  to  the 
purpose  of  such  corporations,  may  be  promotive  of  that 
purpose.  If  a  wage  earner  has  the  money,  it  may  be  well 
to  permit  him  to  make  the  advance  payments,  and  thus  to 
save  his  money  ;  and  in  this  way,  too,  money  is  accumulated 
by  the  corporation  more  rapidly  for  loan  to  its  members. 
So,  the  law  is  not  violated  by  these  advance  payments  upon 
instalment  stock,  and  no  injustice  is  done  to  any  of  the 
members  thereby.  The  certificate  provides  that  upon  pre- 
ferred stock  there  shall  be  paid  at  the  time  of  subscription, 
dues  to  the  amount  of  sixty  dollars,  and  the  holder  thereof 
shall  be  entitled  to  receive,  out  of  the  profits  apportioned 
thereto,  semi-annual  dividends  in  cash,  up  to  the  rate  of  six 
per  cent,  per  annum.  The  profits  apportioned  to  such 
stock,  over  and  above  such  dividends,  shall  be  credited 
thereto  and  be  payable  with  the  stock  at  its  maturity.  The 
character  of  such  stock  must  be  determined  at  the  time  of 
the  subscription.  What  harm  can  come  from  the  creation 
of  such  stock?     It  allows  a  member  who  has  money  enough 


148  BUILDING   AND    LOAN   ASSOCIATIONS.      Ch.  VIII. 

to  pay  his  dues  for  ten  years  in  advance ;  and  why  is  that 
not  wise  policy  ?  Having  thus  paid  in  advance  his  divi- 
dends are  not  needed  to  carry  his  stock  to  maturity,  and 
hence  he  may  draw  his  dividends  up  to  six  per  cent.,  and 
the  balance  of  his  dividends  over  that  sum  are  applied 
to  carry  his  stock  to  maturity.  He  has  no  advantage  over 
the  holders  of  instalment  stock.  Their  dividends  are  ap- 
plied to  carry  their  stock  to  maturity,  and  they  then  have 
the  same  benefit  that  they  would  have  if  the  dividends  were 
first  paid  to  them,  and  then  by  them  paid  upon  their  stock. 
All  dividends  are  required  to  be  made  upon  the  net  sums  to 
the  credit  of  the  shares,  and  not  upon  the  par  value 
of  the  shares ;  and  hence  the  holders  of  prepaid  shares 
get  precisely  the  same  dividends  proportioned  to  the 
amount  standing  to  the  credit  of  their  shares,  as  are  paid 
to  other  stockholders,  and  no  more.  It  is  impossible 
for  us  to  perceive  how  this  scheme  violates  the  law  or 
any  public  policy.  It  does  not  prevent  or  defeat  equality 
or  mutuality  among  the  members.  And  if  the  prepaid 
stock  is  to  be  condemned,  then  it  is  not  perceived  how 
prepayment  of  instalments  upon  instalment  stock  can  be 
upheld.  Money  must  come  into  the  treasury  of  one  of  these 
corporations,  from  the  small  monthly  dues,  very  slowly,  and 
members  desiring  to  borrow  money  for  the  purchase  or  im- 
provement of  homes  must  wait  a  long  time  before  they  can 
be  accommodated  with  loans  from  money  thus  contributed  ; 
but,  if  prepayment  of  dues  is  permitted,  the  ability  of  the 
corporation  to  aid  its  members  by  loans  is  greatly  facili- 
tated, and  the  main  purpose  of  their  creation  is  thus  pro- 
moted. The  income  stock  upon  which  the  members  are  also 
required  to  pay  in  advance  $60  per  share,  differs  from  the 
preferred  stock  only  in  the  fact  that  the  holder  of  such 
stock  may  receive  dividends  in  cash  up  to  eight  percent., 
and  in  case  tin1  dividends  are  more,  such  dividends  are  ap- 
portioned  among  the  holders  of  other  kinds  of  stock;  and 
what  we  have  said  about  tin;  prepaid  stock  applies  to  this 
slock.  The  corporation  has  protection  against  the  prepaid 
and  income  slock,  as  it  is  provided  in  the  certificate  that 
tin;  directors  may  at  any  time  refuse  to  issue  such  stock, 


§  150.  STOCK   OR    SHAKES.  149 

and  may  at  any  time,  upon  thirty  days'  notice,  retire  such 
stock  by  paying  the  book  value  thereof.  But  it  is  said  that 
there  is  no  requirement  that  the  prepaid  and  income  stock 
shall  be  carried  to  maturity,  so  as  to  be  full  paid.  We  are 
not  sure  of  this.  As  the  shares  are  fixed  at  $100,  and  are 
not  mature  until  they  reach  that  sum,  it  may  be  that  these 
shares  shall,  at  the  proper  time,  be  brought  to  maturity  on 
an  equality  with  the  other  shares.  But  even  if  this  be  not 
so,  no  injustice  can  come  from  this  situation,  because  in  no 
event  can  the  holder  of  these  shares  draw  more  than  the 
amount  that  has  been  credited  upon  them,  nor  can  they 
draw  dividends  on  more  than  such  amounts."1  These  pre- 
ferred shares  produce  unique  results  often  in  instances  of 
insolvency.  Thus  a  building  society  issued  paid-up  prefer- 
ence shares  at  a  guaranteed  rate  of  interest,  the  holders  not 
being  liable  for  losses,  nor  to  participate  in  profits.  The 
ordinary  members  were  liable  under  the  rules,  whether  on 
withdrawing  their  shares,  or  on  redeeming  their  securities, 
for  a  fair  proportion  of  the  losses,  expenses,  bad  debts,  and 
other  charges  of  the  society.  In  winding  up  the  association 
it  was  found  that  there  was  a  deficiency  of  assets,  and  the 
court  held  the  ordinary  members  liable  for  the  full  amount 
due  on  the  preferred  shares,  including  the  interest  thereon 
from  the  date  of  the  winding-up  order  ;  and  that  those 
members  who  had  received  advances  on  their  shares  must 
satisfy  this  liability  by  payment,  and  the  other  members  by 
submitting  to  a  deduction  from  their  claims  against  the  as- 
sets.2 In  Illinois  it  is  held  that  a  building  association  has 
no  power  to  issue  paid-up  shares  of  stock,  or  preferred 
shares,  or  to  agree  to  pay  the  par  value  of  a  share, 
one  hundred  dollars,  on  the  payment  of  seventy-five  cents 
per  month  for  six  years,  under  a  statute  requiring  subscrip- 
tions to  stock  to  be  paid  in  periodical  instalments  which 
should  continue  until  such  payments  and  the  earnings  equal 

1  People  v.   Preston,   140  N.  Y.  2  hire  Reliance  Permanent  Ben- 

549 ;    s.  c.  35  N.  E.   Rep.  979  ;    46  efit  Building  Society,  61  L.  J.  Ch. 

Amer.  &  Eng.  Corp.  Cas.,  494;  24  453  ;  s.  C.   66  L.  T.  823  ;  8  T,   L, 

L.  R.  A.  57.  Rep.  525. 


150  BUILDING    AND   LOAN    ASSOCIATIONS.     Ch.  VIII. 

the  face  value  of  the  stock.1  Bat  the  holder  of  such  stock 
cannot  insist  that  the  contract  is  void  in  order  to  have  him- 
self declared  a  creditor  of  the  association  when  insolv- 
ency intervenes.2  Where  a  statute,  however,  provided  for 
the  payment  of  the  capital  stock  in  instalments  as  the 
by-laws  should  provide,  but  authorized  the  directors  in 
their  discretion,  to  allow  interest  not  exceeding  eight  per 
cent.  "  on  such  instalments  as  are  paid  in  advance,"  it  was 
held  that  an  association  had  authority  to  receive  full  pay- 
ment in  advance,  and  issue  paid-up  stock  bearing  seven  per 
cent,  interest.3 

Sec.  151 — Acquisition  of  Stock. 

The  acquisition  of  stock  in  a  building  association  does  not 
differ  from  the  acquisition  of  stock  in  any  other  corpo- 
ration. If  the  charter  provides  that  all  the  stock  must  be 
subscribed  for  by  a  certain  time  or  the  organization  will 
fail,  then  a  failure  to  secure  subscriptions  for  the  full 
amount  of  the  stock  by  that  time  will  release  those  that 
have  subscribed,  and  they  cannot  be  held  by  an  amend- 
ment of  the  charter  obtained  after  their  subscription,  ex- 
tending the  time,  unless  they  assent  thereto.4  If  there  is  a 
written  subscription  with  a  parol  condition,  the  latter  is 
void  and  cannot  be  enforced  ;  because  it  is  a  variance  of 
the  written  terms  of  the  contract  of  subscriptions.5  So  if 
the  subscribers  all  agree  among  themselves  that  they  are 

1  King    v.    International,    etc.,  5  Evansville,  etc.,  R.  R.    Co.   v. 

Union,  170  111.  135  ;  48  N.  E.  Rep.  Possey,  12  Ind.  3G3 ;  Clem  v.  New 

077;  reversing,  68  111.  640 ;  Gibson  Castle,  etc.,  R.  R.  Co.,  9  Ind.  488; 

^.Safety,  etc,  Ass'n,  170  111.  44 ;   18  s.  c.  68  Am.  Dec.  653  ;  Connecticut, 

N.  B.  Rep.  580  ;  Loan  and   Protec-  etc.,  R.  R.  Co.  v.  Bailey,  24  Vt.  465  ; 

ti0I]   \-,-M   r.   Eolland,  63  111.  App.  s.   c.   58    Am.   Dec.  181;    Dill    v. 

Wierman  v.  International,  etc.,  Wabash,  etc..  R.  R.  Co.,  21  111.  91 ; 

\      i,    (,;  in.    \|,|,.  :,;,(».  Topeka  Mf.  Co.  v.  Hale,  39  Kan. 

.  on    '-.  Safety,  etc.,    A.ss'n,  23;  Robinson  v.  Pittsburgh,  etc., 

69   III.   \|.|>.  185;  Towle   v.  Ameri-  Co.,  32  Pa.  St.  334;  s.  c.  72  Am. 

can,  etc.,   Iss'n,  75  Fed.  Rep.  938.  Dec.  792;  Wight  v.  Shelby  R.  R. 

i  Latimerv.  Equitable  Loan,  etc.,  Co.,  16  B.  Mon.  4;s.c.   63  Am. 

\     ,,   81  Fed.  Rep.  770.  Dec.  522. 

1  Union   Hotel  Co.  v.  Hersee,  15 
Bun,  871. 


§  152.  STOCK    OH    SHARES.  151 

not  to  be  liable  unless  upon  the  happening  of  a  certain  event, 
and  this  conditional  agreement  be  in  parol,  while  the  contract 
of  subscription  is  in  writing-,  such  condition  cannot  be  shown 
as  a  defence  in  a  suit  to  enforce  an  assessment.1  It  is  no  de- 
fence in  a  subscriber  that  he  became  such,  merely  for  the  pur- 
posed'inducing  others  to  subscribe,  and  that  there  was  an  un- 
derstanding that  he  was  not  to  be  held  as  a  subscriber,  such 
an  understanding  being  void.2  The  general  rule  is  that  all 
stock  must  be  paid  for  in  money  ;  and  this  is  especially  true 
of  building  associations,  the  agents  of  such  institutions  hav- 
ing no  authority  to  accept  anything  else  in  payment  than 
money.  Then,  where  an  agent  established  local  boards,  solic- 
ited stock,  negotiated  loans,  and  collected  the  price  of  pre- 
paid stock,  all  with  the  acquiescence  of  the  association,  it 
was  held  to  have  no  authority  to  accept  stock  of  another 
association  in  payment  for  prepaid  stock  he  sold.3 

Sec.  152 — All  Stock  must  be  Taken  before  Business  can 
be  Transacted — Waiver. 

Unless  the  articles  of  association,  the  charter  or  a  statute 
provide  differently,  all  the  stock  provided  for,  on  the  or- 
ganization of  the  association,  must  be  subscribed  for  before 
any  business  can  be  transacted  and  the  subscriber  be  bound 
on  his  contract  of  subscription.4  But  this  condition  may  be 
waived  by  the  subscribers,  and  this  waiver  may  be  either 
express  or  implied.  Thus,  if  they  know  the  whole  capital 
stock  has  not  been  taken  and  after  having  such  knowledge 

1  White  Hall,  etc.,  R.  R.  Co.  v.  drew  it  out  the  next  day  after  the 
Meyers,  16  Abb.  Pr.  (N.  S.)  34.  loan  was  made,  has  a  valid  lien  by 

2  Downie  v.  White,  12  Wis.  176  ;  such  mortgage.  Such  a  loan  was 
s.  c.  78  Am.  Dec.  731  ;  White  held  unauthorized.  Lockwood  v. 
Mountains  R.  R.  Co.  v.  Eastman,  Robbins,  1  Clev.  Rep.  101. 

34  N.   H.  124 ;  Pickering  v.    Tern-  s  German     American      Building 

pleton,  2  Mo.  App.  425.  Association  v.  Droge,  14  Ind.  App. 

A  building  association,  forbidden  691  ;  S.  C.  43  N.  E.  Rep.  475. 
by  its  charter  to  loan  to  any  ex-  *  Cabot,  etc.,  Bridge  v.  Chapin, 
cept  members  or  depositors,  mak-  6  Cnsh.  50 ;  Hager  v.  Cleveland, 
ing  a  loan  to  one  who  before  the  36  Md.  476  ;  Morrison  v.  Dorsey.  4s 
loan  was  fully  consummated  by  the  Md.  461  ;  Massey  v.  Citizens'  Build- 
delivery  of  the  mortgage  note,  ing  and  Savings  Association,  22 
made  a  small  deposit — $25 — and  Kan.  624. 


152 


BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  VIII. 


they  attend  meetings  of  the  association,  vote,  and  take  part 
in  the  meetings,  assent  to  the  making  of  contracts,  and  the 
like,  they  will  be  held  to  have  "waived  the  condition  that 
all  the  stock  must  be  subscribed  for  before  they  shall  be 
bound  by  their  contract  of  subscription.1  And  in  building 
associations  it  is  almost  the  universal  rule  that  provision  is 
made,  either  by  statute  or  in  the  incorporating  articles  to 
bep;in  business  when  so  much  stock  shall  be  taken. 

Sec.  153 — Effects  of  Fraud  on  Subscription. 

A  contract  of  subscription  for  stock,  induced  b}r  fraudu- 
lent representations  of  the  corporation  or  its  agents,  may  be 
avoided  by  the  subscriber.2  Of  course,  the  representation 
of  one  not  the  agent  of  the  society,  will  not  bind  such  soci- 
ety.3 But  a  subscriber,  in  order  to  avoid  his  contract  of 
subscription,  must  be  diligent  in  discovering  the  fraud ;  and 
if  knowingly  afforded  the  means  of  making  the  discovery, 
and  fail  to  avail  himself  of  it,  he  will  be  bound  by  his  con- 
tract.4 But  when  an  officer  or  agent  makes  the  fraudulent 
representations,  the  subscriber  has  a  right  to  rely  upon 
them;  and  he  is  not  bound  to  go  out  and  make  inquiry, 
although  he  could  thereby  easily  have  ascertained  the 
truth.5  After  being  informed  of  the  fraud,  the  subscriber 
may  waive  his  right  to  insist  upon  an  annulment  of  the 
contract,  by  taking  part  in  the  corporate  business,  or  by 
some  affirmation,  act  or  express  declaration  of  waiver.6  The 


1  Hager  v.  Cleveland.  36  Md.  476. 

2  Vreeland  v.  New  Jersey  Stone 
Co.,  29  N.  J.  Eq.  1U0 ;  Walker  v. 
Mobile,  etc.,  R.  R.  Co.,  34  Miss. 
245;  Custer  v.  Titusville,  etc.,  R. 
];.  Co.,  63  Pa.  St.  381  ;  Robinson  v. 
Pittsburgh,  etc.,  R.  R.  Co.,  32  Pa. 
St.  334  ;  8.C.72  Am.  Dec.  792.     See 

r.  Turquand,  L.  R.,  2  H.  L. 

Neuman  v.  N.  Y..  etc.,  Ass'n, 

•II  N.  Y.  Supp.  896;  S.  C.    L7    Ipp. 

Div.  72. 

«  Walker  v.  Mobile,  etc.,  R.  R. 

upra. 

mneci  icul .  etc.,  R.  R.  ( !o.  v, 


Bailey,  24  Vt.  465;  S.  c.  58  Am. 
Dec.  181 ;  American  Building  and 
Loan  Association  v.  Rainbolt  48 
Neb.  434,  476  ;  s.  c.  67  N.  W.  Rep. 
493  ;  Baker  v.  Leighton  Lea  Ass'n. 
46  N.  Y.  Supp.  35. 

r'  Smith  r.  Reese  River  Co.,  L.R., 
2  Eq.  264  ;  s.  c.  L.  R.  4  H.  L.  64  ; 
Union  National  Bank  v.  Hunt,  76 
Mo.  439,  reversing  7  Mo.  App.  42  ; 
I  >irectors  v.  Kisch,  L.  R.,  2  H.  L.  99. 

6  City  Bank  v.  Bartlett,  71  Ga. 
7i)7  ;  Centre,  etc.,  Co.  v.  McConaby, 
16  S.  &  R.  140;  National  Park 
Bank  v.  Nichols,  2  Biss.  146. 


§  153.  STOCK   OR   SHARES.  153 

fraud  that  will  enable  a  subscriber  to  avoid  a  contract  of 
subscription,  must  be  such  as  was  a  material  inducement  to 
the  contract.1  The  fraudulent  representations  must  have 
been  made  for  the  purpose  of  inducing'  the  person  com- 
plaining to  subscribe;  and  if  made  to  a  third  person  for  a 
like  purpose,  and  the  person  complaining  of  them  relied 
upon  them  without  the  company  knowing  it,  he  cannot  set 
up  as  a  defense  that  he  was  misled.2  An  intent,  however, 
to  deceive  the  public  generally  will  be  sufficient  to  secure 
the  loan,  if  acted  upon.3  Nor  is  it  necessary  that  the  fraudu- 
lent representations  should  have  been  wilfully  made.  It  is 
sufficient  that  they  were  carelessly  made,  without  due  regard 
for  the  truth.4  More  puffing,  however,  will  not  be  suffi- 
cient to  enable  the  subscriber  to  avoid  the  contract,  for  that 
is  expected,6  nor  will  the  holding  out  of  an  inducement  of 
something  that  is  unlawful,0  and  the  same  is  true  of  state- 
ments of  matters  of  opinion  or  belief.7  If  a  subscriber  waive 
the  fraud  perpetrated  upon  him  in  securing  his  own  sub- 
scription, he  will  also  waive  his  right  to  rescind  subscrip- 
tions made  by  others,  induced  by  fraudulent  representations, 
of  which  he  has  become  the  assignee.8 

1  Pulsford  v.  Richards,  22  L.  J.  8  American  Building  &  Loan  As- 
Ch.  569  :  s.  C.  17  Jur.  865  ;  19  E.  C.  sociation  v.  Rainbolt,  48  Neb.  434  ; 
L.  &  Eq.  387.  s.  c.  67  N.  W.  Rep.  4'.):;. 

2  Ex  parte  Worth,  4  Drew.  529  ;  False  representations  by  tbe  offi- 
Ex parte  Brigg,  L.  R.,  1  Eq.  483.  cers  of    an   association,   that    its 

3  Ayre's  Case,  25Beav.  513  ;  Peck  profits  were  15  to  20  per  cent,  every 
v.  Gurney,  L.  R.  6  H.  L.  377.  year,   whereby  a  person  was  in- 

4  Crump  v.  United  States  Mining  duced  to  become  a  member,  and 
Co.,  7  Gratt.  353;  s.  c.  56  Am.  to  borrow  money  on  his  shares, 
Dec.  116;  Glamorganshire  Iron  was  held  ground  for  a  rescission  of 
Co.  v.  Irvine,  4  F.  &  F.  947.  the  contract  on  payment  of  the 

5  Kisch  v.  Central  Railroad,  34  loan  with  legal  interest.  Neuman 
L.  J.  Ch.  545;  Thornburg  v.  New  v.  N.  Y.,  etc.,  Ass'n,  44N.  Y.  Supp. 
Castle,  etc.,  R.  R.  Co.,  14  Ind.  499.  896 ;  s.  c.  17  App.  Div.  72. 

6  Upton  v.  Tribilcock,  91  U.  S.  An  agent  of  an  association  solic- 
50;  Wight  v.  Shelby,  R.  R.  Co.,  16  iting  stock  and  loans  may  agree 
B.  Mon.  4  ;  s.  c.  63  Am.  Dec.  522.  with  a  first  mortgagee  that  if  he 

7  Armstrong  v.  Karshner,  47  would  waive  his  prior  lien  on  the 
Ohio  St.  276 ;  s.  c.  24  N.  E.  Rep.  mortgaged  premises  in  favor  of  a 
897  ;  Henderson  v.  Railroad  Co.,  second  mortgage  running  to  the 
17  Tex.  560 ;  s.  c.  67  Am.  Dec.  675.  association,  he  (the  agent)  would, 


154  BUILDING   AND   LOAN   ASSOCIATIONS.      Ch.  VIII. 

Sec.  154— Increase  of  Stock. 

By  an  increase  of  the  stock  of  a  corporation  is  not  meant 
the  issuance  of  a  new  "  series,"  such  as  is  peculiar  to  build- 
ing associations  ;  but  an  increase  over  the  amount  fixed  by 
the  original  articles  of  association.  When  the  stock  is  in- 
creased,  if  a  charter  or  statute  does  not  authorize  them  to  do 
so,  the  board  of  directors  cannot  do  it ;  for  that  event  must 
be  brought  about  by  the  act  of  the  corporation.  Speaking 
of  the  increase  of  stock  of  an  ordinary  corporation,  the 
Supreme  Court  of  the  United  States  has  used  the  following 
language :  "  The  general  power  to  perform  all  corporate  acts 
refers  to  the  ordinary  business  transactions  of  the  corpora- 
tion, and  does  not  extend  to  a  reconstruction  of  the  body 
itself  or  to  an  enlargement  of  the  capital  stock.  A  corpo- 
ration, like  a  partnership,  is  an  association  of  natural  per- 
sons who  contribute  a  joint  capital  for  a  common  purpose ; 
and  although  the  shares  may  be  assigned  to  new  individuals 
in  perpetual  succession,  yet  the  number  of  shares  and  amount 
of  capital  cannot  be  increased  except  in  the  manner  expressly 
authorized  by  the  charter  or  articles  of  association.  Author- 
it  v  to  increase  the  capital  stock  of  a  corporation  may  un- 
doubtedly be  conferred  by  a  law  passed  subsequent  to  the 
charter  ;  but  such  a  law  shall  regularly  be  accepted  by  the 
stockholders.  Such  assent  might  be  inferred  b}T  subsequent 
acquiescence ;  but  in  some  form  or  other  it  must  be  given  to 
render  tin-  increase  valid  and  binding  on  them.  Change  in 
the  purpose  and  object  of  an  association,  or  in  the  extent  of 
its  constituency  or  membership,  involving  the  amount  of  the 
capital  stock,  are  necessarily  fundamental  in  their  character, 
;iii<|  cannot,  on  general  principles,  be  made  without  the 
express  or  implied  consenl  of  the  members.     The  reason  is 

on  behalf  of   the  association,  see  to  a  certain  series.    Prairie  State, 

thai  the  money  advanced  was  used  etc.,  Ass'n  v.  Gorrie,  167  III.  414; 

in  the  improvement  of  the  mort-  s.  c.  47  N.  E.  Rep.  739;  affirming 

Ipremises.     Wayne  Interna-  64  111.  App.  325. 

tional,  etc.,  Ass'n  v.  Moats,  149  Ind.        A    Imildin^  association  may  be 

123;  s.  c.  18  V  E.  Rep.  "•'■*'■'■  bound  by  the  fraudulent  represen- 

\  Imildiii^  association    is  lioinnl  tat  ions  of  its  promoters.     Buker  V. 

I,,  the  representations  of  itssecre-  Leighton Lea  Ass'n,  46 N.  Y.  Supp. 

lock  thai   it  belongs  35 ;  s.  c.  18  App.  Div.  548. 


§  154.  STOCK   OR   SHARES.  155 

obvious.  First,  as  it  respects  the  purpose  and  object.  This 
may  be  said  to  be  the  final  cause  of  the  association,  for  the 
sake  of  which  it  was  brought  into  existence.  To  change 
this  without  the  consent  of  the  associates  would  be  to  com- 
mit them  to  an  enterprise  which  they  never  embraced,  and 
would  be  manifestly  unjust.  Secondly,  as  it  respects  the 
constituency  or  capital  and  membership.  This  is  the  next 
most  important  and  fundamental  point  in  the  constitution 
of  a  body  corporate.  To  change  it  without  the  consent  of 
the  stockholders  would  be  to  make  them  members  of  an 
association  in  which  they  never  consented  to  become  such. 
It  would  change  the  relative  influence,  control,  and  profit 
of  each  member.  If  the  directors  alone  con  id  do  it,  they 
could  always  perpetuate  their  own  power.  Their  agency 
does  not  extend  to  such  act,  unless  so  expressed  in  the  char- 
ter or  subsequent  enabling  act ;  and  such  subsequent  act,  as 
before  said,  would  net  bind  the  stockholders  without  their 
acceptance  of  it,  or  assent  to  it  in  some  form.  Even  when 
the  additional  stock  is  distributed  to  each  stockholder  pro 
rata,  it  would  often  work  injustice,  because  many  of  the 
stockholders  might  be  unable  to  take  their  respective  shares, 
and  might  thus  lose  their  relative  interest  and  influence  in 
the  corporate  concerns.  These  conclusions  flow  naturally 
from  the  character  of  such  associations.  Of  course  the 
associates  themselves  may  adopt  or  assent  to  a  different 
rule.  If  the  charter  provides  that  the  capital  stock  may  be 
increased,  or  that  new  business  may  be  adopted  by  the  cor- 
poration, that  is  undoubtedly  an  authority  for  the  corpora- 
tion (that  is,  the  stockholders)  to  make  such  a  change  by  a 
stockholders'  vote,  in  the  regular  way.  Perhaps  a  subse- 
quent ratification,  or  assent  to  a  change  already  made, 
would  be  equally  effective.  It  is  unnecessary  to  decide  the 
point  at  this  time.  But  if  it  is  desired  to  confer  such  a  power 
on  the  directors  so  as  to  make  their  acts  binding  and  final, 
it  should  be  expressly  conferred."  *  "Where  the  stock  ex- 
pressly allowed  by  charter  has  not  been  all  subscribed,  the 
power  of  the  directors  to  receive  subscriptions  for  the 
balance  may  stand  on  a  different  footing.  Such  an  act 
i  Railway    Co.    v.  Allerton,   18  Wall.  233. 


156  BUILDING   AND   LOAN    ASSOCIATIONS.      Ch.  VIII. 

might,  perhaps,  be  considered  as  merely  getting  in  the  capi- 
tal already  provided  for  the  operation  and  necessities  of  the 
company,  and,  therefore,  as  belonging  to  the  orderly  and 
proper  administration  of  the  company's  affairs.  Even  in 
such  case,  however  prudent  and  fair,  directors  would  prefer 
to  have  the  sanction  of  the  stockholders  to  their  acts." 1  But 
even  the  stockholders  cannot  increase  the  capital  stock  un- 
less the  charter  or  a  statute  authorize  them  so  to  do ; 2  nor 
can  they  decrease  it,  except  under  like  provisions.3  All  the 
stock  increased  beyond  the  limit  allowed  by  the  charter,  or 
the  corporation's  constitution,  is  void  ;4  and  if  a  subscriber 
has  paid  any  instalment  on  such  illegal  stock  he  may  recover 
it  back,  for  the  consideration  for  the  payment  has  failed.5 
But  unanimous  consent  of  all  the  stockholders  of  the  corpo- 
ration will  make  the  increase  binding  upon  them,  though 
not  made  with  the  statutory  formalities.6  Acquiescence  on 
the  part  of  the  stockholders  will  also  cure  mere  irregulari- 
ties ; 7  especially  where  no  objection  be  made  until  after 
insolvencv  of  the  corporation  intervenes.8  If  a  corporation 
is  authorized  by  a  statute  to  increase  its  stock,  then  the 
assent  of  a  stockholder  to  an  increase  is  not  necessary ;  and 
he  will  be  bound  by  an  increase  properly  made.9  If  the 
stock  be  increased,  the  existing  stockholders  have  the  right 
to  subscribe  for  such  increase  in  the  ratio  their  stock  bears 

1  Id.  In  this  case  it  was  held  G  Pool  v.  West  Point,  etc.,  30 
that  a  dissenting  stockholder  Fed.  Rep.  513;  Bailey  v.  Cham- 
could    maintain    a    suit  in    equity     plain,  etc.,  Co.,  77  Wis.  453 ;  s.  C. 

us!    the   directors    to   prevent  40  N.  W.  Rep.  539. 
making  an   unauthorized  increase       7  Payson  v.  Stoevev,  2  Dill.  428 

of  the  capital  stock.  Stutz  v.  Hendley,  41  Fed.  Rep.  531; 

2  Sutherland  v.  Olcott,  95  N.  Y.  s.  c.  139  U.  S.  417;  Byers  v.  Rol- 
93;  reversing  29  Bun,  L61 ;  Me-  lins,  13  Colo.  22  ;  s.  c.  21  Pac.  Rep. 
chanics'  Banls  v.  New  York,  etc.,  894;  Kansas  City  Hotel  Co.  v. 
R,    l.\  Co.,  I-  N.   Y.  599;   Winters  Hunt,  57  Mo.  120. 

v.  Armstrong,  37   Fed.    Rep.  508;  8  Railway    Co.   v.   Allerton,    18 

Grangers  Life,  etc.,  Co.  •y.Kamper,  Wall.    233;   Upton  v.  Jackson,    1 

73  ,\la.  825.  Flipp,  413;   Clarke  v.  Thomas,  34 

■  Seiznourel  v.  Borne  Insurance  OhioSt.46. 

(  (...  2  I  Fed.  Rep.  882.  9Port  Edwards,  etc.,  R.  R.  Co.  v. 

•  Scovill  r.  Thayer,  L05XJ.  8.  148.  Arpin,  so  Wis.  214;  s.  c.  49  N.  W. 

•  Knowlton  v.  Congress  Spring  Rep.  828. 
Co..  ii  Blatchf.  864. 


§  155.  STOCK   OR   SHARES.  157 

to  the  amount  of  the  increase,  to  the  exclusion  of  all  other 
persons  ;  and  an  effort  to  permit  outsiders  to  take  such  stock 
will  be  unavailing  against  a  dissenting  stockholder,1  unless 
some  provision  of  the  statute  provide  a  different  rule.2  If 
the  corporation  unlawfully  deprives  a  stockholder  of  his 
right  to  subscribe  for  stock,  it  will  be  liable  to  him  for 
damages.3  lie  cannot  be  charged  a  bonus  for  this  privi- 
lege ; 4  but  if  paid  it  cannot  be  recovered  back,  even  if  paid 
under  protest.5 

Set*.  155 — Transfer  of  Stock. 

A  member  has  the  right  to  sell  and  transfer  his  shares, 
and  the  object  of  the  purchase,  in  the  absence  of  a  charge 
of  fraud,  cannot  be  inquired  into  in  order  to  prevent  a  sale.6 
A  temporary  transfer,  however,  will  not  bestow  upon  the 
transferee  the  same  rights  as  if  it  were  a  permanent  one.7 
A  contract  to  sell  and  transfer  in  the  future  is  valid  and  not 
against  public  policy.8  Shares  of  an  unincorporated  asso- 
ciation may  be  transferred  so  as  to  give  the  transfer  a  right 
to  maintain  a  suit  in  equity  against  his  fellows.9  The  trans- 
feree takes  the  stock  of  a  building  association  subject  to  all 
the  liabilities  of  the  transferer,  among  which  is  that  of  pay- 
ing up  any  arrears  of  monthly  dues.10 

1  Jones  v.  Morrison,  31  Minn.  9  Ry.  &  Corp.  L.  Jr.  462  ;  12  L.  R. 
140;  Gray  v.  Portland  Bank,  3  A.  781  ;  In  re  Cawley  L.  R.,  42  Ch. 
Mass.  364;  s.  c.  3  Am.  Dec.  156;  Div.  209  ;  S.  c.  31  Am.  &  Eng.  Corp. 
State  v.  Smith,  48  Vt.  266  ;  Hum-  Cas.  425.  A  stranger  to  thebuild- 
boklt  Driving  Park  Association,  34  ing  association  may  purchase  it. 
Neb.  528;  52  N.  W.  Rep.  568;  33  Parker  v.  Fulton,  etc.,  Association, 
Am.  St.  Rep.  654.  46  Ga.  166. 

2  Ohio  Insurance  Co.  v.  Nunne-  7  Baker's  Appeal,  108  Pa.  St.  510  ; 
macher,  15  Ind.  294.  S.  c.  56  Am.  Rep.  231. 

3  Gray  v.  Portland  Bank,  supra.        8  Smith  v.  Nashville,  etc.,  R.  R. 
*  Cunningham's  Appeal,  108  Pa.     Co.,  91  Tenn.  221 ;  s.  C.  18  S.  W. 

St.  546.  Rep.  546. 

5  De  la  Cuesta  v.  Insurance  Co.,  9  Durkee  v.  Stringham,  8  Wis.  1. 
136  Pa.  St.  62,  658  ;  s.  c.  26  W.  N.  10  Union  Building  Loan  Associa- 
Cas.  337  ;  47  Leg.  Int.  466  ;  20  Atl.  tion  v.  Masonic  Hall,  etc.,  Associa- 
Rep.  505  ;  9  L.  R.  A.  631.  tion,  29  N.  J.  Eq.  389.     But  the  as- 

6  Carson  v.  Iowa  City  Gaslight  signee  takes  it  free  from  latent 
Co.,  80  la.  638  ;  s.  c.  45  N.  W.  Rep.  equities  between  the  parties.  Bal- 
1068  ;  In  re  Argus  Printing  Co.,  1  lou  v.  Manhattan,  etc.,  Co.  19  Misc. 
N.  D.  434  ;  s.  C.  48  N.  W.  Rep.  347 ;  Rep.  698  ;  s.  C.  45  N.  Y.  Supp.  109. 


158 


BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  VIII. 


Sec.  156 — Liens  of  Corporation  on  Shares. 

Unless  some  statute  authorize  it,  an  association  cannot 
claim  a  lien  on  stock  for  dues  or  money  the  owner  owes  it.1 
The  right  to  have  such  a  lien,  however,  may  be  established 
by  an  agreement  inserted  in  the  articles  of  association  with- 
out a  statute  providing  for  it.2  A  power  given  to  a  corpo- 
ration to  "  regulate  "  the  transfer  of  stock  is  amply  sufficient 
to  enable  it  to  adopt  a  by-law  creating  a  lien  on  all  his  stock 
where  the  owner  is  indebted  to  the  association.3  So  a  lien 
for  such  indebtedness  may  be  created  by  contract  between 
the  owner  and  the  corporation  by  inserting  language  to  that 
effect  in  the  certificate  issued  to  the  holder  ;  and  the  pur- 
chaser of  such  certificate  will  be  chargeable  with  notice  of 
the  amount  of  the  lien.4  For  what  kind  of  indebtedness  the 
lien  is  created  depends  upon  the  language  of  the  statute  or 
article  of  association  creating  it.5  If  a  valid  lien  has  been 
created,  a  purchaser  of  the  shares  takes  them  subject  to  the 
lien,  and  a  sale  under  the  lien  to  satisfy  such  indebtedness 


Where  Building  Association  stock 
is  transferred  to  the  association  as 
collateral  security  the  association 
is  invested  with  its  membership 
for  all  purposes  of  dominion  of  the 
debl  secured.  Schlesinger's  Estate, 
1  Law  Times  (N.  S.)  15. 

The  regularity  of  a  transfer  of 
stock  sold  by  a  building  associa- 
tion, after  having  been  surrendered 
to  it  by  a  former  owner,  cannot 
be  questioned  when  sued  for  its 
withdrawal  value  as  belonging  to 
a  certain  series,  it  having  recog- 
nized t  he  t  ransfer  as  being  proper, 
by  being  ready  and  willing  to  pay 
,i  :,    a  le  b  valuable  series.     Prairie 

Stat.-,  etc.,  Ass'n  r.  Conic   Ho    III. 

Ill:  s.  c.  47  N.   E.   Rep.  739;  af- 

ttrming,  ''.l  III.   Ipp.  325. 

'  Gemmell  '•.  Davis,  ;:>  Md.  546; 

32    \mi.  si.   Rep.    II'.' ;    Bell's 

Appeal,  L15  Pa.  St.  88;  s.c.  2  \.m. 

.  p.  582  :  Farmers',  etc.,  Bank 


v.  Wasson,  48  la.  386  ;  s.  c.  30  Am. 
Rep.  398. 

2  Hague  v.  Dandeson,  2  Exch. 
740;  New  London,  etc,,  Bank  v. 
Brocklebank,  L.  R.,  21  Ch.  Div. 
302  ;  Arnold  v.  Suffolk  Bank,  27 
Barb.  424. 

3  Cunningham  v.  Alabama  Life 
Insurance  Co.,  4  Ala.  652  ;  St.  Louis 
Perpetual  Insurance  Co.  v.  Good- 
fellow,  9  Mo.  149 ;  Pendergast  v. 
Bank,  2  Sawy.  108;  Carroll  v. 
Mullanphy  Savings  Bank,  8  Mo. 
Ap|>.  249. 

4  Vansands  v.  Middlesex  County 
Bank,  26  Conn.  144;  Jennings  v. 
Bank  of  California,  79  Cal.  323; 
s.  c.  21  Pac.  Rep.  852;  12  Am.  St. 
Rep.  145;  Cent.  L.  Jr.  150. 

■'■  ///  re  Cawley,  L.  R.  Q.  Ch.  Div. 
209  ;  8.  C.  "I  Am.  &  Eng.  Corp. 
Cas.  425  ;  Schmidt  v.  Hennepin 
County  Barrel  Co.,  35  Minn.  511; 
s.  .'.  29   N.  W.   Rep.   200;  Mobile 


§  156.  STOCK   OR   SHARES.  159 

will  divest  the  purchaser  of  his  title  to  the  stock.1  So  if  the 
lien  has  been  created  by  a  by-law  adopted  by  virtue  of  a 
clause  in  the  charter  authorizing  the  creation  of  the  lien  by 
a  by-law  ;  and  a  statute  provides  that  there  shall  be  no 
transfer  until  such  transfer  is  made  on  the  books  of  the  cor- 
poration, a  purchaser  of  the  stock  is  chargeable  with  notice 
of  the  amount  of  the  indebtedness  that  is  a  lien  thereon.2 
But  if  no  such  a  provision  is  inserted  in  the  charter,  and  the 
lien  is  created  by  a  by-law,  then  a  purchaser  will  take  it  free 
of  any  lien  that  may  exist,  unless  he  had  knowledge  of  the 
by-law  before  he  purchased.3  The  corporation  may  waive 
its  lien  by  permitting  the  stock  to  be  assigned  on  the  books, 
through  its  proper  officers,  without  asserting  its  right  thereto.4 
A  by-law  of  a  building  association  providing  that  no  share 
shall  be  transferred  while  any  debt,  penalty,  or  due  of  any 
kind  against  the  owner  thereof  shall  remain  unpaid,  creates 
a  lien  on  the  share,  as  against  the  shareholder,  for  a  debt 
due  by  him  to  the  association,  and  the  assignee  in  insolvency 
of  such  shareholder  takes  the  shares  subject  to  such  lien.5 
The  foreclosure  of  the  association's  lien  on  the  member's 
stock,  and  the  sale  of  such  stock,  terminates  his  liability  for 
stock  assessments.6  A  by-law  of  a  building  society  required 
that  a  shareholder  should  have  satisfied  all  his  obligations 
to  the  society  before  he  should  be  at  liberty  to  transfer  his 
shares.  One  P.,  a  director,  in  contravention  of  the  by-law, 
induced  the  secretary  to  countersign  a  transfer  of  his  shares 

Mutual  Insurance   Co.   v  Cullom,  4  Hodges    v.   Planters'    Bank,   7 

49  Ala.  558.  Gill  &  J.  306. 

1  Union  Bank  v.  Laird,  2  "Wheat.  5  Thirty-first  Street  Building  and 
390 ;  West  Branch  Bank  v.  Arm-  Loan  Association  v.  Wetherell,  43 
strong,  40  Pa.  St.  278  ;  State  Sav-  111.  App.  509  ;  affirmed,  153  111.  361 ; 
ing  Association  v.   Nixon — Jones  s.  c.  39  N.  E.  Rep.  143. 
Printing  Co.,  25  Mo.  App.  642.  6  Building  and  Loan  Association 

2  Jennings  v.  California  Bank,  of  Dakota  v.  Logan  (Tex.  Civ. 
supra.  App.);    33  S.   W.    Rep.    1088.     In 

See  Union  Building  Loan  Asso-  this  case  it  was  held  that  in  a  suit 

ciation  v.  Masonic  Hall,  etc. ,  Asso-  to  enjoin  a  sale  under  a  deed  of 

ciation,  29  N.  J.  Eq.  389.  trust  given  to  secure  a  Loan,  the 

3  Tuttle  v.  "Walton,  1  Ga.  43;  defendant  association  is  entitled  to 
Bank  of  Holly  Springs  v.  Pinson,  foreclose  its  lien  on  the  stock  for 
58  Miss.  421  ;  s.  c.  38  Am.  Rep.  330.  dues  and  fines. 


1G0  BUILDING   AND   LOAN    ASSOCIATIONS.      CI).  VIII. 

to  a  bank  as  collateral  security  for  an  amount  he  borrowed 
from  the  bank,  and  it  was  not  until  P.'s  abandonment  or 
assignment  for  the  benefit  of  his  creditors  that  the  other 
directors  knew  of  the  transfer  to  the  bank,  although  at  the 
time  of  his  assignment  P.  was  indebted  to  the  society  in  a 
sum  of  $3,744,  for  which,  under  the  by-law,  his  share  was 
charged  as  between  P.  and  the  society.  The  society  imme- 
diately paid  the  bank  the  amount  due  by  P.  and  took  an 
assignment  of  the  share  and  of  P.'s  debt.  The  shares  being 
worth  more  than  the  amount  due  the  bank,  the  curators  to 
the  insolvent  estate  of  P.  brought  an  action  claiming  the 
shares  as  forming  part  of  the  insolvent's  estate  and  with  the 
action  tendered  the  amount  due  by  P.  to  the  bank.  The 
society  claimed  the  shares  were  pledged  to  them  for  the 
whole  amount  of  P.'s  indebtedness  to  them  under  the  by-laws. 
It  was  held  that  the  shares  in  question  should  be  held  as 
having  always  been  charged  under  the  by-laws  with  the 
amount  of  P.'s  indebtedness  to  the  society,  and  that  his 
creditors  had  only  the  same  rights  in  respect  of  these  shares 
as  P.  himself  had  when  he  made  the  abandonment  of  his 
property,  namely,  to  get  the  shares  upon  payment  of  P.'s 
indebtedness  to  the  society.1 

Sec.  157 — Effect  upon  Rights  of  Owner  by  Creation  of 
Lien. 

On  speaking  of  the  rights  and  status  of  an  owner  of  stock 
upon  which  a  lien  had  been  created,  the  following  language 
has  been  used:  "It  is  true  that  a  chattel  mortgage,  after 
forfeiture  in  the  hands  of  the  mortgagee,  is  not  liable  to  be 
taken  and  sold  on  execution  at  law  against  the  mortgagor, 
on  the  ground  that  the  legal  ownership  is  in  the  mortgagee. 
But  the  company  is  not  the  mortgagee  of  the  stock.  There 
is,  it  is  shown,  a  formal  transfer  of  the  shares  to  the  associa- 
tion as  collateral  security  for  the  payment  of  the  loans. 
Bui  t  he  shareholder  is  not  deprived  of  his  title  to  the  stock. 
lie  still  continues  to  be  a  member  with  all  the  rights  of 

i  La    Societe    Canadienne-Fran-    449;  reversing,  Montreal  Law  Rep., 
caise  <\<-.  Construct  ion  de  Montreal    7  Q.  B.  417. 
v.  I  >aveluy,  20  I  Ian.  Sup.  ( 't.  Rep. 


§  158.  STOCK   OR   SHARES.  161 

membership.  He  is  by  the  constitution  regarded  as  a  stock- 
holder. As  such,  he  is  required  to  pay  his  monthly  instal- 
ments on  each  share.  He  may  vote,  act  as  a  director,  or 
other  officer,  and,  in  fact,  do  every  act  which  stockholders 
may  do,  except  transfer  the  title  to  his  shares.  Even  that 
he  may  do,  subject  to  the  lien  of  the  association.  The  trans- 
fer of  the  shares  to  the  association  is  in  the  nature  of  a 
pledge  rather  than  of  a  chattel  mortgage.  The  shares  re- 
main the  property  of  the  shareholder  for  every  purpose, 
excepting  that  of  defeating  the  liens  of  the  association. 
The  shareholder  may  exercise  every  other  control  over  them. 
The  principle  is  applied  wherever  a  stockholder  pledges  his 
stock  to  the  corporation  of  which  he  is  a  member.  *  *  * 
It  is  true  that  by  the  strict  rules  of  the  common  law,  a  pledge 
could  not  be  taken  in  execution  in  the  hands  of  the  pledgee. 
Neither  could  an  equity  of  redemption  in  land,  nor  goods 
which  had  been  leased,  or  levied  upon  by  prior  execution, 
nor  book-notes,  nor  stocks,  be  levied  upon,  in  regard  to 
which  the  strictness  of  the  ancient  rule  has  been  quietly  re- 
laxed by  judicial  decision  and  by  statute.  I  doubt  exceed- 
ingly whether  the  doctrine  is  applicable  to  the  peculiar 
nature  of  the  pledge.  But,  admitting  it  to  be  so,  the  doc- 
trine was  designed  to  operate  in  favor  of  the  pledgee.  His 
interest,  it  is  admitted,  cannot  be  disturbed  by  the  levy. 
But  if  the  claim  of  the  pledgee  is  satisfied,  the  levy  is  good. 
The  sheriff  may  even  sell,  with  the  pledgee's  consent,  or 
upon  satisfaction  of  his  claim.  *  *  *  And  if  the  pledgee 
consents,  no  third  party  can  object." 1 

Sec.  158 — Nature  of  Certificate  of  Shares  of  Stock. 

A  certificate  issued  by  a  corporation  to  a  holder  of  a  share 
of  its  stock  is  only  a  muniment  of  title  and  not  the  property 
in  the  share ;  it  is  simply  evidence  of  ownership.  As  a  con- 
sequence, as  is  often  the  case,  an  individual  may  own  stock, 

1  Mechanics'  Building  and  Loan  and  secure  a  foreclosure  of  its  lien 

Association  v.  Conover,  14  N.  J.  upon  such   stock.     Building   and 

Eq.  219.  Loan   Association    of  Dakota  vs. 

In  a  suit  to  enjoin  the  sale  of  Logan,  (Tex  Civ.  App.);  33  S.  W. 

shares  of  stock  under  a  deed  of  Rep.  1088. 
trust,  the  association  may  claim 
11 


162  BUILDING   AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

to  which  he  has  no  certificate,  and  be  liable  to  pay  his  as- 
sessments thereon  and  for  the  debts  of  creditors  of  the  asso- 
ciation the  same  as  if  he  held  that  usual  evidence  of  owner- 
ship.1 This  appears  clearly  when  it  is  recollected  that 
writing,  by  the  owner,  across  the  face  of  the  certificate, 
words  of  cancellation  and  a  returning  it  to  the  secretary  of 
the  corporation  will  not  release  such  owner  from  the  liabil- 
ity incident  to  the  ownership  of  such  stock.2  But  if  the 
officers  of  a  corporation  issue  certificates  of  stock  not  au- 
thorized by  the  corporation  or  in  excess  of  its  charter,  yet 
the  corporation  may  be  liable  for  the  act  to  an  innocent  in- 
vestor, not  to  him  as  a  member,  but  as  to  one  defrauded  by 
it.  Thus  if  he  has  accepted  the  certificate  as  representatives 
of  stock  and  has  loaned  many  on  their  faith,  the  corporation 
will  be  liable  to  him  for  the  amount  loaned  with  interest.3 
The  officers  so  issuing  such  stock  are  also  personally  liable.4 
Everv  shareholder  is  entitled  to  a  certificate,  as  evidence  of 
his  ownership  of  his  stock.5 

Sec.  159 — Formalities  of  Transfer  and  Registration. 

If  the  charter  or  a  statute  prescribe  what  is  necessary  to 
secure  the  transfer  of  shares  of  stock,  then  the  course  pre- 
scribed must  be  followed  ;  but  if  neither  of  those  instruments 
prescribe  the  course  to  be  pursued,  then  the  corporation 
may  prescribe  by  a  by-law  the  course  that  must  be  followed, 
or,  in  the  absence  of  a  by-law,  the  method  may  be  prescribed 

1  Rio  Grande  Cattle  Co.  v.  Burns,  540  ;  New  York,  etc.,  R.  R.  Co  v. 

82  Tex.    50;    S.  C.    17    S.  \V.   Rep.  Schuyler,  34  N.  Y.  30;    Jarvis  v. 

1043;  Agricultural  Bank  v.   Burr,  Manhattan    Beach  Co.,  53   Hun, 

24  Me.  256  ;   Pacific  National  Bank  362  ;  s.  c.  25  N.  Y.  St.  Rep.  1 ;  6  N. 

v.    Eaton,    111    (J.  S.   227;  S.  c.  11  Y.  Supp.  703;  6  Rail.  &  Corp.  L. 

Sup.  <!.  Rep.  984  :   10  Ry.  &  Corp.  Jr.  325. 

L.  Jr.  132;   Thayer  v.  Buller,   Ml  lWindram  v.  French,  151  Mass. 

r.  s.  234  :  s.  c.    II    Sup.  Ct.  Rep.  547;  s.  c.  24  N.  E.  Rep.  914;  8  L. 

987;     Mechanics'     Bank     v.    New  R.  A.  750. 

York,  etc.,  R.  I>".  Co.,  13  N.  Y.626;  B  Johnsons.  Albany,  etc.,  R.  R. 

Ukins  v.  Gamble,  12  Cal.  86  ;  B.C.  Co.  40  How.  Pr.  193  ;  James  v.  Cin- 

10  \iu.  Rep.  282.  <  mnati,  etc.,  R.  R.  Co.,  2  Disney, 

I  hoteau  v.  Dean, 7 Mo.  App.  210.  '.'f'.l  •.  Kent  v.   Quicksilver  Mining 

»Tome   '•■   Parkersburgh    R.   R.  Co.,78  N.  Y.  159. 
Co.,  89  Md.  86;  s.  o.  IT  Am.  Rep. 


§  159.  STOCK   OK    SHAKES.  163 

in  the  certificate  itself.1  The  certificate  may  contain  a 
formal  assignment,  with  the  name  of  the  transferee  left  out, 
but  some  one  named  as  attorney  to  make  the  transfer  on  the 
books  of  the  company;  in  that  event  the  certificate  may 
pass  from  hand  to  hand,  until  it  reach  some  one  who  desires 
to  own  the  stock,  and  the  persons  appointed  attorney  may 
transfer  the  stock  to  him  on  the  books  of  the  corporation.2 
A  by-law  may  require  the  signature  of  the  owner  assigning 
the  certificate  to  be  witnessed  by  al  Least  two  witnesses  or 
by  the  cashier ;  and  it  will  be  valid.3  An  assignment  need 
not  be  under  seal.4  Usually  the  transfer  should  be  entered 
upon  the  stock  ledger  ;  but  if  some  be  kept  by  the  company, 
then  it  may  be  made  upon  the  books  of  the  company  contain- 
ing evidence  of  the  ownership  of  such  stock,  even  upon  the 
subscription  list 5  or  on  the  certificate  book,6  or  on  the  stock 
book.7  If  the  stock  ledger  does  not  correspond  with  the 
transfer  book,  then  the  latter  must  control ;  for  it  contains 
the  act  of  the  transferee  and  the  other  contains  the  act  of 
the  corporate  officers.8  It  is  usual  to  take  up  the  old  certificate 
and  issue  a  new  one  to  the  transferee,  but  that  is  not  neces- 
sary ;  for  the  certificate  is  not  essential  to  the  ownership  of 
the  stock.9  The  company  may  require  the  surrender  of  the 
old  certificate  before  it  issue  a  new  one,  and  should  do  so  ; 
for  if  it  permit  a  transfer  of  the  stock  to  be  made  upon  its 
books  without  first  requiring  a  surrender  of  the  certificate 

1  State   v.   Mclver,  2  S.   C.    25  ;     ing  Co.,  1  Wash.  521 ;  s.  C.  20  Pac. 
Mechanics'  Banking  Association  v.     Rep.  605. 

Mariposa  Co.,  3   Robt.  395.      The  6  American    National    Bank    v. 

officer  of  a  corporation  does  not  Oriental  Mills,  17  R.  I.  74 ;  s.  C.  23 

bear  the  relation  of  trustee  to  a  Atl.  Rep.  795. 

shareholder    seeking     to    sell    his  7  Moore    v.    Marshalltown,  etc., 

stock  to  him.     Cook  v.  Henderson,  Co.,  81  la.  45  ;  s.  c.  46  N.  W.  Rep. 

8  Amer.  L.  Rec.  429.  750. 

2  Kortright  v.  Buffalo  Commer-  8  Downing  v.  Potts,  23  N.  J.  L. 
cial  Bank,   20  Wend.  91  ;  s.  c.  34  66. 

Am.  Dec.  317;  Dunn  v.  Commer-        'Agricultural  Bank  r.  Burr,  42 

cial  Bank,  11  Barb.  580.  Me.  256  ;  Keyser  v.  Hitz,  133  U.  S. 

3  Dane  v.  Young  61  Me.  160.  138  ;  Choteau  Spring  Co.  v.  Harris, 

4  Atkinson  v.  Atkinson,  8  Allen,  20    Mo.  382;    Davenport   Bank  v. 
15.  Gifford,  47  la.  5T5. 

5  Stewart  v.  Walla  Walla  Print- 


164  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  VIII. 

representing  such  stock,  and  an  innocent  person  should  pur- 
chase such  stock,  relying  upon  such  certificate,  the  compan}7 
would  be  liable  to  him,  not  as  a  member  of  the  corporation 
(for  he  would  not  be),  but  for  such  damages  as  he  has  sus- 
tained by  such  purchase.1  So  if  the  company  make  a  trans- 
fer in  reliance  upon  a  certificate  not  properly  indorsed,  it 
will  be  liable  to  the  original  owner,  if  he  had  not  authorized 
or  executed  such  indorsement.2  As  between  the  assignor 
and  assignee  of  the  certificate,  it  is  not  necessary  that  the 
transfer  of  the  stock  be  registered  or  entered  upon  the  com- 
pany's books.3  A  gift  of  the  stock  may  be  made  without  a 
formal  transfer  of  the  stock  upon  the  company's  books,  by 
simply  delivering  the  certificate  to  the  donee  accompanied 
by  proper  words  or  acts  evidencing  a  gift.4 

Sec.  160 — Action  to  Compel  a  Transfer. 

If  a  person  who  has  purchased  shares  of  stock  from  the 
holder  and  has  taken  the  proper  steps  required  to  secure  a 
transfer  thereof  to  himself,  and  the  company  has  refused  or 
neglected  to  make  the  transfer,  he  may  maintain  a  suit  in 
equity  to  compel  the  company  to  recognize  him  as  a  stock- 
holder and  make  the  proper  transfer.5  Such  corporate 
meetings  will  be  restrained  until  the  transfer  be  made.6  But 
if  the  holder  has  been  guilty  of  laches  in  asserting  his  rights 
a  court  of  equity  will  not  aid  him  ; 7  nor  will  it  compel  a 

1  Supply  Ditch  Co.  v.  Elliott,  10  4  Commonwealth    v.  Crompton, 

Colo.  327  ;  s.  c.  3  Am.  St.  Rep.  587.  137  Pa.  138  ;  s.  c.  20  Atl.  Rep.  417  ; 

See  Nollotli  v.  Simplified  Perma-  Walsh  v.  Sexton,  55  Barb.  472. 

nent  Benefit,  etc.,  Society,  34  W.  5  Tanner  v.  Gregory,  71  Wis.  490  ; 

Iron  R.  R.  Co.  v.  Fink,  41  Ohio  St. 

2Taftt>.  Presidio R.  R.  Co.,  84 Cal.  321;  S.  C.  52  Am.  Rep.  84;  Cush- 

131  :    S.   o.    22   Pac.    Rep.    485;  18  man  v.  Thayer  Mf.   Co.,  76  N.  Y. 

Am.  St.  Rep.  166.  365  ;  S.  c.  32  Am.  Rep.  315. 

8  Johnson  v.  Underhill,  52  N.  Y.  °  Archer    v.    American    Water 

203;  West. mi    v.   Bear  Itiver,  etc.,  Works,   50  N.J.  Eq.  33;  s.  c.   24 

Co.,  5  Cal.  186  ;  S.  C.  63  Am.  Dec.  Atl.  Rep.  508. 

117;   Sargent  v.   Franklin   Insur-  7  Newberry  v.  Detroit,  etc.,  R. 

ance  Co.,  8  Pick.  90  ;  s.  0.  19  Am.  R.  Co.,  17  Mich.  141 ;  Wonson  v. 

Dec.  806;  Bruce  v.  Smith,  44  Ind.  Fenno,   129    Mass.  405;   York    v. 

.,  Duke  v.  Catawba,  etc.,  Co.,  10  Passaic,  etc.,  Co.,  30  Fed.  Rep.  471. 
Ala.  82  j  s.  c.  44  Am.  Dec.  317. 


§  161.  STOCK   OR   SHARES.  165 

transfer  of  stock  issued  ultra  vires  the  corporation.1  In 
such  an  action  the  first  owner  is  not  a  necessary  party.2 
Mandamus  is  not  a  proper  action  to  compel  a  transfer.3 

Sec.  161 — Action  of  Law  for  Refusal  to  Transfer. 

A  refusal  by  the  corporation  to  make  a  transfer  of  stock 
when  a  proper  demand,  at  least,  is  made,  is  Equivalent  to  a 
conversion  of  such  stock  by  the  company,  and  the  owner 
may  maintain  an  action  against  the  company  for  damages.4 
If  the  company  has  notice  that  there  is  a  controversy  over 
the  ownership  of  certain  shares,  but  it  assumes  to  decide  who 
is  the  actual  owner  and  transfers  them  to  him,  and  it  turn 
out  that  the  other  claimant  is  the  true  owner,  it  will  be  liable 
to  the  latter  the  same  as  if  it  had  refused  to  make  a  proper 
transfer  to  him.5  Trover  lies  for  a  conversion  of  the  stock 
by  the  company  in  favor  of  the  owner.6  So  trover  lies  for 
a  conversion  of  the  stock  certificate.7  The  person  bringing 
the  suit  must  have  the  right  to  the  immediate  possession  of 
the  stock ; 8  and  a  demand  and  refusal  must  precede  the 
bringing  of  the  action.9  If  the  company  have  a  lien  on  the 
stock,  the  amount  of  such  lien  must  first  be  tendered.10 

1  People  v.  Sterling  Mf.  Co.,  82  tificate.  Rio  Grande  Cattle  Co.  v. 
111.  457.  Burns,  82  Tex.   50 ;  S.  C.   17  S.  W. 

2  Tregear  v.  Etiwanda  Water  Co.,     Rep.  1043. 

76  Cal.  537  ;  s.  c.  9  Am.  St.  Rep.  245.        6  Hawes  v.  Gas  Consumers'  Ben- 

3  Kimball  v.  Union  Water  Co.,     efit  Co.,  9  N.  Y.  Supp.  490. 

44  Cal.  173  ;  s.  c.  13  Am.  Rep.  157  ;  6  Ayres  v.  French,  41  Conn.  142  ; 

Tobey  v.  Hakes,  54  Conn.  274;  1  Daggett  v.  Davis,  53  Mich.  35  ;S.  C. 

Am.  St.  Rep.  114  ;  Baker  v.  Mar-  18  N.  W.   Rep.   548  ;  51  Am.  Rep. 

shall,  15  Minn.  177  ;  State  v.  Peo-  91 ;  McAllister  v.  Kuhn,  96  U.  S. 

pie's  Building  and  Loan  Associa-  87  ;  Payne  v.  Elliott,  54  Cal.  339. 

tion,  43  N.  J.  L.  389.  »  Anderson  v.  Nicholas.  28  N.  Y. 

4  Sargent  v.  Franklin  Insurance  600  :  Atkins  v.  Gamble,  42  Cal.  86  ; 
Co.,  8  Pick.  90;  s.  C.  19  Am.  Dec.  s.  C.  10  Am.  Rep.  282;  Morton  v. 
306  ;  North  American  Building  Preston,  18  Mich.  60  ;  s.  C.  100  Am. 
Association  v.  Sutton,  35  Pa.  St.  Dec.  146. 

463  ;  s.  c.  78  Am.  Dec.  349.     This  8  Ayres  v.  French,  supra. 

remedy  has  been  extended  to  the  9  Daggett  v.  Davis,  supra. 

subscriber  for  the  stock  to  whom  10  Pierson  v.  Bank,  3  Cranch  C. 

the  company  refuse  to  issue  a  cer-  C.  363. 


166  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  VIII. 

Sec.  162— Measure  of  Damages  for  Refusing  to  Transfer. 

la  an  action,  for  damages  for  a  refusal  to  transfer  stock, 
the  measure  of  damages  is  the  value  of  the  stock  at  the  time 
the  refusal  is  made,1  with  interest  to  the  date  of  trial,2  and 
also  all  dividends  accrued  at  the  time  of  the  demand  with 
like  interest.  But  there  is  another  view  that  the  amount  of 
damages  is  the  highest  market  value  of  such  share  between 
the  time  of  the  refusal  to  transfer  and  the  time  of  the  trial.3 
In  an  action  for  the  conversion  of  the  certificate,  a  like  rule 
of  damages  prevails.4  In  an  action  against  a  building 
society  for  unjustly  refusing  to  permit  a  transfer  of  certain 
shares  of  stock  by  the  plaintiff,  the  latter  was  held  entitled 
to  recover  the  amount  paid  on  the  stock,  as  dues,  with 
interest  thereon  from  the  time  of  payments.5 

Sec.  163— Lost  Certificate. 

If  a  shareholder  lose  his  certificate  he  does  not  lose  his 
right  to  his  stock ;  and  even  though  he  has  indorsed  it  in 
blank  and  it  has  come  into  the  hands  of  an  innocent  pur- 
chaser, he  may  still  claim  the  stock,6  and  may  maintain  an 
action  against  the  company  and  the  claimant  under  each 
lost  certificate  to  establish  his  right  to  the  stock.7  In  case 
of  a  lost  certificate  the  company  should  not  issue  a  second 
certificate  to  the  owner  until  he  indemnify  them  against 
loss  occasioned  by  its  being  issued  to  him  when  not  the 
owner  of  the  stock.8      If  the  original  owner  falsely  assert 

1  German   Union  Building    and  Mich.  35  ;  s.  c.  18  N.  W.  Rep.  548  ; 

Savin;;  Fund    Association  v.  Send-  51   Am.  Rep.  91. 

ni>  vi  r.   50  Pa.   St.   <>7  ;  Parsons  v.  8  North  American  Building  As- 

Martin,   11    Gray,   111;    Baltimore  sociation  v.  Sutton,  35  Pa.  St.  4G3  ; 

City  Pass.  R.   R.  Co.  v.  Sewell.  35  s.  c.  78  Am.  Dec.  349. 

Mil.  238  ;  S.  C.  •'»  Am.  Rep.  402.  6  East  Birmingham  Land  Co.  v. 

-  Baltimore  City  Pass.  R.  R.  Co.  Dennis,  85  Ala.  565;  s.  c.  5  So. 

v.  Sewell,  supra.  Rep.  317  ;  2  L.  R.  A.  836  ;  28  Cent. 

■■  .Wilir  r.  Eeiley,  69  Pa.  St.  403.  L.  J.  402. 

See  also  Tomkinson  v.  Balkis,  etc.,  7  Wells  v.  Smith,  7  Abb.  Pr.  261. 

Co.,2Q.  B.  614  B  Cleveland,  etc.,  R.  R.  Co.  v. 

*Connorv.  Hill,  ll   Rich.  (S.  C.)  Robbins,  35  Ohio  St.  483  ;  Guilford 

193;  Morion  r.  Preston,  18  Mich.  v.    Western    Union    Tel.    Co.,  43 

60;  LOO  Am.  Dec.  L46.     Actualloss  Minn.  434;  s.  c.  46  N.  W.  Rep.  70. 
I,,     nil.  i ■..     Daggel t    v.  Davis,  58 


§  164.  STOCK   OR   SHARES.  167 

that  he  has  lost  the  stock  and  present  a  proper  bond  and 
obtain  a  certificate,  yet  if  the  true  owner  afterwards  appear 
and  demand  a  transfer  of  such  stock,  the  company  will  be 
liable  if  it  refuse  to  make  it.1 

Sec.  164 — Liability   of  Company   for    Transferring    or 
Forged  Tower  of  Attorney. 

If  the  power  of  attorney,  executed  in  blank,  as  stated  in 
a  previous  section,  has  been  forged,  and  the  company, 
relying  upon  its  validity,  transfer  the  share  to  a  person  not 
entitled  to  it,  such  company  will  be  liable  to  the  true  owner 
for  a  conversion  of  such  share,  for  it  was  his  property  and 
not  the  property  of  the  one  to  whom  it  was  transferred.2 
But  in  such  case  the  true  owner  must  not  have  been  guilty 
of  such  negligence,  or  in  the  creation  of  such  a  state  of 
affairs  as  enabled  the  fraudulent  transferee  or  some  other 
designing  person,  to  take  advantage  of  the  conditions  care- 
lessly created  by  the  owner  and  thereby  deceive  or  mislead 
the  officers  of  the  association  ;  for  if  his  negligence  contrib- 
uted to  a  deception  of  the  officers  he  cannot  recover  damages 
for  the  illegal  transfer.3  Thus,  if  the  owner  should  own 
ten  shares  and  he  should  receive  dividends  on  only  six 
instead  of  ten  shares,  and  a  supposed  owner  should  present 
the  forged  power  of  attorney  thereafter,  and  claim  to  own 
the  remaining  four  shares,  the  company  would  be  justified  in 
acting  upon  the  appearance  of  things,  unless  they  had 
knowledge  to  the  contrary,  or  knew  such  facts  as  would 
put  a  prudent  man  upon  inquiry  before  acting.4  And  so 
where  the  owner  of  shares  intrusted  them  with  signed  blanks 
of  powers  of  attorney,  to  his  own  agent  for  safe  keeping, 
and  the  latter  filled  them  up  with  the  name  of  an  ostensible 
owner  who  then  transferred  them  to  an  innocent  third 
person,  it  was  held  that  the  company  was  not  liable  to  the 

1  Greenleaf  v.  Ludington,  15  Dec.  701  ;  Telegraph  Co.  v.  Daven- 
Wis.  558 ;  S.  c.  83  Am.  Dec.  698.  port,  97  U.  S.  369. 

2  Pratt  v.  Boston,  etc.,  R.  R.  Co.,  3  Sewall  v.  Boston  Water  Power 
126  Mass.  443;  Pratt  v.  Taunton,  Co.,  supra. 

123  Mass.  110  ;  S.  c.  25  Am.  Rep.  4  Coles  v.  Bank  of  England,  10 
37  ;  Sewall  v.  Boston  Water  Power  Ad.  &  El.  4:37  ;  Bank  of  Ireland  v. 
Co.,   4  Allen,   277;  S.    C.   81   Am.     Evans'  Charities,  5  H.  L.  Cas.  389. 


168  BUILDING   AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

true  owner.1  If  the  original  owner  has  not  been  guilty 
of  neglect,  he  may  maintain  an  action  against  the  company, 
in  equity,  to  compel  it  to  issue  to  him  a  new  certificate.2 

Sec.  165— Liability  of  Company  to  Innocent  Purchaser 
under  Forged  Power  of  Attorney. 

If  a  company  register  shares  in  the  name  of  a  transferee 
of  a  forged  certificate,  and  such  forged  transferee  is  an 
innocent  purchaser  of  the  share,  having  no  notice  of  the 
forgery  and  having  paid  value  therefor,  it  will  be  liable  to 
him  the  same  as  if  he  were  the  true  owner  of  the  share, 
although  it  may,  at  the  same  time,  be  compelled  to  recog- 
nize the  original  owner  as  the  true  holder  of  the  stock.3 
The  company  is  liable  to  pay  dividends,  accruing  on  such 
stock,  to  the  innocent  purchaser  whom  it  has  recognized  as 
the  actual  and  true  owner.4 

Sec.  166— Pledge  of  Shares. 

It  is  no  uncommon  thing  to  pledge  shares  of  stock  to 
secure  the  performance  of  some  condition  or  the  payment 
of  money  ;  and  this  can  be  lawfully  done.5  The  usual  way 
is  to  deliver  to  the  pledgee  the  certificate  representing  the 
stock,  either  assigned  or  unassigned ; 6  but  by  such  an  act 
the  property  in  the  stock  still  remains  in  the  pledgor.7  It  is 
not  necessary  to  the  validity  of  the  pledge  that  the  stock  be 
transferred  to  the  pledgee  upon  the  company's  books,  for  the 
transaction  as  between  the  pledgor  and  pledgee  is  valid;8 

i  Pennsylvania  R.   R.  Co.'s  Ap-    Rep.  868;   Shaw  v.  Port  Phillips, 
peal,  86  Pa.  St.  80.     Contra.    Tay-    etc.,  L.  R.,  13  Q.  B.  Div.  107. 
lor   v.  Greal   India  Peninsular  R.        6  Brownell  v.   Hawkins,  4  Barb. 
R.  Co.,  4  De  Gex  &  J.  559.     See    491 ;  Lewis  v.  Graham,  4  Abb.  Pr. 
Swan  v.  North  British  Australian    100. 
Co.,  3  Hurl.  &  Colt.   175.  6  McNeil  v.  Tenth  National  Bank, 

•HiMyanl    v.    South   S«-;i    Co..   2     55  Barb.  59. 
I".    Wins.     76;    Telegraph    Co.    v.        7  Wilson  v.  Little,  2  N.  Y.  443 ; 
Davenport,  97U.  S.  369;  Brown  v.    s-  <'•  r>t  Am.  Dec  807. 
Howard     Insurance    Co.,  42  Md.        K  Smith  v.   Crescent  City,  etc., 
884  ;  s.  i  .  20  Am.  Rep.  90.  Slaughter  House  Co.,  30  La.  Ann. 

In  ,;■   U;,|,i:,,  <tc   It.  R.  Co.,  L.     1378  ;    Friedlander    v.     Slaughter 
I;     :;  Q.  |;   ,-,s|.  House  Co.,  :{|  La.  Aim.   523;  Cres- 

1  I);im  v.  Bank  of  Kngl;m<l,  2  <!(>nt  City,  etc.,  Co.  v.  Deblieux, 
Bing.  898;  Eisterbook's  Appeal,  U)  La-  Ann-  155 i  s- c-  3  So.  Rep. 
1 J7  Pa.  st.  601  ;  s.  o.    U   Am.  St.    726. 


§  167.  STOCK   OR   SHARES.  169 

but  he  should  notify  the  company  of  the  transaction  in 
order  to  preserve  his  rights  in  case  it  be  wound  up.1  The 
pledge  must  be  in  writing,  although,  as  stated,  that  writing 
need  not  be  an  assignment  or  transfer  of  the  stock.2  But 
if  there  be  an  absolute  assignment  of  the  stock,  the  pledgor 
on  bringing  an  action  to  redeem,  may  show  that  the  transfer 
was  made  only  by  way  of  a  pledge.3  I i v  pledging  his  stock 
a  member  does  not  forfeit  his  membership  in  the  corpora- 
tion ; 4  but  if  the  stock  has  been  regularly  transferred  to  the 
pledgee  on  the  corporation's  books  the  latter  may  exercise 
all  the  rights  of  the  actual  owner,  although,  in  a  proper 
case,  equity  will  compel  him  to  give  the  pledgor  a  proxy.5 
The  pledgee  takes  the  stock  subject  to  all  the  liabilities  of 
the  owner,  among  which  is  that  of  paying  up  any  arrears  of 
dues  and  fines  in  the  case  of  building  associations.6 

Sec.  167 — Enforcing  Stock  Payments  by  Suit. 

Although  a  member  of  a  building  association  is  liable  to  a 
fine  for  a  failure  or  neglect  to  pay  his  dues  at  the  stated  time 
(of  which  he  is  not  entitled  to  any  notice) ; 7  yet  he  is  liable 
in  an  action  of  assumpsit  to  the  association  for  the  amount 
of  his  delinquent  dues,9  and  so  separate  actions  may  be  main- 
tained for  the  amount  falling  due  at  each  stated  period.9 

Sec.  168 — Payment  of  Dues  on  Stock  Not  a  Payment, 
on  Owner's  Debt  to  Building  Association. 

If  the  owner  become  a  borrower  and  assign  his  stock,  in 
addition  to  the  mortgage  he  may  give,  to  his  building  associa- 
tion, a  payment  of  the  dues  on  his  stock  will  not  be  a  payment, 

1  Bank  of  Commerce's  Appeal,  6  Union  Building  Loan  Associa- 
73  Pa.  St.  59.  tion  v.  Masonic  Hall,  etc.,  Associa- 

2  Brewster  v.  Hartley,  37  Cal.  tion,  29  N.  J.  Eq.  389.  See  also 
15  ;  s.  c.  99  Am.  Dec.  237.  Jenning  v.  Bank  of  California,  7!) 

3  Newton  v.  Fay,  10  Allen,  505.  Cal.  323  ;  s.  c.  21  Pac.  Rep.  852  ;  12 

4  Mechanics'  Building  and  Loan  Am.  St.  Rep.  145. 
Association  V.   Conover,   14  N.    J.  7  Morrison  v.  Dorsey,  48  Md.  461. 
Eq.  219.  8  Association   v.    Kribs,    7   Leg. 

5  In  re  Argus  Printing  Co.,  1  N.  and  Ins.  Rep.  (Pa.)  21. 

D.  434  ;  s.  c.  48  N.  W.  Rep.  437  ;  9  Building  Association  v.  Hop- 
12  L.  R.  A.  781 ;  26  Am.  Rep.  639.       pie,  12  W.  N.  Cas.  222. 


170  BUILDING    AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

pro  tanto,  on  his  debt.  This  is  very  well  stated  in  a  New  Jer- 
sey case,  where  it  was  claimed  that  certain  shares  of  stock 
pledged  for  a  loan  had  been  assessed  for  taxes  too  high,  for 
the  reason  that  all  payments  theretofore  made  upon  it  had 
been  applied  to  the  extinguishment,  pro  tanto,  of  his  debt, 
and  the  stock  therefore  had  little  value.  In  passing  on  this 
question  the  court  said :  "  The  unsoundness  of  the  argu- 
ment in  support  of  this  denial  consists  in  not  observing  the 
distinct  and  separate  existence  of  the  stock  on  the  one  hand, 
and  the  bond  on  the  other, — the  distinct  and  separate  rela- 
tion borne  to  the  company,  on  the  one  hand  by  its  stock- 
holder, and  on  the  other  by  its  borrower.  A  connection  is. 
sought  to  be  established  between  the  stock  held  by  the 
stockholder  and  the  bond  held  b}T  the  company,  b\T  virtue 
of  which,  as  payments  are  made  on  the  stock,  they  are  to 
be  treated  as  payments  on  the  bond,  so  that  one  steadily 
merges  in  or  becomes  offset  by  the  other.  But  while,  in 
a  general  way,  this  view  may  seem  fair,  because  an  ex- 
change of  the  one  for  the  other  is  the  result  expected  to 
happen,  it  is  still  not  a  view  warranted  by  the  terms  of  the 
company's  constitution,  nor  by  the  terms  of  the  bond.  By 
the  condition  of  the  bond,  the  borrower  is  to  pay  interest 
monthly,  on  the  principal  borrowed,  at  the  rate  of  six  per 
cent,  per  annum.  No  time  is  named  for  the  payment  of 
the  principal,  because  if  the  borrower,  in  addition  to  inter- 
est, pays  also  the  monthly  instalments  on  the  stock,  he 
cannot  be  compelled  to  pay  the  principal  in  cash,  but  may, 
when  his  stock  becomes  paid  up,  exchange  his  stock  for 
such  principal  debt.  This  is  so  provided  in  the  condition  of 
the  bond.  But  until  so  exchanged, they  are  distinct  in  legal 
contemplation  :is  well  as  in  form.  The  stock  is  a  collateral 
security  for,  and  not  a  credit  on,  the  bond."1  Following 
ii])  I  he  rule  Laid  down  in  this  quotation,  it  seems  settled  that 
:i  payment  of  dues  upon  stock  is  not,  ■ij>sofa<,to,&  payment 
on  the  mortgaged  or  bonded  debt  of  the  owner.2     For  this 

i  Statev.  Hornbacker,  42N.  J.  I...  Spring     Garden     Association    v. 

affirming s.  C.  41  N.  J.  L.  519.  Tradesmen's    Association,    46  Pa. 

•  North  American   Building  As-  St.  ■!*.•:: ;  WYiss's  Appeal,  5  W.N. 

BociatioD  v.  Sutton,  85  Pa.  St.  468;  Cas.  128;  Early's  Appeal, 89 Pa. St. 


168. 


STOCK   Oil    SHAKES. 


171 


reason  such  payments  on  stock  cannot  be  regarded  as  pai 
tial  payments  on  the  debt,  and  do  not  draw  interest.3 

411  ;  Selden  v.  Reliable  Savings 
and  Building  Association,  32  P.  F. 
Smith,  336;  Germania  Building 
Association  v.  Neill,  93  Pa.  St.  322  ; 
Springville  Building  Association  v. 
Raber,  33  Leg.  Int.  329  ;    s.  C.  24 


Pitts.  L.  Jr.  23;  King-sessing Build- 
ing Association  v.  Roan,  9  W.  N. 
Cas.     15;    Link    v.    Germantown 

Building  Association,  89  Pa.  St.  15  ; 
Pioneer  Savings  &  Loan  Co.  v. 
Everhart  (Tex.),  44  S.  W.  Rep.  885  ; 
Building  Association  v.  Eshelbach, 
7  Phila.  189  ;  Kreamer  v.  Building 
Association,  6  W.  N.  Cas.  207 ; 
Building  Association  v.  Wall,  7 
Phila.  240  ;  Watkins  v.  Working- 
men's  Building  Association,  97  Pa. 
St.  514  ;  38  Leg.  Int.  333  ;  10  W.  N. 
Cas.  414 ;  In  Ohio,  a  borrowing 
member  who  makes  payments  in 
advance  on  the  amount  borrowed 
is  not  entitled  to  dividends  on  such 
payment,  or  any  dues,  except  such 
as  accrued  as  stated  above  at  the 
times  for  semi-annual  dividends  ; 
but  he  is  entitled  to  credit  on  his 
premium  in  so  far  as  his  payments 
cancel  the  loan.  Turner  Ban  Ver- 
ein  v.  Woodburn,  27  Wkly.  L.  Bull. 
409.  See  People's  Building  and 
Loan  Association  v.  Furey,  47  X. 
J.  Eq.,  410  ;  S.  C.  20  Atl.  Rep.  890  ; 
Murphy  v.  Goodland,  etc.,  Associa- 
tion. 2  App.  Kan.  330  ;  s.  C.  43Pac. 
Rep.  8C3  :  Building  and  Loan  As- 
sociation of  Dakota  v.  Logan  (Tex.), 
33  S.  W.  Rep.  1088. 

1  Seibel  v.  Victoria  Building  As- 
sociation, 43  Ohio  St.  371  ;  S.  C.  2 
N.  E.  Rep.  417  ;  1  West.  Rep.  340  ; 
10  Amer.  &  Eng.  Corp.  Cas.  460 ; 
Tilley  v.  American  Building  and 
Loan  Association,  52  Fed.  Rep. 
618 ;  s.  c.  40  Am.  &  Eng.  Corp. 
Cas.  375. 


Therefore  a  statutory  rule  for 
computing  interest  on  part  hi 
ments  lias  no  applicability  to  pay- 
ments on  such  slock,  and  such  in- 
terest is  not  allowed.  Reeve  /•. 
Ladies'  Building  Association,  5 ■'< 
Ark.  335;  s.  C.  19  S.  W.  Rep.  917  ; 
18  L.  R.  A.  129;  Hughes  v.  La 
Compagnie  des  Villa-.  5  .Montreal 
Sup.  Ct.  129. 

In  North  Carolina,  the  transac- 
tion between  the  society  and  bor- 
rower is  treated  as  an  ordinary 
case,  and  the  payment  on  his  stock 
is  considered  as  partial  payments 
onhisdebt.  Overbyr.  Fayetteville 
Building  and  Loan  Association, 
81  N.  C.  50.  The  same  rule  was 
applied  in  the  early  Pennsylvania 
cases.  Kupfert  v.  Guttenberg 
Building  Association,  30  Pa. 
465;  Philanthropic  Building  As- 
sociation v.  McKnight,  35  Pa.  St. 
470;  Hughes  Appeal,  30  Pa.  S  . 
471  ;  Savings  Fund  v.  Murray.  1  1 
Leg.  Int.  133;  Building  Associa- 
tion v.  Reid,  :;  Phila.  345  ;  T'.uild- 
ing  Association  v.  Timmins,  •"! 
Phila.  209;  Building  Association 
v.  Howe.  15  Leg.  Int.  45;  Building 
Association  v.  Dobbins,  15  Leg. 
Int.  45. 

The  burden  is  on  the  defendant 
borrower  to  show  the  value  of  the 
stock  or  the  amount  he  is  enl  it  led 
to  credit  on  his  loan.  Laurel  Run 
Building  Association  r.  Bayley,  1 
Kulp.  215:  Watkins  v.  Working- 
men's,  etc.,  Association,  97  Pa.  St. 
514  ;  s.  C.  38  Leg.  Int.  337  ;  10  W. 
N.  Cas.  414. 

Where  an  association  agrees  to 
accept  the  stock  of  a  defaulting 
borrower  upon  condition  that  he 
be  credited  with  the  amount  paid 
thereon,  he  is  not  entitled  to  re- 


172  BUILDING   AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

Sec.    169— Application   of  Stock    Payments   to  Extin- 
guishment of  Borrower's  Debt. 

Whatever  may  be  said  with  reference  to  a  payment  on 
his  stock  not  being  a  payment  on  the  borrower's  indebt- 
edness to  the  association,  it  is  quite  clear  that  he  has 
a  right,  under  his  contract  with  the  association,  to  have 
such  payments  applied  to  the  extinguishment  of  his  in- 
debtedness, pro  tanto  •  and  the  association,  if  it  hold  a 
lien  on  such  share,  has  the  right  to  make  the  same  applica- 
tion.1 This  right,  of  course,  extends  to  his  assignee  in 
insolvency.  If  he  insist  upon  this  course,  his  stock  becomes 
extinguished  and  his  membership  destroyed.  But  he  may 
pursue  another  course, — he  may  pay  the  full  indebtedness 
and  retain  his  stock  and  membership,  and  thence  on  he  will 
be  a  non-borrowing  member,  unless  he  should  secure  an- 
other loan.2  If  the  stock  has  been  pledged  to  the  associa- 
tion as  a  collateral  security  for  the  debt,  as  is  almost  uni- 
versally the  case,  the  association  has  the  right  to  apply  the 
payments  thereon  &spro  tanto  payments  upon  the  borrower's 
debt.3     A  borrowing  member  cannot,  in  the  absence  of  an 

ceive  any  credit  therefor,   if  the  186 ;    S.    c.    62  N.    W.    Rep.    373 ; 

amount  paid  thereon  has  been  pre-  Wadlinger  v.  Washington  German 

viously    deducted  from   his    debt.  Building  and  Loan  Association,  153 

Mutual  Building  and  Loan  Asso-  Pa.  St.  622  ;  s.  c.  26  Atl.  Rep.  647  ; 

ciationv.  Tascott,  143111.  305  ;  s.  C.  La  Societe  Canadienne-Frangaise 

32  N.  E.  Rep.  376;  40  Am.  &  Eng.  v.   Daveluy,   20   Can.    S.  Ct.    449; 

Corp.  Cas.  361.  Watkins  v.  Workingmen's  Build- 

1  Spring  Garden  Association  v.  ing  and  Loan  Association,  93  Pa. 

Tradesmen's  Building  Association,  St.  514;  s.  c.  38  Leg.  Int.  337;  10 

;;    Pa.  St.    L93  ;    North   American  W.  N.  Cas.  414 ;  Seibel  v.  Building 

ling   Association   v.  Sutton,  35  Association,  43  Ohio  St.  371  ;  s.  c. 

Pa.  St.  463;  s.  C.  78  Am.  Dec.  349  10  Am.  &  Eng.  Corp.  Cas.  460 ;  re- 

Early's  Appeal,  89  Pa.  St.  411.  versing,  13  Wkly  L.  Bull.  265. 

-  hi.  See  also  Watkinsv.  Work-  That  a  borrowing  member  of  a 
ingmen's  Building  Association,  97  building  and  loan  association  may 
I'm.  si.  51  I  :  s.  c.  38  Leg.  Int.  '■'•'■'>'■'< ;  elecl  to  have  payments  on  account 
in  W,  N.  C.  111.  Springville  of  stock  applied  on  his  indebted- 
Building  Association  v.  Raber,  24  ness  to  the  association,  see  Randall 
Pitts.    L.  .Jr.   2:>;  s.  c.  '-'>'■'>   Leg.   Int.  v.     National    Building,    Loan   and 

Protective    Union,   43    Neb.    870; 

■  /-/.  People's  Building  and  Loan  B.C.  62  \.  W.  Rep.  252;  Buist  v. 

Association  v.    Hilling,   104    Mich.  Bryan  II  S.  C.  121  :  21  S.  E.  537; 


§  169. 


STOCK   OR   SHARES. 


173 


agreement,  have  the  payments  on  his  unmatured  stock  applied 
on  a  loan  from  the  association.1     The  mere  fact  of  making" 

o 

payments,  where  there  is  no  agreement  touching  their  ap- 
plication, will  not  ipso  facto  make  them  payments  on  the 
indebtedness;2  and  the  testimony  of  the  officers  of  the 
association  that  they  considered  the  payments  as,  in  law, 
payments  on  the  loan,  is  not  evidence  of  an  appropriation 
of  them  to  that  object.3  A  receipt  book  of  the  association, 
containing  entries  of  payments,  is  evidence  against  it  with- 
out calling  the  officer  who  made  them  ;  and  the}r  cannot  be 
rejected  because  they  furnish  evidence  of  other  payments 
than  those  for  which  they  are  properly  admissible  in  evi- 
dence.4    A  member  is  not  entitled  to  have  the  payments  on 


Randall  v.  National  Building,  Loan 
Protective  Union,  42  Neb.  809; 
&  s.  C.  60  N.  W.  Rep.  1019 ;  Ply- 
mouth Building  Association  v. 
Mangan,  2  Kulp.  210  ;  Plymouth 
Building  Association  v.  Rood,  2 
Kulp.  246;  Treffeirson's  Estate,  3 
Kulp.  308  ;  Harris'  Appeal,  18  W. 
N.  Cas.  14 ;  Oliver's  Estate,  1  Del. 
(Pa.)  358;  Kreamer  v.  Springville 
Saving  Fund  and  Loan  Associa- 
tion, 1  Chest.  (Pa.)  353  ;  s.  C.  6  W. 
N.  Cas.  267  ;  Greenfield's  Estate,  1 
Chest.  (Pa.)  356. 

1  Sweeney  v.  El  Paso  Building 
and  Loan  Association  (Tex.  Civ. 
App.),  26  S.  W.  Rep.  290  ;  Blakeley 
v.  El  Paso  Building  and  Loan  As- 
sociation (Tex.  Civ.  App.)  26  S. 
W.  Rep.  292  ;  Rogers  v.  Hargo,  92 
Tenn.  35  ;  s.  C.  20  S.  W.  Rep.  430. 

A  stockholder  having  made  pay- 
ments, which  had  not  been  appro- 
priated to  any  portion  of  his  sev- 
eral sources  of  indebtedness,  on  a 
bill  to  foreclose  a  mortgage  given 
by  him,  the  payments  were  di- 
rected to  be  appropriated  ;  first,  in 
payment  of  the  monthly  fines  ; 
then  to  the  monthly  instalments 
on  subscription  to  stock,  and  the 


balance  to  the  monthly  interest. 
Clarksville  Building  and  Loan  As- 
sociation, v.  Stephens,  26  N.  J.  Eq. 
351.  See  Roberts  v.  American 
Building  &  Loan  Ass'n,  62  Ark. 
572;  s.  c.  36  S.  W.  Rep.  1080. 
Pioneer  Savings  &  L.  Co.  v.  Ever- 
hart  (Tex),  44  S.  W.  Rep.  884; 
Pioneer  Savings  &  L.  Co.  v.  Kas- 
par        Kan.         ;  52  Pac.  Rep.  023. 

2  Economy  Building  Association 
v.  Hungerbuehler,  93  Pa.  St.  258  ; 
s.  c.  10  W.  N.  Cas.  414  ;  38  Leg.  Int. 
333 ;  Spring  Garden  Association 
v.  Tradesmen's  Loan  Association, 
46  Pa.  St.  493  ;  Whilden  v.  Broom- 
all,  1  Del.  (Pa.)  142;  Treffeirson's 
Estate,  3  Kulp.  308  ;  Harris's  Ap- 
peal, 18  W.  N.  Cas.  14;  Randall  y. 
National  Building,  Loan  and  Pro- 
tective Union,  43  Neb.  876 ;  s.  C. 
62  N.  W.  Rep.  252.  See  interna- 
tional Building  and  Loan  Associa- 
tion v.  Mayers  (Tex.  Civ.  App.); 
25  S.  W.  Rep.  1132. 

sId. 

4  North  American  Building  As- 
sociation v.  Sutton,  35  Pa.  St.  463  ; 
s.  c.  78  Am.  Dec.  349  ;  Economy 
Building  Association  v.  Hunger- 
buehler, supra ;  Kreamer  v.  Spring 


174 


BUILDING   AND   LOAN   ASSOCIATIONS.      CI).  VIII. 


shares  in  one  series  credited  upon  his  indebtedness  for 
money  borrowed  on  shares  in  another  series.1  Nor  can  he 
insist  upon  credit  being  given  him  for  stock  of  another 
assigned  to  him  after  the  maturity  of  his  loan.2  The  fact 
that  the  contract  with  the  borrower  provides  for  the  for- 
feiture of  his  stock  in  case  a  payment  is  not  made,  does  not 
affect  his  right  to  have  all  his  stock  payments  applied  in 
reduction  of  his  loan,  for  that  provision  of  the  contract  is 
void.3  Where  the  agreement  for  the  loan  provides  that  on 
default  in  the  payment  of  dues  on  the  stock  transferred  as 
collateral  security,  the  association  may,  at  its  option,  de- 
clare the  stock  forfeited,  and  apply  its  withdrawal  value  on 
the  debt,  a  formal  foreclosure  is  not  necessary  to  such  appli- 
cation.4 


ville  Saving  Fund  and  Loan  As- 
sociation, 1  Chest.  (Pa. )  353  ;  s.  c. 
6  W.  N.  Cas.  267. 

AVhere  no  election  by  the  debtor 
concerning  the  application  of  pay- 
ments has  been  made  until  the  date 
of  the  trial,  he  is  not  entitled  to 
credit  as  of  the  date  the  payments 
were  actually  made.  Hazel  Loan 
and  Building  Association  v.  Gross- 
beck,  41  Leg.  Int.  16.  See  York 
Trust,  etc.,  Co.  v.  Gallatin  (Pa.)  40 
Atl.  Rep.  317. 

1  Anthracite  Saving  Fund  v. 
Cake,  2  Leg.  Rec.  Rep.  172. 

2  Plymouth  Building  Association 
v.  Rood,  2  Kulp.  246.  Contra. 
Hennighausen  v.  Tisher.  50  Md. 
583. 

;  Randall  v.  National  Building, 
Loan  and  Protective  Union,  42 
Neb.  809;  s.  c.  60  N.W.  Rep.  1019; 
People's  Building  and  Loan  Asso- 
ciation v.  Billing  104  Mich.  186; 
62  N.  W.  Rep.  373.  But  see 
Freeman  v.  Ottawa  Building, 
Homestead  <v  Saving  Association, 
114  111.  L82  :  s.  c.  38N.  E.  Rep.  611  ; 
Holmes  v.  Smythe,  LOO  III.  U8. 

1  People's  Building  and  Loan 
i.it ion    r.  Billing,    104   Mich. 


186;  s.  c.  62  N.  W.  Rep.  373; 
Oliver's  Estate,  1  Del.  (Pa.)  358. 

In  Alabama  it  is  held  that  the 
association  may  forfeit  the  amount 
paid  on  the  stock  without  credit- 
ing the  borrower's  indebtedness 
therewith.  Southern  B.  L.  Co.  v. 
Anniston  Loan  and  Trust  Co.,  101 
Ala.  582  ;  s.  c.  15  So.  Rep.  123. 

Upon  the  appointment  of  a  re- 
ceiver for  a  building  association,  a 
stockholder  who  has  executed  a 
mortgage  to  secure  the  payment 
of  an  advance  of  stock  is  entitled 
to  have  all  payments  of  monthly 
dues  and  interest  made  by  him 
credited  upon  such  mortgage. 
Buist  v.  Bryan,  44  S.  C.  121  ;  S.  C. 
21  S.  E.  Rep.  537. 

In  New  Jersey  it  is  held  that  in- 
stalments paid  on  stock  are  not 
deducted  ;  for  the  reason  that  the 
mortgagor  receives  their  value 
when  the  association  comes  to  an 
end.  To  get  these  benefits  the 
stockholder  must  withdraw.  Peo- 
ple's Building  and  Loan  Associa- 
tion V.  Furry.  47  N.  J.  Eq.  410; 
s.  c.  20  Atl.  Rep.  890.  See  also 
Equitable  B.  &  L.  Ass'n  v.  Vance 
4.9  S.  0.  402;  27  S.  E.  Rep.  274. 


170. 


STOCK    OR    SHARES. 


175 


Sec.  170— Borrower  having  Assigned  his  Stock. 

If  a  borrower  has  assigned  his  stork,  then  hecannot  have 
payments  thereon  set  off  against  his  indebtedness ;  for  by 
the  assignment  he  has  received  from  the  assignee  his  full 
benefit.1 

against  the  amount  clue  on  the 
mortgage.  Novak  v.  Vypomocny, 
etc.,  Ass'n,  68  111.  App.  C82. 

In  Tennessee,  a  payment  on 
stock  is  not  ipso  facto  a  payment 
on  the  member's  loan.  Post  v. 
Mechanics'  B.  &  L.  Ass'n,  97Tenn. 
408  ;  s.  c.  37  S.  W.  Rep.  216  ;  3  I  L. 
R.  A.  201.  The  rule  is  not  waived 
by  the  fact  that  the  loan  is  tainted 
by  usury  ;  and  the  borrower  who 
has  paid  usury  cannot  recoup  it  by 
receiving  back  the  payments  made 
on  his  stock,  since  this  is  a  sepa- 
rate transaction.  Id.  :  Rogera  v. 
Raines  (Ky.)  38  S.  W.  Rep.  -183. 

In  Washington  it  is  held  that 
where  the  amounts  paid  by  a  mort- 
gagor,  as  interest  and  dues,  are 
equal  to  the  amount  which  the 
mortgage  was  given  to  secure,  a 
complaint  for  foreclosure  would 
not  be  sustained.  Interstate,  etc., 
Ass'n  v.  Cairns.  16  Wash.  215  ;  47 
Pac.  Rep.  509. 

1  Schober  v.  Accommodation 
Saving  Fund  and  Loan  Associa- 
tion, 35  Pa.  St.  223;  Philadelphia 
Mercantile  Loan  Association  v. 
Moore,  47  Pa.  St.  233  ;  Wadlinger 
v.  Washington  Germania  Building 
and  Loan  Association,  153  Pa.  St. 
622  ;  S.  c.  26  Atl.  Rep.  647. 

In  Michigan,  shares  of  stock 
transferred  to  an  association  to  se- 
cure a  loan  become  Liquidated,  and 
the  owner  cannot  afterwards  sell  or 
transfer  them  to  another.  Mich- 
igan Building  and  Saving  Associa- 
tion v.  McDevitt,  77  Mich.  1  ;  s.  c. 
43  N.  W.  Rep.  7G0. 

Allowing  ili"  mortgagor  to  with- 


in North  Carolina  a  contract  by 
which  the  stock  assigned  by  a  bor- 
rower to  the  association,  depriving 
him  of  an  allowance  of  credit  on 
his  mortgage  for  the  payments 
made  on  such  stock,  when  he 
makes  default,  is  held  unconscion- 
able, and,  though  upheld  by  the 
laws  of  the  association's  own 
state,  will  not  be  enforced  in 
North  Carolina.  Rowland  v. 
Old  Dominion  Building  and  Loan 
Association,  115  N.  C.  825;  S.  C. 
18  N.  E.  Rep.  965;  Rowland  v. 
Old  Dominion  Building  and  Loan 
Association,  116  N.  C.  877  ;  s.  c.  22 
S.  E.  Rep.  8  ;  Rowland  v.  Old 
Dominion  Building  and  Loan  As- 
sociation (N.  C,  ;  S.  C.  24  S. 
E.  Rep.  366. 

In  Maryland  it  is  held  that  the 
mortgagor  may  set  off,  in  a  fore- 
closure of  the  mortgage  he  has 
given  the  association,  the  value  of 
his  stock,  in  order  to  avoid  a  cir- 
cuity of  action.  Middle  States, 
etc.,  Co.  i\  Hagerstown,  etc.,  Co., 
82  Md.  506 ;  s.  c.  33  Atl.  Rep.  886. 

If  the  mortgagor  be  delinquent 
on  both  his  stock  and  mortgage 
and  he  makes  a  payment  without 
saying  upon  which  he  makes  it,  the 
society  may  apply  it  wholly  to  his 
stock,  if  there  be  not  enough  to 
pay  both,  or  at  least  so  much  of  it 
as  is  necessary  to  satisfy  his  stock. 
Nickels  v.  People's  Building.  Loan 
and  Savings  Association  (Va. )  25 
S.  E.  Rep.  522. 

AVhere  stock  has  matured,  the 
delinquent  mortgagee  can  set  off 
what    is   due    him   on   the    stock 


176  BUILDING    AND    LOAN    ASSOCIATIONS.  Cll.     VIII. 

A  member  of  a  loan  association  gave  bond  for  a  loan 
and  the  payment  of  instalments  on  four  shares  of  stock, 
and  thereupon  assigned  all  the  shares  he  had  as  collateral 
security  therefor ;  and  on  obtaining  a  second  loan  on  two 
or  more  shares,  made  a  second  assignment  of  all  his  stock, 
as  collateral.  It  was  held  that  he  could  not  afterwards 
apply  the  instalments  paid  upon  the  stock,  to  the  first  loan, 
which  had  been  secured  by  judgment,  if  before  obtaining 
the  second,  he  had  made  no  appropriation  of  them.  It  was 
decided  that  the  first  assignment,  as  collateral,  was  not  a  dis- 
charge of  the  loan  to  the  extent  of  the  instalments  paid ; 
and  the  second  was  an  election  by  the  defendant  not  to  make 
the  first,  as  a  partial  payment  of  the  first  bond,  but  to 
pledge  all  the  stock  as  a  living  security  for  the  payment  of 
the  second.  It  was  also  decided  that  the  payments  on  the 
stock  should  be  applied  to  the  second  bond  and  not  to  the 
first,  against  the  consent  of  the  association,  except  to  the  ex- 
tent of  what  might  remain  after  the  second  was  paid.1 

Sec.  171 — Strangers  Cannot  Compel  Application  of 
Stock  Payments  to  Debt. 

It  is  only  the  borrower,  his  legal  representatives,  or  the 
association  that  may  make  the  application  of  stock  pay- 
ments to  the  member's  indebtedness  to  the  association ; 
strangers  cannot  exercise  that  right.  Thus  the  purchaser 
of  the  real  estate  mortgaged  to  secure  the  loan  cannot  com- 
pel the  application  of  such  payments  in  order  to  reduce  the 
amount  due  under  the  mortgage ;  and  on  a  scire  facias 
thereon  against  the  terre  tenant,  the  plaintiff  is  entitled  to 
recover  the  amount  borrowed,  with  interest,  deducting  only 
the  payments  of  interest  made  by  the  mortgagor.2    "Where 

draw  shares  pledged  as  collateral  ducted.    Merchantville  B.  &  L.  As- 

for    the    Loan    and    to    substitute  sociationv.  Zane(N.  J.  Ch.),38  Atl. 

others  of  a  lower  value,  is  not  a  Rep.  420. 

payment  of  the  mortgage  so  as  to  l  Philadelphia  Mercantile  L.  R. 

allow  a  second  mortgage  to  become  v.  Moore,  47  Pa.  233  ;  "Wadlinger  v. 

a  prior  lien;  but  in  marshalling  "Wadington,  etc.,  A.  153  Pa. G22  ;  26 

ecurities,   tin:  difference  between  Atl.  Rep.  647. 

the  withdrawal  value  of  (lie  first  -Spring  Garden  Association,  v. 

and    second    series    must    be  de-  Tradesman's  Loan  Association  46 


§  172.  STOCK   OR   SHAKES.  177 

a  borrower  sold  and  transferred  his  stock  to  another,  sub- 
ject to  the  rights  of  the  association,  and  the  latter  was  duly 
notified  of  the  assignment,  it  was  held  that  a  junior  mort- 
gagee had  no  equity  against  such  transferee  to  claim  that 
payments  made  by  such  borrowing  member  should  be 
applied  on  account  of  the  first  or  building  association  mort- 
gage.1 But  where  the  purchase  was  subject  to  the  mortgage 
and  the  grantee  assumed  the  debt,  not  knowing  that  by  the 
provisions  of  the  mortgage  that  the  vendor  had  no  interest 
in  the  stock  of  the  corporation  and  was  not  a  member,  he 
having  assigned  to  the  company  half  of  his  previously  owned 
stock  as  a  premium  for  a  loan  ;  it  was  held  that  as  against 
such  purchaser,  the  corporation  could  not  demand  that  half 
of  the  dues  paid  by  him  should  be  applied  on  the  stock 
assigned  to  it.2 

Sec.  172— Surety's  Right  to  Stock. 

The  surety  in  a  judgment  given  to  secure  a  loan  for  which 
the  borrower's  stock  has  been  assigned  to  the  association  as 
collateral,  is  entitled,  on  payment  of  the  debt,  to  subroga- 
tion to  the  association's  collateral.  Even  before  payment 
of  the  debt,  the  surety's  rights  are  superior  to  those  of  a 
creditor  of  the  borrower  attaching  the  stock  in  the  hands 
of  the  association.3 

"  It  is  claimed,  however,  that  said  share  has  not  only  been 
assigned,  but  has  been  forfeited,  to  the  company,  and  there- 
fore that  no  credit  should  be  allowed  it.  This,  however,  is 
not  in  accordance  with  the  rules  of  equity  that  apply  in 
such  cases,  where  personal  property  has  been  pledged  as  a 
security  for  a  debt.  And  this  stock  was  pledged  merely  as 
a  security  for  a  debt.     If  A.  borrowed  money  from  B.  and 

Pa.  St.  493  ;  s.  C.  11  Phila.  546  ;  33  Building  Association  v.  Mangan,  2 

Leg  Int.  329.     Economy  Building  Kulp.  210  ;  Flynn  v.  Equitable  Sav- 

Association  v.  Hungerbuehler,  93  ing  Fund.  37  Leg.  Int.  333  ;  Whil- 

Pa.  St.  258;  Building  Association  den  v.  Broomall,  1  Del.  (Pa.)  142. 

v.  Eschlebach,  7  Phila.  189;  S.  c.  i  Hows'  Appeal,  18  W.  N.  Cas.  14. 

Leg.    1870,    p.    13.      Kreamer    v.  2  Sawtell  v.  N.  &  S.  L.  &  B.  Co. 

Springville  Saving  Fund  and  Loan  48  Pac.  Rep.  211. 

Association,  1  Chest.  (Pa.)  353;  s.  c.  s  Diemer  v.  Egolf,  1  Chest.  (Pa.) 

6  W.  N.  Cas.  267  ;  Greenfield's  Es-  55. 
tate,  1  Chest.  (Pa.)  356  ;  Plymouth 
12 


178  BUILDING   AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

gave  his  note  therefor,  with  C.  as  his  surety,  who  mortgages 
his  property  to  secure  A.'s  debt,  and  at  the  same  time  A. 
delivered  to  B.  his  watch,  as  additional  security,  to  be  for- 
feited if  default  be  made  in  the  payment,  can  B.  keep  the 
watch  and  recover  from  the  maker  of  the  note  the  full 
amount  of  the  debt  and  interest,  having  C.'s  mortgaged 
property  sold  to  satisfy  the  same?  Or  would  not  C.  be 
entitled  to  have  the  watch  sold  first  and  the  proceeds  of 
such  sale  credited  on  the  judgment,  before  his  property  can 
be  appropriated  to  the  payment  thereof?  If  the  share  has 
any  value,  Mrs.  Massey  [the  surety]  has  the  right  to  have 
that  value  credited  on  the  judgment  before  any  of  the  pro- 
ceeds of  the  sale  of  her  property  shall  be  applied  to  its 
payment." x 

Sec.  173 — Attachment  or  Levy  upon  Building  Associa- 
tion Stock. 

At  common  law  stock  of  a  corporation  could  not  be 
attached  by  a  writ  of  attachment  nor  levied  upon  by  an 
execution ;  but  statutes  have  universally  been  passed  allow- 
ing such  proceedings,  and  they  apply  to  the  stock  of  build- 
ing associations.2  Some  of  these  hold,  however,  that  the 
assignment  of  the  stock  to  the  association  as  collateral 
security  for  a  loan  divests  the  title  of  the  assignor  so  far  as 
to  prevent  a  sale  of  it  upon  ixfi.fa.  against  the  assignor.3  As 
a  consequence  of  this  rule,  it  was  held  that  a  borrower  who 
has  assigned  his  stock  as  collateral,  which  loan  is  also 
secured  by  a  judgment  against  him,  may  elect,  upon  a 
si i cliff's  sale  of  his  realty,  to  have  the  actual  value  of  his 
stock  deducted  from  the  amount  of  the  judgment  before  the 
latter  is  allowed  to  participate  in  the  fund  arising  from 
the  siilc4 

1  Massey  v.  Citizens'  Building,  8  Early's  Appeal,  89  Pa.  St.  411  ; 
etc.,   Association,  22  Kan.  624.  s.  c.  7  W.  N.  Cas.  184;  Mulford  v. 

2  See  Diemer  v.  Egolf,  1  Chest.  Weisberger,  3  Lerz  Leg.  Reg.  99; 
(Pa.)  55  ;  Mechanics' Building  and  Laurel  Run  Building  Association 
Loan    \ssoci:it  inn  r.  ( '(mover,  14  N.  v.  Bayley,  1  Kulp.  215. 

.).  Eq.  219  ;  Economy  Building  As-       i  /'/. 

Bociation  v.  Hungerbuehler,  93  Pa.       Under    the    Michigan    statute 

St.  258.  shares  assigned  to  association  to 


§  174.  STOCK   OR   SHARES.  179 

Sec.  174—  Value  of  Stock  when  Applied  to  Borrower's 
Debt. 

In  ascertaining  the  value  of  bis  stock  to  be  setoff  against 
a  borrower's  indebtedness  the  court  will  merely  take  the 
aggregate  of  all  his  payments  that  have  been  made  upon 
such  stock,  and  not  the  actual  value  of  the  stock  as  of  the 
date  of  the  trial.1  "If  his  interest  has  been  punctually 
paid,  the  remaining  claim  against  him  to  be  discharged  is 
the  principal  sum  loaned.  Towards  payment  of  that  the 
mortgagor  may  properly  apply  the  gross  amount  of  all 
sums  paid  as  monthly  dues,  computing  the  same  as  the 
amount  may  be  at  the  time  of  the  adjustment.  But  upon 
such  payments  of  monthly  dues  the  mortgagor  can  claim 
no  interest,  nor  require  any  application  of  them  to  be  made 
as  payments  at  the  time  when  received.  They  are  not  pay- 
ments  originally  required  or  stipulated  to  be  paid  as  pay- 
ments towards  any  loan.  The)'  are  paid  as  the  capital  of 
the  company,  and  paid  alike  by  those  who  do  and  by  those 
who  do  not  take  loans.  Those  who  take  loans  may  apply 
them,  on  the  final  adjustment  of  the  loans,  to  the  discharge 
of  the  loans ;  but  they  are  to  be  applied  in  a  gross  sum  and 
without  any  allowance  of  interest  thereon." 2  A  defaulting 
borrowing   member  stands  upon  quite  a  different  footing 

secure  a  loan  are  in  fact  sold  and  toance  fee.     "We  do  not  see  any 

become  liquidated.     The  assignor  grounds  for  applying  the  moneys 

cannot  afterwards  sell  or  transfer  paid  as  entrance  fees  in  discharge 

them   to    another  party ;    and  of  of  the  sums  loaned.     No  provision 

course  they  cannot  be  sold  on  exe-  to  that  effect  is  found  in  the  ar- 

cution    against     him.       Michigan  tide  providing  for  discharging  the 

Building  and  Saving  Association  mortgage,  when  the  monthly  dues 

v.  McDevitt,  1  Mich.  77  ;  s.  c.  43  N.  shall  be  equal  to  the  loss.     These 

W.  Rep.  760.  entrance  fees  are  more  properly  ;i  ]  >- 

1  Watkinsr.  Workingmen's,  etc.,  plicable  to  the  discharge  of  the 
Association,  97  Pa.  St.  514  ;  s.  c.  10  ordinary  expenses  of  the  associa- 
W.  N.  Cas.  414 ;  38  Leg.  Int.  333 ;  tion,  and  are  not  properly  to  be 
National  Building  Association  v.  considered  a  default  of  money,  to 
Mangan,  2  Kulp.  19;  Barker  v.  be  afterwards  allowed  to  the  mem- 
Bigelow,  15  Gray,  130  ;  Building  bers  upon  any  future  loan."  Id. 
Association  v.  Groesbeck,  41  Leg.  But  see  Meroney  v.  Atlanta,  etc., 
Int.  16;  s.  c.  17Phila.  242.  Association,  116  N.    C.  882;  S.  C. 

2  Barker  v.  Bigelow,  supra.     He  2183  Rep.  924. 
was  allowed  no  credit  for  his  en- 


180  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  VIII. 

from  a  voluntarily  withdrawing  member.  The  latter  is  at 
least,  unless  a  by-law  provides  otherwise,  entitled  to  a  cer- 
tain proportion  of  the  profits  arising  from  the  transactions 
of  the  society,  but  a  defaulting  member  is  not.1  The  with- 
drawal value,  where  a  member  has  not  made  default,  and 
continues  until  the  association  is  wound  up,  may  be  made 
up  in  the  first  instance  of  the  member's  stock  payments,  of 
his  payments  of  interest  (or,  as  it  is  often  called,  of  his 
redemption  money),  of  the  fines  or  fees  he  has  paid,  and  of 
the  share  of  the  profits  made  upon  all  these  payments 
mingled  with  the  common  fund.  In  the  second  instance  he 
is  entitled  to  a  proportionate  share  of  all  the  like  revenues 
the  society  has  had  from  other  members,  such  as  their  stock 
payments,  interest,  fines,  fees,  and  other  charges,  including 
forfeiture  of  stock  and  fortunate  speculations  realized  by 
the  investment  of  the  corporate  funds.  And  in  a  third 
instance,  whatever  the  society  has  realized  from  the  premi- 
ums received  by  it.  But  where  the  society  has  not  reached 
the  period  of  its  existence,  or  where  the  series  to  which  he 
belongs  had  not  reached  the  period  of  its  termination,  he  is 
not  entitled  to  any  of  these  amounts,  except  such  as  he  has 
paid  in  on  his  stock  or  dues,  unless  the  by-laws  provide 
otherwise.2  In  no  instance,  however,  whether  a  retiring 
member  is  a  defaulter  or  not,  is  he  entitled  to  interest  upon 
the  amounts  he  has  paid  upon  his  stock ;  for  the  society 
never  borrowed  money  from  him,  nor  did  it  ever  agree  to 
pay  interest  upon  such  payments.3    Where  a  defaulting  bor-r 


*Watkins    v.    Workingmen's  Where  a  by-law  provided  that 

Building    and    Loan    Association,  the  legal  representative  of  a  de- 

supra ;  Matterson  v.  Elderfield,  L.  ceased  member  might  receive,  up- 

R.  4  Ch.  207  ;  S.   c.  17  W.  R.  422 ;  on   notice,   the    net   value   of  his 

20  L.  T.  (N.  8.)  503  ;  36  J.  P  326.  share,  it  was  held  that  proper  mode 

*  Mechanics'  Building  and  Loan  of  determining  that  value  was  to 

Association  v.  Conover,   14   N.  J.  ascertain  the  market  value.     Bab- 

Eq.  219  (not  overruled  this  point  in  cock  v.   Middlesex,   etc.,  Co.,  28 

17  N.  J.  Eq.  197).  Conn.  302;  Hensel  v.  International 

:<  Citizens' Mutual   Loan  and  Ac-  Building    and    Loan     Association 

cumulating  Fund   Association,  26  (Tex.)  20  S.  W.  Rep.  116. 
Barb.  268  ;  Delano  v.  Wild,  6  Allen, 
1 ;  s.  0.  83  Am.  Dec.  605. 


§  174.  STOCK   OR   SHARES.  181 

rowing  member  elects  to  deduct  the  amount. of  payments 
made  on  his  stock  from  the  amount  of  his  loan  then  due, 
all  arrearages  on  such  stock,  as  fines,  must  first  be  deducted.1 
Where  the  constitution  of  a  building  association  provided 
that  the  profits  that  might  accrue  should  be  credited  as  so 
much  paid  on  the  shares  not  paid  up  in  full,  and  paid  in 
cash  to  those  who  had  paid  up  their  shares;  and  also  that 
where  the  shares  were  paid  up  by  instalments  and  divi- 
dends of  profits  the  mortgaged  property  should  be  valued ; 
it  was  held  that  the  profits  credited  to  a  borrower  were  not 
to  be  refunded  by  him,  but  were  to  go  in  part  payment  of 
the  mortgage,  where  he  brought  an  action  charging  that 
the  association  had  taken  from  him  usurious  interest,  and 
asking  that  his  mortgage  be  cancelled  on  ascertaining  and 
payment  of  the  amount  actually  due.2  It  may  be  added 
that  where  the  by-laws  of  an  association  providing  for  the 
declaration  of  quarterly  or  other  periodical  dividends,  a 
defaulting  member  is  entitled  to  have  credit  for  all  divi- 
dends declared  up  to  and  including  the  last  quarter  made 
upon  his  debt.3  Upon  the  subject  of  this  section  generally 
we  quote  the  following  from  a  Pennsylvania  case  : 4 

"  Its  value  for  the  purposes  of  this  case  was  just  what  the 
defendant  had  paid  on  account  thereof.  This  was  all  *  *  * 
the  law  gave  him  the  right  to  apply.  The  value  of  stock 
beyond  this  consisted  mainly  of  the  profits,  in  which  a  de- 
faulting borrower  has  no  right  to  participate.  This  arises 
from  two  causes :  1st,  The  peculiar  nature  of  the  contract 
between  building  associations  and  their  members ;  and  2d, 
The  difficulty,  if  not  absolute  impossibility,  of  ascertaining 
the  profits  until  the  association  is  ready  to  wind  up.  A 
venture  in  building  associations  is  a  peculiar  investment. 
It  is  much  to  be  feared  that  many  persons  ol  slender  means 
embark  in  such  enterprises  without  a  clear  understanding 

1  Plymouth  Building  Association  3  See  Marks  v.  Monroe  Co.,  etc., 
v.  Rood,  2  Kulp.  246;  Plymouth  Association,  52  N.  Y.  St.  Rep.  451. 
Building  Association  v.  Mangan,  2  4Watkins  v.  Workingmen's 
Kulp.  210.  Building  and  Loan  Association,  97 

2  Border  State    Perpetual,   etc.,  Pa.  St.  514. 
Association  v.  Hayes,  61  Md.  597. 


182  BUILDING    AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

of  their  particular  working.  The  present  case  furnishes  an 
apt  illustration  of  the  result  in  one  class  of  cases.  The 
defendant  received  but  $384,  in  cash,  on  his  loan  ;  at  the  end 
of  ST  months,  a  little  over  seven  years,  he  had  paid  into  the 
treasury  the  sum  of  $794.  He  now  has  a  judgment  against 
him,  in  addition,  for  the  sum -of  $518.84.  This  disastrous 
result  is  the  legitimate  outgrowth  of  our  building  associa- 
tion laws ;  yet  it  is  not  worse  than  many  other  ventures  in 
partnership  and  other  transactions,  where  persons  embark 
in  enterprises  beyond  their  means. 

"  The  loss  is  not  necessarily  the  fault  or  result  of  the  law, 
but  of  the  inabilitjr  of  the  defendant  to  keep  his  contract 
with  the  association.  Such  investments  are  profitable  or 
otherwise,  according  to  circumstances.  'Where  the  associa- 
tion is  prudently  managed,  and  is  wound  up  within  the  pre- 
scribed period,  it  is  alwa}Ts  profitable  to  the  non-borrowing 
members.  They  participate  in  the  premiums  which  they 
do  not  pay.  If  the  association  was  composed  exclusively  of 
borrowers,  the  gain  of  the  individual  member  would  depend 
upon  the  amount  of  his  premium  ;  if  he  had  paid  less  than 
the  average,  there  would  be  a  profit ;  if  he  had  paid  more, 
there  would  be  a  loss.  Where  the  association  is  composed 
of  both  classes  of  members,  the  result  of  the  borrowing 
member  must  depend,  to  a  great  extent,  upon  the  relative 
proportion  of  the  two  classes,  and  upon  the  amount  of 
premiums  which  he  had  paid.  There  are,  of  course,  other 
matters  which  in  a  minor  degree  affect  the  result ;  but  the 
foregoing  are  the  two  cardinal  principles  which  underlie 
the  whole  matter;  and  it  is  further  to  be  observed,  that  the 
profits  are  reserved  for  those  members  who  continue  to  the 
end.  For  borrowing  members  who  drop  out  of  the  way, 
there  is  nothing  but  disaster.  The  defendant  dropped  out 
of  the  way.  There  is  nothing  in  the  character  of  the  asso- 
cial  ion,  or  in  his  conl  ract,  to  entitle  him,  at  this  stage,  to  a 
share  of  the  profits.  The  law  provides  but  for  one  such 
case,  and  that  is  a  withdrawing  member.  *  *  *  The 
defendant  was  not  ;i  withdrawing  stockholder,  nor  could  he 
have  been,  so  long  as  his  stock  was  held  in  pledge.  lie  is 
not  entitled   to  the  rights  which  the  law  confers  upon  such 


§  174.  STOCK   OR    SHARES.  183 

stockholders,  yet  his  claim  far  exceeds  what  the  Act  of 
Assembly  gives  to  them.  Withdrawing-  stockholders  can 
only  claim  of  the  profits  such  proportion  as  may  be  fixed 
by  by-laws.  Such  proportion  might  readily  be  iixed  by 
a  by-law,  so  as  not  to  work  injustice  to  remaining  stock- 
holders. At  most  it  would  be  an  approximation.  Here 
the  defendant  claims  an  absolute  right  to  participate  in  the 
entire  profits  up  to  the  time  of  the  trial  of  his  case  ;  such 
right  is  nowhere  to  be  found,  and  if  it  existed,  how  can  it 
be  ascertained  with  accuracy  at  this  stage  of  the  associa- 
tion's business?  Its  assets  consist  chiefly  of  judgments 
for  money  loaned,  including  some  houses  which  were  evi- 
dently bought  in  upon  executions.  The  exact  value  of  the 
houses  can  be  ascertained  only  by  a  sale,  and  the  judgments 
are  worth  only  what  can  be  realized  therefrom  ;  as  such 
loans  are  made  usually  upon  small  margins,  they  cannot  be 
regarded  as  securities  having  a  fixed  value.  In  view  of  the 
fact  shown  by  the  evidence,  that  a  large  number  of  mem- 
bers had  ceased  paying  up  their  dues  by  reason  of  a  sup- 
posed defect  in  the  charter  of  the  association,  the  difficul- 
ties of  realizing  the  face  of  the  judgments  may  be  readily 
appreciated.  The  ascertainment  of  the  real  value  of  the 
stock  can  only  be  arrived  at  by  closing  up  the  affairs  of  the 
corporation.  This  the  defendant  has  no  right  to  demand. 
If,  as  was  contended,  he  was  entitled  to  it  in  this  proceed- 
ing, the  most  that  can  be  done  would  be  to  approximate  it. 
The  jury,  and  even  the  officers  of  the  company,  might 
place  a  much  higher  value  upon  the  securities  than  could  be 
realized  therefrom.  In  such  case  the  defaulting  member 
would  receive  more  than  the  members  who  paid  up  to  the 
end ;  besides  the  profits  are  composed  chiefly  of  the  pre- 
miums. They  are  made  up  in  part  of  the  premiums 
which  the  defendant  agreed  to  pay.  I  say  agreed  to  pay, 
for  it  is  a  mistake  to  suppose,  as  was  claimed  by  the  defend- 
ant, that  he  has  paid  the  premium.  He  only  promised  to 
pay  it.  It  was  inserted  in  the  judgment  note,  and  is  now 
being  collected.  The  building  association  law  expressly 
authorizes  the  plaintiff  to  recover  the  premium  from  a 
defaulting   borrower,   yet   the   defendant's    proportion,   if 


184 


BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  VIII. 


sustained,  would  defeat  his  right  in  part.  "We  are  of  opinion 
that  the  right  to  apply  the  stock  in  such  cases  as  this,  means 
onl}T  the  right  to  apply  the  pa}Tinents  made  thereon."  1 


1  The  following  rule  was  adopted 
to  find  the  present  value  of  a  share 
of  stock,  viz :  Add  together  the 
amount  of  all  the  mortgages  held 
by  the  association  against  the 
members,  including  its  premiums 
therein,  and  add  to  this  any  delin- 
quent clues,  and  interest  due  from 
members,  and  cash  on  hand,  and 
divide  this  aggregate  by  the  num- 
ber of  shares  held  by  all  the  mem- 
bers of  the  association,  and  the 
result  is  taken  as  the  value  of  each 
share.  Licking  County  Saving 
Loan  and  Building  Association  v. 
Bebout,  29  Ohio  St.  252.  See  Sei- 
bel  v.  Building  Association,  43 
Ohio  St.  371  ;  S.  C.  10  Amer.  & 
Eng.  Corp.  Cas.  460 ;  2  N.  E.  Rep. 
417  ;  reversing,  13  Wkly.  L.  Bull. 
265. 

In  another  case  it  was  said  that 
the  association  might  show  that  a 
computation  of  the  value  of  a  de- 
ceased member's  share  of  stock 
inserted  in  his  pass  book  was  er- 
roneous and  not  founded  upon  the 
facts  ;  that  where  the  value  of  the 
stock  was  to  be  determined  by  as- 
certaining  the  value  of  the  assets. 
the  inquiry  should  be  as  to  their 
value  upon  a  sale  conducted  fairly 
ii  the  usual  manner  of  selling 
such  property,  neither  forced  at  a 
time  of  unusual  depression  in  the 
market,  nor  dependent  in  expecta- 
tion of  an  unusual  rise.  Babcock 
r.  Middlesex,  etc.,  Association,  28 
.  302. 

Where,  in  an  action  between  an 
[a1  ton,  having  made  them  one 
series  of  stock,  and  one  of  its  share- 
holders,   the   issue    was   as  to  t  la- 


value  of  his  shares,  and  the  evi- 
dence of  experts  in  the  business  of 
such  associations  showed  that  the 
proper  and  equitable  method  of 
computing  the  value  of  such  shares 
was  to  divide  the  annual  profits 
among  the  shares  in  proportion  to 
the  amount  paid  on  each,  and  that 
seventy-five  per  cent  of  such  asso- 
ciations used  such  method,  it  was 
held  that  the  referee  properly 
adopted  it  in  determining  such 
value,  instead  of  dividing  the  an- 
nual profits  among  all  the  shares, 
according  to  the  method  used  by 
the  association,  in  the  absence  of 
any  law  of  the  association  requir- 
ing the  use  of  the  latter  method. 
Charles  Tyrell  Loan  and  Building 
Association  v.  Haley,  163  Pa.  St. 
301  ;  s.  c.  30  Atl.  Rep.  154 ;  35  W. 
N.  Cas.  269.  A  provision  in  the 
constitution  of  such  an  association 
providing  that  "  where  it  shall  be 
ascertained  "  that  the  value  of  each 
share  of  stock  amounts  to  a  cer- 
tain sum,  a  meeting  of  the  share- 
holders shall  be  convened,  at  which 
time  a  division  shall  take  place," 
etc.,  does  not  obligate  a  share- 
holder to  abide  by  any  particular 
mode  of  computation,  or  the  mode 
adopted  and  used  by  the  associa- 
tion in  determining  the  value  of 
his  shares.     Id. 

The  fact  that  other  stockholders 
have  made  improper  withdrawals 
cannot  affect  the  right  of  another 
to  have  the  value  of  his  stock  as- 
certained according  to  the  by-laws 
Of  the  association.  Building  Asso- 
ciation v.  Gallagher,  3  L.  T.  (Pa.) 
(N.  S.)  101. 


§  175- 


STOCK   OR   SHARES. 


185 


Sec.  175— Right  to  Membership  After  Foreclosure  and 
Sale  of  Mortgaged  Security. 

Whether  or  not  a  borrowing  member  continues  to  be  a 
member  after  foreclosure  for  a  default  in  paying  off  his 
indebtedness  and  sale  of  the  mortgaged  security  must 
depend  upon  the  contract  of  borrowing  between  him  and 
the  association.  If  he  did  not  assign  his  stock  as  collateral 
security  for  the  loan,  then  his  right  to  insist  upon  his  mem- 
bership after  the  foreclosure  and  sale  is  quite  clear ;  for  in 
such  an  instance  he  does  not  forfeit  his  membership,  unless 
a  valid  by-law  of  the  association  provides  otherwise.  But 
if  he  has  assigned  his  stock  as  collateral  security,  and  in 
the  foreclosure  has  received  credit  on  his  loan  for  the  pay- 
ments made  on  his  stock,  and  the  decree  of  foreclosure 
fixes  and  determines  the  amount  then  due,  after  giving 
credit  for  the  value  of  his  stock,  then  his  stock  is  gone,  for 
he  has  received  its  value  and  paid  back  his  loan,  less  such 
value.1 


On  an  accounting  between  a 
quasi  building  and  loan  association 
and  its  borrowing  stockholders,  he 
should  be  charged  with  all  he  re- 
ceived, with  legal  interest  thereon, 
and  should  be  credited  with  en- 
trance fee,  stock  dues,  premiums, 
and  interest  on  payments  in  ad- 
vance of  legal  interest,  and  should 
not  be  charged  with  fines  for  each 
non-compliance  with  provisions  as 
to  payment  of  premiums.  Mer- 
oney  v.  Atlanta  National  Building 
and  Loan  Association,  116  N.  C. 
882 ;  s.  C.  21  S.  E.  Rep.  924. 

In  Arkansas  it  is  declared  that 
the  equitable  rule  for  ascertaining 
the  amount  due  on  a  building  as- 
sociation loan,  on  default  of  the 
borrower  and  foreclosure  and  can- 
cellation of  his  stock,  is  to  ascer- 
tain the  amount  of  stated  dues  and 
interest  which  will  become  due  in 
the  future,  to  the  time  of  the  ma- 
turity of  the  stock,  as  estimated. 


The  principal  which,  with  interest 
for  the  supposed  time,  will  amount 
to  the  dues  and  interest  for  the 
supposed  time,  will  amount  to  the 
dues  and  interest  so  calculated, 
will  be  the  present  value  of  the 
anticipated  payments  ;  and  to  this 
the  arrearages  due,  and  the  fines  for 
the  time  between  the  date  of  the 
default  and  the  entry  of  the  decree 
of  sale,  should  be  added.  Roberts 
v.  American  B.  &  L.  Ass'n.  62  Ark. 
572  ;  s.  c.  36  S.  W.  Rep.  1080. 

1  Bearing  on  this  question,  see 
Massey  v.  Citizen's  Building  and 
Savings  Association.  22  Kas.  624 
North  American  Building  Associa 
tion    v.   Sutton,   35    Pa.   St.    463 
Overby    v.   Fayetteville    Building 
and  Loan  Association,  81  N.  C.  56 
Rowland  v.   Old   Dominion,   etc., 
Association,       N.  C.  ;  S.  C.  22 

S.  E.  Rep.  8;  Rowland  v.  Old 
Dominion,  etc.,  Association,  115 
N.  C.  S25  ;  S.  C.  18  S.  E.  Rep.  965. 


186  BUILDING  AND   LOAN   ASSOCIATIONS.     Ch.  VIII. 

"  When  he  took  the  money  he  undertook  to  do  the  very 
thino-  the  judgment  made  him  do,  and  he  pledged  to  the 
association  his  stock  as  collateral  security  for  the  faithful 
performance  of  his  undertaking,  and  when  he  performs  it 
by  pavment,  as  prescribed  by  section  fourteen  of  the  char- 
ter,  this  stock  is  released  from  the  pledge,  and  he  holds  it 
as  though  he  had  never  got  an  advance — which,  in  fact,  he 
has  not,  for  he  will  have  returned  it.  There  is  nothing  in 
any  portion  of  the  charter  or  by-laws  which  declares  he  is 
no  longer  a  member.  He  is  exactly  in  the  situation  of  one 
who  has  discharged  his  property  from  the  mortgage  by 
section  twenty-four  of  the  by-laws.  He  pays  back  the 
money  he  got,  with  such  an  advance  upon  it  as  will  enable 
the  company,  at  the  lower  rates  at  which  money  is  selling, 
to  get  the  same  monthly  interest  upon  it  as  the  defendant 
ought  to  pay  at  the  rate  he  got  it  at.  He  pays  up  all 
arrears  and  dues,  and  he  pays  up  all  fines  due  the  compan}r 
for  his  failure.  Why  should  he  not  now  be  the  owner  of 
the  stock?  Why  should  he  not  stand  exactly  like  a  man 
who  has  got  no  advance?  The  company  is,  as  to  him,  pre- 
cisely in  the  situation  it  is  to  a  man  who  has  got  no  ad- 
vance. Why  should  he  not  stand  in  the  same  way  as  to 
the  company  ?  *  "  *  As  to  the  amount  the  defaulter  is 
due,  except  as  to  the  fines,  that,  we  think,  is  very  plain. 
The  point  is,  what  will  make  the  company  whole;  what 
will  put  it  precisely  in  the  situation  it  would  have  been  in 
had  .1  idler  never  got  any  money,  or  promptly  paid 

his  dues,  as  he  agreed  to  do?  Obviously  such  a  sum  as  at 
present  rate,  will  produce  to  the  company  the  same  dues  as 
he  pays,  the  same  number  of  dollars  on  each  share.  Money 
has  fallen  since  he  sold  his  interest  or  borrowed,  the  time  of 
winding  up  has  gol  nearer,  and  it  will  take  more  money  to 
be  sold  to  pay  $20.00  at  $1.00  per  share  than  it  did  when 
pi  his  advance.     This  he  must  make  up." 3     If  an  asso- 

ln  Virgina  the  shares  by  the  mere  1  Ocmulge  Building,  etc.,  A.sso- 

act  of  assignment  as  collateral  is  ciation    v.   Thomson,   52  Ga.   427. 

i  bed  and  sunk  hi  the  as-  See    Somerset    County    Building, 

ition,       Winchester     Building  Loan  ami     Saving    Association    v. 

ciation  v.   Gilbert,   28  Gratt.  Cainman,  II  N.  J.   Eq.   382 ;  Me- 

787.  chanios'  Building  and  Loan  Asso- 


§  175. 


STOCK    OR    SHAKES. 


187 


ciation  receive  clues  on  stock  after  a  recovery  of  the  moil- 
gage,  it  will  be  estopped  to  set  up   that  the  stock  is  extin- 


guished.1 

ciation  v.  Conover,  14  N.  J.  Eq. 
219;  Charles  Tyrrell  Loan  and 
Building  Association  v.  Haley,  139 
Pa.  St.  476  ;  S.  C.  27  W.  N.  Cas.  244  ; 
48  Leg.  Int.  345  ;  O'Reilly  v.  Hey- 
don,  29  Atl.  Rep.  1063 ;  14  N.  S. 
Wales  283. 

1  North  American  Building  As- 
sociation v.  Sutton,  35  Pa.  St.  463  ; 
s.  c.  78  Am.  Dec.  349. 

Where  a  borrower  gave  to  an 
association,  his  bond  and  mortgage 
for  $2000  to  secure  a  loan  of  $1500, 
and  after  suit  brought  they  agreed 
in  writing  upon  a  settlement  be 
tween  them,  that  judgment  should 
be  entered  for  the  amount  actually 
loaned  with  legal  interest,  it  was 
held  that  the  payments  made  by 
the  defendant  upon  his  stock  under 
the  agreement  were  not  payments 
on  his  bond  ;  for  the  effect  of  such 
payments  would  have  been  to  ex- 
tinguish the  stock,  which  by  the 
agreement  and  settlement  was  not 
to  be  extinguished,  but  to  remain. 
Kelly  v.  Perseverance  Building 
Association,  39  Pa.  St.  148. 

"For  how  could  the  defendant 
possibly  have  a  credit  for  the  stock, 
and  yet  retain  it."  Watkins  v. 
Workingmen's  Building  and  Loan 
Association,  97  Pa.  St.  514  ;  s.  c.  38 
Leg.  Int.  333  ;  10  W.  N.  Cas.  414. 

A  member  of  a  building  associa- 
tion gave  a  mortgage  to  it  to  secure 
the  payments  of  his  monthly  dues, 
fines,  etc.  The  mortgage  contained 
a  provision  that  in  case  of  default 
the  association  might  sell  under  the 
statute,  and  invest  the  surplus,  if 
any,  and  draw  for  and  apply  it 
from  time  to  time  as  required, 
to  the    payment  of  all  accruing 


monthly  dues,  etc.,  until  the  ter- 
mination of  the  association.  It 
was  held  that  this  provision  was 
valid,  and  that  the  association  w;;s 
entitled,  on  judgment  of  fore- 
closure, to  have  a  provision  inserted 
directing  the  surplus  to  he  invested 
according  to  the  mortgage  pro- 
vision. Franklin  Building  Asso- 
ciation v.  Mather,  4  Abb.  Pr.  L'?4. 

By  a  mortgage  made  with  a 
Building  Society  to  secure  700/,  it 
was  provided  that  the  principal 
and  interest  should  be  paid  off  by 
monthly  instalments.  The  mort- 
gagee was  given  power  of  entry 
sale,  in  the  event  of  default  in  its 
payment  of  two  months'  instal- 
ments being  made.  The  rule  of  the 
society  provided,  inter  alia,  that  if 
a  mortgagor  wished  to  redeem  be- 
fore the  time  limited  for  the  pur- 
pose, the  hoard  might  allow  him 
to  do  so  upon  such  terms  as  they 
might  think  reasonable.  Default 
having  been  made,  the  society  en- 
tered into  possession  of  the  mort- 
gaged premises,  but  did  not  exer- 
cise their  power  of  sale.  It  was 
held  that  the  mortgagor  was  not 
entitled  to  redeem  before  the  due 
date  of  the  mortgage  without  the 
board's  permission  ;  but  that  an 
account  would  be  ordered  of  what 
was  then  due  between  the  mort- 
gagor and  mortgagee,  and  that  on 
payment  of  the  amount  due,  the 
mortgagor  would  be  entitled  to  re- 
cover possession  of  the  premises. 
O'Reilly  v.  Heydon,  14  N.  S.  Wales, 
283. 

A  Building  Association  took 
from  a  borrowing  member  a  judg- 
ment and  conditioned,  inter  alia, 


188 


BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  VIII. 


Sec.  176— Forfeiture  of  Stock — Notice — Waiver. 

Where  a  statute  authorizes  a  forfeiture  of  a  member's 
stock  for  a  failure  to  pay  his  dues,  interest  and  fines,  a  failure 
in  this  respect  justifies  a  forfeiture  made  without  notice 
first  given  ;  and  the  courts  will  not  relieve  against  such  a 
forfeiture.1  The  entry  of  the  word  "  forfeiture "  l^  the 
secretary  opposite  the  names  of  certain  members,  in  the 
books  of  the  society,  is  not  sufficient  evidence  that  such 
members  received  due  notice  that  their  shares  would  be 
forfeited  if  their  arrears  were  not  paid, — more  especially 
where  the  entry  was  made  long  after  the  date  of  such  alleged 
notice.  In  this  case  a  statute  required  a  declaration  of  the 
confiscation  to  be  made,  and  it  was  held  that  such  a  decla- 
ration might  be  made  b\r  resolution  ;  but  if  the  resolution 
had  not  been  adopted  before  the  society  went  into  liquida- 
tion, the  liquidators  had  no  authority  to  declare  a  forfeiture.2 
"Where  the  right  to  declare  a  forfeiture  has  accrued,  but 
instead  of  declaring  a  forfeiture  the  association  accept  dues 
on  the  stock,  it  will  waive  by  such  acceptance  its  right  to 
declare  such  forfeiture.3 


that  the  debtor  should  pay  all  fines 
imposed  by  the  constitution  and 
by-laws  of  the  association  and  that 
if  default  should  be  made  for  six 

jutive  months  in  the  payment 
of  instalments  of  interest,  duos. 
. t  premiums,  then  the  princi- 
pal debt,  tog  i  her  with  interest, 
dues,  fines,  and  premiums  should 
become  due  and  payable  and  could 
be  n  covered.  Itwas  held  thai  fines 
for  nonpay nt  of  instalments  of 

st  and  premium,  which  fell 
due  nj'ii  r.si.r  months  default  on  t  he 
pari  of  t  he  debtor,  could  not  be  re- 
covered, but  t  lint  ,  as  he  elected  to 
I  eep  his  stock  in  existence  and  not 
to  apply  it  to  reducing  t  he  debl .  the 

lines   for   non-p;iyinent   of  t  lie  dues 

t  hereon  could  becollected  up  to  the 

date  of  the  Bale  of  the  debtor's  real 

old  on  a  judgmenl  entered 

on   the   bond)   and   although    the 


debt  and  interest  were  fully  paid 
from  the  proceeds  of  sale,  the  judg- 
ment would  still  stand,  and  could 
be  used  for  the  collection  of  dues, 
and  fines  for  nonpayment  there- 
of, subsequently  accruing.  Hou- 
letto's  Estate,  2  Chest.  511 ;  Ever- 
ham  v.  Oriental  S.  &  L.  47  Pa.  352. 

1  Freeman  v.  Ottawa  Building, 
etc.,  Association,  114  111.  182;  S.  C 
28  N.  E.  Rep.  Gil. 

2  Higgins  v.  Power,  1  Montreal 
Sup.  Ct.  268;  S.  C.  8  Leg.  News. 
197. 

8  Lime  City  Building,  Loan  and 
Saving  Association  v.  Black,  136 
End.  544;  s.  c.  35  N.  E.  Rep.  829. 

If  the  association  declare  the 
stock  of  a  borrowing  member,  up- 
on which  he  has  secured  a  loan, 
forfeited,  it  canrecoveron  his  bond 
only  the  union  id  actually  advanced 
with  interest,  deducting  payments 


§  178.  STOCK    OE    .SHAKES.  1.89 

Sec.  177 — Canceling  Stock,  Association  Cannot. 

A  building  association  cannot  cancel  a  member's  stock 
without  his  consent  where  its  by-laws  provide  that  he  shall 
be  entitled  to  share  in  the  profits  when  the  association  is 
wound  up;  and  an  attempt  on  its  part  to  do  so  may  be 
enjoined.  A  mere  failure  on  his  part  to  object  to  a  void 
by-law  canceling  it  until  an  attempt  is  made  to  enforce 
such  by-law  against  him  does  not  estop  him  to  object  to  it.1 
So  a  stockholder  may  maintain  suit  for  an  injunction  to 
prevent  the  directors  closing  out  a  series  of  shares  before 
their  maturity.2 

Sec.   178— Building    Association  Purchasing    its    own 
Shares. 

A  building  association  cannot  purchase  its  own  shares  ; 
but  it  may  receive  them  as  securit^y  for  a  debt  or  other 
similar  purpose.3  But  the  inability  of  a  building  association 
to  purchase  its  own  stock  does  not  prevent  it  from  effecting 
a  binding  compromise  with  a  shareholder,  although  the 
effect  of  the  compromise  is  the  retirement  of  his  stock.4 

made  on  such  loan.     Bechtold  v.  Ehodes  v.   Missouri,  etc.,   Co.,  63 

Brehm,   26  Pa.  St.  269;  Denny  v.  111.  App.  77. 

West  Philadelphia,   etc.,  Associa-  3  State  v.  Oberlin  Building  and 

tion,    39    Pa.    St.     154;    Premium  Loan  Association,  35  Ohio  St.  258 ; 

Fund  Association's  Appeal,  39  Pa.  Wangerien  v.  Aspell,  47  Ohio  St. 

St.  156.  250 ;  s.  c.   24  N.  E.  Rep.   405  ;   23 

i  Bergman  v.  St.  Paul,  etc.,  As-  Wkly.  L.  Bull.  380. 

sociation,  29  Minn.  282  ;    s.   C.  13  4  Id. ;  Miller  v.  Jefferson  Build- 

N.  \V.  Rep.  122  ;   Kolff  v.  St.  Paul  ing  Association,  50  Pa.  St.  32. 

Fuel  Exchange,  48  Minn.  215.  "A  purchase  implies  an  acqui- 

In  such  an  action  the  stockhold-  sition   of    property,  a   change   or 

er's  certificate  is  not  such  a  basis  transfer  of  ownership.     This  was 

of  the  suit  as  to  require  it  to  be  not  within  the   contemplation  of 

made  an  exhibit.     Fisher  v.  Pat-  the  parties  to  the  transaction  ;  it 

ton,  131  Mo.  32  ;  33  S.  W.  Rep.  451  ;  was  not  intended  that  the  shares 

S.  C  34  S.  W.  Rep.  1096.  should  be  kept  alive  (so  to  speak) 

2  Fisher  v.   Patton,  134  Mo.  32 ;  and    remain  the    property  of  the 

S.  c.  34  S.  W.  Rep.  1096.  association  ;  on  the  contrary,  the 

A    decree    of    foreclosure    may  object  sought  was  their  extinguish- 

provide  for  the  cancelation  of  so  ment  by  retirement  and  cancela- 

much  stock  as  has  been  credited  tion,  and  we  see  no  reason  for  im- 

with    full    withdrawal    value    in  posing    on    the    transaction    any 

reduction    of     his    indebtedness,  other  character  than  that  intended 


190 


BUILDING  AND   LOAN   ASSOCIATIONS.     Cll.  VIII. 


See.  179— Number  of  Shares  a  Member  may  hold. 

Unless  some  statute  or  the  rules  of  the  association  forbid 
it  there  is  no  limit  to  the  number  of  shares  an  individual 
may  hold.1  A  holder  of  more  shares  than  the  statute  allows 
is  not  liable  for  dues  and  assessments  on  the  shares  in  excess 
of  the  number  he  may  lawfully  hold.2  A  statute  limiting 
the  number  a  member  may  hold  is  valid,  and  the  association 
cannot  authorize  him  to  hold  more  than  the  statute  permits. 
Therefore,  a  transfer  of  more  than  the  statutory  number 
cannot  be  compelled.3  But  if  he  hold  more  shares  than  the 
by-laws  of  the  association  permit,  although  fewer  than  the 
statute  allows,  he  cannot  set  up  that  fact  as  a  defence  against 
any  claim  which  the  association  may  have  against  him  on 
account  of  such  shares.4  Neither  the  borrower  nor  his  cred- 
itors can  defend  against  a  mortgage  on  the  ground  that  he 
borrowed  on  more  shares  than  the  law  allowed  him  to  hold.5 
Nor  can  any  one  giving  a  mortgage  for  the  borrower's  loan.6 

Sec.  180— Fee  for  Transferring  Stock. 

A  building  association  may  provide  by  a  by-law  for  the  pay- 


by  the  parties  themselves.  Nor 
did  the  parties  intend  a  division 
of  the  funds  of  the  concern  in  ad- 
vance. The  parties  who  went  out 
expressly  waived  any  right  in  the 
ultimate  division  contemplated  by 
the  constitution  of  the  association, 
in  consideration  of  receiving  at 
the  time,  a  sum  agreed  upon  by 
the  parties.  Theobjecl  of  the  as- 
sociation was  to  reduce  the  num- 
ber of  shares  anion--  which  final 
divisions     should    be     made    when 

the  funds  should  be  sufficient  to 
divide  two    hundred   dollars   per 

share,  and  this  cancelation  of 
stock    was   a    means,   as   they    sup- 

po  ed,  of  ha  itening  that  day."  x 

1  .Morrison   r.   ( Hover,    19   L.   J. 


Exch.  20,  25  ;  s.  c.  4  Exch.  430 ;  14 
L.  T.  (O.  S.)  204  ;  14  J.  P.  84.  See 
also  Murray  v.  Scott,  9  App.  Cas. 
Ct.  p.  548. 

2  Simpson  v.  Building  and  Sav- 
ings Association,  38  Ohio  St.  349. 

3  State  v.  Greenville  Building 
and  Saving  Association,  29  Ohio 
St.  92. 

4  Hagerman  v.  Ohio  Building  and 
Saving  Association,  25  Ohio  St. 
186. 

5  Victoria  Building  Association 
v.  The  Arbiter  Bund,  6  Wkly.  L. 
Bull.  823 ;  s.  c.  10  Amer.  L.  Rec. 
485. 

6  Ohio  Building  Association  v. 
Leyden,  1  Wkly.  L.  Bull.  126  ;  S.  C. 
4  Amer.  L.  Rec.  765. 


LWangerien  d.  Asp.-n.  17  Ohio  St.    250;24   X.  E.   Rep.  406;  23  Wkly.  L. 

Bull.  389;  211  N.  E.  Hep.  405. 


§  181.  STOCK   OR   SHARES.  191 

merit  of  a  fee  for  the  transferring  of  stock.1  But  a  rule 
providing  that  each  member  on  transferring  his  shares  to 
another  shall  pay  the  association  a  fee  on  each  share  trans- 
ferred has  no  application  where  a  person  who  has  subscribed 
for  a  number  of  shares  in  his  own  and  others'  names,  seeks 
to  exercise  his  right  of  withdrawal  on  all,  and  produces 
proper  vouchers  from  others  for  payments.2 

Sec.  181 — Dividends. 

Not  infrequently  it  is  the  plan  of  an  association  to  provide 
for  the  payment  of  dividends  upon  the  stock.  Sometimes 
this  is  called  a  "  bonus,"  especially  in  England.  In  some 
associations  no  dividends  are  declared ;  but  those  who 
remain  in  until  the  series  to  which  their  stock  belong1  is 
terminated,  or  the  association  is  terminated  as  in  the  case 
of  terminating  associations,  receive  their  proportionate  part 
of  the  profits  the  association  has  realized.  But  in  any  case 
before  a  building  association  can  declare  dividends,  some 
statute  must  authorize  it  so  to  do.  If  a  statute  does  author- 
ize a  dividend  to  be  declared,  it  cannot  be  declared  out  of 
the  premiums  bid  for  loans,  for  it  cannot  be  known  whether 
these  will  constitute  profits  until  the  transaction  is  closed.8 
If  the  constitution  or  by-laws  provide  that  a  dividend  of  the 
net  profits  shall  be  declared  at  each  quarterly  meeting,  the 
directors  have  a  discretion,  to  declare  the  dividend,  not  on  the 
earnings  of  the  quarter  in  which  it  is  declared,  but  on  those 

1  McGannon  v.  Central,  etc.,  Saving  and  Loan  Association,  53 
Association,  19  W.  Va.  726,  N.  Y.  St.  Rep.  451.     Contra,  Boone 

2  Northwestern  Central  Building  v.  Homestead  Loan  Association,  23 
Association  v.  Henderson,  3  Wkly  N.  Y.  Supp.  203.  Nor  can  it  be 
L.  Bull.  386.  declared  out    of  what  might  be 

Where  a  receiver  is  appointed  termed  the  capital.     Kisterbock's 

for  the  association  the  court  may  Appeal,  51  Pa.  St.  485. 

order  that  he  shall  be  entitled  to  Dividends    should  be  computed 

a  fee  for  transferring  the  shares  for  the  full  amount  of  monthly 

on  the  books  of  the  association,  to  contributions  of  the  stockholders 

be  paid  by  the  person  to  whom  tbe  to  the  general  fund,  together  with 

transfer  is  made.     A  fee  of  25  cents  interest  according  to  the  average 

per  certificate  was  held  to  be  rea-  time  of  payment  of  contributions. 

sonable.     Chapman  v.   Young,  65  Chapman  v.  Young,  65  111.  App. 

111.  App.  181.  131. 

3  Marks    v.   Monroe    Permanent 


192  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  VIII. 

of  the  previous  quarter.  They  are  not  required  to  use  all 
the  profits  earned  at  any  time  for  the  purpose  of  a  dividend 
but  the}r  have  power  to  retain  such  money  as  may  be  neces- 
sary to  pay  debts  to  become  due  as  for  other  purposes  of  the 
business  of  the  association.1  "Where  a  director  actively 
participated  in  declaring  dividends,  knowing  at  the  time 
the  association  was  insolvent,  it  was  held  that  he  could  not 
recover  any  money  from  the  association  which  he  had 
loaned  it  until  all  the  stockholders  were  fully  paid,  whether 
they  had  become  members  of  the  association  before  or  after 
the  declaration  of  the  fraudulent  dividends.2  A  withdraw- 
ing member  is  also  entitled  to  whatever  dividends  have  been 
declared  before  he  gave  notice  of  withdrawal,3  and  after  he 
has  given  such  notice  the  association  cannot  change  the 
amount  by  lowering  it.4  A  by-law  allowing  a  voluntary 
withdrawing  member  a  certain  per  cent,  by  way  of  profit, 
upon  their  payments,  applies  also  to  a  borrowing  member.5 
Earnings  of  an  association  made  subsequent  to  the  death  of 
the  holder  of  stock  must  be  treated  as  income  and  be  paid 
to  the  life  tenant.6  The  proper  method  of  apportioning  the 
profits  of  a  building  association,  having  more  than  one  series 
of  stock,  is  to  divide  them  equally  among  the  shares  in  pro- 
portion to  the  amount  paid  in  on  each  share;  and  to  ascer- 
tain the  value  of  any  particular  share  at  a  given  time  there 
must  be  added  to  the  amount  paid  on  the  share  a  propor- 
tion of  the  profits  thus  ascertained.  The  fact  that  a  share- 
holder has  acquiesced  for  a  number  of  years  in  a  different 

1  Marks  v.  Monroe  Permanent  4  Archer  v.  Harrison,  7  De  Gex 
Saving  and  Loan  Association,  M.  &  G.  404;  3  Jur.  (N.  S.)  194; 
mpra.  29  L.    T.   Rep.  71;    21  J.  P.    515; 

2  Kisterbock's  Appeal,  supra.  Smith  v.  Pilkington,  30  L.  T.  Rep. 
See  also  Sellout  v.  Conkey  Ave.,  196;  s.  c.  4  Jur.  (N.  S.)  58;  22  J. 
etc.  Asso.,  87  Hun,  568;  s.  c.  32  P.  5  ;  on  appeal,  1  De  Gex  F.  &  J. 
N.  Y.  Supp.  713;  71  Misc.  Rep.  120  ;  29  L.  J.  Ch.  227  ;  24  J.  P.  227. 
151  :  66  N,  Y.  St.  Rep.  66.  °  Winterer  v.  Building  Associa- 

Fleming  v.  Self,  8  Eq.  Rep.  14  ;  tion,  4  Leg.  Int.  122  :  s.  c.  19Phila. 

24  I..  T.  Rep.   lol  ;   18J.   P.  772  ;  8  426;  Leister  v.  Log  Cabin  Building 

W.  R.  80;  8  !>«•  <:«-x,  M.  &  <;.  997  :  Association,  38  Md.  115. 

1  -J  iii.  (  X.  S.  i  25  ;  24  L.  J.  Ch.  29  ;  6  Elton's  Estate,  1  Pa.  Dist.  Rep. 

on  appeal,  28  L.  T.  Rep.  68;  18  J.  458;  s.  c.  30  W.  N.  Cas.  275;  49 

P.  296:  Kay,  518.  Leg.  Int.  268. 


§  182.  STOCK   OR   SHARES.  193 

method  adopted  by  the  association,  by  which  the  profits 
were  divided  equally  among  all  the  shares  without  regard 
to  the  amount  paid  in,  will  not  estop  him  from  requiring 
that  the  method  of  ascertaining  the  value  of  his  share  be 
changed  to  the  proper  method.1 

Sec.  182 — Maturity  of  Stock  Cancels  on  Return  of  Secu- 
rities. 

It  should  not  be  forgotten  in  this  connection  that  the 
maturity  of  a  borrowing  member's  stock  is  a  cancelation 
of  a  loan  made  to  him  by  reason  of  his  ownership  of  such 
stock  ;  and  he  is  entitled  to  a  return  of  any  securities  he  has 
given  for  the  repayment  of  such  loan.2  "  If  the  mortgagor 
performs  his  obligation  as  a  stockholder  of  the  corporation, 
no  principal  sum  is  to  be  repaid.  The  sum  he  receives  from 
the  corporation  on  the  execution  of  the  mortgage,  is  a 
payment  by  anticipation  of  what  will  be  the  value  of  his 
stock  in  the  corporation  on  its  dissolution  and  distribution 
of  assets  among  the  proprietors.  Having  received  the 
ultimate  value  of  his  stock  in  advance  of  the  other  stock- 
holders, and  long  before  the  period  fixed  for  the  first  distri- 
bution of  assets,  and  being  liable  to  pay  monthly  instal- 
ments on  his  subscription  to  the  stock  of  the  corporation, 
he  executes  a  mortgage,  not  to  secure  the  repayment  of  a 
loan,  but   the  performance  of  his  contract  with  his  fellow 

1  Charles  Tyrell  Loan  and  Build-  the   dividends    of  an    association 

ing  Association  v.  Haley,  163  Pa.  can  only  be  paid  from  the  earnings, 

St.  301  ;  35  W.  N.  Cas.  269  ;  30  Atl.  where  a  certificate  is  issued  contain- 

Rep.  154.  ing  a  fixed  maturity  period,  such 

The  value  of  a  share  may  not  be  certificate  is  beyond  the  authority 

a  proper  basis  for  distribution  of  of  the  officers  issuing  it,  and  should 

earnings  due  such  share  ;  but  the  be  construed  as  naming  an  esti- 

amount  of  dues  paid  on  such  share  mated  period  of  maturity.     O'Mal- 

and  the  other  credits  to  the  share  ley  v.  People's  Building.  Loan  and 

make  such  a  basis,  whether  or  not  Savings  Association,  36  N.  Y.  Supp. 

a  loan  has  been  awarded  on  such  1016. 

share.     Seibel  v.  Building  Associa-  2  Charles  Tyrell  Loan  and  Build- 

tion,  43  Ohio  St.  371  ;  s.  c.  lOAmer.  ing  Association  v.  Haley,  139  Pa. 

&  Eng.   Corp.   Cas.    460  ;  2  N.  E.  St.  476 ;  s.  C.  20  Atl.  Rep.  1063  ;  48 

Rep.  417  ;  reversing,  13  Wkly.  L.  Leg.  Int.  345  ;  reversing,  27  W.  N. 

Bull.  265.  Cas.  244; 

Under  a  statute  providing  that 
13 


194  BUILDING   AND   LOAN    ASSOCIATIONS.    Ch.  VIII. 

stockholders."  :  After  the  maturity  of  the  stock,  without 
default  having  been  made  by  the  borrower,  the  association 
cannot  recover  a  judgment  for  the  amount  of  the  loan.2 

Sec.  183— Loss  of  Pass-Book. 

A  pass  or  receipt  book  is  often  given  a  stockholder  in 
which  entries  of  payments  are  made  by  the  secretary  with 
his  signature.  Not  infrequently  this  book  contains  the 
certificate  of  membership  and  a  statement  of  the  number  of 
shares  held  by  the  person  entitled  to  it.  When  such  a  book 
is  issued  it  becomes  the  primary  evidence  of  the  payments 
made  by  such  member.  If  he  has  carelessly  lost  this  book 
and  claims  credits  not  admitted  by  the  association,  he  must 
produce  convincing  proof  of  their  having  been  made.  Un- 
certain, vague  and  indefinite  statements  will  not  suffice.3 

Sec.  184 — Rebate  of  Interest. 

A  statute  provided  that  "  at  the  end  of  each  year "  the 
association  should  "  make  a  rebate  of  interest  on  the  amount 
of  dues  paid  on  loans  awarded."  In  construing  this  clause 
the  court  said :  "  The  legislative  intent  was  to  lessen  the 
interest  paid  on  such  loans.  The  interest-bearing  power  of 
the  loan  is  reduced  year  by  year  as  dues  are  paid,  which,  at 
the  final  settlement,  must  be  credited  on  the  loan ;  and  so 
each  year  the  interest  earnings  of  the  loan  become  less. 
The  entire  loan  earns  some  interest,  and  the  effect  is  the 
same  as  though  the  rate  per  cent,  of  interest  were  reduced 
each  vcar.  This  is  not  a  provision  that  dues  when  paid 
shall  be  credited  on  loans  awarded;  but  the  various  items 
of  dins  paid  and  earnings  credited — from  first  to  last — are 

i  Clarksville   Building  and  Loan  Building  Association's  Appeal,  33 

\    ociation  v.  Stephens,  26  N.  J.  Pitts.  L.  Jr.  324. 

|.;(|   35i,  2  Charles Tyrell,  Loan  and  Build- 

\    stockholder's  share  was  ex-  Lng  Association  v.  Haley,  supra. ; 

tinguished  by  errors  Lnthe  compu-  Inter-state  Savings,  etc.,  Ass'n  v. 

tation  and  apportionmenl  ofprof-  ('aims,  16  Wash.  215 ;  s.  c.  47  Pac. 

its  among  several  series  of  stock.  Rep.  215. 

and  it  washeld  thai  hecould  main-  :  I  ilarksville  Building  and  Loan 

tain  B  bill  fco  correct  such  errors.  Association  v.  Stephens,  26  N.J. 

Eq.  351. 


§  184.  STOCK   OR   SHARES.  195 

put  into  one  amount,  and  so  remain  until  the  share  is  paid 
in  full,  and  then  such  amount  is  applied  to  offset  the  loan, 
and  the  loan  is  settled,  if  premiums  and  interest  are  paid. 
Shares  or  stock  subscribed  must  be  paid  in  full.  And  when 
a  loan  is  obtained  upon  a  share,  the  share  is  taken  out  in 
advance,  for  which  privilege  premiums  and  interest  are  paid, 
and  then  the  share  may  be  of  no  value,  but  be  a  burden, 
and  the  shareholder  must  continue  to  pay  his  dues  until  the 
share  is  paid,  and  he  must  pay  the  premiums  and  interest 
until  the  loan  is  settled." 1 

1  Seibel  v.  Building  Association,     Eng.  Corp.  460  ;  2  N.  E.  Eep.  417 ; 
43  Ohio  St.  371 ;  S.  0.  10  Amer.  &    reversing,  13  Law  Bull.  265. 


CHAPTER  IX. 

DUES   ON    STOCK-PAYMENTS. 

Sec.  185.  Definition. 

186.  Duty  of  Member  to  Pay. 

187.  How  and  When  Paid. 

188.  When  Liability  to  Pay  Begins. 

189.  Assumpsit  for  Dues — Notice. 

190.  Bringing  of  Suit;  Effect  on  Payment  of  Dues. 

191.  Dues  Secured  by  Mortgage  Given  on  Securing  an  Advance  or 

Loan. 

192.  Lien  on  Stock  for  Dues. 

193.  Forfeiture  of  Stock  for  Non-Payment  of  Dues. 

194.  When  Liability  for  Dues  Ceases. 

195.  Purchaser  of  Mortgaged  Premises. 

196.  Number  of  Shares  upon  which  Member  Liable  for  Dues. 

197.  Proof  of  Payments  on  Stock. 

198.  Application  of  Payments  made  by  a  Borrower. 

Sec.  185— Definition. 

Dues  are  payments  to  be  made  by  a  member  on  the  stock 
he  owns.  They  may  be  payable  weekly,  monthly  or  at  any 
other  distinct  periods  of  time.  In  an  instance  of  prepaid 
stock  there  are  no  dues.1 

Sec.  186— Duty  of  Member  to  Pay. 

It  is  a  member's   duty  to  pay  the  dues   on  his  stock, 

1  A  statute  may  change  or  in  order  to  increase  the  amount 
broaden  this  definition.  For  in-  of  fines,  see  Shannon  v.  Mutual 
stance,  where  a  stockholder  be-  Building  Association,  36  Md.  383. 
comes  a  borrower,  and  he  has  been  A  purchaser  of  shares  from 
paying  weekly  dues,  the  amount  he  another,  on  having  them  trans- 
will  theie;iHer  Imve  to  pay  weekly  ferred  to  himself,  is  entitled  to 
will  be  increased  by  the  amount  of  credit  for  the  dues  paid  on  the 
i 1 1 1 1  rest  payable  each  week  on  his  stock  purchased,  the  same  as  if  he 
loan  ;  and  these  two  items  are  often  had  originally  subscribed  for  them 
designated  in  statutes  as  "weekly  and  paid  the  dues  thereon.  Mu- 
dues  "  or  "  lines."  tual  Savings  &  L.  Ass'n  v.  Owings 

That,  dues  cannot  be  subdivided  (Ky.),  43  S.  W.  Rep.  422. 
1% 


§  187.  DUES    ON    STOCK-PAYMENTS.  197 

whether  he  be  a  borrowing  or  non-borrowing  member ;  and 
he  cannot  urge  as  an  excuse  that  another  has  not  paid  his 
dues.1  The  failure  of  the  proper  officer  of  the  society  to  apply 
to  him  for  his  dues  will  not  excuse  him  in  not  paying  them  ;2 
nor  will  the  society  be  enjoined  from  collecting  dues,  on 
the  ground  of  the  fraud  and  official  misconduct  of  its 
former  officers.3 

Sec.  187— How  and  When  Paid. 

Dues  must  be  paid  according  to  the  provisions  of  the  by- 
laws ;  and  if  such  by-laws  make  no  provision  how  they  shall 
be  paid,  they  must  be  paid  in  cash.4  If  the  by-laws  re- 
quire them  to  be  paid  at  stated  meetings  of  the  directors, 
and  they  are  paid  elsewhere  to  officers  of  the  association 
who  embezzle  them  and  do  not  apply  them  to  the 
stock,  the  payments  will  be  invalid.6  But  if  the  as- 
sociation has  permitted  a  different  course  to  be  pur- 
sued, then  the  payments  to  its  officers,  in  pursuance 
of  such  practice,  at  a  time  and  place  not  provided  for  in  the 
by-laws,  will  be  valid.6  Payment  to  the  secretary  when 
payable  to  the  treasurer  will  not  bind  the  society.7 
Where  the  constitution  and  by-laws  provided  for  stated 
meetings  for  the  payment  of  dues,  and  that  all  money  must 
be  received  by  the  board  of  directors  in  the  presence  of  the 
first  secretary,  it  was  held  that  a  shareholder  was  not  en- 
titled to  credit  for  payments  unless  made  in  accordance  with 
such  provisions,  or  unless  the  money  actually  came  to  the  as- 
sociation, and  that  a  shareholder  making  a  claim  for  pay- 
ments had  the  burden  of  proof  as  to  such  facts,  which  was 

1  Hoboken  Building  Association  Mueller  v.  Cohen,  27  Ohio  L.  J. 
vs.  Martin,  13  N.  J.  Eq.  428.  353. 

2  Taylor  v.  Collins,  46  L.  T.  Rep.  5  Morrow  v.  James,  4  Mackey,  59. 
(N.  S.)  168.  See  however  Schutte  v.  California 

3  Rowland  vs.  Workingmen's  Building  and  Loan  Association, 
Building  and  Loan  Association,  1  146  Pa.  St.  324 ;  S.  C.  23  Atl.  Rep. 
Lack  L.  Rec.  456.  336. 

4  People's  Building  and  Loan  As-        6  Haverson  v.  Cole,  6  W.  R.  17. 
sociation  v.  Wroth,  43  N.  J.  L.  70  ;        7  Browne  v.   Sanders,   20  D.  C. 
Mutual  Building  and  Loan  Asso-  455  ;  S.  C.  20  Wash.  L.  Rep.  277. 
ciation  v.  Hammel,  43  N.  J.  L.  71 ; 


198  BTJTLDIXG   AND   LOAN   ASSOCIATIONS.  Cll.  IX. 

not  met  by  the  production  of  a  pass-book  showing  credits 
of  the  amount  claimed.1 

See.  188— When  Liability  to  Pay  Begins. 

Liability  to  pay  dues  for  stock  subscribed  does  not  begin, 
as  a  matter  of  course,  until  the  association  is  incorporated. 
Nor  does  it  begin  until  all  the  stock  has  been  subscribed 
for ;  or  in  the  instance  of  a  serial  association,  until  all  the 
stock  of  the  particular  series  to  which  the  stock  subscribed 
for  belongs  has  been  taken.2  The  laws  or  by-laws  may 
however,  provide  for  the  payment  of  dues  when  a  certain 
amount  of  stock,  less  than  the  whole,  has  been  subscribed 
for.3  Likewise,  if  the  association  is  put  in  running  order 
before  all  of  its  stock  has  been  subscribed  for,  a  member 
attending  its  corporate  meeting  and  voting  and  participating 
in  the  forwarding  of  its  business  will  be  liable  for  dues ;  for 
he  thereby  waives  his  right  to  insist  upon  a  full  subscription 
before  the  association  begins  the  transaction  of  business.4 
A  subscriber  to  a  series  of  stock  which  had  commenced  to 
run  several  months  before  may  be  required  to  pay  dues  and 
interest  from  the  date  they  began  to  run.5 

Sec.  189 — Assumpsit  for  Dues — Notice. 

Assumpsit  lies  on  behalf  of  the  association  against  a  mem- 
ber to  recover  dues  he  owes  it.6     Unless  a  statute  or  by-law 

1  Sachs  v.   Duckworth   B.  &   L.  their  dues  and  instalments,   they 

Ass'n,  6   Ohio  Dec.  254;    s.  c.   4  are  not  required,  when  such  agency 

Ohio  N.  P.  214.  is    discontinued,   to  tender    their 

Failure  of  a  shareholder  to  pay  clues  at  any  other  place.     People, 

his  ilius  is  not  excused  by  the  re-  etc.,    Ass'n    v.   Reynolds,  17  Ind. 

fusal  of  the  officers  of  the  asso-  App.  453;  S.  C.  45  N.  E.  Rep.  522. 

ciation  to  allow  trim  to  inspect  the  2  Morrison  v.  Dorsey,  48  Md.  461. 

books,    where  the  inspection  w;is  »  Massey    v.    Citizens'    Building 

in. I  ileniiinded  until  long  after  the  and  Savings  Association  of  Paola, 

shareholder  had    ceased  to   pay  his  22  Kan.  (524. 

dues.     Bukerv.Leighton  Lea  Ass'n  4  See  generally  Hinmanv.  Ryan, 

46   N.  Y.  Supp.  85;  8.0.  L8  App.  8  Ohio  C.  C.  529. 

Div.  548.  6Setliff    v.    North,    etc.,   Ass'n 

Where  an  association  agrees  to  (Tenn.),  39  S.  W.  Rep.  546. 

keep    an   agency    in    the   city    in  ''Association  v.  Kribs,  7  Leg.  & 

which    members    live,    to  receive  Ins.  Rep.  21. 


§  190.  DUES    ON    STOCK-PAYMENTS.  199 

requires  notice  to  be  given  a  member  of  his  duty  to  pay  bis 
clues,  none  need  be  given ;  and  a  general  statute  requiring 
corporations  to  give  notice  of  a  failure  to  pay  dues,  before 
suit  brought,  has  no  application  to  a  building  association 
requiring  periodical  payments  to  be  made  of  dues.1  The 
dues  for  each  particular  period  constitute  a  separate  cause 
of  action.2  The  amount  recoverable  is  the  amount  of  dues 
with  interest.  And  where  an  association's  contract  stipu- 
lated that  if  the  contracting  member  defaulted  in  payment 
of  dues  or  interest,  the  whole  amount  of  dues  which  would 
be  payable  before  the  maturing  of  the  stock,  less  what  had 
been  paid  thereon,  should  be  immediately  due  and  payable 
as  liquidated  damages  for  breach  of  the  contract,  such 
stipulation  was  enforced  only  to  the  extent  of  the  actual 
damages  occasioned  by  the  breach.3 

Sec.  190 — Bringing  Suit,  Effect  on  Payment  of  Dues. 

The  bringing  of  a  suit  against  a  member,  either  to  fore- 
close a  mortgage  he  has  given  or  to  recover  dues  past  due, 
does  not  release  him  from  liability  to  continue  the  payment 
of  his  dues  as  they  accrue,  nor  enable  him  to  evade  a  fine 
for  their  non-payment.4  Nor  does  the  duty  to  pay  dues 
cease  pending  the  negotiation  of  a  plan  to  wind  up  an  in- 
solvent association.5 

Sec.  191 — Dues  Secured  by  Mortgage  Given  on  Securing 
an  Advance  or  Loan. 

Usually  the  terms  of  a  mortgage  given  for  a  loan  are 
broad  enough  to  secure  the  payment  of  dues  on  the  borrow- 
er's stock  assigned  as  collateral  security  for  the  payment  of 
the  loan,6  but  not  broad  enough  to  secure  the  payment  of 

1  Morrison  v.  Dorsey,  48  Mel.  sociation  v.  Metzger,  3  W.  N.  Cas. 
461.  204  ;   Union  Building  Association 

2  Building  Association  v.  Hop-  v.  Masonic  Hall  Association,  29 
pie,  12  W.  N.  Cas.  222.  N.  J.  Eq.  389. 

3  Tilley  v.  American  Building  5  Pioneer  Savings  and  Loan  Co. 
and  Loan  Association,  52  Fed.  Rep.  v.  Oxford  (Tex.  4  Civ.  App.),  35  S. 
618  ;  S.  C.  40   Amer.  &  Eng.  Corp.  W.  Rep.  1078. 

375.  6  Hagerman  v.  Ohio  Building  & 

4  German  Fair  Hill  Building  As-    Loan  Associations,  25  Ohio  St.  186. 


200 


BUILDING   AND    LOAN   ASSOCIATIONS.  Ch.  IX. 


dues  on  stock  not  thus  assigned.1  And  if  there  has  been  a 
foreclosure  of  the  mortgage  and  a  satisfaction  of  the  decree 
by  payment,  the  decree  will  stand  as  security  for  future 
payment  of  dues.2  When  he  exercises  the  right  to  redeem 
he  must  still  continue  to  make  payments  on  his  stock  until 
the  association  or  the  series  to  which  it  belongs  has  ter- 
minated.3 

Sec.  192 — Lien  on  Stock  for  Dues. 

As  elsewhere  stated,  when  authorized  by  a  statute  or  a 
by-law  or  by  contract,4  a  building  association  may  hold  a 
lien  on  shares  of  stock  for  arrearages  of  dues  that  have 
accrued  upon  them.  In  such  an  event  the  holder  of  delin- 
quent stock  cannot  withdraw  from  the  association  without 
first  paying  all  back  dues.5  Nor  can  he  reduce  his  stock 
and  demand  that  payments  made  on  the  larger  number  of 
shares  shall  be  applied  to  the  lesser  number,  and  thus  secure 
stock  with  all  clues  paid  up  to  date  of  the  demand.6  The 
pledgee  of  stock  takes  it  subject  to  the  lien  of  the  associa- 
tion for  dues.7 


1  Everham  v.  Oriental  Savings 
and  Loan  Association,  47  Pa.  St. 
352;  Bowen  v.  Lincoln,  etc.,  As- 
sociation,  51  N.  J.  Eq.  272  ;  s.  C.  28 
Atl.  Rep.  Hi  :  46  Amor.  &  Eng. 
Corp.  Cas.  503. 

2  Robertson  v.  American  Home- 
stead Association,  10  Md.  397;  69 
Amer.  Dec.  145.  See  Risk  v.  Del- 
phos  Building  and  Savings  Asso- 
ciation. 31  Ohio  St.  517;  Mosley  v. 
linker,  (J  I  laic  S7  ;  Flagerman  v. 
Ohio  Building  and  Savings  Asso- 
ciation,  25  Ohio  St.  L86;  Everham 

V.  Oriental,  etc.,  Association.  47 
Pa.    St.    352;  Sparrow    v.   Fanner, 

26  Beav.  511 ;  S.  C.  33  L.  T.  216;  28 
I..  .1.  Ch.  537;  5  Jur.  (N.  S.)  530. 
( 'ontra.  Everman  v.  Schmidl ,  '-'I 
Wkly.  L.  Bull.  56. 

Sparrow    v.     Farmer,    eupra ; 
Farmer  v.  Smith,  I   B.  &  N.   196; 


S.  c.  28  L.  J.  Exch.  226 ;  5  Jur. 
(N.  S.)  533,  note. 

*  Thirty  -First  Street  Building 
and  Loan  Association  v.  Wetherell, 
43  111.  App.  509. 

6  McGrath  v.  Hamilton  Savings 
and  Loan  Association,  44  Pa.  St. 
383;  Anderson,  etc.,  Association 
v.  Thompson,  88  Ind.  405  ;  Watkins 
v.  Workingmen's  Building  and 
Loan  Association,  97  Pa.  St.  514 ; 
Hawkeye  Benefit  and  Loan  Asso- 
ciation v.  Blackburn,  48  la.  385. 

6  Fulton  v.  American  Building 
and  Loan  Association,  40  Minn. 
190  ;  s.  c.  48  N.  W.  Rep.  781 ;  Eaton 
v.  American  Building  and  Loan 
Association,  47  Minn.  236;  S.  C.  49 
N.  W.  Rep.  865. 

7  Societe  Canadienne-Francaise 
v.  Daveluy,  20  Cas.  S.  C.  449. 


§  193.  DUES   ON   STOCK-PAYMENTS.  201 

Sec.  103 — Forfeitures  of   Stock  for    Non-payment  of 
Dues. 

An  association  may  provide  by  its  by-laws  that  upon 
failure  for  a  certain  number  of  times  or  for  a  certain  length 
of  time  the  stock  of  such  delinquent  member  may  or  shall 
be  forfeited.1  But  forfeitures  for  non-payment  of  dues  are 
not  favored,  and  they  must  be  declared  in  unambiguous 
language.2  The  rules  relating  to  forfeitures  are  strictly 
construed;3  and  they  must  be  strictly  followed,  or  the  de- 
faulting member  will  have  a  cause  of  action  against  the 
association  for  a  conversion  of  his  stock.4  The  fact  of  a 
member's  default  is  sufficient  notice  to  him  of  the  associa- 
tion's right  to  forfeit  the  stock,  and  a  notice  need  not  be 
given  unless  some  statute  or  the  by-laws  require  it.5  Before 
the  forfeiture  can  be  deemed  to  have  taken  place  there  must 
be  some  action  upon  the  part  of  the  society,  either  by  the 
society  itself  or  by  its  board  of  directors,  or  possibly  its 
duly  authorized  officers,  declaring  a  forfeiture  of  the  stock, 
and  usually  a  record  made  of  such  declaration.6  The  right 
of  forfeiture  may  be  waived,7  as,  for  instance,  by  receiving 
dues  on  the  delinquent  stock.8  When  the  stock  is  declared 
forfeited  the  membership  of  the  owner  ceases  and  his  lia- 
bility to  pay  for  the  dues  is  at  an  end.9  If  the  stock  is 
forfeited  in  the  hands  of  the  assignee  the  liability  of  the 
assignor,  by  reason  of  his  subscription  for  it,  is  terminated.10 


iCard  v.  Carr,  1  C.  B.    (N.  S.)        6  Watkins      v.      Workingmen's 

197  ;  S.  C.  26  L.  J.  C.  P.  113.  Building    Association,   97  Pa.   St. 

2  Occidental  Building  and  Loan  514. 

Association    v.    Sullivan,   62  Cal.        7  North  American  Building  As- 

394;  In  re  Butchers'    Benefit  As-  sociation  v.  Sutton,  35  Pa.  St.  463. 
sociation,  38  Pa.  St.  298.  8  Lime  City  Building,  Loan  and 

3  Building  Association  v.  Hopple,  Savings  Association  v.  Black,   136 
12  W.  N.  Cas.  222.  Ind.  544 ;  S.  c.  35  N.  E.  Rep.  829. 

4  Allen    v.    American    Building        9  McCahan  v.  Columbian  Build- 
and  Loan  Association,   49    Minn,  ing  Association,  40  Md.  226. 

544 ;  s.  c.  52  N.  W.  Rep.   144  ;  40        *>  Hatfield  v.    Huntington  City 

Amer.  &  Eng.  Corp.  Cas.  144.  Building    and   Loan    Association, 

5  Freeman  v.  Ottawa,  etc.,  Asso-  132  Ind.  149;  S.  c.  31  N.  E.   Rep. 
ciation,  114  111.  182 ;  S.  C.  28  N.  E.  532. 

Rep.  611. 


202  BUILDING   AND   LOAN   ASSOCIATIONS.         Cll.  IX. 

After  forfeiture  of  a  member's  stock  he  no  longer  has  any 
interest  in  the  assets  of  the  association,  for  the}r  belong  to 
the  members  who  have  kept  their  stock  alive  by  the  pay- 
ment of  their  dues.  It  would  be  unjust  to  allow  him  to 
participate  in  a  distribution  of  the  assets  if  sufficient  funds 
have  been  paid  to  retire  unforfeited  stock;  for  the  latter 
would,  under  such  an  arrangement,  have  paid  more  than 
their  proportion.  Consequently,  where  a  borrowing  mem- 
ber has  made  default  on  his  mortgage,  and  the  stock  he 
held  has  been  declared  forfeited,  he  cannot  defend,  on  suit 
brought  to  foreclose  the  mortgage,  on  the  ground  that  the 
association  had  retired  the  outstanding  valid  stock.1 

Sec.  194 — Where  Liability  for  Dues  Ceases. 

As  stated  in  a  former  section,  liability  for  dues  ceases  on 
forfeiture  of  the  stock.  So  liability  ceases  when  the  asso- 
ciation has  come  to  an  end.2  Such  would  be  the  case  where 
a  receiver  is  appointed  for  the  association,3  for  that  puts  an 
end  to  its  corporate  existence ;  and  in  this  respect  it  is  un- 
like the  ordjnary  association.  But  the  fact  that  the  officers 
of  the  association  have  acted  illegally,  or  conducted  the 
association  in  an  illegal  manner,  does  not  relieve  him  from 
his  liability  to  pay  his  dues  so  long  as  it  is  a  going  concern.4 

1  Id.      Southern    Building    and  of  the  matter,  refused  to  pay  their 

Loan     Association    v.     Anniston  dues  and  their  shares  were  then 

Trust  Co.,  101   Ala.   582;  s.  c.    15  forfeited  on  due  notice  and  in  the 

So.    Rep.    12:5;    29   L.    R.    A.    120.  ina i mer  prescribed  in  the  constitu- 

loreclosure  of  the  association's  tion.      Buker     v.     Leighton    Lea 

lien   "ii   a   member's  stock  and  a  Ass'n,  46  N.  Y.  Supp.  35;  18  Aj>j>. 

thereof    under  the   decree  is  Div.  548. 

equivalent  to    a  forfeiture  of   his  -Cook    v.    Kent.   105    Mass.  210; 

:..     Building  and    Loan   A.sso-  Bowker  v.  .Mill  River  Loan  Fund 

ciation  of  Dakota  v.   Logan,  (Tex.  Association.  7  Allen.  100. 

Civ.  A  pp. )  33  S.  \V.  Rep.   1088.  8  Peter's  Building  Association  v. 

Shareholders  whose  shares  have  Jaecksch.  51  Md.  198. 

been  forfeited  for  o.on-paymen1  of  i  Regina  v.   D'Eyncourt,  4  B.  & 

,  are  not  entitled  1 [uitable  S.  820;  s.  C.  9  L.  T.  Rep.  (N.  S.) 

relief  on  the  ground  thai  they  had  383;  12  W.  R.  408;  28  J.  P.  116; 

been  deceived  bj   a  secrel  agree-  Sub.  nom.  ;  Hughes  v.  Layton,  10 

menl      between     the     promoters,  Jur.  (N.  S.)  518;  88  L.  J.  M.  C.  89; 

when  they,  after  knowledge  of  the  Sub.  nom.\  I  Inches?'.  D'Eyncourt, 

ment,  and  after  consideration  8N.  R.  420;  116  E.  L.  &Eq.  819;  Ho- 


§  197.  DUES   ON   STOCK-PAYMENTS.  203 

The  foreclosure  of  the  association's  lien  on  a  member's 
stock,  followed  by  its  sale  under  the  decree,  terminates  his 
liability  for  dues.1 

Sec.  195— Purchaser  of  Mortgaged  Premises. 

A  purchaser  of  the  premises  mortgaged  to  an  association 
to  secure  a  loan  is  liable  for  the  dues  on  the  mortgagor's 
stock  assigned  as  collateral,  where  he  takes  such  shares,  the 
same  as  if  he  was  the  original  owner.2 

Sec.  196 — Number  of  Shares   upon   which  Member  is 
Liable  for  Dues. 

A  member  is  liable  for  the  dues  upon  all  shares  for  which 
he  subscribes,  unless  some  statute  forbids  any  one  member 
holding  more  than  a  specified  number  of  shares  ;3  in  which 
event  he  is  liable  only  for  so  many  as  he  may  own.  But  if  a 
by-law  limit  the  number  he  may  hold,  he  will  be  liable  for  the 
full  amount  for  which  he  may  subscribe,  although  that  amount 
exceed  the  limitation  contained  in  such  by-law  ;  for  by  ac- 
cepting the  subscription  the  association  waives  the  by-law 
to  that  extent,  so  that  he  cannot  set  it  up  as  a  defense.4 

Sec.  197 — Proof  of  Payments  on  Stock. 

If  a  stockholder  be  sued  to  recover  dues  on  his  stock  and 
he  plead  payment,  he  must  prove  that  the  payments  were 
made  on  the  stock  ; 5  although  if  sued  on  his  mortgage  for 
instalments   thereon  due,  and  it  is  proven  that  he  had  paid 

boken    Building    Association     v.  (Tex.   Civ.  App.)   35  S.  W.   Rep. 

Martin,  13  N.  J.  Eq.  428  ;  Miller's  1078. 

Estate,   2    Pears    (Pa.)    248.      See  2  Handley  v.   Farmer,  29   Beav. 

Turner  Ban-Verein  v.  Woodburn,  362.     See  Capital  Hill  Building  As- 

27  Wkly  L.  Bull.  409.     See  Hughes  sociation  v.  Hilton,  1  Mackey,  107. 

v.  Farmers,  etc.,  Ass'n.  (Tenn.)  46  3  Simpson  v.  Greenfield  Building 

S.  W.  Rep.  362.  and    Saving  Association,  38  Obio 

1  Building  and  Loan  Association  St.  349. 

of    Dakota  v.   Logan    (Tex.     Civ.  4  Hagerman    v.    Ohio    Building 

App.)  S.  C.  33  S.  W.  Rep.  1088.  and  Savings  Association,  25  Ohio 

Pending  negotiations  of  a  plan  St.  186. 

to  wind  up  an  insolvent  Associa-  5  Selden  v.  Reliable  Savings  and 

tion  dues  must  be  paid.     Pioneer  Building  Association,  2  W.  N.  Cas. 

Savings  and  Loan  Co.  v.  Oxford  481  ;  s.  c.  8U  Pa.  St.  336. 


204  BUILDING    AND   LOAN   ASSOCIATIONS.  Cll.  IX. 

certain  sums  to  the  society  at  the  time  he  should  have  paid 
on  the  mortgage,  the  court  will  presume  that  such  payments 
were  made  on  his  stock  dues  and  on  fines,  and  not  on  the 
mortgage.  He  has  the  burden  to  show  that  the  payments 
were  made  on  the  mortgage  if  he  desire  them  so  ap- 
plied.1 If  he  has  lost  his  pass-book  containing  the  entries 
as  evidence  of  his  payments,  and  the  association  disputes 
the  pavments  he  claims,  he  must  show  by  clear  evidence 
that  he  made  the  payments  before  the  court  will  allow 
them ;  for  vague  and  uncertain  statements  will  not  suffice.'2 
If  he  desires  to  have  his  stock  applied  to  the  satisfaction  of 
his  loan,  he  must  prove  that  the  stock  has  matured.3 

Sec.  198 — Application    of   Payments    made  by  a  Bor- 
rower. 

A  borrowing  stockholder,  in  the  absence  of  any  agree- 
ment on  the  subject,  may  apply  his  payments  either  to  his 
stock  dues  or  to  the  satisfaction  of  his  mortgage,  or  to 
both ;  and  if  he  do  not  make  the  application,  the  society 
may.4  And  so  his  assignee  for  the  benefit  of  his  creditors 
may  make  the  application  if  neither  his  assignor  nor  the  so- 
ciety have  done  so.6  Payment  upon  dues  does  not  of  itself 
work  an  extinguishment  of  so  much  of  his  mortgage,  unless 
there  be  an  agreement  to  that  effect.6  They  are  partial 
payments   on   his   stock.7     If  the  association  has  credited 

1  Association  v.  Wall,  7  Phila.  ing  Association  v.  Sutton,  35  Pa. 
240;  Building  Association  v.  Tay-  St.  463.  But  see  Pioneer  Savings 
lor,  13  W.  N.  Cas.  13.  &  Loan  Co.   v.   Cannon,  96  Tenn. 

2  Clarkville  Building  and  Loan  599  ;  s.  c.  36  S.  W.  Rep.  386. 
Association  v.  Stephens,  26  N.  J.  5  Id. 

Eq.  351.  6  North  American  Building  As- 

3  Watkins  v.  Workingmen's  sociation  v.  Sutton,  35  Pa.  St.  463  ; 
Building  and  Loan  Association,  97  Link  v.  Germantown  Building  As- 
Pa.  St.  514.  sociation,  89  Pa.  St.  15 ;  Economy 

1  Spring  Garden   Association    r.  Building  Association  v.   Hunger- 

Tradesnicn's  Building   Association,  hurghley,  93   Pa.  St.  258;  Delano 

16  Pa.  St.  898;  Early's  Appeal,  89  v.  Wild,  6  Allen,  1. 

Pa.   St.    Ill:  Randall  v.    National  7  Seibel  v.  Victoria  Building  As- 

Building,     Loan    and     Protective  sociation,  48  Ohio  St.  871 ;  s.  C.  2 

Union,  42  Neb.  809;  S.  C.  60  N.  W.  N.  E.  Rep.  417. 
Rep.  L019  ;  North  American  Build- 


198. 


DUES    ON   STOCK-rAYMENTS. 


205 


a  payment  to  a  stockholder's  general  account,  an  officer  of 
the  association  cannot  testify  that  such  payments  were  con- 
sidered by  it,  in   law,    as   payments  on   the   stockholder's 


mortgage.1 


1  North  American  Building  As- 
sociation v.  Sutton,  35  Pa.  St.  463. 

Of  course  a  stockholder,  when 
applying  his  stock  dues  paid  in  to 
his  mortgage,  is  not  entitled  to  in- 
tei-est  on  such  dues  ;  Citizens'  Mu- 
tual Loan  and  Accumulating  Fund 
Association  v.  Webster,  25  Barb. 
263,  unless  the  association  has 
come  to  an  end  by  reason  of  its  in- 
solvency and  the  appointment  of  a 
receiver. 

In  determining  the  period  fixed 
by  the  by-laws  or  contract  as  the 
limit  allowed  before  the  whole 
debt  becomes  due,  partial  pay- 
ments of  dues  cannot  be  counted. 
Thus    a    member  is    deemed    six 


months  in  arrear,  notwithstanding 
a  partial  payment  of  dues  in  tin.- 
first  part  of  the  six  months. 
Barndt  v.  Greul,  4  Leg.  Gaz.  (Pa.) 
388 ;  s.  c.  1  Leg.  L.  Reg.  737. 

If  a  member  be  both  delinquent 
on  his  dues  and  on  his  mortgage, 
and  he  pay  only  enough  to  satisfy 
his  dues  without  making  an  appli- 
cation of  such  payment,  the  asso- 
ciation may  apply  the  payment  to 
his  stock  and  proceed  to  foreclose 
the  mortgage.  Nickels  v.  People's 
Building  Loan  and  Savings  Asso- 
ciation 93  Va.  380  ;  25  S.  E.  Rep.  8  ; 
People's  Building  Loan  and  Saving 
Association  v.  Ash  worth.  91  Va. 
706 ;  s.  c.  22  S.  E.  Rep.  522. 


CHAPTER  X. 

FINES. 

Sec.  199.  Definition. 

200.  Part  of  General  Plan. 

201.  Not  Regarded  as  a  Penalty  or  Forfeiture. 

202.  Court  Enforcing. 

203.  Charter  or  Statute  Authorizing. 

204.  Fixed  by  By-Laws. 

205.  Must  be  Certain. 

206.  Must  be  Reasonable. 

207.  Amount  of  Fine. 

208.  Only  Members  Liable  to  Fine. 

209.  Additional  Fine  for  Continued  Neglect. 

210.  In  Arithmetical  Progression. 

211.  Fines  on  Delinquent  Interest. 

212.  Interest  on  Fines. 

213.  Fines  on  Premiums. 

214.  Married  Women  Liable  to  Pay  Fines. 

215.  Mortgage  Secure. 

216.  Illegal  Fines  Reduce  Debt. 

217.  When  Fines  Cease. 

218.  Lien  on  Stock. 

219.  Condonation  or  Remission  of  Fines. 

220.  How  Collected. 

221.  Insolvency — Appointment  of  Receiver. 

Sec.  199— Definition. 

A  line  is  a  penalty  inflicted  in  the  nature  of  liquidated 
damages,  pursuant  to  the  provisions  of  the  by-laws,  upon  a 
member,  for  failure  to  comply  with  the  rules  and  regulations 
of  the  association  requiring  prompt  payment  of  dues,  in- 
terest or  other  sums  payable  at  stated  times  on  his  stock.1 

Sec.  200— Part  of  General  Plan. 

Fines  area  part  of  the  general  plan  of  all  building  associa- 

1  Shannon    v.    Boward    Mutual    56  Ga.    350;    Hagerman    v.  Ohio 

I'.uil.lin^  Associat  ion,  ::c>  M<l.  ::*;: ;     Building  and  Saving  Association, 
Ocmulgee  Building,  etc.,  Associa-    25  Ohio  St.  186. 
tion  v.  'I'll. mis., n,  52  Ga.  427  ;  s.  0. 
206 


§  202.  fines.  207 

tions.  The  object  in  exacting  them  is  to  enforce  the  duties 
each  member  of  the  association  owes  to  his  fellows.1  The 
associations  deal  in  small  payments.  Such  were  the  original 
object  and  plan  of  their  formation  ;  and  in  this  respect  that 
object  and  plan  have  never  been  changed.  To  confine  the 
association  to  the  damages  actually  sustained  by  the  failure 
of  a  member  to  pay  promptly  a  few  cents  per  week  would 
practically  enable  him  to  ignore  his  obligation  to  the  asso- 
ciation and  suit  his  own  convenience  in  making  these  small 
payments.2  The  success  of  the  association  depends  upon 
prompt  payments,  either  weekly  or  monthly,  of  small  sums 
by  each  member,  so  that  these  may  make  in  the  aggregate  a 
sum  sufficient  to  attract  the  borrower.  If  this  plan  be  not 
pursued  and  these  payments  be  not  promptly  made,  the 
usefulness  and  efficiency  of  the  association  will  be  much 
impaired  ;  and  the  benefits  to  be  reaped  by  each  member 
greatly  reduced.  Hence,  it  may  be  said,  that  fines  are 
essential  to  the  well  working  of  a  building  association.3 

Sec.  201 — Not  Regarded  as  a  Penalty  or  Forfeiture. 

A  fine  is  not,  therefore,  regarded  as  a  penalty  or  for- 
feiture, such  as  is  abhorred  by  the  law,  but  as  liquidated 
damages  which  all  the  members  have  contracted  to  pay 
upon  the  happening  of  certain  contingencies  brought  about 
by  their  own  neglect.4  When  reasonable  in  amount  courts 
sustain  them,  rather  than  strike  them  down.5 

Sec.  202 — Court  Enforcing. 

The  rule  of  law  forbidding  the  enforcement  of  penalties 

1  ;'The    owners  of    a  series    of    Ass'n,  62  Ark.  572;  s.  c.  36  S.  W. 
stock  in  a  building  and  loan  asso-    Rep.  1080. 

ciation  are  to  all  intents  and  pur-        *  Shannon    v.    Howard    Mutual 

poses  partners."    Maloney  v.  Real  Building  Association,  36  Md.  383 ; 

Estate,  etc.,   Association,    57   Mo.  Ocmulgee  Building,  etc.,  Associa- 

App.    384.      But  see   Brownlie  v.  tion  v.  Thomson,  52  Ga.  427  ;  s.  c. 

Russell,  8  App.   Cas.  235 ;  s.  c.  48  53  Ga.   350 :  Roberts  v.  American 

L.  T.  881  ;  47  J.  P.  757.  B.  &  L.  Ass'n,  62  Ark.  572  ;  s.  C.  36 

2  See  Maudlin  v.  American  Sav-  S.  W.  Rep.  1080. 

ing  and  Loan  Association,  63  Minn.  b  Harris  B.  &  L.  Ass'n  v.  Simon, 
358  ;  s.  C.  65  N.  W.  Rep.  645.  19  Pa.  C.  C.  110. 

3  Roberts  v.  American  B.  &  L. 


208  BUILDING    AND   LOAN   ASSOCIATIONS.  Cll.  X. 

agreed  upon  for  a  breach  of  contract  has  no  applicability  to 
the  enforcement  of  fines  prescribed  by  the  rules  of  a  build- 
in  g  association.1  In  a  leading  case  in  Maryland,  the  court 
used  the  following  language  with  reference  to  a  court  of 
equity  enforcing  fines  of  such  an  association  : 

"  In  regard  to  the  question  that  a  court  of  equity  does 
not  enforce  the  payment  of  penalties  and  forfeitures,  accord- 
ing to  the  principles  regulating  its  jurisdiction,  this  is  true 
in  cases  where  the  doctrine  is  applicable.  "Where,  in  strict- 
ness, nothing  but  forfeitures  and  penalties  are  sought  to  be 
claimed  and  enforced  in  a  court  of  equity,  it  will  not  lend  its 
aid  for  their  collection,  but  the  parties  must  resort  to  the 
courts  of  law  for  the  purpose.  The  sum  stipulated  to  be 
paid  by  a  member  of  a  building  association,  under  by-laws 
or  regulations  authorized  by  its  charter,  for  a  default  in  set- 
tling his  weekly  dues,  is  not  such  a  forfeiture,  but  is  simply 
an  amount  conventionally  due  upon  the  accruing  of  the 
weekly  instalment,  and  the  failure  to  pay  it  accordingly. 
It  is  in  the  nature  of  liquidated  damages,  agreed  to  be  paid 
for  the  non-performance  of  a  promise  or  covenant ;  and 
where  they  are  not  unconscionable  or  disproportioned  to  the 
exigency  of  the  case,  a  court  of  equity  will  award  their 
payment,  more  especially  when  incidentally  involved  in  a 
matter  confided  to  its  peculiar  jurisdiction  and  control. 
From  the  character  of  these  building  associations,  the  impo- 
sition of  adequate  fines,  as  agreed  upon  by  the  by-laws,  is 
justified  in  order  to  prevent  default  in  the  punctual  pay- 
ment of  the  weekly  dues,  upon  which  the  success  of  the 
company  depends ;  or  in  case  of  default,  that  some  recover- 
able  equivalent  for  the  consequent  damage  sustained,  may 
be  provided.  The  law  authorizing  the  formation  of  the 
company,  expressly  provides  for  the  imposition  of  such 
fines,  and  the  mortgage  given  by  the  appellant  recognizes 
their  obligation,  and  stipulates  for  their  payment ;  and  the 
court  of  equity  is  required,  where  a  case  occurs  justifying 
its  interposition,  to  foreclose  the  mortgage  exparte  or  other- 
wise, to  allow  in  the  ascertainment  of  the  indebtedness  of 

■  Ocmulgee  v.  Building  and  Loan    Fifth  Ward  Building  Association, 
Asso-i.it  [on,  52  ( i.i.  427  ;  Mulloy  v.     2  McArthur  (D.  C.)  594. 


§  203.  fines.  209 

the  party,  such  recoverable  and  legal  fines  incurred  by  the 
party,  by  his  own  consent,  which  he  has  been  in  default. 
*  *  *  Such  fines  do  not  come  within  the  principle  for- 
bidding a  court  of  equity  to  lend  its  assistance  for  the  simple 
purpose  of  the  recovery  of  fines,  penalties  and  forfeitures."  1 
In  England  it  is  held  that  such  a  fine,  inflicted  for  arrears 
in  the  payment  of  subscriptions,  is  not  interest  entitling  a 
member  to  equitable  relief.2  In  Mississippi  it  was  said  : 
"  What  is  called  a  fine  is  imposed  for  every  default  in  pay- 
ment, as  a  spur  to  prompt  payment,  so  as  not  to  derange 
the  process  of  compounding,  which  must  fail  if  there  is 
want  of  payment  as  agreed,  and  failure  of  which  would 
cause  failure  of  the  scheme.  We  see  nothing  wrong  in. 
members  of  full- age,  and  compos  mentis,  mutually  binding 
themselves  to  so  beautiful  a  scheme  for  reciprocal  advantage, 
and  being  led  to  the  performance  of  what  they  have 
agreed."3 

Sec.  203 — Charter  or  Statute  Authorizing. 

In  some  cases  it  has  been  held  that  a  fine  cannot  be  in- 
flicted unless  the  charter  or  some  statute  authorizes  its  im- 
position.4 But  this  rule  has  not  always  prevailed  ;  and  it 
would  seem  that  it  is  not  the  better  one.  Since  under  the 
general  law  any  corporation,  not  prohibited,  may  be  formed 
with  any  customary  and  appropriate  powers  not  inconsist- 
ent with  law,  a  building  association,  it  has  been  held,  may 
be  incorporated  with  power  to  impose  fines  for  non-payment 

1  Shannon  v.  Howard  Mutual  and  Loan  Association,  71  Miss.  130  ; 
Building  Association,  36  Md.  383.  s.  C.  14  So.  Rep.  146. 

2  Parker  v.  Butcher  L.  R. ,  3  Eq.  i  Lincoln  Building  and  Savings 
762  ;  s.  c.  36  L.  J.  Ch.  552.  See  Association  v.  Graham,  7  Neb.  173  ; 
also  Matterson  v.  ElderfieldL.  R.,  Lincoln  Building  and  Savings  As- 
4  Ch.  App.  207  ;  s.  c.  20  L.  T.  Rep.  sociation  v.  Benjamin,  7  Neb.  181  ; 
(N.  S.)503;  17W.R.  422;  33  J.  P.  Jarrett  v.  Cope,  68  Pa.  St.  67; 
326  ;  and  Thompson  v.  Hudson  L.  Rhoades  v.  Hoernerstown  Building 
R.,  2  Ch.  App.  255  ;  Pilkington  vs.  Association,  82  Pa.  St.  180;  Link 
Baker  W.  N.,  1877  p.  210;  In  re  v.  Germantown  Building  Associa- 
Middlesborough  Building  Society,  tion,  89  Pa.  St.  15  ;  Building  Asso- 
54  L.  J.  Ch.  592  ;  S.  c.  51  L.  T.  743  ;  ciation  v.  Schuller,  3  W.  N.  Cas. 
49  J.  P.  278.  431. 

3  Goodman  v.   Durant  Building 


■210  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  X. 

of  dues,  although  there  be  no  statute  expressly  authorizing 
the  creation  of  such  corporations.1  If.  however,  there  be  a 
statute  regulating  the  assessment  of  fines,  the  power  to  im- 
pose them  is  measured  by  its  provisions.2  The  association 
need  not,  however,  go  the  full  limit  allowed  by  the  statute, 
and  may  fix  the  fine  by  a  by-law  at  a  smaller  amount.3 

Sec.  204— Fixed  by  the  By-laws. 

Unless  some  by-law  of  the  association  or  the  charter  or  a 
statute  provide,  a  fine  for  the  failure  of  a  member  to  per- 
form a  certain  duty  cannot  be  inflicted.4  But  in  the  ab- 
sence of  a  statute,  an  association  may  provide  for  fines,  and 
its  by-laws  in  that  respect  will  be  valid.5 

Sec.  205— Must  be  Certain. 

In  describing  the  certainty  required  in  the  by-laws  provid- 
ing for  a  fine,  an  English  author  has  said  :  "  The  rules  im- 
posing fines  should  be  very  precise  in  their  terms,  and  clear 
in  their  meaning,  as  the  courts  do  not  like  penalties  of  any 
kind,  and  generally  decide  against  them  if  possible."6  The 
decided  cases  furnish  many  illustrations  of  this  rule ;  espe- 
cially is  this  true  of  the  English  cases.  Thus,  a  by-law  pro- 
vided that  "  mortgagors  neglecting  to  pay  their  monthly 
repayments  will  be  subject  to  fines  at  the  rate  of  three  per 
cent,  per  share  for  the  first  month,  and  for  each  and  every 

1  Goodman  v.  Durant  Building  It  has  been  said  that  fines  are  ob- 
and  Loan  Association,  71  Miss.  310 ;  jectionable  on  account  of  usury. 
S.  c.  14  So.  Rep.  146  ;  Lynn  v.  Free-  Building  Association  v.  Rowe,  15 
mansburg  Building  and  Loan  As-  Leg.  Int.  45  ;  Hollo  well  v.  Southern 
sociation,  117  Pa.  St.  1  ;  s.  c.  11  B.  &  L.  Ass'n,  120  N.  C.  286  ;  26  S. 
Atl.  Rep.  537.  E.  Rep.  781. 

2  Lynn  v.  Freemensburg  Build-  The  fact  that  usurious  interest 
ing  and  Loan  Association,  11?  Pa.  has  been  exacted  is  no  defence  to 
St.  1  ;  8.  0.  85  Pitts.  Leg.  Jr.,  208;  an  action  to  enforce  a  fine.  Her- 
20  W.N.  0.185;   11   Leg.  Ent.  162;  bert  v.  Kenton  Building,  etc.,  As- 

1!)  Amer.  &  Eng.  Corp.  ('as.  UN  ;    ll      sociation,  11  Bush.  289. 

Atl.  Rep.  587.  '"  Roberts  v.  American  B.  &  L. 

Dupuy  v.  Eastern  B.&  L.  Ass'n,  Ass'n,  62  Ark.  572;  s.  c.  86  S.  W. 

03  Va.  160;  s.  o.  258.  E.  Rep.  537  ;  Rep.  1080. 

85  L.  R.  A.  215.  °  Davis  on  Law  of  Building,  etc., 

1  Building  Association  v.  Scbul-  Societies  (4  ed.),  p.  45. 
ler,  8  W.  N.  C.  181. 


§  205.  FINES.  211 

succeeding  month  three  pence  per  share  additional  on  such 
payments."  Under  this  rule  the  association  was  allowed  to 
collect  only  one  fine  of  three  pence  on  each  share  of  the 
defaulting  member,  although  this  was  less  than  the  default- 
ing member  contended  for.  The  society  claimed  the  right 
to  charge  him  with  fines  computed  as  cumulative  in  arith- 
metical progression.  Such  a  construction  would  swamp  a 
man's  estate;  and  it  was  claimed  that  a  court  of  equity 
would  not  adopt  such  a  construction.  The  borrower  con- 
tended that  he  was  chargeable  with  six  pence  per  share  for 
each  month's  default  after  the  first; — that  is,  six  pence  for 
the  second,  six  pence  for  the  third,  and  so  on.  In  passing 
on  the  question,  the  court  said  :  "  I  think  that  the  rule  admits 
of  three  constructions, — the  one  contended  for  by  the  society, 
the  other  suggested  in  the  argument  for  the  borrower,  and 
a  third,  more  favorable  for  him,  which  I  think  the  right  con- 
struction, and  that  is  that  the  society  are  only  to  be  allowed 
one  fine  of  three  pence  on  each  share."  x  A  by-law  provided 
that  "  wherever,  and  so  often  as,  the  borrower  should  make 
default  in  the  payment  of  any  of  the  said  monthly  instal- 
ments," he  should  "  pay  to  the  society  one  shilling  in  the 
pound  for  each  and  every  pound  of  such  instalment  so  left 
unpaid."  The  society  claimed  one  shilling  in  the  pound  for 
the  month  in  which  default  was  made  and  also  a  like  shilling 
for  all  the  subsequent  months  during  which  the  pound  re- 
mained unpaid,  and  for  each  fractional  part  of  a  pound. 
But  the  court  held  that  it  was  entitled  to  only  one  shilling 
in  the  pound  for  the  month  in  which  default  was  made,  and 
that  it  could  not  claim  anything  on  the  fraction  of  a  pound.2 
So  where  the  society's  table  of  fines  was  so  arranged  that 
the}7  were  progressive  from  the  first  to  the  sixth  month  in- 
clusive, but  there  was  no  express  charge  for  the  seventh  and 
eighth  months,  it  was  held  that  the  fines  were  not  to  increase 
in  amount  after  the  sixth  month.3     Husband  and  wife,  the 

1  In  re  Tierney,  9  Ir.  Rep.  1 ;  S.  C.  W.  R.  22  :  13  C.  B.  (N.  S.)  290  ;  106 
8  Ir.  L.  T.  Rep.  29.  Eng.  C.  L.  Rep.  289. 

2  Three  Towns    British    Mutual  s  Lovejoy  v.  Mulkern,  37  L.  T. 
Deposit  and  Loan  Society  v.  Doyle,  (N.  S.)  77  ;  s.  c.  46  L.  J.  Ch.  630. 
7  L.  T.  Rep.  (N.  S.)   276  ;  S.  C.  11 


212  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  X. 

owners  of  stock,  borrowed  money  from  an  association,  and 
gave  their  notes  for  it,  secured  by  mortgage  and  the  hy- 
pothecation of  their  stock.  The  ninth  by-law  provided  that 
"  every  stockholder  for  every  share  of  stock  shall  pay  to  the 
secretary,  on  the  second  Wednesday  in  every  month,  the  sum 
of  one  dollar  in  gold."  The  eleventh  by-law  provided  that 
"any  stockholder  failing  to  pay  his  monthly  instalments,  or 
interest,  shall  pay  a  fine  of  ten  per  cent,  per  month  upon  the 
amount  of  the  indebtedness.  This  fine  shall  be  charged  by 
the  secretary,  and  collected  with  the  delinquent's  monthly 
dues,  and,  in  case  any  stockholder  shall  neglect  or  refuse  to 
pay  the  monthly  dues  or  fines  for  the  space  of  six  months, 
the  secretary  shall  tender  to  the  delinquent  the  amount  ac- 
tually paid  in,  deducting  all  fines  and  forfeiture  that  may  be 
charged  against  him,  and  from  that  time  he  or  she  shall 
cease  to  be  a  member  of  the  association."  The  court  held 
that  the  ninth  by-law  in  no  way  affected  or  changed  the 
terms  of  any  contract  or  loan  between  the  association  and  a 
stockholder ;  and  that  the  word  "  interest  "  in  the  eleventh 
by-law  did  not  refer  to  interest  due  upon  any  loan  from  the 
corporation  to  a  stockholder.  This  was  upon  the  ground 
that  penalties  and  forfeitures  are  not  to  be  favored,  and  must 
be  created  by  unambiguous  language.1  A  b}?"-law  provided 
that  "  if  any  stockholder  shall  neglect  or  refuse  to  pay  his 
weekly  dues  as  often  as  the  same  shall  be  payable  *  *  * 
every  stockholder  so  neglecting  or  refusing  shall  forfeit  and 
pay  the  additional  sum  of  ten  cents  for  every  share  by  him 
held  for  every  weekly  neglect  or  refusal,  to  be  charged  with 
the  weekly  dues."  It  was  held  that  one  fine  only  could  be 
charged  on  any  number  of  omissions  to  pay  one  particular 
instalment.2  A  by-law  provided  that  "if  any  person  shall 
neglect,  omit  or  refuse  to  pay  his  or  her  weekly  dues  at  the 
1  ime  required  hereby,  he  or  she,  as  the  case  may  be,  shall  be 
lined  ten  cents  weekly,  for  each  and  every  dollar  remaining 
unpaid."  It  was  held  that  under  this  by-law  one  fine  only 
could  be  imposed  for  the  failure  to  pay  a  weekly  instalment 
aa  it  Eel]  due,  and  not  repeated  lines  for  every  week  that  it 

1  Occidental  Building  and   Loan        2  Shannon    v.   Howard    Mutual 
iation,  62  Cal.  894.  Building  Association,  3G  Md.  383. 


§  206.  fines.  213 

stood  in  arrears.1  An  Indiana  case  affords  an  illustration  on 
this  subject.  There  a  by-law  provided  that  if  a  stockholder- 
failed  to  pay  his  monthly  assessment  he  should  be  lined  tor 
the  first  and  second  weeks  five  cents  ;  for  the  third  ten  cents, 
and  for  each  successive  week  fifteen  cents  per  share.  It  was 
held  that  the  highest  fine  that  could  be  imposed  was  fifteen 
cents  per  week  for  each  share,  and  that  duplicate  fines  of 
five,  ten  and  fifteen  cents  could  not  be  collected,  although 
the  default  continued  for  several  successive  months.  It  was 
also  held  that  a  by-law  inflicting  a  line  of  ten  cents  per 
month  for  a  failure  to  pay  monthly  interest  gave  the  right 
to  collect  only  that  amount  each  month.2 

Sec.  206 — Must  he  Reasonable. 

It  is  one  of  the  essentials  of  by-laws  that  they  be  reason- 
able.3 They  must  be  consistent  with  the  charter  and  subor- 
dinate thereto.4  "  The  amount  of  the  fine  must  be  reasona- 
ble. It  can  be  imposed  only  by  way  of  punishment  for  some 
delinquency  in  the  performance  of  a  duty  which  the  mem- 
ber may  owe  to  the  corporation  by  reason  of  his  member- 
ship." 5  And  the  fact  that  a  statute  authorizes  the  collection 
of  "such  sums  of  money,  by  rate  of  stated  dues,  fines, 
*  *  *  as  the  corporation  by  its  by-laws  may  adopt," 
does  not  change  this  rule.6 

1  Monumental  Permanent  Build-  B.  &  L.  Ass'n  v.  Simon,  19  Pa.  C. 
ing  and  Land  Society  v.  Lewin,  38  C.  110  ;  s.  c.  6  Pa.  Dist.  Rep.  204. 
Md.  445.     See  also  Building  Asso-        3  Lynn  v.  Freemansbury  Building 
ciation  v.  Schuller,  5  W.  N.  C.  431.  and  Loan  Association,  117  Pa.  St. 

2  Gouckenour  v.  Sullivan  Build-  1  ;  s.  C.  35  Pitts.  Leg.  Jr.  208  ;  20 
ing  and  Loan  Association,  119  Ind.  W.  N.  C.  185  ;  44  Leg.  Int.  462  ;  19 
441  ;  s.  c.  21  N.  E.  Rep.  1088.  Amer.  &   Eng.  Corp.  Cas.  68  ;  11 

A  by-law   which  provides  that  Atl.  Rep.  537  ;  In  re  Tierney's  Es- 

"  fines  or  penalties  for  the  non-  tate,  8  Ir.  L.  T.  Rep.  29  ;  s.  c.  9  Ir. 

payment  of  dues,  premium  and  in-  R.    Eq.    1  ;    Lovejoy   v.    Mulkarn, 

terest  shall   not    exceed   two  per  46  L.  J.  Ch.  630 ;  s.  c.  37  L.  T.  77. 

cent,  per  month  on  all  arrearages,  4  Rex  v.   Cutbush,  4  Burr.  2204  ; 

is  explicit  enough  and  unequivocal.  Hoblyn  v.   Rex,  2  Bro.  P.  C.  329  ; 

It  imposes  the  maxim  penalty  of  Kirk  v.  Nowill,  1  T.  R.  118. 

two  per  cent,  per  month.     Harris  5  Hagerman    v.    Ohio    Building 

6  Forest  City  United  Land  Build-  excessive  demand,  a  fine  for  the 

ing    Association  v.   Gallagher,   25  failure     will     not     be     enforced. 

Ohio  St.  208.     If  the  failure  to  pay  Hughes    v.    Farmers',    etc.,  Ass'n 

amount   due  is  occasioned  by  an  (Tenn.),  46  S.  W.  Rep.  362. 


214  BUILDING    AND   LOAN   ASSOCIATIONS.  Cll.  X. 

Sec.  207— Amount  of  Fine. 

In  the  section  immediately  preceding  this  it  has  been  seen 
that  a  line  must  be  reasonable  in  amount.  The  true  meas- 
ure of  a  fine  is  that  it  is  sufficient  in  amount  to  reimburse 
the  .society  for  any  loss  it  has  suffered  by  reason  of  the 
member's  delinquency.  This  amount  may  be  said  to  be  equal 
to  the  interest  the  sum  to  be  paid  would  have  earned  from 
the  period  of  default  until  it  be  paid,  to  which  should  be 
added  the  amount  coming  to  it  from  the  then  obtainable 
premiums  on  the  sale  of  money.1  Even  a  slight  increase  upon 
this  amount  is  desirable  ;  so  that  it  is  not  more  profitable  to 
pay  them  to  be  delinquent,  in  order  to  obtain  the  use  of  the 
money  due.  If  the  legislature  has  established  the  amount, 
then  any  excess  over  that  amount  is  illegal.2  But  the  fact 
that  a  fine  is  slightly  in  excess  of  the  amount  of  damage  in- 
flicted by  the  delinquency  will  not  justify  the  courts  in  de- 
claring it  void.3  A  rule  of  a  society  declared  that,  in  case 
of  default  in  paying  his  monthly  subscriptions,  the  defaulter 
should  pay  a  fine  of  three  pence  per  share  for  the  first 
month,  six  pence  for  the  second,  one  shilling  for  the  third, 
;iiid  doubling  the  fine  for  each  succeeding  month  until  the 
expiration  of  the  first  six  months  ;  and  that  after  that  time, 
if  the  same  remain  unpaid,  it  should  become  forfeited.  It 
was  held  that  no  line  could  l»e  charged  after  the  expiration 
of  the  first  six  months.4  Where  a  by-law  provided  that  the 
lines  for  non-payment  of  monthly  advance  repayments 
should    be   at    the   rate   of  one  shilling  per   pound   on    the 

and  Savings  Association,  25  Ohio  19  Ainer.  &  Eng.  Corp.  Cas.  68  ;  11 

Si.     186;    In    re    Middlesborough  Atl.  Rep.  537. 

Building  Society,  54  L.  J.  Chanc.  8  Hagerman  v.  Ohio  Building  and 

Div.  592  :  S.  C.  51  L.  T.  (N.  S.)  74:5  ;  Loan  Association,  25  Ohio  St.  18G  ; 

49  J.  P.  278;  Building  Association  Forrest  City  Building  and    Loan 

v.  Rowe,  15  Leg.  Int.  15.  Association   v.  Gallagher,  25  Ohio 

lOcmulgee   Building  and   Loan  St. 208 ;  Pfeister v.  Wheeling Build- 

i.iii.,ii    v.   Thomson,   52  Ga.  ing  Association,   in  W.  Va.  076; 

427 ;  s.  C.  56  Ga.  350.  Building  Association  r.  Schuller, 

-Lynn  v.  Freemansbury   Build-  8W.  N.  C.  431;  McGannon  v.  Cen- 

ing  and  Loan  Association,  117    Pa.  tral    P.nihling    Association,    lit  W. 

St.   I  ;     .«    85   Pitts.  Leg.  Jr.  208;  Va.  726. 

:jo  W.  N.  C.  185;  44  Leg.  Int.  462;  '  Wilson  v.  CJpper Canada  Build-» 

ing  Society,  12  (Irani.  Ch.  206. 


§  209.  fines.  215 

amount  thereof,  it  was  held  that  the  fines  were  neither  ille- 
gal nor  unreasonable.1  Ten  cents  a  share  for  each  and  every 
month  that  payment  is  not  made  is  a  reasonable  fine.2 

Sec.  208 — Only  Members  liable  to  Fines. 

Fines  can  only  be  inflicted  upon  members  of  the  associa- 
tion and  not  upon  those  holding  a  relation  to  the  associa- 
tion of  less  than  membership.  Thus  those  who  are  only 
depositors  cannot  be  subjected  to  fines.  This  arises  from 
the  fact  that  fines  can  only  be  justified  on  the  ground  of  a 
member's  full  participation  in  the  profits  of  the  association, 
in  which  participation  others  do  not  partake.3  But  where 
a  rule  of  the  society  permitted  an  advanced  member  to  sell 
the  mortgaged  property  if  all  subscriptions  and  fines  were 
paid  up  to  the  date  of  the  sale,  whereupon,  the  purchaser 
should  become  liable  to  make  the  payments  required  by  the 
rules,  and  also  providing  that  the  society,  after  default, 
could  sell  to  a  purchaser  on  the  same  terms ;  it  was  held 
that  the  purchaser  of  such  property,  who  took  the  forfeited 
shares  and  agreed  to  pay  part  of  the  purchase-mone}^  by  in- 
stalments of  twenty  pounds,  was  liable  to  fines  for  non- 
payment of  such  instalments  of  purchase-money.4 

Sec.  209 — Additional  Fines  for  Continued  Neglect. 

If  the  by-laws  provide  for  it,  additional  fines  may  be 
assessed  and  collected  for  continued  neglect  of  duty.5 
Where  a  by-law  provided  that  "  the  fines  incurred  by  all 
present  or  future  mortgagors,  by  neglecting  to  make  their 
monthly  payments  of  principal,  interest,  fines,  and  other 

1  Parker  v.  Butcher,  3  Eq.  762  ;  3  Hagermen  v.  Ohio  Building  and 
s.  c.  36  L.  J.  Ch.  552.  So  where  Saving  Association,  25  Ohio  St. 
the  fine  was  sixpence  in  the  pound    186. 

per  month.     Pilkington  v.  Baker,  4  Handley  v.   Farmer,  29  Beav. 

W.  N.  1877  p.  210.  362. 

2  Roberts  v.  American  B.  &  L.  5  Love.joy  v.  Mulkern,  37  L.  T. 
Ass'n,  62  Ark.  572  ;  S.  C.  36  S.  W.  (N.  Y.)  77  ;  S.  C.  46  L.  J.  Ch.  Div. 
Rep.  1080.  So  is  two  per  centum  630 ;  Citizens'  Mutual  Loan  and 
per  month  on  all  arrearages.  Har-  Accumulating  Fund  Association, 
ris  B.  &  L.  Ass'n  v.  Simon,  19  Pa.  25  Barb.  263  ;  Building  Associa- 
C.  C.  110 ;  s.  c.  6  Pa.  Dist.  Rep.  tion  v.  George,  3  W.  N.  C.  239. 
204. 


216  BUILDING   AND    LOAN    ASSOCIATIONS.  Ch.  X. 

payments,  will  be  at  the  rate  of  five  per  cent,  per  month  on 
the  total  amount  in  the  arrear,"  it  was  held  that  the  monthly- 
fine  was  to  be  calculated  at  the  rate  of  five  per  cent,  per 
month  on  the  amount  of  the  previous  fines  and  other  pay- 
ments as  well  as  on  the  principal  and  interest  in  arrear.1 
A  by-law  provided  that  a  member  in  default  "  shall  forfeit 
and  pay  the  additional  sum  of  five  cents  for  each  and  every 
dollar  due  by  him  or  her  at  each  and  every  monthly  meet- 
ing ;  each  and  every  such  monthly  neglect  to  be  charged 
with  the  monthly  dues."  This  was  held  to  authorize  fines 
upon  lines.2  But  unless  the  by-laws  clearly  and  unequivocally 
authorize  the  assessment  of  additional  or  accumulating  fines, 
the  courts  will  not  uphold  their  assessment.  Thus  a  by-law 
provided  that  "  If  any  stockholder  shall  neglect  or  refuse  to 
pay  his  weekly  dues  as  often  as  the  same  shall  be  payable 
as  aforesaid,  every  stockholder  so  neglecting  or  refusing 
shall  forfeit  and  pay  the  additional  sum  of  ten  cents  for 
every  share  of  stock  by  him  held,  for  every  such  weekly 
neglect,  or  refusal,  to  be  charged  with  the  weekly  clues." 
"  The  weekly  instalments,"  said  the  court, "  and  weekly  inter- 
est constitute  but  one  debt,  and  the  weekly  interest  *  -  * 
ought  to  be  included  in  the  weekly  dues."  Consequently, 
a  fine,  it  was  held,  could  not  be  inflicted  for  the  non-pay- 
ment of  a  weekly  instalment  of  the  principal,  another  for 
the  weekly  interest,  and  another  for  the  weekly  dues ;  nor 
could  another  fine  be  inflicted  if  they  were  not  paid  on  the 
succeeding  week,  and  for  each  week  in  default.  It  was 
further  held  that  a  by-law  authorizing  the  infliction  of  such 
cumulative  penalties  was  void,  unless  a  statute  expressly 
provided  for  it.3  In  another  instance,  the  following  by-law 
was  held  not  to  authorize  the  imposition  of  fines  for  the 
unpaid  dues  of  past  months,  viz:  "In  case  any  stockholder 
shall  neglect  or  refuse  to  pay  his,  her,  or  their  monthly  dues 

1  In  re  Middlesborough  Building        :!  Shannon    v.    Howard    Mutual 
iety,  54   L.  .1.  Chan.   Div.   .VJ2  ;     Building  Association,  36  Md.  383. 

51  L.  J.  (N.  S. )  748;  49  .1.  I'.    See  also  Setl iff  v.  North  Nashville 

I!.    &   S.    Ass'n  (Tenn.)  39  S.  W. 

2  James  D.  Howley  Building  As-    Rep.  3-40. 
sociation  v.   Taylor,  3'J   Leg.    Int. 

•i  i  j. 


§210. 


FINES. 


217 


or  interest,  such  stockholder  shall  forfeit  and  pay  the  addi- 
tional sum  of  ten  cents  on  each  dollar  due  by  him  or  her  or 
them  for  every  such  monthly  refusal  or  neglect,  to  be 
charged  with  the  monthly  dues;  but  no  fines  shall,  in  any 
case,  be  charged  on  lines."1 


Sec.  210 — In  Arithmetical  Progression. 

Fines  cannot,  however,  be  assessed  in  arithmetical  pro- 
gression. The  courts  without  dissent  denounce  such  an 
arrangement.  Thus  a  fine  upon  stockholders,  delinquent  in 
the  payment  of  monthly  dues,  of  "  the  additional  sum  of  ten 


1  Building  Association  v.  Schul- 
ler,  3  W.  N.  Cas.  431. 

In  Ohio  it  was  said  that  only  one 
fine  can  be  assessed  for  the  non- 
payment of  the  same  stated  due  ; 
and  no  fine  could  bo  collected  for 
any  default  in  the  payment  of  in- 
terest on  loans  advanced.  In  pass- 
ing on  the  question,  the  court  said: 

"  A  second  fine  for  the  non-pay- 
ment of  the  same  stated  due,  is  a 
second  punishment  for  the  same 
offense.  It  is  not  a  sufficient  an- 
swer to  the  last  proposition,  to  say 
that  the  non-payment  of  the  same 
stated  due,  at  a  subsequent  clay,  is 
a  new  offense.  The  obligation  to 
pay,  when  the  due  first  matured, 
was  complete.  No  new  obligation 
to  pay  it  in  the  future  is  under- 
taken by  the  defaulting  member  ; 
but  the  obligation  or  duty  to  pay 
it  at  maturity  continues  after  de- 
fault, until  payment  be  made. 
Nor  is  it  within  the  powrer  of  the 
corporation  to  assess  and  collect  a 
fine  for  default  in  the  payment  of 
interest  upon  loans  advanced.  If 
the  loan  be  advanced  to  a  member, 
he  becomes  bound  to  pay  interest 
by  his  promise  to  do  so ;  not  be- 
cause he  is  a  member  of  the  asso- 
ciation, but  because  he  is  a  bor- 
rower,  and  as  such  promises  to 


pay  interest  on  the  loan.  When 
money  is  thus  advanced  to  a  mem- 
ber, a  new  relation  arises  between 
him  and  the  company — the  rela- 
tion of  debtor  and  creditor  ;  a  rela- 
tion not  common  to  all  the  mem- 
bers, or  even  necessary  as  between 
corporation  and  corporator.  It  is 
in  the  relation  of  debtor  to  the  cor- 
poration, and  not  as  a  member  of 
it,  that  he  promises  to  pay  interest, 
but  it  is  only  as  a  member  of  the 
corporation,  and  in  relation  to  his 
conduct  as  such,  that  the  power  to 
impose  a  fine  upon  him  exists. 
This  proposition  is  made  manifest, 
when  we  consider  the  fact,  that 
loans  are  authorized  to  be  made  to 
depositors  as  well  as  members. 
When  a  depositor  takes  a  loan,  he 
thei-eby  assumes  exactly  the  same 
relation  to  the  association  as  does 
a  member  by  taking  a  loan  ;  and 
it  is  perfectly  clear,  that  no  fine 
can  be  assessed  against  a  depositor 
for  default  in  payment  of  interest 
on  his  loan.*' 

Hagerman  v.  Ohio  B.  &  S.  Asso- 
ciation, 25  Ohio  St.  186.  To  same 
effect  Setliff  v.  North  Nashville  B. 
&  S.  Ass'n  (Tenn.)  39  S.  W.  Rep. 
546;  Dupuy  v.  Eastern  B.  &  L. 
Ass'n,  93  Va.  460  ;  S.  c.  25  S.  E. 
Rep.  537  ;  35  L.  R.  A.  215. 


218  BUILDING   AND    LOAN    ASSOCIATIONS.  Ch.  X. 

cents  monthly  on  each  and  every  dollar  due  "  was  held  to 
be  unreasonable.  This  was  ten  cents  for  each  month,  or 
one  dollar  and  twenty  cents  per  year,  for  each  dollar.  It 
is  to  be  observed,  however,  that  no  statute  expressly  au- 
thorized the  exacting  of  a  fine.1  So  too  where  the  fine  upon 
the  dues  of  each  share  delinquent  was  twelve  cents  the  first 
month,  thirty-seven  the  second,  seventy-five  for  the  third, 
one  dollar  and  a  quarter  for  the  fourth,  and  for  each  suc- 
ceeding month  fifty  cents  more  than  the  amount  charged  in 
the  proceeding  one,  it  was  held  that  the  rate  was  unreason- 
able and  exorbitant.2 

Sec.  211 — Fines  on  Delinquent  Interest. 

In  Ohio  it  has  been  held  that  fines  cannot  be  assessed 
because  of  a  failure  to  pay  interest ;  8  and  this  rule  has  been 
followed  in  West  Virginia.4  The  distinction  is  drawn  that 
fines  are  only  designed  for  a  member  of  an  association  in 
his  relation  to  the  association  as  a  member,  and  not  for  him 
in  his  relation  to  it  as  a  borrower.  So  where  under  a 
statute  5  the  instalments  on  account  of  payments  on  stock 
and  of  interest  were  lumped  in  one  periodical  contribution, 
and  the  fine  levied  at  a  certain  rate  per  share,  it  was  held 
improper  to  divide  the  lumped  sum  into  its  two  elements, 

1  Lynn  v.  Freemansburgh  Build-  courts  refused  to  enforce  fines  on 

ing  and  Loan  Association.  117  Pa.  an  arithmetical  progression  scale, 

St.  1  ;  s.  C.  35  Pitts.  Leg.  Jr.  208  ;  see  In   re  Tierney's  Estate,  9   Ir. 

20  W.  N.  < '.  185  :   14  Leg.  Int.  462  ;  Rep.  Eq.  1  ;  s.  c.8  Ir.  Law.  T.  Rep. 

19  Amer.  A;  Eng.  Corp.  ('as.  68;  11  2!t.  and  Lovejoy  v.  Mulkern,  46  L. 

Ail.  Rep.  537.     Under  the  Pennsyl-  J.  Ch.  630;  37  L.  T.  77.     See  these 

vania  Act  of  1859,  a  building  asso-  cases,  as  stated  in  Sec.  205. 

ciation   cannot  charge  a  member  8  Forest  City  United  Land  and 

more  than  ten  cents  line  on  each  Building  .Association  v.  Gallagher, 

share  and  ten  cents  tine  for  each  25 Ohio  St.  208 ;  Eagerman  v.  Ohio 

loan  of  $200  per  month.     Building  Building  and  Savings  Association, 

ion   v.   Banlen,  7  Luz.   L.  25  Ohio  St.  186. 

.  It;.",.  i  Parker  v.  United  States  Build- 

-Sccoml  New  York  Building  As-  ihg,  etc.,  Association,  19  W.Va.744. 

ation  v.  Gallier,  cited   in  Citi-  And  the  same  would  he  true  in 

/.ens'  Mutual   Loan  ami  Aecunuila-     (he    ahsence    of   a    statute,    if   the 

ting  Fund  Association  v.  Webster,    rules  of  the  society  were  to  the 

I  oh.  •.'(;:;.  sa effect. 

For  ot her  instances  where  t he 


§  211.  TINES.  219 

and  levy  two  fines  for  its  non-payment, — one  for  a  failure 
to  pay  dues  on  stock  and  the  others  for  a  failure  to  pay 
interest.  "The  weekly  instalments  and  the  weekly  in- 
terest constitute  but  one  debt,  and  the  weekly  interest, 
according  to  our  construction  of  the  terms  of  the  law, 
ought  to  be  included  in  the  weekly  dues  *  ::"  -  that  i;-', 
the  portion  of  the  principal  properly  so-called  payable 
weekly,  and  the  proportional  interest,  payable  weekly, 
constitute  the  weekly  indebtedness,  which,  if  not  paid 
punctually,  subjects  the  party  to  a  line,  if  the  company 
think  proper  so  to  determine  by  its  by-laws."1  But  on  the 
contrary,  in  England,  a  fine  for  the  non-payment  of  an  in- 
stalment of  interest  was  sustained.  There  the  loan  was 
repayable  by  monthly  contributions  which  covered  both 
principal  and  interest.  The  line  for  the  non-payment  of  a 
monthly  contribution  was  at  the  rate  of  a  shilling  per 
pound  a  month.  This  line  was  upheld,  the  Master  of  the 
Rolls  saying  :  "  I  see  nothing  unreasonable  in  it.  It  is  a 
matter  well  understood  between  the  contracting  parties, 
and  it  is  a  contract  which,  in  the  absence  of  all  fraud  or 
undue  pressure,  the  parties  were  perfectly  competent  to 
enter  into.  Xeither  do  I  see  anything  in  the  shape  of  a 
forfeiture  in  the  transaction.  It  is  true  that  the  court  will 
not  allow  a  person  to  contract  to  receive  a  given  rate  of 
interest,  and  to  stipulate,  that,  if  not  paid,  the  rate  of  in- 
terest shall  increase  ;  but  this  has  no  resemblance  to  that 
case.  It  is  simply  such  a  transaction  as  the  following  : 
One  man  lends  to  another  £100,  to  be  repaid  on  a  given 
day,  and  if  it  be  not  repaid  on  that  day,  it  shall  bear  in- 
terest at  the  rate  of  sixty  per  cent.;  that  is,  no  doubt,  a 
high  rate  of  interest,  but  since  the  repeal  of  the  usury  laws 
I  see  nothing  illegal  in  the  transaction  if  there  be  no  con- 
cealment  and  no  undue  pressure,  and  the  parties  perfectly 
understand  and  assent  to  the  contract.  If,  then,  such  a 
transaction  is  legal,  does  it  become  illegal  because  the  loan 
is  to  be  repaid  by  instalments,  as  if  a  man  lent  another 
£100,  to  be  repaid  by  sums  of  £10  per  month,  with  interest 
at  the  rate  of  sixty  per  cent,  on  every  instalment  unpaid  ? 
1  Shannon    v.   Howard    Mutual  Building  Association,  36  Md.  383. 


220  BUILDING   AND    LOAN    ASSOCIATIONS.  Cll.  X. 

I  think  it  does  not."  *  So  a  fine  upon  the  whole  amount 
delinquent,  including  interest  upon  the  delinquent  mem- 
ber's loan,  is  valid.2  A  fine  for  the  non-payment  of  monthly 
interest,  at  the  rate  of  ten  cents  for  each  loan  of  two 
hundred  dollars  has  been  upheld.3  So  it  would  seem  that 
lines  for  the  non-payment  of  interest  have  been  allowed  in 
Canada,4  in  New  Jersey,5  and  in  Indiana.6 

Sec.  212 — Interest  on  Fines. 

Interest  cannot  be  charged  upon  fines.  "  To  give  the 
society  interest  upon  these  fines  would  be  to  give  them 
compound  interest,  which  is  not  in  the  contract,  and  which 
is  contrary  to  the  rules  and  principles  adopted  by  courts  of 
equity."7  But,  of  course,  after  a  foreclosure  of  a  member's 
mortgage  given  to  secure  an  advance,  the  decree,  although 
it  includes  the  amount  of  fines  assessed  against  him,  draws 
interest ; 8  and  this  case  gives  color  to  the  claim  of  interest 
upon  a  fine,  and  an  American  case  expressly  decides  that 
such  a  charge  can  be  made9 
Sec.  213 — Fines  on  Premiums. 

When  the  premium  is  deducted  in  a  gross  sum  from  the 
amount  of  the  loan  when  it  is  made,  no  question  can  arise 
concerning  the  imposition  of  a  fine  for  its  non-payment; 
but  where  it  is  distributed  through  a  whole  period  of  the 
loan  and  forms  a  part  of  each  periodical  payment,  a  failure 

1  Parker  v.  Butcher  L.  R.  3  Eq.  6  Gouchenour  v.  Sullivan  Build- 

762  :  s.  c.  36  L.  J.  Ch.  552.  ing  and  Loan  Association,  11!)  Ind. 

-  In  re  Middlesborough  Building  441  ;  s.  c.  21  N.  E.  Rep.  1088. 

Society,  54  L.  J.  Ch.  Div.  592  ;  S.C.  7  Parker  v.  Butcher  L.  R.,  3  Eq. 

51  L.T.(N.S.)743;  49J.P.278.  See  7G2;  s.  c.  36  L.  J.  Ch.  552;  [ngoldby 

City   B.  &  L.  Co.  v.  Fall/..  1   Abb.  v.  Riley,  28  L.  T.  (N.  S. )  55  ;  Clarks- 

App.Dec.  347,  and  Melville  v.  Amer-  ville  Building  and  Loan    Associa- 

[can  Benefit  B.  A.  33  Barb.  L03.  tion  v.  Stephens,  26  N.  J.  Eq.  351. 

'■'■  ( 'larksvillo  Building  and   Loan  "Provident   Building  Society   r. 

•ciation  v.  Stephens,  36  N.  J.  Greenhill  L.  R.,  9  Ch.  Div.    I'.".': 

Eq.  351.  s.  c.  38  L.  T.  Rep.  (N.  S.)  140;  27 

«  Ottawa  Union  Building  Society  W.  R.  110. 

v.  Scott,  24  U.  C.  CJ.  B.  341.  'Livingston  Loan  and  Building 

6  Bowen  v.  Lincoln  Building  and  Association  v.  Drummond,  49  Neb. 

1,-an  A  aociation,  51  N.  J.  L.  272  ;  200  ;  s.  C.  68  N.  W.  Rep.  753. 

•     \tl.   Rep.  67  ;  46  Amer.  & 
Eng.  <  lorp.  « 'as.  I'.tl. 


§  215.  fines.  221 

to  make  one  of  these  payments  will  authorize  the  imposition 
of  a  fine.1 

Sec.  214— Married  Women  Liable  to  Pay  Fines. 

If  a  married  woman  has  power  to  become  a  member  of  a 
building  association,  she  will  be  liable  for  the  payment  of 
fines  assessed  against  her.  Indeed,  the  rule  goes  further 
than  this.  Thus,  where  a  married  woman  could  only  bind 
herself,  when  giving  a  mortgage  to  a  building  association 
for  an  advance,  to  the  extent  of  the  amount  advanced  with 
interest,2  it  was  held  that  her  mortgage  given  to  secure  the 
payment  of  an  advance  made  to  her  husband  was  liable 
also  for  the  fines  assessed  against  him.3 

Sec.  215 — Mortgage  Securities. 

Fines  must  be  regarded  as  personal  obligations  unless  the 
mortgage  given  for  an  advance  provide  for  their  payment.4 
But  if  a  mortgage  given  b}T  a  member  for  an  advance  recog- 
nizes the  obligation  of  the  fines  which  may  be  imposed  upon 
him,  then  upon  a  foreclosure  the  court  should  include  all 
reasonable  fines  assessed  against  him.5  But  the  fact  that 
the  by-laws  and  constitution  are  referred  to  in  a  mortgage 
given  to  secure  a  loan  as  being  a  part  of  it,  when  such  by- 
laws and  constitution  provide  for  the  imposition  of  fines 
on  defaulting   members  as   personal  obligations  only,  will 

1  Ricks  v.  Durant  Building  and  Howard  Mutual  Building  Associa- 
Loan  Association,  (Miss.)  :  tion,  36  Md.  383;  Barker  r.  Bige- 
S.  c.  18  So.  Rep.  359.  low,  15  Gray,  130  ;  Hamilton  Build- 

2  Wolbach  v.  Lehigh  Building  ing  Association  v.  Reynolds,  5 
Association,  84  Pa.  St.  211.  Duer,  671  ;  Hazel  Loan  &  Building 

3  Juniata  Building  and  Loan  As-  Association  v.  Greenwood,  41  Leg. 
sociation  v.  Mixell,  84  Pa.  St.  313.  Int.  16  ;  s.  c.  17  Phila.  242  ;  Provi- 
See  also  Relief  Saving  Fund  Asso-  dent  Permanent  Building  Society 
tion  v.  Longshore,  8  Luz.  Leg.  v.  Greenhill,  9  Ch.  Div.  122  ;  s.  C. 
Reg.,  199  ;  and  Massey  v.  Citizens'  38  L.  T.  140 ;  27  W.  R.  110. 
Building  and  Savings  Association,  5  Shannon  v.  Howard  Mutual 
22  Kan.  624.  Building  Association,  36  Md.  383 ; 

4  Bowen  v.  Lincoln  Building  and  Juniata  Building  and  Loan  Asso- 
Loan  Association,  51  N.  J.  L.  272  ;  ciation  v.  Mixell,  84  Pa.  St.  313; 
s.  C.  28  Atl.  Rep.  67  ;  46  Amer.  &  Building  Association  v.  Groesbeck, 
Eng.  Corp.  Cas.  503 ;  Shannon  v.  17  Phila.  242. 


222  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  X. 

not  render  the  mortgage  a  security  for  the  payment  of  such 
fines.1  And  it  has  even  been  held  that  a  covenant  to  pay 
"  all  fines  imposed  by  the  articles  of  association  "  does  not 
make  the  articles  a  part  of  the  mortgage  so  that  the  court 
ma  v  consider  it  in  construing  the  mortgage.2  Some  of  the 
cases  are  to  the  effect  that  a  clause  expressly  including  such 
fines  as  a  part  of  the  mortgage  is  necessary  before  that  in- 
strument can  be  deemed  a  security  therefor.3  But  where 
the  mortgage  made  no  reference  to  the  constitution  and  by- 
laws, nor  contained  a  clause  agreeing  to  pay  fines,  and  the 
mortgagor  paid  his  fine  before  foreclosure,  it  was  held  that 
he  could  claim  no  credit  for  such  payment  on  the  amount 
otherwise  due  on  his  mortgage.4  Where  the  mortgage 
covers  the  fines,  a  failure  to  pay  such  fines  authorizes  the 
association  to  foreclose  the  mortgage.5 

Sec.  216— Illegal  Fines  Reduce  Debt. 

If  illegal  fines  have  been  paid  b}r  the  mortgagor,  on  a 
foreclosure  of  his  mortgage  he  is  entitled  to  credit  for  the 
amount  paid ;  and  the  fact  that  he  paid  them  voluntarily 
does  not  deprive  him  of  that  right.  "  There  is  a  clear 
distinction,"  said  the  court,  "  between  a  suit  to  recover  back 
moneys  which  have  been  paid  by  mistake  either  of  law  or 
fact,  and  interposing  as  a  defence  such  payments  as  could 
not  have  been  recovered  on  account  of  their  illegalhVv.  In 
the  latter  class  of  cases,  the  payments  as  a  rule  are  credited 
on  the  amount  legally  due.  This  is  always  done  in  cases  of 
usurious  payments  where  the  obligation  is  still  outstanding. 

1  Bowen  v.  Lincoln  Building  and  lette's Estate,  2 Chester,  511  ;  Ever- 

Loan  Association,  51  N.  J.  Eq.  272 ;  ham,  v.  Oriental  Savings  and  Loan 

B.C.  28    Atl.  Rep.  67 ;  46   Amer.  &  Association,  47  Pa.  St.  352.     Provi- 

Eng.  Corp.  Cas.  503.  dent  Permanent  Building  Society 

-  Robertson  v.  American  Home-  v.  Greenhill,  9  L.  R.  Ch.  Div.  122; 

iation,  10  Md.  397  ;  69  s.  c.  38  L.  T.  N.  S.  140;  27  W.  R. 

Am.  Dec.  1  15.  110. 

8  Hazel  Loan  and  Building  Asso-  *Clarkville  Building  and  Loan 

ciation  v.  Groesbeck,  41   Leg.  Int..  Association  v.  Stephens,  26  N.  J. 

16;  s.  o.  17  I'liila.  242  ;  Hagerman  Eq.  351. 

V.  Ohio   Building  and   Siivin^s  As-  fj  Setliff  V.  North  Nashville  B.  & 

ition,  25  "hi.,  st.   L86;  Barker  S.  Ass'n  (Tenn),  39  S.  W. Rep. 546, 
v.    i  ligelow  .    L5  I  hray,    ISO  ;    I  [ou- 


§  217.  fines.  223 

We  can  see  no  difference  in  principle  between  that  class  of 
cases  and  the  present.  While  it  may  be  true  that  fines  are 
no  part  of  the  mortgage  debt,  it  is  also  true  that  they  are 
moneys  paid  by  defendant  to  plaintiff  in  consequence  of  a 
relation  of  debtor  and  creditor  existing  between  them  ;  and 
if  the  creditor  have  no  right  to  receive  them  as  fines,  he  has 
no  right  to  receive  them  in  any  other  capacity  than  as 
creditor.  Being  received  by  a  creditor  it  is  obvious  the 
moneys  must  be  applied  to  whatever  was  legally  due.  *  *  * 
The  question  in  this  proceeding  is  only  how  much  is  legally 
due  upon  the  obligation  in  suit,  and  in  determining  that 
question,  credit  should  be  given  for  all  the  moneys  claimed 
and  received  as  fines."  x 

Sec.  217 — When  Fines  Cease. 

While  notice  of  an  intention,  given  by  a  member,  to 
withdraw  does  not  terminate  his  membership  in  the  associa- 
tion ;  yet  it  so  far  severs  his  relation  that  he  is  no  longer 
required  to  make  any  further  instalment  payments,  and  he 
is  therefore  not  liable  to  be  assessed  with  fines  for  delin- 
quency.2 And  so  after  a  decree  of  foreclosure  they  cease  ; 3 
but  they  do  not  cease  for  delinquent  dues  on  the  stock 
pending  the  proceedings  to  foreclosure,  where  such  stock 
has  been  assigned  as  collateral.4 

And  it  is  clear  that  if  the  foreclosure  and  sale  thereunder 
do  not  work  a  forfeiture  of  the  mortgagor's  stock,  then  the 
decree  does  not  terminate  the  liability  for  fines  assessed  by 
reason  of  a  failure  to  pay  dues  on  such  stock ;  though  it 
would,  of  course,  for  a  non-payment  of  interest  on  the 
loan,  for  the  obligation  to  pay  the  loan  has  been  merged 
in  the  decree  of  foreclosure.  Where  a  by-law  of  a  build- 
ing society  provided  that  any  member  neglecting  to  pay 
his  monthly  dues  should  be  fined  a  specified  sum  per  share 

1  Lynn  v.  Freemansburg  Build-  3  Houlette's  Estate,  2  Chest.  511. 
ing  and  Loan  Association,  117  Pa.  4  Union  Building  Loan  Associa- 
St.  1  ;  s.  C.  35  Pitts.  Leg.  Jr.  208  ;  tion  v.  Masonic  Hall,  etc.,  Associa- 
20  W.  N.  C.  185  ;  44  Leg.  Int.  462 ;  tion,  29  N.  J.  Eq.  389  ;  German 
19  Amer.  &  Eng.  Corp.  Cas.  68;  Fair  Hill  Building  Association  v. 
S.  C.  11  Atl.  Rep.  537.  Metzger,  3  W.  N.  C.  204. 

2  Barker  v.  Bigelow,  15  Gray,  130. 


■224:  BUILDING  AND   LOAN   ASSOCIATIONS.  Ch.  X. 

each  month  "until  the  end  of  one  year,  when  the  share  or 
shares  in  default  shall  be  declared  forfeited  to  the  society  ; " 
and  it  then  directed  that  a  month  before  the  expiration  of 
the  society  the  secretary  should  send  a  notice  to  the  de- 
faulter, calling  his  attention  to  the  by-law ;  and  it  also 
provided  that  in  case  the  defaulter  was  a  borrower,  these 
tines  should  be  tripled,  and  at  the  end  of  six  months  default 
the  mortgage  should  be  liable  to  foreclosure  and  to  be  de- 
clared forfeited  ;  it  was  held  that  the  fines  could  be  imposed 
on  the  borrower  only  for  twelve  and  on  the  non-borrower 
for  six  months,  the  right  of  forfeiture  or  foreclosure  being 
then  substituted.1  So  where  the  society  votes  to  wind  it  up, 
the  plan  upon  which  it  was  organized  not  having  produced 
results  expected  of  it  by  the  members,  the  rule  providing 
fines  for  non-payment  is  suspended,  and  cannot  thereafter 
be  enforced.2  So  the  liability  for  a  fine  ceases  on  the  exer- 
cise of  a  right  by  the  association  to  declare  a  loan  due ; 
and  the  right  does  not  extend  to  the  date  of  the  decree.3 
Sec.  218— Lien  on  Stock. 

A  by-law  of  a  building  association  provided  that  no 
shares  of  stock  should  "  be  transferred  while  any  debt,  pen- 
alty  or  due  of  any  kind  against  the  owner  thereof  may  re- 
main unpaid."  It  was  held  that  this  created  a  lien  in  favor 
of  the  society  for  any  debt  due  it  from  the  stockholder, 
both  as  against  him  and  his  assignee  for  benefit  of  his 
creditors,  whether  the  stock  stood  in  his  name  or  has 
merely  been  assigned  to  him  by  the  former  owner.4 

Sec  '210— Condonation  or  Remission  of  Fines. 

The  society  has  full  power  to  condone  or  remit  a  fine 

1  Ottawa  Union  Building  Society  ciation,  29  N.  J.  Eq.  389.     See  Gadd 

,.   Scott,  34  U.  C.  Q.  B.  341.  v.TJ.  S.  etc.,  Bk.  17  N.  Y.   Misc. 

a  Wilson  r.  Upper  Canada  Build-  320.;  s.  c.  40  N.  Y.  Supp.  358. 

ing  Society,  12  Granl  ( !h.  206.  4  Wetherell  v.  Thirty-first  Street 

»  Murphy  v.  Goodland   Building  Building    and    Loan  Association, 

and  Loan  Association,  2  Kan.  App.  L53  01.361  ;  s.  c.  39  N.  E.  Rep.  143; 

330;  s.  0.  48  Pao.  Rep.  803.     Con-  affirming,  43  111.  App.  509;  Provi- 

tra,   German  Fair   Hill    Building  denl  Permanent  Building  Society 

ooiation  v.  Metzger,  8  W.  N.  v.  GreenhiU,  9  L.  R.  Ch.  Div.  122 ; 

204;    Union    Building    Loan  s.  O.  88  L.  T.  N.  S.  140;  27  W.  R. 

Ociation  V.  Masonic    Hall    Asso-     110. 


§  221.  fines.  225 

incurred.1     But  it  has  been  held,  however,  that  the  direct- 
ors cannot  waive  a  rule  inflicting  a  fine  for  delinquency.2 

Sec.  220--How  Collected. 

Fines  cannot  be  recovered  on  a  common  count ;  but  the 
declaration  or  complaint  should  set  out  the  by-law  so  the 
court  may  judge  of  its  legality.3 

Sec.  221 — Insolvency — Appointment  of  a  Receiver. 

If  an  association  becomes  insolvent  and  proceedings  are 
taken  to  wind  it  up,  the  borrowers  are  not  entitled  to 
credit  for  the  fines  paid  on  their  stock,  it  has  been  held ; 
but  this  conclusion  was  reached  upon  the  theory  that  pay- 
ments on  the  stock  could  not  be  used  to  cancel  so  much  of 
the  debt  as  their  payments  aggregated  in  amount.4  But  a 
different  result  has  been  reached  in  North  Carolina,  where 
the  amount  of  the  fines,  in  such  an  instance,  is  used  to 
reduce  the  amount  due.5 

1  People  v.  Lowe,  117  N.  Y.  175  ;  N.  C.  556  ;  s.  C.  23  S.  E.  Rep.  450. 
s.  c.  22  N.  E.  Rep.  1016 ;  31  Amer.  See  also  Meroney  v.  Atlanta  Na- 
&  Eng.  Corp.  Cas.  249  ;  reversing,  tional  Building  and  Loan  Associa- 
47  Hun,  577.  tion,  116  N.  C.  882;  S.  C.  21  S.  E.  Rep. 

2  Wilson  v.  Upper  Canada  Build-  924,  a  case  brought  by  a  member 
ing  Society,  12  Grant  Ch.  206.  for  an  accounting  ;  Rowland  v.  Old 

3  Ottawa  Union  Building  Society  Dominion  Building  and  Loan  Asso- 
v.  Scott,  24  U.  C.  Q.  B.  341.  ciation,  118  N.  C.  173  ;  s.  c.  24  S.  E. 

4  Towle  v.  American  Building,  Rep.  366 ;  on  second  appeal,  116 
Loan  and  Investment  Society,  61  N.  C.  877  ;  s.  c.  22  S.  E.  Rep.  8  ;  on 
Fed.  Rep.  446.  first  appeal,  115  N.  C.  825 ;  S.  c.  18 

5  Strauss  v.   Carolina    Intestate  S.  E.  Rep.  965. 
Building  and  Loan  Association, 118. 

15 


CHAPTER  XL 

PREMIUMS    OE    BONUS. 

Sec.  222.  Definition. 

223.  Different  Plans. 

224.  Nature  of  Premium. 

225.  Not  Earnings. 

226.  Interest  Upon  Premiums.  . 

227.  Adding  Bonus  to  Amount  Loaned. 

228.  Deducting  Amount  of  Bid  from  Sum  Loaned. 

229.  Minimum  Bid  Fixed  by  By-Laws. 

230.  Association  Cannot  Refuse  a  Bid. 

231.  Change  in  By-Laws. 

232.  Collecting  Premiums  after  Maturity  of  Loan. 

233.  More  than  One  Premium. 

234.  Return  of  Premium  on  Withdrawal. 

235.  Provable  in  Bankruptcy. 

Sec.  222— Definition. 

A  premium  is  the  amount  which  a  stockholder,  desiring  to 
borrow,  is  willing  to  pay  for  the  privilege  of  anticipating 
the  ultimate  value  of  his  stock,  by  obtaining  at  once  the  use 
of  the  amount  of  money  his  stock  will  be  worth  when  the 
association  is  wound  up.1  In  referring  to  the  term  "  bonus  " 
the  Superior  Court  of  Connecticut  used  the  following  lan- 
guage: "  By  that  expression  we  think  that  they  meant 
something  definite ;  something  distinct  and  independent  of 
the  interest,  in  the  ordinary  acceptation  of  the  term — a  defi- 
nite sum  for  a  loan  for  a  specified  time,  and  not  anything 
which  the  parties,  in  their  contract,  might  choose  to  de- 
nominate a  bonus.  I>nt  even  this  extra  compensation  can 
be  received  only  from  a  member  of  the  association.  No 
Loan  can  be  made  to  any  other  person,  at  more  than  legal 

1  Sullivan  r.  Jackson  Building  Homestead  Loan  Association,  54 
andLoan   S^sociation,  70  Miss.  94 ;    N.  Y.  St.  Repr.  63  ;  s.  c.  23  N    Y. 

1 1  So.  Rep.  590;  46  Amer.  &    Supp.  203. 
Eng.     <'<>i'|>.    Cas.    494;    Boone  v. 
J26 


§  222.  PREMIUMS    OR   BONUS.  227 

interest,  and  not  even  at  that  rate,  provided  any  member  of 
the  association,  who  can  give  sufficient  security,  applies  for 
the  loan."1 

"  Having  no  English  word  to  express  accurately  the 
abatement,  they  might  have  called  it,  as  they  did,  'this 
premium  bid  for  the  right  of  precedence  in  taking  the  loan.' 
And  there  being  no  appropriate  word  to  represent  this 
transaction,  it  would  naturally  come  to  be  called  by  various 
names  which  with  more  or  less  accuracy  would  in  a  word 
or  brief  phrase  give  an  idea  of  it.  Some  might  call  it  '  a 
redemption  of  his  interest  in  the  association,'  as  the  ultimate 
effect  of  it  would  be,  that  he  would  at  the  close  of  the  asso- 
ciation get  no  money  from  it,  because  what  would  be  other- 
wise coming  to  him  would  be  absorbed  by  the  payment  of 
his  note  and  this  abatement  he  had  agreed  to,  or  his  pre- 
mium, as  it  is  generally  called.  Sometimes  it  would  be 
called,  for  the  like  reason,  but  with  still  more  inaccuracy, '  a 
purchase  of  all  his  interest  in  the  association  by  the  associa- 
tion.' And  as  the  loan  is  really  to  be  ultimately  paid  by 
offsetting  his  interest  in  the  association  against  this  note  to 
the  association,  it  would  sometimes  with  much  more  accuracy 
be  called  '  a  loan  on  his  interest  in  the  association '."  2 

"  It  appears,  however,  the  association  before  paying  the 
amount  of  the  loan  deducted  the  premium  from  the  sum 
awarded  and  delivered  to  the  borrower  the  residue.  It 
actually  had  the  premium  in  hand.  The  contract  on  the 
part  of  each  was  to  pay  money,  the  bidder  to  pay  the 
premium,  the  lender  to  pay  or  advance  the  full  amount  of 
the  loan  awarded  to  the  borrower.  Either  party  could 
have  insisted  on  such  performance  of  the  contract.  Had 
they  done  so,  no  one,  I  suppose,  would  deny  that  the  pre- 
mium, the  whole  of  it,  could  he  counted  as  so  much  money 
gained  or  earned.  Its  payment  would  have  formed  no  part 
of  the  mortgage  obligation.     The  parties  were  not  bound 

1  Mechanics',  etc.,  Association  v.  bid.  Bates  v.  People's,  etc. ,  Asso- 
Wilcox,  24  Com.  147.  ciation,  42  Ohio  St.  655  ;  Boone  v. 

2  Pfeister  v.  Wheeling  Building  Homestead  Loan  Association  54 
Association,  19  W.  Va.  676,  685.  N.  Y.  St.  Rep.  68  ;  s.  C.  23  N.  Y. 
The  premium  is  the  amount  of  the  Supp.  203. 


228 


BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XL 


to  insist  upon  this  method.  The  course  they  did  adopt  led 
to  the  same  result.  There  was  reason  and  natural  equity 
in  that  mode  of  proceeding.  It  was  a  simple  matter  of 
compensation  and  avoided  the  circuit  of  two  actual  pay- 
ments. Both  were  implied  and  it  was  not  necessary  that 
they  be  formally  made."  1 

Sec.  223— Different  Plans. 

It  is  impossible  to  enumerate  all  the  many  plans  in  vogue 
for  the  payment  of  premiums.  An  early  plan  was  to  put 
up  the  money  on  hands  at  public  auction,  and  the  persons 
desiring  to  secure  loans  entered  into  a  competition  by  bid- 
ding for  the  money  or  so  much  as  they  desired,  and  the 
highest  bidder  received  an  award  of  the  loan.  If  the  bid, 
for  instance,  is  ten  per  cent,  then  that  percentage  is  deducted 
from  the  amount  desired  by  the  borrower,  but  he  gives  his 


1  Boone  v.  Homestead  Loan  As- 
sociation, 54  N.  Y.  St.  Repr.  63. 

The  constitution  of  1838  of  Penn- 
sylvania provided  that  "No  cor- 
porate body  shall  hereafter  be 
created,  renewed,  or  extended, 
with  banking  or  discounting  priv- 
ileges, without  six  months  previous 
notice  of  the  intended  application 
for  the  same,  in  such  manner  as 
shall  be  provided  by  law."  It  was 
held  that  the  word  "discounting" 
applied  to  banks  and  not  to  a  loan 
by  a  building  and  loan  association. 
Schober  v.  Accommodation  Saving 
Fund  and  Loan  Association,  35  Pa. 
St.  223 ;  Building  Association  v. 
Beemiller,  85  Pa.  St.  225,  note ;  s.  c. 
15  Leg.  Int.  132;  3  Phila.  115; 
Cooper  v.  Oriental  Saving  and 
Loan  Association,  100  Pa.  St.  402, 
407;  s.  0.  12  W.  N.  Cas.  332. 

Under  a  mortgage  given  to  a 
building  society,  the  principal  sum 
advanced,  together  with  a  fixed 
sum  l>y  way  of  premium  for  the  a<l- 
<.:in<-e  and  interest  on  the  whole 
amount     due    was     payable    by 


monthly  instalments.  It  was  held 
that  the  premiums  were  not  inter- 
est at  all,  and  that  in  the  liquida- 
tion of  the  mortgagor  the  society 
were  not  entitled  to  prove  for  the 
whole  amount  of  the  premiums, 
and  were  not  restricted  to  the  pro- 
portionate part  which  had  accrued 
due  at  the  date  of  the  liquidation. 
Ex  parte  Bath,  L.  R.  27  Ch.  Div. 
509 ;  S.  c.  51  L.  T.  N.  S.  520 ;  33 
W.  R.  808. 

A  building  association  cannot,  by 
a  by-law,  compel  the  stockholders 
to  offer  a  premium  for  priority  of 
payment,  after  its  shares  has  be- 
come worth  par.  Rodgers  v. 
Southwestern,  etc.,  Association,  7 
W.  N.  Cas.  95.  See  Building  As- 
sociation v.  Jones,  2  Law  Times 
(N.  S.)  17. 

In  order  to  set«up  the  defence 
that  the  premiums  are  another 
form  of  usury,  the  fact  must  be 
especially  plead.  Yankton  B.  & 
L.  Association  v.  Dowling  (S.  D.), 
74  N.  W.  Rep.  438. 


§  225.  PREMIUMS   OR   BONUS.  229 

obligation  for  the  full  amount.  As  an  illustration,  if  he  bid 
on  a  loan  of  one  thousand  dollars  and  his  bid  was  ten  per 
cent,  one  hundred  dollars  would  be  iirst  deducted  from  the 
one  thousand  dollars,  and  the  remainder,  nine  hundred  dol- 
lars, paid  him ;  but  he  would  give  his  obligation  to  pay  the 
association  the  full  one  thousand  dollars.  Another  method 
is  to  pay  him  the  one  thousand  dollars,  but  take  his  obliga- 
tion for  eleven  hundred  dollars.1 

Sec.  224 — Nature  of  Premium. 

The  premium  is  not  a  prepayment  by  the  borrower  of 
any  part  of  the  amount  he  has  borrowed,  nor  can  the  taking 
on  the  part  of  the  society  be  deemed  usurious.2  It  is  not  a 
deduction  from  money  which  belonged  to  him  in  the  soci- 
ety's possession,  nor  which  he  was  entitled  to  receive  from 
it.  "  It  is  a  mistake  to  suppose,  as  was  claimed  by  the  de- 
fendant, that  he  has  paid  the  premium.  He  only  promised 
to  pay  it.  It  was  inserted  in  the  judgment  note  and  is  now 
being  collected."  3 

Sec.  225 — Not  Earnings. 

The  premiums  are  not  the  present  earnings  of  the  society, 
because  they  are  neither  deductions  nor  payments.  There- 
fore, a  statute  which  permits  a  society  to  declare  dividends 
from  the  earnings  does  not  authorize  it  to  declare  dividends 
from  such  premiums.4  But  in  another  case  in  the  same 
state,  where  the  articles  of  the  association  provide  that  if 

1  Various  other  methods  are  v.  Bachelor,  54  N.  J.  Eq.  600  ;  s.  c. 
shown  in  the  appendix.  35  Atl.  Rep.  745. 

2  Sullivan  v.  Jackson  Building  But  see  Low  Street  Building  As- 
and  Loan  Association,  70  Miss.  94  ;  sociation  v.  Zucker,  48  Md.  448. 
S.  C.  12  So.  Rep.  590  ;  46  Anier.  &  The  whole  sum  borrowed  is  paid  to 
Eng.  Corp.  Cas.  494 ;  People's  him,  and  out  of  it  lie  pays  the 
Building  and  Loan  Association  v.  premium.  Concordia  Savings, 
McElroy,  72  Miss.  434 ;  s.  c.  17  So.  etc.,  Association  v.  Reed,  93  N.  Y. 
Rep.  348 ;  Natchez  Building  and  474 ;  s.  c.  4  Amer.  &  Eng.  Corp. 
Loan    Association   v.   Shields,    71  Cas.  175. 

Miss.  630  ;  s.  c.  15  So.  Rep.  793.  4  Marks  v.   Monroe    Permanent 

3Watkins    v.    Workingmen's  Saving  and  Loan  Association,  52 

Building  and  Loan  Association,  97  N.  Y.  Supr.  Rep.  451. 
Pa.  St.  514;  New  Jersey,  etc.,  Co. 


230  BUILDING    AND   LOAN   ASSOCIATIONS.  Cll.  XI. 

several  members  apply  for  a  loan,  it  shall  be  awarded  at 
auction  to  the  one  paying  the  highest  premium  therefor, 
and  that,  if  the  successful  applicant  neglect  to  take  the  loan, 
it  shall  be  charged  against  him,  it  was  held  that  such  pre- 
miums are  gains  before  the  loans  are  consummated,  and  are 
therefore  "  earnings  "  within  the  meaning  of  a  statute  pro- 
viding that  the  trustees  may  "  declare  dividends  from  time 
to  time  from  its  earnings,  payable  in  such  manner  as  may 
be  provided  in  its  articles."1  So  it  has  been  said  "the 
earnings  of  the  association  include  all  sources  of  income 
except  the  stated  clues."  2 

Sec.  '226— Interest  upon  Premium. 

Unless  there  be  a  statute  authorizing  the  transaction, 
interest  cannot  be  charged  upon  the  amount  of  the  pre- 
mium. This  is  quite  patent.  For  if  the  amount  of  the  bid 
be  deducted,  then  the  borrower  would  be  paying  interest 
upon  a  sum  he  never  received.  "  The  statute  does  not 
authorize  the  exaction  of  interest  on  the  premium,"  said  the 
Supreme  Court  of  Ohio.  "The  extent  of  the  plaintiff's 
demand,  exclusive  of  fines,  is  to  require  the  payment  of  the 
stated  dues  and  interest  on  the  money  advanced,  until  the 
time  arrives  for  winding  up  the  affairs  of  the  association. 
The  premium  is  then  to  be  accounted  for  by  the  borrower 
as  so  much  advanced  towards  the  redemption  or  payment 
of  his  stock.  Interest  is  intended  by  the  statute  as  a  com- 
pensation for  the  use  of  the  money  the  borrower  receives. 
The  higher  the  premiums  the  less  money  the  borrower  gets, 
and,  if  interest  can  also  be  charged  on  the  premium,  the  less 
money  he  has  to  use  the  higher  the  rate  of  interest  he  will 

i  Boone  v.  Homestead  Loan  As-  ing  between  a  quasi  building  asso- 

sociation,    33  N.  Y.  Supp.  203 ;  54  oiation  and   its  borrowing  stock- 

N.  V.  Si.  Rep.  63.  holders,  he  receives  credit  for  the 

-Si'ilirlr.  Building  Association,  amount  of  his  premium.     Meroney 

I:;  Ohio  St.  :;7I  ,  s.  c.  2  N.  E.  Rep.  r.    \tlanta    National  Building  and 

417;  id   A.mer.  &  Eng.  Corp.  Cas.  Loan  Association,  116  N.  C.  882; 

160,  reversing  18    Wkly.  L.   Bull.  s.  C.  21  S.  E.  Rep.  924.     So  in  case 

See  also  N < ■  1 1 1 1 1 ; 1 1 1  r.  Associa-  of  an  insolvent  association  in  Ten- 

bion,  78  N-  Y.  Rep.  896.  nessee,  Rogers   r.  [largo,  92  Tenn. 

InNorthl  larolina,  on  an  account-  ■'>■>;  s.  c.  20  S.  W.  Rep.  430. 


§  226. 


Ti:  KM  I  IMS    Oil    liONUS. 


231 


have  to  pay  for  it.  A  declared  object  of  the  statute,  as  ex- 
pressed in  its  title,  in  authorizing  these  associations,  is  to 
enable  their  members  to  obtain  for  themselves  homesteads. 
To  justify  an  exaction  so  well  calculated  in  its  practical 
results  to  defeat  this  object,  as  this  exorbitant  demand  for 
interest,  the  authority  for  it  ought  to  be  unequivocally  ex- 
pressed."1 The  same  doctrine  has  been  announced  in  other 
states.2  But  where  a  statute  authorizes  the  taking  of 
interest  upon  a  premium,  it  may  be  done.3  A  custom  of  an 
association,  or  of  building  associations  generally,  to  charge 


1  Forest  City  United  Land  and 
Building  Association  v.  Gallagher, 
25  Ohio  St.  208 ;  Sullivan  v.  Jack- 
son Building  and  Loan  Association, 
70  Miss.  94  ;  s.  C.  12  So.  Rep.  590  ; 
46  Anier.  &  Eng.  Corp.  Cas.  494; 
Goodman  v.  Durant  Building  and 
Loan  Association,  71  Miss.  310; 
s.  C  14  So.  Rep.  146  ;  Risk  v.  Del- 
phos  Building  and  Saving  Associa- 
tion, 31  Ohio  St.  517. 

2  In  Ioiva,  Hawkeye  Benefit  and 
Loan  Association  v.  Blackburn,  48 
la.  385  ;  s.  C.  6  Cent.  L.  Jr.  466  ; 
Burlington  Mutual  Loan  Associa- 
tion v.  Heider,  55  la.  424  ;  Phillips 
v.  Columbus  City,  etc.,  Associa- 
tion, 53  la.  719.  In  Kentucky,  Gor- 
don v.  Winchester  Building  and 
Accumulating  Fund  Association, 
12  Bush.  110  ;  Herbert  v.  Kenton 
Building  and  Savings  Association, 
11  Bush.  296.  In  Tennessee.  Martin 
v.  Nashville  Building  Association, 
2  Cold.  418.  In  West  Virginia, 
Parker  v.  U.  S.  Building,  etc., 
Association,  19  W.  Va.  744.  In 
Virginia,  Edelyn  v.  Pascoe,  22 
Gratt.  826.  In  Mississippi,  Peo- 
ple's Building  and  Loan  Associa- 
tion v.  McElroy,72  Miss.  434  ;  s.  c. 
17  So.  Rep.  348.  In  Maryland, 
Baltimore  Permanent  Building 
and  Land  Society  v.  Taylor,  41  Md. 
409 ;  Oak  Cottage   Building  Asso- 


ciation v.  Eastman,  31  Md.  556. 
In  Noi*th  Carolina,  Hollowed  r. 
Southern  B.  &  L.  Ass"n,  120  N.  C. 
286;  26  S.  E.  Rep.  781.  See  City 
B.  &  L.  Co.  v.  Fatly,  1  AM..  A].).. 
347 ;  Citizens,  etc.,  Ass'n  v.  Wbester 

25  Barb.  263. 

3  In  Pennsylvania,  Bui  Id  ing  Asso- 
ciation v.  Neurath,  2  W.  N.  Cas.  95  ; 
Building  Association  v.  George,  3 
W.  N.  Cas.  239  ;  Selden  v.  Reliable 
Savings  and  Building  Association, 
811  Pa.  St.  336.  In  New  York,  Citi- 
zens' Mutual,  etc.,  Association  v. 
Webster,  25  Barb.  263.  In  Ala- 
in una,  Montgomery,  etc.,  Associa- 
tion v.  Robinson,  69  Ala.  419.  In 
North  Dakota,  Vermont  Loan  and 
Trust  Co.  v.  Whithed,  2  X.  I).  82  ; 
S.  c.  49  N.  W.  Rep.  318  ;  35  Anier. 
&  Eng.  Corp.  Cas.  250.  In  Min- 
nesota, Fitzgerald  v.  Hennepin 
County,  etc.,  Association,  56  Minn. 
424  ;  s.  c.  57  X.  W.  Rep.  1066.  In 
New  Jersey.  Bowen  v.  Lincoln 
Building  and  Loan  Association,  51 
N.  J.  Eq.  272;  s.  C.  28  Atl.  Rep.  67;  16 
Anier.  &  Eng.  Corp.  ('as.  494.  In 
Canada,  Canada  Permanent  Build- 
ing and  Saving  Society  v.  Harris, 
16  U.  C.  C.  P.  54.  In  Eng!  am  I. 
Harvey  V.  Municipal  Permanent 
Investment  Building  Society  L.  R., 

26  Ch.  Div.  273  ;  5:5  L.  J.  Ch.  Div. 
1126  ;  51  L.  T.  N.  S.  408  ;  32  W.  R, 


232  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XL 

interest  upon  the  premium  bid,  when  no  statute  authorizes 
it,  cannot  be  used  to  justify  the  exaction  of  interest  on  a  bid ; 
nor  does  a  custom  of  such  associations  to  charge  interest  on 
money  bid  for  by  a  borrower,  whose  application  for  a  loan 
is  subsequently  refused,  bind  the  parties.  "  Many  things  are 
done  in  the  management  of  building  associations  by  mutual 
consent  which  cannot  be  sustained  in  the  courts.  When  the 
parties  come  here  with  their  difficulties,  they  must  rely  upon 
the  law  of  the  land  or  the  by-laws  of  the  association  to 
sustain  their  acts."  l 

Sec.  227— Adding  Bonus  to  Amount  Loaned. 

A  charter  of  an  association  provided  "  that  it  shall  and 
may  be  lawful  for  the  said  association  to  loan  money  upon 
such  interest  as  may  be  prescribed  by  law,  for  any  period  of 
time,  and  upon  such  premiums  or  bonus  as  may  be  agreed 
upon  by  the  association  and  the  borrower,  and  in  all  cases 
to  deduct  the  interest  and  bonus,  or  either  of  them,  in  ad- 
vance." A  shareholder  borrowed  $1000  and  agreed  to  give 
a  bonus  of  $250  for  the  loan.  Instead  of  deducting  the 
bonus,  lie  gave  his  note  and  mortgage  for  $1250,  agreeing  to 
pay  the  association  the  $1250  "  in  monthly  instalments  of 
ten  dollars  and  forty-one  and  two-thirds  cents  each  with  an 
additional  monthly  instalment  of  six  dollars  and  twenty- 
live  cents  as  interest  and  bonus,  both  said  instalments  to  be 

557  :  affirming  in  part,  52  L.  J.  Ch.  stock  as  collateral,  for  the  whole 

Div.349.    Hughesv. Farmers', etc.,  amount  of  the  loan,  but  received 

Ass'n,  16  s.  W.  Rep.  362  ;  Payne  v.  only  its  amount,  less  the  premium  ; 

Freer,  2.1  Hun,  124;  affirmed,  91  it  was  held  that  while  she  remained 

N.  Y.  4o  ;    Melville  v.  American,  a  member  of  the  association  she 

etc.,  Ass'n,  33  Barb.  103.      •  was  not  entitled  to  a  cancelation  of 

1  Winterer   v.  Fairmount  Build-  the  trust  deed  on  the  ground  that 

ing  Association,  44  Leg.  frit.  122.  payment  of  interest  on   the  pre- 

Where  certain   premiums  were  mium  \\;is  usurious,  but  was  en- 
usurious,  the  amounl  of  the  usury  titled  to  have  the  illegal  interest, 
credited  on  his  Loan.     Brown  so  paid,  credited  on  the  amount  of 
r.    Archer,   62    Mo.  App.  277;  B.C.  dues  and  tines  assessed.     People's 
I  Mo.  App.  Rep.  165.  Building  and  Loan  Associations. 

Where  a  stockholder  bid   off  ;i  McElroy,  supra. 
loan    it  a   premium,  and  gave  her        H  lias  been  held  thata  member 

note,  bearing  ten  per  cent  interest,  cannol     apply    usurious    interest 

ired  by  a   trusl   «!«*•■<),  with   Ikt  pai<l  upon  a  loan  in  liquidation  of 


§  227.  PREMIUMS   OR   BONUS.  233 

due  and  payable  on  the  first  Thursday  of  each  and  every 
month,"  commencing  at  a  certain  date,  and  to  continue  one 
hundred  and  twenty  consecutive  months.  The  mortgage 
also  provided  if  default  were  made  in  the  payment  of  these 
monthly  instalments,  or  either  of  them,  the  mortgagor 
should  pay  a  certain  fine  for  the  first  month's  default,  and 
an  increased  fine  for  each  subsequent  default.  Upon  de- 
fault made  it  was  held  that  the  privilege  granted  by  the 
charter  was  a  very  unusual  and  extraordinary  one,  and  no 
contract  should  be  brought  within  its  operation  unless 
made  and  executed  in  strict  conformity  with  the  very  terms 
of  the  law  ;  that  it  must  be  so  construed  as  protecting  a 
contract  of  loan  upon  a  bonus  agreed  upon,  only  where  the 
bonus  was  actually  deducted  in  advance  ;  that  the  contract 
was  unlawful,  and  that  the  mortgagor  was  liable  only  for 
the  actual  amount  received  with  ordinary  interest.1 

Sec.  228— Deducting  Amount  of  Bid  from  Sum  Loaned. 

A  statute  providing  that  the  member  bidding  the  highest 
premium  for  the  priority  of  a  loan  shall  be  entitled  to  re- 
ceive the  amount  fixed  by  the  by-laws  in  relation  to  the 
amount  of  his  stock,  "  less  the  premium  bid,"  authorizes  the 
association  to  deduct  the  premium  bid  from  the  face  of  the 
loan.2 

stock  dues,  so  long  as  such  interest  89  Pa.  St.  428;  S.  c.  36  Leg.  Int. 

does  not  exceed  the  amount  of  the  346  ;  s.  c.  6  W.  N.  Cas.  141  ;  Bowen 

principal.     Heady  v.  Bexor  Build-  v.  Lincoln  Building  and  Loan  As- 

ing,   etc.,   Association   (Tex.   Civ.  sociation,  51  N.  J.  Eq.  272  ;  s.  c.  28 

App.),26S.  W.  Rep.  468.  Atl.  Rep.   67;    46   Amer.    &  Eng. 

1  Birmingham  v.  Maryland  Land,  Corp.  Cas.  503;    Boone  v.  Home- 
etc..  Association,  45  Md.  541.  stead  Loan  Association,  23  N.  Y. 

2  People's  Building  and  Loan  As-  Supp.  203  ;  S.  C.  54  N.  Y.  St.  Rep. 
sociation  v.  Billing,  104  Mich.  186;  63.  See  Hughes  v.  Farmers'  etc., 
S.  C.  62  N.  W.  Rep.  373  ;  People's  Ass'n  (Tenn.),  46  S.  W.  Rep.  362. 
Building  &  Loan  Association  v.  Under  a  statute  which  provided 
Furey,  47  N.  J.  Eq.  410  ;  s.  C.  20  that  the  stockholder  who  should 
Atl.  Rep.  890  ;  Jarrett  v.  Cope,  68  bid  the  highest  premium  for  prior- 
Pa.  St.  67  ;  Rhoads  v.  Hoerners-  ity  of  a  loan  should  receive  a  loan 
town  Building  and  Saving  Associa-  of  $100  less  the  premium  bid,  for 
tion,  82  Pa.  St.  180  ;  s.  C.  33  Leg.  each  share  of  stock  held  by  him,  a 
Int.  417  ;  Workingmen's  Building  stockholder  who  lias  made  a  bid  of 
and  Loan  Association  v.  Coleman,  25  per  cent  premium,  the  bidder  is 


234  BUILDING    AND    LOAN    ASSOCIATIONS.        Cll.  XL 

Sec.  229— Minimum  Bid  Fixed  by  By-laws. 

The  association  cannot  by  means  of  a  by-law  fix  the 
amount  of  the  least  bid  that  will  be  entertained.  Such  a 
by-law  is  void.  The  by-law  turns  what  would  have  other- 
wise been  a  valid  transaction  into  a  usurious  one.1  Such  a 
premium,  it  was  said  by  the  Supreme  Court  of  Ohio,  "  was, 
in  fact  a  part  of  the  price  named  by  the  lender  to  be  paid 
b}r  the  borrower  for  the  use  of  the  money  loaned.  The 
assent  of  the  borrower  to  pay  the  price  required  did  not 
make  him  a  bidder  within  the  meaning  of  this  statute. 
Calling  the  excess  above  the  highest  legal  rate  a, premium 
did  not  change  the  nature  of  the  transaction.  It  was 
usurious." 3  "  They  are  bound  to  offer  all  that  is  in  the 
treasury  to  open  competition,"  said  Chief  Justice  Sharswood, 
"  so  that  the  members  may  obtain  the  loan  at  a  low 
premium,  if  there  should  be  no  bid  at  a  higher.  The  pract- 
ical operation  of  such  institutions  is,  that  whenever  the 
member  procures  a  loan,  at  a  premium  below  the  average  of 
the  premiums  for  the  whole  time  the  association  has  to 
make,  he  is  to  that  extent  a  gainer  ;  when  his  loan  is  at  a 
premium  higher  than  the  average,  he  is  to  that  extent  a 
loser.  This  is  a  most  valuable  feature  in  such  associations, 
and  hence  the  importance  of  maintaining  the  principle  of 
free  competition  in  the  bids.  Where  the  member  is  told 
that  there  is  a  minimum  premium  below  which  loans  will 
not   be   made,  he   must   offer  that  amount   for   the   loan, 

entitled   to  receive  $80  for  each  Brown  v.  Archer,  62  Mo.  App.  277  ; 

share  of  liis  stock  ;  since  the  per-  S.  C.  1  Mo.  App.  Rep.  -Kir.. 

centage  <>!'  the   premium  is  to  be  '  Brown  v.  Archer,  62  Mo.  App. 

computed  on  the  sum  actually  re-  277;    s.  C.   I    App.  Rep.   Mo.  4G5  ; 

ceiveil  I >y   him.     Mutual  Building  State  v.  Oberlin  Buildingand  Loan 

and   Loan    Association   v.   Tascotl  Association,  35  Ohio  St.  258;  Mc- 

(III.,,  28  N.  E.  Rep.  801  ;  25  Ch.  L.  Cauley  v.  Workingmen's  B.  &  S. 

News,  92;   10  Amer.  .V  Eng.  Corp.  Ass'n,  97  Tenn.  421;  s.  c.  37  S.  \V. 

361  ;  affirming  :!7    III.    App.  Rep.   212:  35  L.  R.  A.  211.     Can 

2~\,  when  statute  permits  it.    People's 

\.  statute  providing  thai    no  pre-  S.  &  L.   Ass'n  v.  Roberts,  5  Ohio 

tniums  accruing  to  a  building  as-  N.  P.  86. 

ttion  shall  be  deemed  usurious,  8  Bates  v.   People's  Saving  and 

applies  only  to  premiums  exacted  Loan  Association,  42  Ohio  St.  655 ; 

n,  accordance   with   the   statute,  b.  c.  18  WTdy.  L.  Bull.  396. 


§  230.  PREMIUMS    OR    BONUS.  235 

whether  any  one  offers  or  not.  If  no  offer  to  that  amount 
is  made,  the  money  remains  in  the  treasury  without  invest- 
ment. It  is  evident,  in  this  way,  that  the  members  who 
are  not  borrowers  will  obtain  a  very  undue  advantage  over 
the  members  who  are  borrowers.  These  institutions  are 
liable,  like  everything  else  human,  to  abuse,  and  we  are 
bound  to  guard  them  carefully  from  being  perverted  into 
mere  contrivances  by  which  capitalists  can  evade  the  laws 
of  usury."1  In  an  Ohio  case  it  was  said  :  "The  most  val- 
uable right  that  a  member  acquires  by  virtue  of  his  mem- 
bership is  that  of  obtaining  a  loan  of  mone}r  with  which  to 
procure  a  home,  with  the  privilege  of  repaying  the  same  in 
weekly  instalments.  This  right  *  "::"  -  cannot  be  destroyed 
or  abridged  by  the  board  of  directors."2  But  it  has  been 
held  that  if  a  by-law  does  fix  an  amount  below  which  no 
bid  will  be  received,  and  a  borrower  bid  over  that  amount, 
even  though  no  one  else  bid,  he  will  be  bound  and  the  loan 
will  not  be  deemed  usurious.3  "  If  a  purchase  of  a  loan  is 
made  upon  competition  in  bidding,  beyond  the  minimum 
premium  fixed  the  purchaser  cannot  complain  of  the  fixed 
premium,  as  his  purchase  was  made  in  accordance  with  the 
law;  but  where  he  is  obliged  to  take  the  loan  at  the 
minimum  fixed  premium,  because  of  the  rule  of  the  associa- 
tion simply,  and  in  the  absence  of  competition  bidding,  he 
may  complain  and  defend  on  that  ground.  The  same  prin- 
ciple will,  of  course,  apply  in  the  repayment  of  a  loan, 
when  the  rule  for  settlement  under  the  charter  or  by-laws, 
differs,  in  any  respect,  from  that  fixed  by  law." 1 

Sec.  230 — Association  Cannot  Refuse  a  Bid. 

It  necessarily  follows  from  what  has  been  said  in  the 
previous  section  that  an  association  cannot  refuse  to  enter- 

1  Stiles'  Appeal,  92  Pa.  St.  122  ;  Fund  and  Loan  Association.  9  W. 
s.  c.  9  W.  N.  Cas.  83 !  37  Leg.  Int.  N.  Cas.  251  ;  s.  c.  37  Leg.  Int.  475. 
366.  4  Albright  v.  Lafayette  Building 

2  State  v.  Greenville  Building  and  Savings  Association,  102  Pa. 
Association,  29  Ohio  St.  92  ;  State  St.  411. 

v.  Oberlin  Building  and  Loan  As-  It  has  been  held  that  the  lien  of 
sociation,  35  Ohio  St.  258.  a  mortgage  given    an  association 

3  Orangeville      Mutual      Saving    was  valid    as    to    the    premiums 


236  BUILDING   AND   LOAN   ASSOCIATIONS.         Ch.  XI. 

tain  a  bid  on  the  ground  that  it  is  too  small  or  insignificant. 
If  it  is  the  only  or  the  highest  bid,  and  none  other  exceeds 
it  in  amount,  the  bidder  is  entitled  to  the  loan.1  But  this 
rule  probably  does  not  prohibit  the  adoption  of  a  by-law 
providing  that  no  loan  will  be  awarded  to  a  bidder  unless 
there  has  been  at  least  one  bid  preceding  his  bid,  a  rule 
often  adopted  at  auctions  to  prevent  bidders  agreeing  not  to 
bid  against  each  other.2 

Sec.  231 — Change  in  by-laws. 

Where  a  by-law,  in  force  when  plaintiff  became  a  mem- 
ber, and  drew  his  money  in  advance,  provided  that  the 
premium  should  be  payable  weekly,  at  the  rate  of  $1  per 
share,  and  must  be  paid  in  full  by  withdrawing  members, 
and  afterwards  the  legislature  passed  an  act  requiring  prem- 
iums to  be  paid  in  weekly  sums,  distributed  through  the 
whole  estimated  duration  of  the  society,  and  that  a  with- 
drawing member  should  pay  only  a  "  relative  proportion  " 
of  the  whole  premium,  and  the  association  changed  its  by- 
laws to  correspond  with  the  new  law,  and  thereupon  plain- 
tiff paid,  and  the  society  received  his  premium  in  small 
weekly  instalments  under  the  new  law,  and  he  afterwards 
withdrew,  and  to  get  his  mortgage  canceled  was  compelled 
to  pay  the  balance  of  his  premium  in  full  under  the  by- 
laws in  force  when  he  received  his  money  ;  it  was  held  that 
he  was  entitled  to  recover  back  the  part  of  the  premium 
paid  for  the  time  after  the  withdrawal,  it  being  paid  without 
consideration,  but  the  part  paid  under  the  former  by-law, 
while  it  was  in  force,  could  not  be  recovered  back,  although 
the  whole  amount  was  more  than  his  "relative  propor- 
tion." :; 

allowed  tlie  company  am  I,  included  precent.     Hughes  v.  Farmers',  etc., 

in  the  mortgage,  as  against  subse-  Ass'n  (Tenn.).  46  S.  W.  Rep.  362. 

quent    incumbrances;    and    that  -An   association    can  be    com- 

though  the  loan  was  made  with-  polled  to  make  a  loan  if  the  stock- 

< mt    bidding.      New    Jersey,    etc.,  holder  complies  with  its  by-laws. 

('.,.  /•.   Bachelor,  54  N.  J.  Eq.  600;  Bergman  v.  St.    Paul,  etc.,  Asso- 

35  At  I.  Rep.  745.  ciation,  29  Minn.  282  ;  s.  c.  13  N. 

i  State  v.  Oberlin  Building  and  W.  Rep.  122. 

Loan    \  sociation,  85  OhioSt.  258.  8Windhorst  v.  Germania  B.  A. 

The   person   bidding  need   not  be  7Wkly.L.  Bull.  29.  See  Home,  etc., 


§234. 


PREMIUMS   OR   BONUS. 


237 


Sec.  232— Collecting  Premium  after  Maturity  of  Loan. 
A  premium  cannot  be  collected  after  the  maturity  of  the 
loan,  at  least  where  the  loan  is  for  a  specified  time,  and  the 
premium  is  a  percentage  on  the  amount  payable  periodi- 
cally.! 

Sec.  233 — More  than  One  Premium. 

Only  one  premium  can  be  charged  upon  a  loan.  This 
was  well  illustrated  in  a  case  from  Pennsylvania.  There, 
after  a  sheriff's  sale  on  a  mortgage,  the  stockholders  re- 
ceived a  second  loan,  at  a  higher  premium,  on  the  same 
security  ;  and  it  was  held  that  he  was  entitled  to  be  repaid 
his  first  premium.2 

Sec.  234— Return  of  Premium  on  Withdrawal. 

A  statute  allowing  a  member  withdrawing  to  a  return  of 
proportionate  part  of  the  premium  he  has  paid,  will  not 
entitle  a  member  to  a  return  of  proportionate  part  on  de- 
fault made  and  suit  brought  to  recover  the  amount  due.3 


Association  v.  Boning,  7  Wkly.  L. 
Bull.  174. 

A  statute  declaring  that  the 
premium  bid  shall  not  be  taken  as 
a  violation  of  the  statute  of  usury 
is  void  as  to  transactions  already 
taken  place.  Reiser  v,  William 
Tell  Saving  Fund  Association,  39 
Pa.  St.  137  ;  Denny  v.  West  Phila- 
delphia Saving  and  Building  Asso- 
ciation, 39  Pa.  St.  154  ;  Premium 
Fund  Association's  Appeal,  39  Pa. 
St.  156;  Blackburn's  Appeal,  39 
Pa.  St.  160. 

See  also  Fisher  v.  Patton,  33  S. 
W.  Rep.  451,  although  reversed. 
134  Mo.  32;  s.  c.  34  S.  W.  Rep. 
1096  ;  McCauley  v.  Workingmen's 
B.  &  S.  Ass'n,  97  Tenn.  421  ;  s.  c. 
97  S.  W.  Rep.  212 ;  35  L.  R.  A.  244. 

The  proportion  of  the  premiums 
which  shall  be  paid  each  week 
cannot  be  increased  by  subsequent 
action  as  to  existing    mortgages 


unless  the  constitution  and  by-laws 
confer  such  authority.  And  where 
the  constitution  provided  that  the 
instalments  of  premiums  should  be 
fifty  cents  per  week  for  four  years, 
and  after  that  time  the  directors 
should  determine  the  amount  to 
be  paid  weekly,  this  language  was 
held  not  to  clearly  give  such  au- 
thority, and  was  not  construed 
prospectively,  and  to  authorize  a 
larger  weekly  instalment  only  as 
to  loans  made  after  the  change. 
Burke  v.  Home  Building  Associa- 
tion, 7  Wkly.  L.  Bull.  114. 

1  Savings,  etc.,  Association  r. 
Stevens,  5  Wkly.  L.  Bull.  113  ;  Peo- 
ples' Saving  and  Loan  Association 
v.  Stevens,  3  Wkly.  L.  Bull.  113. 

2  Flounders  v.  Hawley,  78  Pa. 
St.  45 ;  S.  c.  1  W.  N.  Cas.  74  ;  2 
Del.  (Pa.)  219. 

8  Flynn  v.  Equitable  Saving 
Fund,"  3  Walk.  (Pa.)  170. 


238  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XL 

AYhere  a  statute  provided  that  a  borrower  might  repay  a 
loan  at  any  time,  "  and  in  case  of  the  repayment  thereof  be- 
fore the  expiration  of  the  eighth  year  after  the  organization 
of  the  corporation,  there  shall  be  refunded  to  such  borrower 
one-eighth  of  the  premium  he  paid  for  every  year  of  the 
said  eight  years  then  unexpired ; "  this  was  held  to  entitle 
the  member  to  a  return  of  one-eighth  of  the  premium  for 
every  whole  year  anticipated,  but  not  to  a  proportionate 
return  for  a  fraction  of  a  year.1  A  statute  providing  that, 
on  repayment  of  a  loan  before  the  end  of  the  eighth  year 
after  its  issue  of  the  stock  on  which  the  loan  is  made,  one- 
eighth  of  the  premium  bid  shall  be  returned  for  each  unex- 
pired year  of  the  eight,  applies  only  in  case  of  voluntary 
payment.2  Under  the  rule  of  a  building  society  which  re- 
quired that  loans  upon  a  mortgage  should  be  repaid  by 
annual  instalments  and  premiums  spread  over  a  certain 
number  of  years,  it  was  held  that  the  society  was  justified 
in  adding  the  whole  of  the  annual  premiums  to  the  capital ; 
and  charging  interest  upon  the  combined  amount ;  and  upon 
the  borrower  redeeming  before  the  end  of  the  period,  he 
was  not  entitled  to  a  rebate  in  respect  of  the  premium  con- 
tracted to  be  paid.3  The  by-laws  of  a  society,  fixing  the 
terms  on  which  a  borrowing  member  might  pay  up  the  loan 
before  the  maturity  of  his  stock,  provided  that  he  "be 
charged  with  the  total  amount  of  loan  and  premium,  and 
credited  with  one-ninth  of  the  premium  for  each  whole  un- 
expired year,  up  to  the  ninth  year, — the  basis  of  the  loan, — 
together  with  dues  and  interest,  or  profit  on  said  dues,  as 
the  case  maybe;  it  was  held  that,  in  the  settlement,  the 
borrower  should  be  charged  interest  during  the  first  year  on 
the  whole  premium,  during  the  second  year  on  eight-ninths, 
during  the  third  year  on  seven-ninths,  and  so  on.4 


1  Sherman   Building  Association  Investment   Building  Society,   L. 

v.  Rock.  '.)  Phila.  75;  S.  C.  29  Leg.  R.  26  Ch.   Div.  273;  s.  c.  53  L.  J. 

|„t.    IK).  Ch.    1126;  51    L.  T.  N.  S.  408;  32 

a  People's     Building    and     Loan  W.  R.  557  ;  affirming  in  part,  S.  C. 

Association   v.    Billing,   KM    Mich.  52  L.  J.  Ch.  349. 
186  ;  s.  C.  ''.'.'  N.  W.  Rep.  873.  4  Fitzgerald  v.  Hennepin  County 

Elarvej  v.  Municipal  Permanent  Catholic  Building  and  Loan  Asso- 


§  235. 


PEEMIUMS    OR    BONUS. 


239 


Sec.  235 — Provable  in  Bankruptcy. 

If  a  borrower  become  bankrupt,  the  association  may  prove 
against  his  estate  the  amount  of  premium  yet  due,  without 
any  diminution.1 


ciation,  56  Minn.  424;  s.  C.  57  N. 
W.  Rep.  1006. 

i  Ex  parte  Bath,  27  Ch.  Div.  509; 
s.  C.  32  W.  R.  808. 

This  case  decides  that  interest 
cannot  be  proved  which  accrued 


after  the  adjudication  in  bank- 
ruptcy. See  also  Ex  parte  Bath, 
22  Ch.  Div.  450  ;  S.  0.  48  L.  T.  2\)?>; 
31  W.  R.  281 ;  and  In  re  Browne 
[1891 J  2  Q.  B.  574  ;  s.  C.  61  L.  J. 
Q.  B.  15  ;  65  L.  T.  485  ;  40  W.  R.  71. 


CHAPTER  XII. 

LOANS   TO   MEMBERS. 

Sec.  236.  Two  Kinds  of  Members. 

237.  Amount  of  Loan  Never  Returned. 

238.  When  Loan  Falls  Due. 

239.  Relationship   of   a  Borrowing  Member  of  an  Incorporated 

Association  to  it. 

240.  Loans  not  a  Usurious  Transaction — Unincorporated  Associa- 

tion— English  Cases. 

241.  Loans  not  a  Usurious  Transaction — Incorporated  Association 

— English  Cases. 

242.  American  Cases — Usury. 

243.  Arkansas — Louisiana — Alabama. 

244.  New  Jersey — New  Hampshire. 

245.  Illinois — Minnesota. 

246.  New  York — Georgia. 

247.  Virginia — District  of  Columbia. 

248.  Mississippi — Michigan. 
249  Nebraska. 

250.  North  Carolina — South  Carolina. 

251.  Kentucky — Texas. 

252.  Pennsylvania. 

253.  Indiana. 

254.  Connecticut — Iowa — Missouri — Ohio — West  Virginia. 

255.  Canada — New  Brunswick. 

Sec.  236— Two  Kinds  of  Members. 

The  workings  of  a  building  association  are  so  well  known, 
and  so  well  understood  at  this  time,  that  it  is  scarcely  nec- 
essary to  discuss  them  at  length.  The  members  fall  readily 
into  two  classes,  viz. :  Borrowing  and  Non-borrowing  mem- 
bers. 

A  borrowing  member  is  often  termed  an  "advanced 
member,"  ;ind  the  amount  of  money  he  receives  is  often 
called  an  "  advancement."  This  is  upon  the  theory  that  his 
240 


§  237.  LOANS   TO    MEMBERS.  241 

stock   has   been   paid   off   in   advance  of   the   time  of   its 
maturity.1 

Sec.  237 — Amount  of  Loan  Never  Returned. 

In  theory,  the  amount  of  the  loan  is  never  returned  by 
the  borrower.  Theoretically,  this  is  correct ;  but  upon  the 
principle  that  you  cannot  get  something  in  this  way  for  noth- 
ing, it  is  inaccurate.  Either  weekly,  monthly,  or  at  other 
stated  periods  of  time,  the  borrower  is  paying  to  the  asso- 
ciation the  dues  periodically  accruing  on  his  shares  of  stock, 
and  at  the  same  time  is  paying,  for  a  like  period,  a  certain 
sum  of  money  as  interest  on  his  loan.  If  he  becomes  delin- 
quent in  any  way,  he  pays  his  tine  the  same  as  if  he  were 
not  a  borrower,  and  this  is  added  to  the  general  fund.  This 
process  continues  until  the  dues,  interest,  and  fines  have 
accumulated  in  a  sum  that  if  divided  among  all  the  mem- 
bers of  the  association,  or  among  all  the  members  of  the 
series  to  which  the  borrowing  member  belongs,  each  mem- 
ber would  receive  a  sum  equal  to  the  amount  he  has  bor- 
rowed. The  sum  that  is  then  due  him  is  applied  to  his 
debt,  and  his  obligation  is  then  canceled,  while  at  the  same 
time  the  association's  obligation  to  him  is  likewise  canceled. 
In  this  statement,  one  element  which  accelerates  the  accu- 
mulation of  the  general  fund  has  been  omitted ;  and  that  is 
the  several  amounts  of  premiums  bid  for  loans.  If  the 
amount  of  the  loan  is  to  be  one  thousand  dollars,  and  the 

144  The  name  is  unimportant."  nifies  this,  that  the  society  pays  to 
"  It  is  an  advancement  of  money  the  member  by  anticipation  the 
in  anticipation  of  the  par  A-alue  of  amount  of  his  shares,  upon  receiv- 
his  stock,  or,  if  it  be  more  agree-  ing  in  return  certain  consider- 
able to  so  call  it,  a  loan  to  be  paid  tions  which  are  fixed  by  the  rules." 
by  stock  at  its  par  value,  with  cove-  Brownlie  v.  Russell,  8  App.  Cas.  at. 
nants  to  make  such  payments  of  p.  249 ;  s.  C.  48  L.  T.  881 ;  47  J.  P. 
dues  on  stock,  etc.,  as  shall  event-  757  ;  10  Rettie,  H.  L.  19  ;  20  Scots 
ually  bring  such  shares    to  their  L.  R.  481. 

par  value."     Freeman  v.  Ottawa        See,  also,  Commercial  B.  &  L. 

Building,  etc.,  Association,  114  111.  Association  v.  Mackenzie,  85  Md. 

182  ;  s.  C  28  N.  E.  Rep.  611.  132 ;   s.  c.  36  Atl.  Rep.  754  ;   and 

"An  advance  under  the  statute  Richard  v.  Southwestern  B.  &  L. 

and  under  those    rules  does  not  Association,  49  La.  Ann.  481  ;  S.  C. 

mean  a  loan  by  the  society  upon  21  So.  Rep.  643. 
the  security  of  the  shares  ;  it  sig- 
\Q 


242  BUILDING    AND    LOAN   ASSOCIATIONS.      Cli.  XII. 

premium  bid  shall  be  two  hundred  dollars,  it  is  quite  clear 
that  only  eight  hundred  dollars  will  be  advanced  to  the 
borrower,  and  the  general  fund  will  not  be  depleted  by  the 
sum  of  two  hundred  dollars.  If  the  full  thousand  were 
drawn  out  by  the  borrower,  it  is  quite  evident  that  the  gen- 
eral fund  would  not  rise  so  quickly  to  that  point  where  it 
would  equal  in  amount  the  sum  total  of  all  the  stock  to 
which  it  is  applicable.1 

Sec.  238— When  Loan  Falls  Due. 

A  loan  to  a  member  continues  during  the  life  of  the  asso- 
ciation, or  during  the  continuance  of  the  series  of  stock  in 
which  the  borrower  holds  stock  and  by  virtue  of  which  the 
loan  was  secured  by  him.  Of  course,  it  is  altogether  possible 
to  make  a  different  kind  of  loan  where  the  by-laws  of  the 
association  provide  for  it ;  but  such  a  loan  is  not  usual  and 
is  decidedly  the  exception.  Usually  these  are  not  strictly 
building  association  loans.  A  long  time  to  satisfy  the  loan 
by  frequent  payments  are  the  characteristics  of  the  plans  of 
such  an  association ;  and  even  though  a  definite  time  be 
fixed  in  the  obligation  for  its  maturity,  courts  will  not  con- 
strue it  as  due  so  long  as  the  life  of  the  association  or  series 
continues,  unless  there  be  default  in  the  making  of  payments 
on  the  stock  and  of  this  interest.2  Some  English  cases 
furnish  very  good  illustrations  of  the  statement.  Thus, 
where  the  deed  of  trust  simply  recited  the  amount  received 
by  the  member  and  contained  an  agreement  for  the  pay- 
ment of  "redemption  money  or  interest  "  during  the  life 
of  the  association,  the  loan  was  construed  as  a  continuing 
one  during  the  time  the  association  continued.3  A  like 
result  was  reached  where  a  mortgage  had  been  given  for 
the  payment  of  8*.,  including  redemption  money,  for  100 

i  Barker  v.  Bigelow,  15  Gray  130  ;  ing   Association,   30  Pa.   St.  465; 

State  v.   Eornbacker,  12   N.  J.  L.  Middle  States  Loan,   etc.,  Co.  v. 

685;  Brawnlee  u.   Russell,  8   A.pp.  Bagerstown,  etc.,  Co.  82  Md.  506  ; 

p.  249;  s.  G.48L.T.881  ;  IT.),  s.  c.  33  Ail.  Rep.  886. 

P.  757;  lORettieH.  L.  19;  20Scot.  8  Seagrave  v.  Pope,  1  De  G.  M.  & 

L.  R.481.  Sughesv.  Farmers',  etc.,  G.  783  ;  s.  c.  16  Jur.  1099;  22  L.  J. 

\     ,,  (Tenn.),  46  8.  W  Rep.  862.  Ch.  258;  15  E.  L.  &  Eq.  477,  20 

»Kupfert  v.  Guttenburg  Build-  L.  J.  Rep.  158. 


§  239.  LOANS    TO    MEMBERS.  243 

months;1  and  so  where  the  note  given  by  the  borrowing 
member  was  payable  on  demand,  the  agreement  of  prefer- 
ence and  stock  payments  being  an  additional  and  outside 
agreement.2  This  is  upon  the  theory  that  the  court  will 
look  at  the  transaction  as  the  partit  s  thereto  intended  it,  and 
will  construe  it  according  to  such  intention.3 

Sec.  239 — Relationship  of  a  Borrowing  Member  of  an 
Incorporated  Association  to  It. 

The  relationship  of  a  borrowing  member  of  an  incor- 
porated association  to  it  is  not  that  of  a  partner  to  his  part- 
nership. A  member  of  an  incorporation  does  not  stand  in 
the  relationship  to  his  co-member  of  a  partner  to  the  part- 
nership of  which  he  is  a  member.  A  member  of  a  building 
association,  in  fact,  stands  in  a  little  different  relation  to  his 
association  that  a  member  of  an  ordinary  incorporation 
bears  towards  such  a  corporation.  A  member  of  the  former 
has  an  interest  in  the  accumulating  fund  that  is  greater  and 
different,  it  may  be  said,  than  a  member  of  the  latter  has  in 
the  general  assets  of  the  corporation.  A  member  of  a 
building  association  is,  in  a  sense,  both  a  borrower  and  a 
lender,  through  the  medium  of  the  association.  Each  dollar 
he  pays  in  on  his  stock  is  for  the  satisfaction  of  his  own  and 
every  other  member's  indebtedness  by  the  accumulation  of 
a  fund  for  the  purpose  of  paying  off  the  stock,  and  thereby 
the  cancelation  of  his  stock.  It  is  not  easy  to  define  the 
relationship,  but  it  is  not  that  of  a  partner,  while  it  is 
something  more  than  that  of  a  member  of  an  ordinary 
incorporation.4 

1  Bin-bridge  v.  Colton,  5  De  G.  &  declared  due,  an  election  to  mature 
Sm.  17;  15  Jur.  1070;  21  L.  J.  Ch.  the  loan  for  such  default,  when- 
201  ;  8  E.  L.  &  Eq.  57.  ever  actually  made,  must  be  as  of 

2  Silver  v.  Barnes, '6  Bing.  N.  C.  the  date  of  three  months  after  such 
180 ;  8  Scott,  300 ;  37  E.  C.  L.  335.  default,  and  the  amount  due  on 

3  Where  a  mortgage  is  made  to  the  stock  and  the  withdrawal  value 
secure  a  loan  made  on  shares,  with  of  its  shares  must  be  calculated  as 
a  provision  that  upon  failure  to  pay  of  that  date.  United  States,  etc., 
any  monthly  dues  on  the  stock  or  Co.  v.  Sullivan,  80  Fed.  Rep.  762. 
interest  continuing  due  for  three  *  Estate  of  National  Association, 
months,  the  whole  loan  might,  at  9  W.  N.  C.  79.  That  a  member 
the  election  of  the  mortgagee,  be  complying  with  the  by-laws  of  the 


244  BUILDING    AND   LOAN    ASSOCIATIONS.      Cll.  XII. 

Sec.  240— Loan  not  a  Usurious  Transaction— Unincor- 
porated Association— English  Cases. 

The  relationship  of  a  borrowing  member  to  the  associa- 
tion, and    whether  or  not  the    transaction   is  usurious,  is 
pretty  clearly  brought  out  in  several  early  English  cases, 
where  the  transaction  was  between  a  member  of  an  unin- 
corporated association  to  which  he  belonged.     The  first  case 
arose  in  1839.     By  the  rules  of  the  society  loans  were  made 
to  its  members  from  time  to  time  at  five  per  cent,  interest, 
the   member   receiving  the   loan   having   bid  the   highest 
premium  for  it.     A  member  having  bid  £15  17s.  6d.  for  a 
loan  of  £80,  was  awarded  it  and  gave  his  note,  payable  on 
demand  for  the  full  amount,  £80,  with  interest,  the  amount 
of   the   bid  having   been   agreed  upon,  in   addition.     The 
whole  sum,  namely  £80  plus  £15  17  s.  6d,,  and  interest  on 
the  £80,  was  to  be  paid  by  monthly  instalments  of  16s.     In 
a   suit  on  the   obligation   given,   usury  was   pleaded   as   a 
defence.     The  court  left  it  to  the  jury  to  determine  whether 
the  contrivance  was  a  shift  to  evade  the  usury  laws.     If 
they  so  found  it  to  be,  they  were  instructed  to  find  for  the 
defendant ;  but  if  they  found  it  to  be  lonafide  partnership, 
they  were  to  find  for  the  plaintiffs.     The  jury  gave  their 
verdict  for  the  plaintiffs,  and  the  court  refused  to  set  it  aside. 
In  passing  on  the  question  Tindall,  C.  J.,  said  :  "  The  ques- 
tion was,  whether  the  transaction  was  a  loan  of  money,  or 
a  dealing  with  the  partnership  fund.     If  it  was  a  loan  it  was 
usurious.     We  think  it  was  a  dealing  with  the  partnership 
fund,  in  which  the  defendant  had  an  interest  in  common 
with  the  other  members  of  the  society,  and  that  it  was  not 
a  loan.     The  defendant  was  interested  in  the  fund  when  the 
money  was  advanced  and  when  it  was  repaid.     The  rules  of 
the  society  are,  in  effect,  a  mere  agreement  by  partners  that 
their  joint  contributions  shall  be  advanced  for  the  use  of 
one  or  t  he  other  as  occasion  requires;  and  the  transaction 

association  can  compel  it  to  make  On  the  subject  of  this  section, 

him  a  loan  if  it  have   funds,  see  see  Bradbury  v.  Wild,  3  R.   195; 

!'„rKmiui  r.St.  Paul,  etc.,  Associa-  B.C.  [1893]  1  Ch.  377  ;  62  L.  J.  Ch. 

i  ion,  29  Minn.  282  ;  s.  c.  13  N.  W.  508  ;  68  L.  T.  50 ;  41  W.  R.  361 ;  57 

Rep.  122.  J.  P.  68. 


§  241.  LOANS    TO    MEMBERS.  245 

was  not  a  borrowing  by  the  maker  of  the  note  from  the 
payees."2  It  is  to  be  observed  that  the  question  of  usury 
was  left  to  the  jury,  and  the  court  refused  to  disturb  their 
finding.  In  the  next  section  we  shall  see  the  doctrine 
carried  still  farther. 

Sec.  241 — Loan  not  a  Usurious  Transaction — Incorpo- 
rated Association — English  Cases. 
In  the  previous  section  we  dealt  with  an  unincorporated 
association.  We  now  deal  with  associations  duly  incor- 
porated under  statutes  authorizing  their  incorporation.  In 
one  of  these  associations  it  appeared  that  the  objects  of  the 
society  were  to  accumulate  and  divide  the  profits  at  stated 
periods.  The  advancements  were  secured  by  members  in 
the  usual  auction  methods  of  competition  among  the  mem- 
bers. The  highest  bidder  took  the  share  and  hud  the  privi- 
lege of  taking  twenty  at  the  same  premium.  For  each  share 
taken  he  paid  the  premium  bid  and  also  Ss.  a  month  for  one 
hundred  months,  as  redemption  money.  If  he  would  give 
security  for  its  repayment,  together  with  the  premium  and 
redemption  money,  he  could  have  an  advance  of  £100,  the 
full  value  of  each  share.  This  did  not  debar  him  from  par- 
ticipating in  the  general  profits  of  the  society.  A  member 
of  the  society  secured  an  advancement  of  five  shares  at  pre- 
miums of  £71  for  three,  and  £73  for  the  other  two,  gave  the 
required  security  and  received  as  an  advance  £500.  His 
executrix  filed  a  bill  against  the  society,  alleging  that  the 
transaction  was  usurious,  the  societv  illegal ;  and  claimed 
the  right  to  redeem  the  security  on  repayment  of  the  £500 
with  lawful  interest.  It  was  held  that  the  transaction  was 
a  dealing  with  partnership  funds,  not  a  loan,  and  hence 
there  could  be  no  question  of  usury.2  In  the  next  case  a 
member  was  advanced,  on  two  different  occasions,  upon  ten 
shares,  at  a  premium  of  £45  10,?.   per  share  of  £100.     Each 

1  Silver  v.  Barnes,  6  Bing.  N.  C.  2  Burbridge  v.  Cotton,  5  De  G.  & 

180  ;  s.  c.  8  Scott,  800 ;  37  Eng.  C.  Sm.   17 ;  s.  c.  21  L.  J.  Ch.  201  :  15 

L.  335.     The  court  refers  to  a  sim-  Jur.  1070  ;  8  E.  L.  &Eq.  57,  follow- 

ilar  case  before  Chief  Baron  Alex-  ing  the  principle  laid  down  in  Sil- 

ander  in  1828,  in  which  the  same  ver  v.  Barnes,  supra. 
view  was  taken. 


246  BUILDING  AND   LOAN   ASSOCIATIONS.       Ch.  XII. 

time  he  received  £272  10s.,  and  gave  two  mortgages  con- 
dition for  payment  of  dues,  etc.,  and  3*.  6d.  per  share 
redemption  money,  called  in  the  rules  interest.  He  desired 
to  transfer  these  mortgages  to  other  property.  Obtaining 
the  consent  of  the  directors  for  that  purpose,  a  deed  was 
drawn  by  which,  in  consideration  of  £544,  paid  to  him  by 
the  trustees  of  the  society,  he  assigned  to  them  certain  lease- 
hold property,  in  trust,  to  permit  him,  as  long  as  he  should 
duly  make  the  several  payments  and  observe  the  society's 
regulations  prescribed  in  its  articles,  to  hold  the  premises 
described  therein,  and  receive  the  rents  thereof  for  his 
benefit.  If  he  should  make  default  for  six  months,  the 
society  could  take  the  rents,  and  if  insufficient  to  cover  the 
payments  due  upon  his  obligation,  the  premises  could  be 
sold.  In  an  elaborate  opinion,  it  was  held  that  the  trans- 
action was  not  a  loan,  but  an  anticipatory  payment,  by  way 
of  discount,  of  the  share  the  member  would  otherwise  be 
entitled  to  claim  payment  of  on  the  termination  of  the 
society.  The  court  held  that  it  made  no  difference  whether 
the  3s.  Gd.  per  share  was  called  "  redemption  money  "  or 
"  interest,"  in  the  society's  rules  ;  and  that  it  was  a  con- 
sideration, not  for  the  loan  of  the  money  to  be  returned,  but 
for  a  repayment  to  the  member  made  earlier  than  that  he 
would,  of  right,  be  entitled  to  receive  it.1  Since  the  date  of 
these  three  decisions,  other  English  cases  have  followed  in 
the  furrow  ploughed  by  them.2 

Sec.  242 — American  Cases — Usury. 

The  reasoning  of  these  cases  have  been  in  part  adopted 
in  America.  In  j\I<ir;/ht/td  it  was  adopted  to  its  full 
extent."     I!ut  in    all   such    instances  the   association    must 

1  Seagrave  v.  Pope,  1  De  G.  &  G9  Amer.   Dec.    145;   Shannon    r. 

M.  783  ;  s.  e.  10  Jur.  1099;  22  L.J.  Howard  Mutual  Building  Associa- 

158;   L5E.  L.  &  Eq.  477.  (ion,   :5(J  Md.   ::s:5 ;   Lister  v.   Log 

'•M'litlull  v.    Kingdom,    I    Kxcli.  Cabin     Building    Association,    38 

494  ;  s.  C.  17  L.  J.  Exch.  177  ;   Tnre  Md.    115;     Williar    v.    Baltimore 

Durham  County  Permanent  Bene-  Brothers'  Loan  and  Annuity  Asso- 

lil  Building  Society.     L.  I.'.  12  Eq.  ciation,  45  Md.  546;  Citizens,  Se- 

516;  s.  c.  25  I..  'I'.  Rep.  88.  curity,  etc.,  Co.  v.  Uhler,  48  Md. 

Robertson  v.  American  Home-  455. 
Btead  \  i  tociation,  to  .Md.  :;'.i?  ;  s.o. 


§  242.  LOANS   TO   MEMBERS.  247 

be   organized  in  strict    accord  with  the  provisions   of  the 
statute.1 

"  The  mortgage  debt  can  consist  only  of  the  several  items 
above  enumerated,  that  is  to  say,  for  money  due  to  the  cor- 
poration on  account  of  the  monthly  interest,  the  weekly 
instalments  for  fines  imposed  by  the  articles  of  the  associa- 
tion, if  any,  and  for  ground  rent,  taxes,  and  costs  of  insur- 
ance, if  any  have  been  paid  by  the  corporation,  which  may 
be  in  arrear,  after  allowing  to  the  appellant  the  credits  to 
which  he  may  be  entitled  for  payments  made  by  him,  and 
the  balance  due  on  said  several  items,  constitute  the  whole 
mortgage  debt  in  presently  and  if  the  same  be  paid  a  sale  of 
the  property  will  be  prevented,  and  a  decree  will  stand  as 
security  for  future  instalments  and  liabilities.  *  *  ::'  The 
true  rule  is  to  ascertain  by  proof  the  probable  duration  of 
the  society,  then  to  estimate  the  aggregate  amount  of  the 
weekly  and  monthly  instalments  payable  during  that  time ; 
from  that  sum  rebate  a  just  amount  for  interest,  and  add 
thereto  the  averages  due,  after  allowing  for  payments  made 
to  the  society,  and  the  sum  thus  ascertained  is  the  amount 
which  the  mortgagee  is  entitled  to  receive  in  presenti  in 
satisfaction  of  the  mortgage."  2 

1  Bermingham  v.  Maryland  Land  should  not  be  "  a  cause  of  action 
and  Permanent  Homestead  Asso-  in  any  case  where  the  bond,  bill 
ciation,  45  Md.  541  ;  Baltimore  obligation,  promissory  note,  bill  of 
Permanent  Building  and  Land  So-  exchange  or  other  evidence  of  in- 
ciety  v.  Taylor,  41  Md.  409  ;  Wav-  debtedness,  has  been  redeemed  or 
erly,  etc.,  Association  v.  Buch,  64  settled  for  by  the  obligor  or  oblig- 
Md.  338;  s.  c.  1  Cent.  Rep.  484;  14  ors,  in  money  or  other  valuable 
A.  &  E.  Corp.  Cas.  649  ;  Geriger  v.  consideration,  except  that  of  a  re- 
Eighth  German  Building  Associa-  newal  in  whole  or  in  part  of  the 
tion,  58  Md.  569 ;  Border  State,  original  indebtedness."  A  mem- 
etc,  Association  v.  McCarthy,  57  ber  of  an  association  having  eight 
Md.  555;  Home  Mutual  Building  shares  of  stock,  of  the  par  value  of 
Association  v.  Thursby,  58  Md.  $260  per  shares,  in  Is?:;  obtained 
284 ;  Williar  v.  Baltimore  Butch-  a  loan  of  $2,080,  secured  by  mort- 
ers' Loan  and  Annuity  Association,  gage.  He  continued  to  pay  the 
45  Md.  546.  required  dues,  and  interest  on  the 

2  Robertson  v.  American  Home-  mortgage  at  the  rate  of  eight  per 
stead  Association,  10  Md.  397  ;  s.  C.  cent,  until  November,  1876,  when 
69  Am.  Dec.  145.  he  executed  a  new  mortgage  to  the 

A  statute   provided  that  usury    association   upon  the   same  prop- 


248  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XII. 

So  in  Kansas.1  In  an  early  Tennessee  case  it  was  held 
that  the  transaction  was  only  a  device  to  avoid  the  laws  of 
usury,  and  treated  the  transaction  only  as  a  loan  ; 2  but  in  a 
subsequent  case  the  whole  transaction  was  upheld  and  the 
claim  that  it  was  usurious  denied.3  In  Massachusetts  the 
court  used  the  following  language  :  "  The  monthly  payment 
which  he  stipulated  to  pay  as  long  as  the  association  should 
continue  to  exist,  was  not  simply  for  the  use  of  the  money, 
or  forbearance  of  repayment  of  the  principal,  but  for  the 
privilege  accorded  to  him  of  becoming  an  owner  of  a  certain 
number  of  shares,  and  of  eventually  taking  the  dividend  to 
which,  by  the  articles  of  agreement,  he  would,  upon  the 
winding  up  of  the  affairs  and  general  settlement  of  the  con- 
cerns of  the  association,  be  entitled.  Whether  the  arrange- 
ment made  was  one  which  would  be  likely  to  result 
advantageousl}7",  was  a  question  upon  which  to  exercise  his 
own  judgment.  All  the  association  had  the  same  right. 
Each  one  would  determine  for  himself  what  was  the  value 
of  the  prospective  benefit  to  be  enjoyed,  and  would  make 

ei'ty  for  $1040,  as  an  advance  on  transaction  ;  and  that  he  was  en- 
four  shares  of  stock,  with  a  view  titled  to  a  rebate  of  all  the  usurious 
to  the  reduction  of  his  indebted-  interest  paid  on  the  original  mort- 
ness.     Out  of  this  $1040,  he   paid  gage. 

n] >  seven  of  the  eight  shares  of  Border    State    Perpetual,    etc., 

stock    he    had    originally    taken.  Associations.  Hayes,  61  Md.  597; 

leaving  one  share  of  such  original  Border  State  Perpetual,  etc.,  Asso- 

stock    still  outstanding,    and   this  ciation   v.    Hillary,  68  Md.  52  ;  11 

one  share  was  not  paid  until  Au-  Atl.  Rep.  505. 

gust,  1879.     In  1883,  he  filed  a  bill  l  Massey    v.   Citizens'    Building 

against  the  association,  claiming  and  Savings  Association  of  Paola, 

tliat  the  transaction  was  usurious,  22   Kan.   624;    Hekelnkaemper  v. 

and    praying  that  the  association  German   Building  Association,  22 

tnighl   be  required  to  release  the  Kan.  549  ;  Glynn  v.  Howe  Building 

mortgage  on  being  paid  what  was  Association,  22  Kan.  746.    Pioneer 

actually  due.     It  was  held  that  the  etc.,  Ass'n.  v.   Kaspar  (Kan.),  52 

bill  could  be  maintained,  the  plain-  Pac.  Rep,  623. 

tiff  coming  within  the  exception  of  -Martin    v.   Nashville    Building 

the  statute  ;  for  the  second  mort-  Association,  2  Cold.  418. 

gage  transaction  was  a  part  of  the  '•   Patterson    v.    Workingmen's 

first,  and  the  application  of  a  part  Building  and  Loan  Association,  14 

of    the    money    received    on    the  Lea.  677  ;  s.   C.  10  Amer.  &  Eng. 

i,.|   mortgage   in   discharge  of  Corp.    Cas.    420;    Ketliff   v.    North 

the  in  t  did  nol  close  the  original  Nashville,  etc.,  Ass'n (Tenn.), 39 S. 


§  242.  LOANS    TO    MEMBERS.  240 

his  offer  for  the  money  to  be  loaned,  according  to  his  esti- 
mate of  the  worth  of  the  shares  which  he  was  allowed  to 
take  and  of  which  he  became  the  owner.  *  *  *  Whether 
the  advance  anticipated  will  finally  be  obtained,  may  per- 
haps be  questionable ;  but  since  the  borrower,  under  such 
circumstances,  is  to  have  his  full  proportion  of  the  benefit 
of  all  the  gain  wljich  may  be  made,  he  cannot  assert  that  lie 
contracted  to  pay,  or  that  the  lender  has  reserved  to  himself 
a  usurious  interest.1' 1 

In  a  subsequent  case  the  court  goes  into  a  consideration 
of  a  borrowing  transaction  at  great  length,  and  reaches  the 
conclusion  that  the  parties  sustain  the  relationship  of  part- 
ners, "  because  it  is  a  dealing  between  them  as  partners  in 
relation  to  a  partnership  fund,  in  which  they  have  a  com- 
mon interest."  2     In  another  and  later  case,  it  was  said  : 

"  By  joining  the  association  and  subscribing  for  shares 
therein,  the  plaintiff  became  bound  to  make  a  monthly  pay- 
ment upon  each  share,  and  incurred  a  liability  for  certain 
fines  for  non-compliance  with  his  obligations  as  a  member. 
In  consideration  of  these  undertakings  on  his  part,  he  be- 
came entitled  to  the  privileges  of  a  member,  the  principal  of 
which  was  the  right  to  participate  in  the  final  distribution 
of  an  accumulating  fund,  the  value  of  which  right  would  be 
contingent  upon  the  success  of  the  business  of  the  associa- 
tion, and  might  be  increased  or  diminished  by  the  estimates 
which  other  members  might  make  of  its  value,  and  this 
consequent  willingness  to  dispose  of  their  interest  on  more 
or  less  favorable  terms.  The  period  to  which  his  monthly 
payments  wTould  continue  is  of  course  indefinite.  Whether, 
if  he  continue  a  member,  he  will  ultimately  receive  more  or 
less  than  the  amount  which  he  has  paid,  with  interest,  is 
uncertain.  In  view  of  these  facts,  it  was  held  in  Delano  v. 
Wild3  that  it  was  not  a  usurious  contract  to  agree  to  con- 
tinue his  payments  as  if  he  had  remained  a  member,  and  to 

"W.  Rep.  546.    Hughes  v.  Farmers',  2  Delano  v.  Wild,  G  Allen,  1  ;  s.  C. 

etc.,  Ass'n,  46  S.  W.  Rep.  362.  83  Am.  Dec.  605  ;  Bowker  v.  Mill 

1  Merrill  v.  Mclntire,    13  Gray,  River  Loan  Fund  Association,   7 

157;  Barker  v.  Bigelow,  15  Gray,  Allen,  100. 

130 ;  Baxter  v.  Mclntire,  13  Gray,  3  6  Allen,  1  ;   S.  C.  83  Am.  Dec. 

168.  605. 


250  BUILDING    AND   LOAN    ASSOCIATIONS.      Cll.  XII. 

receive  any  agreed  sum  in  hand  for  the  sum  to  which  a 
member  would  be  entitled  on  the  final  settlement  of  the 
affairs  of  the  association.  In  the  present  case,  the  only  dif- 
ference is  that  the  payment  of  monthly  dues  is  limited  to  a 
fixed  time  and  amount.  But  be  is  thereby  released  from  an 
obligation  to  continue  to  make  it  for  an  indefinite  time  and 
to  au  unlimited  amount.  The  value  of  tbis  release  cannot 
be  computed,  and  is  therefore  the  subject  of  lawful  agree- 
ment by  the  parties.  The  contract  is  not  a  mere  advance  or 
loan  of  money,  to  be  repaid  with  more  than  lawful  interest, 
as  it  would  be  if  made  with  a  stranger  ;  but  the  parties,  hav- 
ing an  existing  contract  by  which  the  member  is  to  pay  cer- 
tain sums  monthly  for  a  period  of  time  that  is  contingent, 
and  the  association  being  then  bound  to  repay  him  a  certain 
sum,  which  may  be  more  or  less  than  they  have  received 
from  him,  substitute  for  this  contract  a  new  one,  by  which 
a  limit  is  placed  to  the  member's  payment,  and  a  smaller 
sum  received  by  him  in  advance  in  exchange  for  the  right  to 
a  larger  at  some  doubtful  time  in  the  future.  There  is 
nothing  usurious  in  such  a  contract.  It  would  be  a  contract 
on  sufficient  and  lawful  consideration  if  the  plaintiff  received 
nothing,  and  is  none  the  less  so  that  he  is  induced  to  make 
it  bv  a  payment  to  him  in  money."' ] 

Sec.  243— Arkansas,  Louisiana  and  Alabama. 

In  Arkansas  it  is  said  that  the  premiums  are  not  usurious, 
for  the  reason,  in  view  of  the  whole  contract,  of  the  un- 
certainty as  to  the  amount  eventually  to  be  paid  by  the 
borrower  in  order  to  discharge  his  obligation.2  So  in 
Louisiana  a,  Like  result  is  reached,  even  with  relation  to  un- 
incorporated associations.3     In    Alabama  such  transactions 

ifiowker  v.  Mill  River,  etc.,  As-  Eng.    Corp.   Cas.    375:    Black    v. 

sociation,  :  Allen.  100.  Tompkins,  <>3  Ark.  502;  39  S.  W. 

-  Reeve  v.  Ladies'  Building  Asso-  Rep.  55::. 
ciation,  56  Ark.  335  ;  s.  C.  19  S.  W.  ■  American  Homestead  Co.  v. 
Rep.  917;  18  L.  R.  A.  129.  Taylor  Linigan,  46  La.  Ann.  1118;  s.  c.  15 
r.  Van  Buren  Building*  Loan  As-  S<».  Rep.  369;  Sec  Latchford's  Suc- 
ociation,  56  Ark.  840;  19  S.  W.  <-<-ssion,  42  La.  Ann.  539;  s.  C  7 
Rep.  918 ;  Tilley  v.  American  Build-  S<>.  Rep.  628;  Richard  v.  South- 
ing &  Loan  Association  (Ark),  52  western  B.  &  L.  Ass'n,  49  La.  Ann. 
Fe  I.   Rep.  <'>ls;  s.  c.  40   Amer.  &  1*1  ;  3.  c.  21  So.  Rep.  643. 


§  245.  LOANS   TO   MEMBERS.  251 

are  upheld,1  although  a  previous  transaction,  under  the 
guise  of  a  lease  had  been  declared  usurious.2  In  the  latter 
state  it  is  also  held  that  if  the  transaction  is  expressly  au- 
thorized  by  a  statute  the  courts  cannot  hold  it  to  be  usurious, 
although  the  charge  paid  for  the  money  exceed  the  lawful 
rate  of  interest.3 

Sec.  244 — New  Jersey — New  Hampshire. 

In  New  Jersey  the  usual  loaning  transaction  of  a  building- 
association  is  regarded  as  valid,  and  not  subject  to  the 
charge  of  a  usurious  one.4  In  New  Hampshire  the  Massa- 
chusetts cases  are  followed,  holding  the  contract  of  loan 
prim <t  facie  a  partnership  dealing  ;  although  the  jury  may 
determine,  from  all  the  facts,  that  the  transaction  is  usuri- 
ous.5 

Sec.  245 — Illinois — Minnesota. 

The  earliest  case  in  Illinois  treated  the  transaction  as  a 
sale  of  the  member's  shares  of  stock  ;  but,  it  was  said,  if  the 
transaction  was  to  be  regarded  in  the  nature  of  a  loan,  then 
the  premium  might  be  regarded  as  liquidated  damages  in 
case  the  borrower  should  fail  to  comply  with  his  contract.6 
In  a  more  recent  case  it  was  held  that  the  transaction  was 
an  advancement  of  money  in  anticipation  of  the  par  value 
of  the  member's  stock,  or  it  might   be  called  a  loan  to  be 

1  Security  Loan  Association  v.  Franklin  Building  Association  v. 
Lake,  69  Ala.  456;  S.  C.  1  Amer.  &  Marsh,  29  N.  J.  L.  225  :  Slate  v. 
Eng.  Corp.  Cas.  418  ;  s.  c.  72  Ala.  Hornbacker,  13  N.  J.  L.  635  ;  Som- 
307.  erset  County  Building,  etc.,  Asso- 

2  Mobile  Building,  etc.,  Associa-  ciation  v.  Canman,  11  N.  J.  Eq. 
tion  v.  Robertson,  65  Ala.  389;  382;  Bowen  v.  Lincoln  Building 
Kelly  v.  Mobile,  etc.,  Association,  and  Loan  Association,  51  N.  J.  Eq. 
(il  Ala.  501.  272;    s.    C.    (Atl.   Rep.)  46    Amer. 

3  Montgomery  Building  and  Loan  &  Eng.  Corp.  Cas.  503  ;  Red  Bank 
Association,  69  Ala.  413 ;  S.  c.  1  Mutual  Building  and  Loan  Asso- 
Amer.  &  Eng.  Corp.  Cas.  403  ;  ciation  v.  Patterson,  27  N.  J.  Eq. 
Southern  Building  &  Loan  Asso-  223  ;  Mechanics' Building  and  Loan 
ciation  v.  Anniston  &  Trust  Co.,  101  Association  v.  Conover,  14  N.  J. 
Ala.  582;  s.  C.  15  So.  Rep.  123.  Eq.  219;  Granite  State  President 

4  Clarksville  Building  and  Loan  Association  v.  Monk  (X.  J.  Ch.), 
Association  v.  Stephen,  26  N.  J.  30  Atl.  Rep.  81 3. 

Eq.  351  ;  Hoboken  Building  Asso-        b  Shannon  v.  Dunn,  43  X.  II.  194. 
ciation  v.  Martin,  13  N.  J.  Eq.  427  ;        «  Holmes  v.  Smyth,  100  111.  413. 


252 


BUILDING   AND   LOAN   ASSOCIATIONS.       Ch.  XII. 


paid  by  stock  at  its  par  value,  with  covenants  to  make  such 
payments  of  interest  and  instalments  of  clues  on  stock,  and 
the  like,  as  eventually  would  bring  such  shares  to  their  par 
value.1  In  Minnesota,  loans  by  a  building  association  to 
its  members  are  upheld  on  the  theory  that  it  is  an  advance 
payment  to  the  member  of  the  par  or  matured  value  of  his 
stock.  "ISTo  payment,"  said  the  court,  "if  the  'loan'  was 
provided  for  or  anticipated."  2 

Sec.  246 — New  York — Georgia. 

In  one  of  the  early  New  York  cases  the  transaction  was 
held  not  usurious,  on  the  ground  that  each  member  held  an 
interest  in  the  general  fund,  and  the  greater  the  premium 
the  shorter  the  period  the  association  Avould  have  to  run, 
and  consequently  the  quicker  the  borrower  would  have 
his  debt  paid.3  In  a  subsequent  case  the  doctrine  of  the 
English  cases  were  denied.4  After  these  decisions  a  statute 
was  enacted  authorizing  the  taking  of  interest  which  would 
have  otherwise  been  deemed  usurious.5     The  doctrine  of  the 


i  Freeman  v.  Ottawa  Building  As- 
sociation, 114  111.  182;  s.  c.  'IS  N. 
i"..  Hep.  611;  Wright  r.  Quincy 
Building,  etc.,  Association,  128  111. 
67  ;  S.  i !.  21  N.  E.  Rep.  1 2  :  25  Amer. 
&  Eng.  Corp.  Cas.  652  ;  Conserva- 
i  ive  Building  and  Loan  Association 
r.  Cady,  55  111.  A  pp.  469.  In  this 
Last  case  it  was  held  that  the  mem- 
ber was  estopped  to  plead  usury. 
Mechanics',  etc.,  Association  v. 
\  ierling,  66  III.  App.  621  ;  Freie  v. 
Fidelity,  etc.,  Union,  66  III.  App. 
L52  ;  Rhodes  '-.  Missouri  S.  &  L. 
( !o.,  i'.::  111.  A]. p.  77. 

2  Fagan  v.  People's  Savin-  and 
I  ....in  A.ssocia1  ion,  55  Minn.  437  ; 
-,?  N.  \Y.  Rep.  1  I'.';  Central 
Building  ami  Loan  As^o.'i:it i » . r i  v. 
Lampson,  60  Minn.  122  ;  B.  <•.<;•.'  N. 
\V.  Rep.  51 l.  Win-re  ii  appeared 
i lint  t he  borrower  from  an  alleged 
corporation  was  required  t<>  buy 
corporate  stock  of  the  Lender  :  thai 


the  note  given  included  the  price 
of  the  stock  in  addition  to  the 
amount  borrowed  ;  that  such  stock 
had  no  market  value,  and  no  divi- 
dends were  paid  thereon,  it  was 
held  that  the  sale  of  stock  was  a 
mere  cover  for  usury.  City  Loan 
Company  v.  Cheney,  01  Minn.  83  ; 
s.  c.  63  N.  W.  Rep.  250.  See  also. 
Maudlin  v.  American  Savings  and 
Loan  Association.  ('»:'.  Minn.  358  : 
S.  0.  05  N.  W.  Rep.  645.  Estoppel 
to  reclaim  payments  made  under 
void  by-law.  Barton  v.  Pioneer  S. 
&  L.  Co.  (Minn.),  71  N.  W.  Rep. 
906. 

::  Citizens'  Mutual  Loan  Associa- 
tion v.  Webster,  25  Barb.  263; 
City  Building  and  Loan  Associa- 
tion r.  Fatty,  1  Abb.  Dec.  347. 

1  Melville/-.  American  Beneficial 
Building  Association,  33  Barb.  103. 

6  Concordia  Savings,  etc..  Asso- 
ciation r.  Read,  !»:!  N.  Y.  474;  s.  c. 


§  246.  LOANS   TO   MEMBERS.  253 

Georgia  Supreme  Court  is  very  near  that  of  New  York  and 
New  Hampshire.  "And  if  there  can  be  any  difference," 
said  the  court,  "  arising  from  the  fact  that  the  sale  is  made 
to  the  company  itself,  it  is  only  in  this,  that  the  seller  him- 
self then  is  and  continues  interested  in  the  purchase,  as  well 
as  in  every  sale  and  purchase  until  the  final  winding  up  of 
the  enterprise.  If  he  sold  it  to  a  stranger,  no  matter  at 
what  discount,  there  could  be  no  question  of  usury  ;  much 
less  can  such  be  the  case  where  he  sells  it  to  an  organization 
of  which  he  is  a  member  an  interested  party."1  In  an 
earlier  case  it  was  said  by  the  court:  "Perhaps  the 
best  argument  in  support  of  this  transaction,  is  the 
risk  and  uncertainty  attending  the  result.  Stock  is  put 
up  at  auction,  the  terms  of  the  sale  are  distinctly  un- 
derstood, and  a  sale  and  purchase  is  made,  taking  into 
view  all  the  contingencies  attendant  on  the  society, 
whether  of  prosperity  or  adversity,  during  the  few  or  many 
years  of  its  existence.  The  stock  may  be  worth  a  premium, 
or  it  may  be  a  dead  loss  at  the  end  of  the  corporation. 
This,  each  must  decide  for  itself.  If  he  conclude  to  take 
half  now  for  it,  that  is,  one  hundred  dollars  for  stock  now 
nominally  worth  two  hundred  dollars,  six,  eight,  or  ten 
years  hence,  who  has  the  right  to  say  he  judges  foolishly  ? 
So,  on  the  part  of  the  association,  they  run  the  hazard  of 
losing  all.  The  debts  of  the  concern  may  absorb  all  their 
funds,  including  [the  borrower's]  bond  and  mortgage,  so 
that  instalments  paid  in,  out  of  their  private  funds,  and 
paid  to  (the  borrower)  for  his  worthless  stock,  in  advance 
*  *  *  is  a  total  loss,  not  only  to  the  body  corporate,  but  to 
each  individual."  2  In  a  subsequent  case  the  court  used  the 
following  language  :  "  The  very  nature  of  such  an  institu- 
tion involves  a  profit  and  loss  account,  and  an  expense  ac- 
count for  management.  An  advanced,  or  borrowing  mem- 
ber, as  well  as  the  rest,  holds  a  relation  to  these  accounts 
which  must  be  adjusted  before  he  can  repudiate  his  express 

4  Amer.  &  Eng.  Corp.   Cas.  175  ;  Building  Association,  46  Ga.  166. 

Payne  v.  Freer,  91  N.  Y.  43,  affirm-  2  Bibb  County  Loan  Association 

ing,  25  Hun,  124.  v.  Richards,  21  Ga.  592. 
1  Parker    v.    Fulton    Loan    and 


254  BUILDING   AND    LOAN   ASSOCIATIONS.       Cll.  XII. 

contract,  on  the  plea  of  deficient  consideration  or  on  that  of 
usury.  Whether  he  gets  full  consideration,  or  whether  he 
pays  usury,  does  not  depend  simply  on  whether  the  amount 
he  refunds  is  more  than  he  has  drawn  out  with  lawful  in- 
terest on  the  latter  sum.  There  may  be  no  excess  after  de- 
ducting from  his  payment  his  due  share  of  the  bonds  and 
expenses.  As  he  takes  his  chances,  in  case  an  earty  winding 
up  should  occur  (in  which  event  his  payments  cease  from  that 
time),  the  rule  of  equity  requires  that  he  should  incur  the 
hazards  fairly  incident  to  the  business  in  the  way  of  losses  and 
expenses,  and  bear  his  due  proportion  of  the  same.  There 
is  no  proper  basis  for  ascertaining  usury  and  arriving  at  the 
amount  of  it  without  all  these  elements  are  brought  in."  1 

Sec.  247 — Virginia — District  of  Columbia. 

In  Virginia  it  is  considered  that  the  effect  of  a  loan  to  a 
borrower  is  to  extinguish  his  membership  in  the  association, 
his  obligation  binding  him  to  continue  certain  payments  dur- 
ing the  association's  existence.  The  association  is  regarded 
as  having  purchased  the  share  ;  and  for  this  reason  the  trans- 
action is  not  regarded  as  usurious.2  The  same  doctrine  has 
been  adopted  by  the  supreme  court  of  the  District  of 
Columbia? 

Sec.  248— Mississippi— Michigan. 

In  J/Av.NvWyy'''  it  is  held  that  the  premium  is  a  bonus  paid 

1  Pattison    v.   Albany    Building  him  in  violation  of  a  by-law  for- 

and  Loan  Association,  63  Ga.  373.  bidding    loans    to    non-members. 

See  also,  Van  Pelt  v.  Home  Build-  Reynolds  v.    Georgia  State,    etc., 

ing  and   Loan   Association,  79  Ga.  Association  (Ga.),  29 S.  E.  Rep.  187. 

439  ;   s.   c.   4  S.   E.   Rep.    501  ;  19  -  Winchester   Building  Associa- 

Amer.  &  Eng.  Corp.  Cas.  66,  and  tion    v.    Gilbert,    23    Gratt,    787 ; 

I  l.i  u  kins    v.   American    Building  White  v.  Mechanics'  Building  As- 

and  Loan  Association,  %  Ga.  206  ;  sociation,  22  Gratt.  233  ;  Cason  v. 

22  S.  B.   Rep.  711  ;  Goodrich  Seldner,  77  Va.  293  ;  Edelyn  v.  Pas- 

v.  Atlanta  National   Building  and  coe,  22  Gratt.  826.    Crabtree  v.  Old 

Loan    Usociation,  96  Ga.  803;  22  Dominion,  etc.,    Ass'n    (Va.),    29 

S.  E.   Rep.  585;  Bosworth  v.  Sum-  S.E.Rep.741:    Bosangv.IronBelt, 

ter,  100  Ga.  60;  8.  0.  28  S.  E.  Rep.  etc.,  Ass'n  (Va.),30S.  E.  Rep.  440. 

i:,(  :l  l';il)sl  v.  Building  Association, 

\  borrower  cannot  insist  thai  he  I  McArthur,  885;  Mulloy  v.  Fifth 

whs  no)   a   member,  and  thai  the  Ward  Building  Association,  2  Mc- 

],,.,,,  for  that  reason  was  made  to  Arthur,  594;  Myers  v.  Schoyer,  20 


§  240.  LOANS   TO   MEMBERS.  255 

by  a  member  for  a  present  advancement  in  cash  of  a  sum 
certain  "  for  the  virtual  transfer  to  the  association  of  his 
share  of  stock,  which  in  the  final  winding  up  of  its  affairs, 
may  realize  the  sums  actually  received  by  the  member,  to- 
gether with  the  premium  bid  or  which  may  not."  The  trans- 
action is  therefore  not  usurious.1  In  Michigan  it  is  held 
that  the  effect  of  the  loan  is  to  liquidate  the  shares,  and  to 
deprive  the  member  of  his  power  over  them,  to  either  sell 
or  transfer  them.2 

Sec.  249 — Nebraska. 

In  Nebraska  it  is  held  that  a  building  association  incor- 
porated under  the  general  laws  for  the  creation  of  incorpo- 
rations, "  for  the  transaction  of  any  lawful  business,"  and 
possessing  the  power  to  "  make  by-laws  not  inconsistent 
with  any  existing  laws,  for  the  management  of  its  affairs," 
cannot,  by  any  device  whatever,  take  interest  beyond  the 
the  maximum  allowed  by  the  general  interest  laws  of  the 
state.  "  Now,  the  scheme  of  a  building  association,  by  sell- 
ing shares  under  reservation  of  a  premium,  included  in  the 
nominal  amount  of  the  debt,  and  contracted  to  be  repaid, 
with  interest,  is  to  be  treated  as  a  mere  loan  of  money,  and 
is,  therefore,  affected  with  the  vice  of  usury."3 

D.  C.  254  ;  s.  C.  20  Wash.  L.  Rep.  even  though  the  by-laws  require  a 

503.  greater  amount.     Sawyer  v.  Men- 

1  Sullivan  v.  Jackson  Building  ominee  Loan  and  Building  Associ- 
Association,  70  Miss.  94  ;  s.  C.  12  ation,  103  Mich.  228  ;  s.  C.  61  N. 
So.  Rep.  590  ;  46  Amer.  &  Eng.  W.  Rep.  521.  But  see  otherwise, 
Corp.  Cas.  494;  Natchez  Building  Myers  v.  Alpena,  etc.,  Ass'n 
and  Loan  Association  v.   Shields,  (Mich).  75  N.  W.  Rep.  944. 

71  Miss.  630  ;  s.  c.  15  So.  Rep.  793 ;        3  Lincoln  Building  and  Savings 

People's  Building  and  Loan  Asso-  Association  v.  Graham.  7  Neb.  173  ; 

ciation  v.  McElroy,  72  Miss.   434;  Lincoln  Building  and  Savings  As- 

s.  c.  17  So.  Rep.  348.  sociation  v.  Benjamin,  7  Neb.  181. 

2  Michigan  Building  and  Saving  See  also,  Randall  v.  National  Build- 
Association  v.  McDevitt.  77  Mich,  ing,  Loan  and  Protection  Union  of 
1  ;  s.  c.  43  N.  W.  Rep.  760;  30  Minneapolis,  42  Neb.  809  :  S.  C.  60 
Amer.  &  Eng.  Corp.  Cas.  665.  If  N.  W.  1019:  Randall  v.  National 
the  secretary  of  the  association  Building,  Loan  and  Protection 
misrepresents  the  amount  neces-  Union  Minneapolis,  43  Neb.  876; 
sary  to  redeem  a  loan  about  to  be  s.  c.  62  N.  W.  Kip.  252  :  charged 
taken  out,  the  association  will  be  by  statute,  see  Livingston  Loan 
bound    by    such    representations,  and  Building  Association  i\  Drum- 


256  BUILDING   AND   LOAN   ASSOCIATIONS.       Cll.  XII. 

Sec.  250 — North  Carolina — South  Carolina. 

In  North  Carolina  a  building  association  can  take  only 
ordinary  interest,  or  rather  at  a  rate  that  does  not  exceed 
ordinary  interest.  "  We  know,"  said  the  court,  "  of  no  de- 
vice or  cover  by  which  these  associations  can  take  from 
those  who  borrow  their  money,  more  than  the  legal  rate  of 
interest,  without  incurring  the  penalties  of  our  usury  laws. 
Calling  the  borrower  '  a  partner,'  or  subsituting  '  redeem- 
ing '  for  lending,  or  '  premium  or  bonus  '  for  the  amount 
which  they  profess  to  have  advanced,  and  yet  withhold,  or 
'  dues '  for  interest  or  any  like  subterfuges,  will  not  avail. 
We  look  at  the  substance."  1  Therefore,  the  courts  of  that 
state  have  adopted  the  method,  in  computing  the  amount 
due  from  a  member,  of  an  ordinary  loan  with  partial  pay- 
ments.2 Perhaps  North  Carolina  inherited  from  Son  tit 
Carolina  the  hostility  manifested  by  the  supreme  court  of 
that  state  at  an  early  day  towards  building  associations.  A 
provision  in  the  charter  of  an  association  in  that  state  pro- 
viding that  "  any  stockholder  taking  an  advance  shall 
allow  to  be  deducted  the  premium  offered  by  him  "  was 
still  controlled  by  the  general  interest  law  providing  "  that 
every  person  lending  or  advancing  money,  or  other  com- 
modity upon  interest,  shall  be  allowed  to  recover  the 
amounts  or  value  actually  lent  or  advanced ;  and  that  the 
principal  sum,  amotmt,  or  value  so  lent  or  advanced  without 
any   interest  shall  be  deemed  or  taken  by  the  court  to  be 

mond,  !'•»  Neb.  200;  s.  c.  68  N.  W.  s.  c.  26  S.  E.  Rep.  781;  Hoskins  v. 

Rep.  375.  Mechanics'  Building  and  Loan  As- 

1  Mills  r.  Salisbury  Building  and  sociation,  84  N.  C.  838;  Heggie  v. 
Loan  Association,  75  N.  C.  292;  Peoples' Building  and  Loan  Asso- 
Smith  v.  Old  Dominion  B.  &  S.  ciation,  107  N.  C.  581  ;  Meroney  v. 
Assn,  ll'.i  N.  <'.  jr,7;  21  S.  E.  Rep.  Atlanta  National  Building  and 
in.  Loan    Association,  116  N.   C.  882  ; 

2  Overby  v.  Fayettesville  Building  s.  C.  21  S.  E.  Rep.  924;  Smith  v. 
and  Loan  Association,  81  N.  < '.  56.  Mechanics'  Building  and  Loan  As- 
See  also,  Manner  v.  (ireensboro  sociation,  73  N.  C.  372;  Rowland 
Building  and  Loan  Association,  78  v.  Old  Dominion  Building  and 
N.  < '.  188;  Latham V.  Washington  Loan  Association,  115  N.  C.  N25  ; 
Building  and  Loan  Association,  77  s.  c.  18  S.  E.  Rep.  965;  affirmed, 
N.  C  115;  Bollowell  v.  Southern  116N.C.877;  S.-C.  22  S.  E.  Rep.  8; 
B.  -V  L.  A  jsociation,  130  N.  C.  886;  modified,  24  S.  E.  Rep.  366. 


§251. 


LOANS    TO   MEMBERS. 


257 


the  true  legal  debt,  or  measure   of  damages,  to  all  intents 
and  purposes  whatever,  to  be  reserved  without  costs." x 

Sec.  251— Kentucky — Texas. 

In  Kentucky  it  is  held  that  the  securing  of  an  advance  by 
a  member  worked  a  release  of  all  his  claims  upon  the  asso- 
ciation, though  remaining  a  member ;  and  as  a  consequence 
the  loan  was  usurious.2 

In  Texas  the  theory  of  a  dealing  with  partnership  funds 
is  rejected,  and  only  the  amount  actually  loaned,  with  inter- 
est, can  be  recovered.3 


1  Columbia  Building  and  Loan 
Association  v.  Bollinger,  12  Rich. 
Eq.  124;  S.  c.  78  Am.  Dec.  463; 
distinguished  in  Thompson  v.  Gil- 
lison,  28  S.  C.  534  ;  6  S.  E.  Rep.  333  ; 

22  Ainer.  &  Eng.  Corp.  Cas.  615. 
A  usury  law  passed  after  the  or- 
ganization of  an  association  is  ap- 
plicable to  its  loans  thereafter 
made.  Mechanics'  and  Farmers' 
Building  and  Loan  Association  v. 
Dorsey,  15  S.  C.  462.  See  generally, 
Sumpter  Building  and  Loan  Asso- 
ciation v.  Winn,  45  S.  C.  481 ;  s.  c. 

23  S.  E.  Rep.  29 ;  Buist  v.  Bryan 
44  S.  C.  121 ;  s.  c.  21 S.  E.  Rep.  537  ; 
Buist  v.  Fitzsiinons  44  S.  C.  130 ; 
s.  c.  21  S.  E.  Rep.  610  ;  Pollock  v. 
Carolina,  etc.,  Association  (S.  C), 
29  S.  E.  Rep.  77. 

But  in  this  state  a  contract  for 
repayment  in  instalments  of  a  sum 
borrowed  from  a  building  associa- 
tion by  a  shareholder  therein  is  not 
usurious  on  its  face,  if  it  stipu- 
lates that  on  final  settlement  the 
amounts  to  be  retained  by  the  as- 
sociation shall  not  exceed  the  sum 
actually  borrowed,  with  interest 
thereon  at  eight  per  cent,  the  legal 
rate.  Turner  v.  Intestate  B.  &  L. 
Association  (S.  C),  25  S.  E.  Rep. 
278. 

So  where  the  defendant  had  sub- 
17 


scribed  for  shares,  on  which  he  was 
obliged,  under  the  charter,  to  pay 
$15  per  month  until  they  matured, 
in  order  to  participate  in  the  prof- 
its ;  and  subsequently  borrowed 
$1500  from  the  association,  giving 
a  bond  as  mortgage  therefor  in 
which  he  agreed  to  pay  $7.50  a 
month  interest  thereon  ;  it  was 
held  that  as  this  was  only  an  agree- 
ment to  pay  interest  at  the  rate  of 
six  per  cent,  per  annum  it  was  not 
usurious,  the  $15  monthly  pay- 
ments on  the  stock  having  no  con- 
nection with  the  loan.  Equitable 
B.  &  L.  Association  v.  Vance  49 
S.  C.  402  ;  s.  c.  27  S.  E.  Rep.  274. 

2  Herbert  v.  Kenton  Building 
and  Savings  Association  of  Coving- 
ton, 11  Bush.  296  ;  Gordon  v.  Win- 
chester Building  &  Accumulating 
Fund  Association,  12  Bush.  110  ; 
Henderson  Building  &  Loan  As- 
sociation v.  Johnson,  88  Ky.  191  ; 
S.  C.  3  L.  R.  A.  289  ;  10  S.  W.  Rep. 
787  ;  Southern  Building  &  Loan 
Association  of  Tennessee  v.  Harris, 
98  Ky.  41  ;  32  S.  W.  Rep.  261  ; 
Mutual  Savings  &  L.  Ass'n  v. 
Owings  (Ky.),  43  S.  W.  Rep.  422  ; 
Pryse  v.  People,  etc.,  Ass'n  (Ky.), 
41  S.  W.  Rep.  574. 

3  Jackson  v.  Cassidy,  68  Tex. 
282  ;  s.  c.  4  S.  W.  Rep.  541 ;  Elpaso 


258 


BUILDING   AND   LOAN    ASSOCIATIONS.       Gil.  XII. 


Sec.  252— Pennsylvania. 

In  the  instance  of  an  unincorporated  association,  it  ap- 
peared that  the  member  had  received  only  $1,418,  but  had 
given  his  obligation  to  the  association  for  $1,800.  He  re- 
fused to  pay  his  fines  and  dues,  and  thereupon  the  associa- 
tion declared  his  bond  forfeited,  and  caused  a  judgment  to 
be  entered  upon  it.  In  passing  upon  the  case,  the  court 
said :  "  We  have  never  had  a  case  like  this  before,  though 
such  cases  are  not  unknown  in  England.  There  such  con- 
tract was  enforced  at  law  and  in  equity,  as  a  security  for  the 
payment  of  the  monthly  contributions  to  the  association. 
In  the  present  case,  the  defendant  has  been  treated  as  hav- 
ing forfeited  his  membership  by  default  in  paying  his  con- 
tributions, and  has  been  required  to  stand  to  his  bond  of 
$1,800  as  a  loan,  after  allowing  his  paid  contributions  and 
his  payment  of  interest  as  a  credit  thereon.     The  bond  has 

tion  v.  Abbott,  85  Tex.  220  ;  S.  C. 
20  S.  W.  Rep.  118 ;  40  Amer.  & 
Eng.  Corp.  Cas.  371.  But  a  note 
given  by  a  stockholder  for  balance 
due,  with  the  maximum  legal  inter- 
est is  usury  where  the  shares 
taken  from  him  are  credited  with 
less  than  their  withdrawal  value 
in  making  up  such  balance.  Bexar 
B.  &  L.  Ass'n  v.  Seebe  (Tex),  40  S. 
W.  Rep.  875. 

A  borrowing  member  cannot  ap- 
ply usurious  interest  paid  upon  his 
loan  in  liquidation  of  stock  dues, 
so  long  as  such  interest  does  not 
exceed  the  amount  of  the  princi- 
pal. Heady  v.  Bexar  Building, 
etc.,  Association  (Tex.  Civ.  App.), 
s.  C.  26  S.  W.  Rep.  468.  See  gener- 
ally, International  Building  and 
Loan  Asssociation  v.  Braden  (Tex. 
Civ.  A  pp.),  32  S.  W.  Rep.  704; 
l.uildin^  and  Loan  Association  of 
Dakota  v.  Logan  (Tex.  ('iv.  \pp>. 
83  S.  W.  Rep.  1088  ;  People's  Build- 
ing, etc.,  Association  r.  Rising 
(Tex.  Civ.  App.),  34  S.  W.  Rep. 
147. 


Building  &  Loan  Association  v. 
Lane,  81  Tex.  369  ;  S.  C.  17  S.  W. 
Rep.  77  ;  Bexar,  etc.,  Association 
r.  Robinson,  78  Tex.  163;  S.  C.  14 
S.  W.  Rep.  227  ;  Abbott  v.  Inter- 
national Building  &  Loan  Associa- 
tion (Tex.),  25  S.  W.  Rep.  620  ;  In- 
ternational Building  &  Loan  A  ss<  >- 
ciation  v.  Biering,  86  Tex.  476; 
S.  c.  25  S.  W.  Rep.  622  ;  Interna- 
tional Building  &  Loan  Associat  ion 
r.  Mayers  (Tex.  Civ.  A.pp.),  25  S. 
W.  Rep.  1132;  Walters  v.  Texas 
Building  &  Loan  Association  (Tex. 
Civ.  App.),  --".l  S.  W.  Rep.  51  ; 
Eeady  v.  Bexar  Building,  etc.,  As- 
sociation (Tex.  Civ.  App.).  s.  c.  26 
S.  W.  Rep.  168.  Pioneer, etc.,  Ass'n 
r.  Everhart(Tex.),44S.  W.  Rep.  824. 
In  considering  t  he  quesl '""  "' 
usury,  payments  made  by  I  he  bor- 
rower On  account  Of  Ids  Stock  are 
tlOl     to    be    considered,    since    such 

paymenl  are  uol  made  for  I  be 
u  e  of  t  he  money  borrowed,  but  in 
order  to  acquire  an  interest  in  the 
propertj  of  the  asocial  ion.  Inter 
jia'  ional  Building  &  Loan  Associa- 


§253. 


LOANS   TO   MEMBERS. 


259 


not  been  used  for  its  legitimate  purpose  of  enforcing  the 
contributions  of  the  defendant  as  a  member,  because  the 
association  has  abandoned  that  purpose,  and  elected  its 
alternative,  by  depriving  the  defendant  of  his  membership, 
and  of  all  the  profits  of  their  seven  or  eight  years'  business. 
We  are  therefore  prohibited  from  considering  this  as  a  case 
of  composition  by  anticipation  of  the  defendant's  future 
share  of  the  common  property,  and  must  treat  it  as  a  mere 
loan;  for  such  is  its  form,  so  the  parties  have  treated  it, and 
as  such  alone,  since  the  forfeiture  of  the  defendant's  mem- 
bership, can  it  be  enforced."1  The  same  views  were  enter- 
tained where  the  association  was  incorporated.2  But  an 
early  case  treated  the  transaction  as  a  dealing  with  partner- 
ship funds,  and  consequently  not  usurious.3  In  1859,  a  stat- 
ute was  enacted  regulating  the  whole  matter  of  charges ; 
and  subsequent  statutes  have  made  like  provisions. 

Sec.  253— Indiana. 

In  Indiana,  the  bonus,  or  premium  is  regarded  merely  as 

i  Bechtold  v.  Brehm,  26  Pa.  St.  237 ;  s.  c.  14  Leg.  Int.  49);  Saving 
269.  Fund  v.  Murray,  14  Leg.  Int.  133  ; 

2  Reiser  v.  William  Tell  Saving  Building  Association  v.  Eowe,  15 
Fund  Association,  39  Pa.  St.  137  ;  Leg.  Int.  45  ;  Columbia  Building 
Denny  v.  West  Philadelphia  Sav-  Association  v.  Dobleims,  15  Leg. 
ing  &  Building  Association,  39  Pa.  Int.  45  ;  Building  Association  v. 
St.  154 ;  Premium  Fund  Associa-  Timmins,  3  Phila.  209  ;  s.  c.  15 
tion's  Appeal,  39  Pa.  St.  156  ;  Kelly  Leg.  Int.  318  ;  Association  v.  Reid, 
v.  Perseverance  Building  Associa-    3  Phila.  345  ;  s.  c.  16  Leg.  Int.  157  ; 

Sunbury  Savings  Fund  &  Building 
Association  v.  Morton,  1  Luz.  Leg. 
Reg.  147  ;  Flounders  v.  Hawley,  1 
W.  N.  Cas.  574  ;  s.  C.  78  Pa.  St.  45; 
Philanthropic  Building  Associa- 
tion v.  McKnight,  35  Pa.  St,  470 ; 
Jarrett  v.  Cope,  68  Pa.  St.  67; 
Rhoads  v.  Hoernerstown  Building 
Association,  82  Pa.  St.  180  ;  Link 
v.  Germantown  Building  Associa- 
tion, 89  Pa.  St.  15  ;  Skinner's  Es- 
tate, 4  Phila,  189  ;  s.  C.  17  Leg.  Int. 
381. 

3  Johnson  v.  Potomac  Building 
Association,  2  Quart.  L.  Jr.  347  ; 
s.  c.  14  Leg.  Int.  393. 


tion,  39  Pa.  St.  148  ;  Blackburne's 
Appeal,  39  Pa.  St.  160  ;  Hansbury 
v.  Pfeiffer,  35  Leg.  Int.  395  ;  Heck- 
man  v.  Building  Association,  11 
Lan.  Bar.  110  ;  Link  v.  Building 
Association,  89  Pa.  St.  15  ;  Row- 
land's Estate,  1  Del.  (Pa.),  98; 
Houser  v.  Hermann  Building  As- 
sociation, 41  Pa.  St.  478;  Marble 
Building  Association  v.  Hocker,  3 
Phila.  494 ;  s.  C.  16  Leg.  Int.  356  ; 
Kupfert  v.  Gutenberg  Building  As- 
sociation, 30  Pa.  St.  465  ;  Hughes' 
Appeal,  30  Pa.  St.  471  ;  (overruling 
Kelly  v.  Accommodation  Saving 
Fund  &  Loan  Association,  2  Phila. 


260  BUILDING  AND   LOAN   ASSOCIATIONS.        Ch.  XII. 

a  contract  price  agreed  upon  by  the  parties  for  the  "  prefer- 
ence,'' which  a  building  association  is  expressly  authorized 
to  sell,  and  a  member  authorized  to  buy,  and  it  is  not  inter- 
est on  money.  "  The  question  propounded  to  its  corpora- 
tors, or  the  members  of  the  association,"  said  the  supreme 
court  of  that  state,  "  was  practically  this,  '  How  much  will 
yon  give  for  the  privilege  of  taking  this  loan  ? '  The  mem- 
bers of  the  association  were  under  no  compulsion,  moral, 
legal,  or  physical,  in  regard  to  any  such  loan ;  they  could 
compete  or  not  for  the  privilege  of  taking  the  loan,  at  their 
own  free  will  and  pleasure."  J 

Sec.  254  —  Connecticut  —  Iowa— Missouri— Ohio— West 
Virginia. 

In  the  State  of  Connecticut,  the  question  of  usurious 
interest  does  not  seem  to  have  been  directly  adjudicated, 
although  there  is  a  decided  leaning  to  regard  them  as  usuri- 
ous.2 In  Iowa,  the  ordinary  building  association  loan  is 
not  regarded  as  usurious,  although  interest  upon  the  pre- 
miums seems  to  have  been  so  regarded.3  In  Missouri,  it 
Would  seem  that  a  member  is  not  in  a  position  to  plead 
usury,4  for  he  shares  in  the  profits  of  the  adventure.5  In 
Oh  io  it  is  held  that  the  law  against  usury  does  not  apply  to 
premiums  bid  on  fair  competition,  no  imposition  being 
practiced.6  Nor  can  the  fines,  dues,  and  premiums  be  used 
to  show  that  the  interest  charged  is  illegal,  where  a  statute 

1  McLaughlin  v.  Citizens'  Build-  sociation  v.  Blackburn,  48  la.  385  ; 
ing  Loan  and  Savings  Association,  Burlington  Mutual  Loan  Associa- 
62  Ind.  264.  This  reasoning  seems  tion  v.  Heider,  55  la.  424  ;  Phillips 
to  apply  to  a  mere  loan  and  will  v.  Columbus  City,  etc.,  Associa- 
justify  the  taking  of  interest  at  tion.  5:;  [a.  719  ;  Sullivan  Savings 
any  rate.  Association  v.  Copeland,  71  la.  67. 

2  Mechanics'  and  Workingmen's  4  Hammerslough  v.  Kansas  City 
Mutual  Savings  Bank  and  Building  Building,  Loan,  etc.,  Association, 
Associal  ion  of  New  Haven  v.  Wil-  7!)  Mo.  80. 

cox,  \i\  Conn.  117;  Welch r.Wods-  6  Brown  v.  Archer,   1  Mo.  App. 

v., Ml,,  80  Conn.   149;  West   Win-  Rep.  405  ;  s.  c  62  Mo.  App.  277. 

Bted,  etc.,  Association  v.  Ford,  27  6  Home  Building  Association  v. 

Conn.  282;  Mechanics',  etc.,  Aeso-  Boning,  7  Wkly.  L.  Bull.  174;  s.  c. 

ciation  v.  Allen,  28  Conn.  97.  10  Amer.  Rec.  626. 
s  Havvkiyc  Benefit  and  Loan  As- 


255. 


LOANS    TO    MK.MIJKUS. 


261 


authorizes  the  imposition  of  fines,  the  assessment  of  dues  or 
the  taking  of  interest.1  In  West  Virginia,  such  loans  are 
upheld.2 

Sec.  255 — Canada — New  Brunswick. 

The  courts  in  Canada  seem  to  regard  a  building  associa- 
tion only  authorized  to  take  interest  above  the  legal  rates 
except  where  a  statute  authorizes  it.  "  But  we  cannot  but 
see  very  plainly  that  such  societies  are  in  themselves  contri- 
vances to  evade  by  statute  the  usury  laws,"  said  the  court.3 
In  New  Brunswick  the  rate  of  interest  taken  is  valid,  even 
if  above  the  rate  allowed  by  the  general  interest  laws.4 


1  Bates  v.  People's  Saving  and 
Loan  Association,  42  Ohio  St.  655  ; 
Lucas  v.  Greenville  Building  and 
Savings  Association,  22  Ohio  St. 
339  ;  Cincinnati  German  Building 
Association  v.  Flach,  1  Cin.  S.  C. 
Rep.  468  ;  Seibel  v.  Building  Asso- 
ciation, 43  Ohio  St.  371  ;  s.  C.  1 
West  Rep.  340 ;  10  Amer.  &  Eng. 
Corp.  Cas.  460  ;  reversing,  13  Wkly 
L.  Bull.  265.  See  Allemania  Loan 
and  Building  Association  v.  Muel- 
ler, 8  Wkly.  L.  Bull.  97.  An  agree- 
ment that  a  retiring  member  may 
take  out  the  money  he  has  paid 
in,  and  interest  thereon  at  a  cer- 
tain rate  over  the  legal  rate  is  not 
open  to  the  objection  of  usury. 
Such  addition  is  not  interest  on 
money  loaned,  but  is  an  adjudged 
profit  on  the  money  put  in.  Jung- 
kuntz  v.  West  Liberty  Building 
Association,  6  Wkly.  L.  Bull.  428; 
People's  Savings,  etc.,  Ass'n  v. 
Roberts,  5  Ohio  N.  P.  86.  Ad- 
ding the  premium  to  the  amount 
offered  as  a  loan  is,  however,  a 
usurious  transaction.  Bates  v. 
People's,  etc.,  Association,  42  Ohio 
St.  655. 

2  Pfeister  v.  Wheeling  Building 


Association,  19  W.  Va.  676  ;  Haigh 
v.  United  States  Building,  etc., 
Association,  19  W.  Va.  792;  Par- 
ker v.  United  States  Building,  etc., 
Association,  19  W.  Va.  744. 

3  Canada  Permanent  Building 
and  Saving  Society  v.  Rowell,  19 
U.  C.  Q.  B.  124  ;  Canada  Perma- 
nent Building  and  Saving  Society 
v.  Harris,  16  U.  C.  C.  P.  54 ;  Free- 
hold Permanent  Building  and  Sav- 
ing Society  v.  Choate,  18  Grant 
Ch.  412.  See  Hughes  v.  La  Com- 
pagnie  des  Villas,  5  Montreal  Sup. 
Ct.  129. 

Where  a  mortgage  given  by  a 
borrowing  member  recited  that  he 
had  become  the  purchaser  of  seven 
shares  of  £100  each,  and  the  mort- 
gage was  conditioned  for  the  pay- 
ment of  the  monthly  subscriptions 
upon  such  shares,  and  of  interest 
upon  the  said  sum  of  £700,  by 
equal  monthly  pajnnents  of  £3, 
10s.  each,  and  contained  a  provis- 
ion for  the  sale  of  the  property  in 
case  of  default,  and  for  the  society 
retaining  out  of  the  proceeds  the 
remainder  of  the  principal  sum  of 
£700  then  remaining  unpaid,  and 
all  interest,  fines,  and  other  sums 


4  Almon  v.  Fairbanks.  1  R.  &  C.  407. 


CHAPTER  XIII. 


LOANS   TO   MEMBERS,    CONTINUED — INCIDENTS. 

Sec.  256.  Presumption  as  to  Usurious  Contract. 

257.  Effect  of  Usurious  Contract. 

258.  Who  may  Defend  against  a  Usurious  Claim. 

259.  Borrower  Recovering  Back  Usurious  Interest  Paid  by  Him. 

260.  Charges  Incident  to  a  Loan  not  Usurious. 

261.  Right  to  add  Amount  of  Interest. 

262.  When  Interest  Ceases  to  Run. 

263.  Amount  Due  on  a  Loan. 

264.  Amount  Due — Ohio  Rule. 

265.  Amount  Due — Canadian  Rule. 

266.  Amount  Due — A  Georgia  Case. 

267.  Amount  Due — English  Rule. 

268.  Interest  during  Pendency  of  Suit. 

269.  Kind  of  Security. 

270.  Straight  Loans. 

271.  Loan  on  Member's  and  Outsider's  Security. 

272.  Object  of  Loan. 

27o.  Loans  to  Non-Members. 

274.  Taking  Several  Securities. 

275.  Purchasing  Notes  of  Persons  not  Members. 

276.  Subscribing  Articles  of  Association. 

277.  Loan  to  One  in  Arrears. 
27s.  Varying  Contract  of  Loan. 

270.  Oppressive  Contract,  Borrower  not  Released  From. 

280.  Lex  Loci — Effect  on  Foreign  Contracts. 

281.  Validity  of  Statutes  Empowering   Building  Associations  to 

take  vi  1  ia t  would  Otherwise  be  Usurious  Interest. 

rim-  <.r  payable  to  the  society,  giv-  a   month,  or  lO.s  per  share,  for  in- 

ing  credit   for  subscriptions  there-  teresl    for   the  whole  period,  but 

tofore  paid,  and  interest   thereon  only  at  that  rate  or  so  much  of  the 

.it  six   per  cent,  for  <  ;t<li  time  of  £700  as   from   time   to  time  was 

such  respective  payments,  and  for  <lne,  after  giving   credit  for  the 

payment  >>r  the  surplus  to  the  mort-  monthly  subscription  paid.    (1866) 

g:igc  ;   it  w;is  held  that  the  mort-  Wilson  r.  U.  C.  B.  S.,  12  Grant 

gagor  w;is  not    liable  to  pay  d,  lO.s-  Cli.  (Ca.)  206. 

262 


§257. 


LOANS   TO    MEMBERS — INCIDENTS. 


263 


Sec.  256— Presumption  as  to  Usurious  Contract. 

It  is  altogether  possible  that  a  building  association  may 
enter  into  a  contract  for  the  payment  of  usurious  interest. 
Such  would  bean  instance  where  it  does  not  keep  within  the 
letter  and  spirit  of  the  statute  or  within  its  own  by-laws. 
But  there  is  no  presumption  that  a  loan  by  a  building  asso- 
ciation is  usurious;  on  the  contrary  it  is  presumed  to  be 
valid,  and  he  who  claims  that  it  is  usurious  must  prove  it.1 

Sec.  257 — Effect  of  Usurious  Contract, 

If  the  original  contract  for  a  loan  is  usurious  and  a  new 
contract  has  been  entered  into  to  the  effect  that  onlv  the 
legal  rate  of  interest  shall  be  taken,  the  original  contract 
from  thence  on  is  freed  from  the  taint  of  usury  and  may  be 
enforced.2 

So  if  the  by-laws  of  the  association  provide  that  when  it 
is  wound  up  only  the  legal  rate  of  interest  on  the  amount 
advanced  shall  be  exacted,  it  has  been  held  that  the  contract 
for  a  loan  cannot  be  declared  usurious,  although  it  may 
appear  that  more  than  the  legal  rate  of  interest  has  been 


1  Selden  v.  Reliable  Saving  and 
Building  Association,  80  Pa.  St. 
336 ;  s.  c.  2  W.  N.  Cas.  481  ;  John- 
ston v.  Elizabeth  Building  and 
Loan  Association,  104  Pa.  St.  394. 
In  the  first  case  cited  in  this  note 
it  was  held  that  merely  averring 
that  only  $1800  was  received  on  a 
three  thousand  dollar  mortgage 
did  not  show  there  was  usury  ;  for 
it  would  be  presumed  that  the  dif- 
ference was  for  the  premium. 

In  a  Canadian  case  it  was  said  : 
"The  only  way  in  which  such  a 
transaction  could  be  impeached 
would  be,  by  showing  that  the 
defendant  was  induced  to  become 
a  member,  and  did  in  fact  become 
a  member,  at  the  request  of  the 
plaintiff,  for  the  mere  purpose  of 
borrowing  money  at  an  excessive 
and  usurious  rate  of  interest,  and 
that,   therefore,  it   was  corruptly 


agreed  between  them  that  he 
should  become  a  member,"  etc., 
Canada  Permanent  Building  and 
Saving  Society  v.  Harris,  16  U.  C. 
C.  P.  54;  doubting  Canada  Per- 
manent Building  and  Saving  Soci- 
ety v.  Rowell,  19  U.  C.  Q.  B.  134. 
But  see  contrary  International 
Building  and  Loan  Association  v. 
Biering  (Tex.  Civ.  App.),  23  S.  W. 
Rep.  621. 

A  settlement  made  with  the  as- 
sociation, on  full  notice  of  what 
lie  is  charged  with,  is  binding  on  a 
member.  Building  &  Loan,  Asso. 
v.  Leonard.  74  Miss..  810;  s.  c.  21 
So.  Rep.  .13  ;  even  though  he  has 
no  suspicion  the  loan  is  usurious. 
Star  Savings  &  L.  Ass'n  v.  Woods 
(Tenn.).  42  S.  W.  Rep.  872. 

2  Phillips  v.  Columbia  City,  etc., 
Association,  53  la.  719  ;  s.  C  6  N. 
W.  Rep.  121. 


264  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  XIII. 

reserved.1  A  borrower  cannot  complain  of  usury  if  he  has 
not  received  the  full  face  of  his  loan,  although  paying  inter- 
est upon  it,  when  the  amount  he  did  not  receive  was  always 
ready  for  him  and  his  payments  went  into  the  common  fund 
in  which  he  was  entitled  to  share  notably  upon  dissolution.2 
But  where  the  original  contract  was  usurious  and  the  parties 
entered  into  a  subsequent  written  contract  to  the  effect  that 
in  consideration  of  one  dollar  and  the  repayment  of  the  usuri- 
ous interest  and  the  payment  of  lawful  interest  after  the 
date  of  such  subsequent  contract,  the  original  contract  should 
be  valid  and  binding,  it  was  held  that  the  original  transac- 
tion was  not  purged  of  usury,  notwithstanding  the  interven- 
tion of  the  rights  of  third  parties.3 

Sec.  258 — Who  May  Defend  against  a  Usurious  Claim. 

The  defence  of  usury  is  a  personal  one  and  cannot  be 
urged  by  strangers.  But  it  is  not  confined  to  the  principal 
debtor ;  for  his  surety  or  guarantor  may  wage  such  a  defence 
as  successfully  as  he.4  The  vendee  of  property,  however, 
which  is  subject  to  a  mortgage  given  to  secure  a  usurious 
loan  cannot  urge  the  defence  of  usury.5  But  the  language 
of  the  statute  on  usury  may  be  so  broad  as  to  allow  the 
defence  to  be  made  by  the  vendee  of  the  land,  even  thougb 
he  be  a  vendee  by  virtue  of  a  sheriff's  sale.6  But  if  the  ven- 
dee purchases  the  land,  subject  to  the  mortgage,  with  an 
express  stipulation  to  that  effect,  then  he  has  a  right  to 
defend  against  the  enforcement  of  the  usurious  debt  thus 
secured;  for  the  reason  that  the  amount  actually  duo  on 

1  Thompson  v.  Gillison,  28  S.  C.  and  Savings  Association,  18  Ind. 
534;  s.  C.  6S.  E.  Rep.  333.  237. 

2  Hammerslough  v.  Kansas  City  6  Sullivan  Savings  Institute  v. 
Building,  etc.,  Association,  71)  Mo.     Copeland,  71  la.  (17. 

80.  6  Lloyd    v.    Scott,   4    Pet.    205 : 

8E1  Paso   Building  and  Loan  As-     same;  case  or  second  appeal,  Scott 

iatioD    v.    Lane,   sl    Tex.   369;    v.   Lloyd,!)  Pet.  418;  reversing,  4 

li  S.  W.  Rep.  77.  ('ranch.  C.   C.  206;  Link   v.  Ger- 

See  to  the  contrary,  Phillips  v.    mantown   Association,  89  Pa.  St. 

Columbus  City,  etc.,  Association,    15;  Building  Association  v.  O'Con- 

,;  [a.  719;  B.  C.  6  N.  W.  Rep.  121.      nor.  3  Phila.  153;  Kupfert  v.  Gut- 

'  Betteley  v.  Reed,  4  <t>.  B.  511  ;    tenberg   Building   Association,  30 

,  C.  8  G.  &    i>.  561  :  Stein  v.  In-    Pa.  St.  4G5. 

dianapolis    Building   Loan,    Fund 


§  259.  LOANS   TO   MEMBERS — INCIDENTS.  265 

the  debt  enters  into  and  forms  a  part  of  the  consideration 
for  the  sale,  and  the  purchaser  is  just  as  much  interested  in 
securing  its  reduction  to  the  amount  lawfully  due  as  was 
the  vendor  before  the  sale.1 

Sec.  259— Borrower  Recovering-  Back  Usurious  Inter- 
est Paid  by  Him. 

The  right  of  a  borrower  from  a  building  association  to 
recover  from  it  usurious  interest  which  he  has  paid  it  does 
not  stand  upon  a  different  footing  from  the  right  of  one  in- 
dividual to  recover  from  another  usurious  interest  he  has 
paid  him  for  or  on  a  loan.  Where  the  statute  against 
usury  regarded  the  lender  alone  as  the  wrongdoer  and 
also  regard  the  borrower  as  his  victim,  the  latter  may 
recover  whatever  usurious  interest  he  has  paid  the  former.2 
In  Maryland,  however,  if  there  has  been  a  bona  fide  settle- 
ment and  not  a  sham  one3  there  can  be  no  recovery  of  any 
usurious  interest  paid  either  before  or  at  the  time  of  the  set- 
tlement.4 A  somewhat  similar  rule  prevails  in  Georgia  ;  for 
there  it  is  held  that  if  the  matter  of  usurious  interest  formed 
a  distinct  part  of  the  controversy  when  the  settlement  was 
made,  and  the  matter  be  settled,  there  can  be  no  recovery. 
The  reason  for  this  decision  is  that  there  was  an  accord  and 
satisfaction.5  Where  an  account  was  furnished  a  borrower 
by  a  building  association,  and  in  it  were  distinct  claims  for 
usurious  interest,  and  upon  the  basis  of  that  account  he  set- 
tled and  gave  his  note  in  settlement,  it  was  held  that  he  could 
not  set  up  the  amount  of  usurious  interest  as  a  defence  in 
part  when  sued  upon  under  the  claim  or  ground  that  the  set- 

1  Link  v.  Germantown  Building  was  said  that  it  was  recoverable 
Association,  89  Pa.  St.  15.  without  the  aid  of  a  statute. 

2  Philanthropic  Building  Asso-  3  See  two  Maryland  cases  in  pre- 
ciation  v.  McKnight,  35  Pa.  St.  470  ;  ceding  note. 

Border  State,  etc.,  Association  v.  4  Await  v.  Eutaw  Building  Asso- 

Hilleary,  68  Md.  52 ;  Border  State,  ciation,  34  Md.  435  ;  Second  Ger- 

etc,  Association  v.  Hayes,  61  Md.  man  American  Building  Associa- 

597 ;  Parker  v.   Fulton   Loan  and  tion  of  Baltimore  v.  Newman,  50 

Building  Association,  42  Ga.  451.  Md.  62. 

See  Bexar  Building  and  Loan  As-  5  Parker    v.    Fulton    Loan    and 

sociation  v.  Robinson,  78  Tex.  163  ;  Building  Association,  46  Ga.  166. 
S.  c.  14  S.  W.   Rep.  227,  where  it 


266  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  XIII. 

tlement  was  procured  by  fraud.1  So  where  a  borrower 
settled  with  an  association,  receiving  credit  for  a  show  of 
the  profits  and  a  rebate  of  a  part  of  the  premium  paid  by 
him,  it  was  held  that  he  could  not  maintain  an  action 
against  the  society  for  usury.2 

Sec.  260 — Charges  Incident  to  a  Loan  not  Usurious. 

A  deduction  from  a  loan  of  the  amount  usually  charged 
for  an  abstract  of  the  title  of  the  land  to  be  mortgaged,  the 
cost  of  recording  the  mortgage,  the  fee  of  an  attorney  for 
examining:  the  abstract  of  title,  and  the  execution  of  the 
necessary  papers,  does  not  constitute  a  charge  of  usury  nor 
render  the  transaction  usurious.3  Commission,  however,  paid 
the  secretary  of  the  association  for  securing  the  loan  upon  a 
contract  made  with  the  borrower  in  the  name  of  the  asso- 
ciation will  be  deemed  usurious,  if  there  be  no  evidence  that 
the  commission  was  not  paid  to  and  received  by  the  associa- 
tion.4 

1  Pattison    v.    Albany    Building    Pollocks.  Carolina,  etc.,  Ass'n.  2."> ; 
ami  Loan  Association,  63  Ga.  373.     s.  c.  Rep.  977. 

The  borrower  was  guilty  of  laches  The  general  statute  of  limita- 
in  not  claiming  credit  for  the  usuri-  tions,  providing  within  what  time 
ous  interest  when  first  presented  to  suit  shall  be  brought  to  recover 
him.  It  would  be  otherwise  if  he  back  usurious  interest  applies  to 
wire  not  guilty  of  laches.  Parker  loans  of  building  associations. 
v.  Fulton  Loan  and  Building  Asso-  Maule  v.  Building  Association,  5 
ciation,  46  Ga.  166.  Phila.  421. 

2  Natchez  Building  and  Loan  As-        3  Hoboken  Building  Association 
sociation   v.  Shields,  71    Miss.  30;    v.  Martin,  13  N.  J.  Eq.  428. 

S.  C.  15  So.  Rep.  793.  SeetheNorth  *  Dime  Savings  Institution  v. 
Carolina  decisions,  where  no  re-  Mulford,  31  N.  J.  Eq.  99.  It'  the 
covery  of  usurious  interest  is  al-  directors  of  (lie  corporation  knew 
low  oil.  for  the  reason  thai  both  nothing  about  the  commission,  and 
partiesare  in  paridelicto.  Mills  r.  the  secretary  himself  retained  the 
Salisbury  Building  and  Loan  Asso-  amount,  the  loan  is  not  usuri- 
ciation,  75  N.  C.  292;  Latham  v.  ous.  Muir  v.  Newark  Savings  In- 
Washington  Building  and  Loan  stitution,  16  N.  J.  Eq.  537.  An 
iciation,  7?  X.  C.  145;  Dicker-  Act,  in  its  tirst  section,  restricted 
son  v.  Raleigh  Co-operative  Land  the  amount  of  its  loan  to  6  per 
and  Building  Association,  89  N.  C.  cent,  interest.  A  subsequent  sec- 
37,  a  similar  rule  prevails  in  tion  authorized  the  association  to 
We  t  Virginia,  Haigh  v.  U.  S.  charge  the  borrower  the  cost  of 
Building,  ••(<■..  Association,  L9  W.  making  the  loan,  expenses,  inter- 
V;,.  ;!i.\  est,    premiums,   fines.      A    subse- 

I'or    South    Carolina   rule,    see    quent   Act    prohibited    any  one, 


8  261. 


LOANS    TO   MEMBERS — INCIDENTS. 


267 


Sec.  261— Right  to  and  Amount  of  Interest. 

Interest  is  incident  to  every  loan,  and  it  is  not  ultra  vires 
for  a  building  society  to  demand  or  reserve  it  although  not 
especially  authorized  to  do  so.1  The  amount  reserved, 
however,  must  not  exceed  the  legal  rate  allowed  on  other 
loans.2  And  it  is  altogether  possible  to  so  combine  the 
interest  and  expense  of  the  loan  as  to  render  the  interest 
usurious  or  illegal.3  Nor  can  it  be  claimed  that  an  unvary- 
ing amount  of  interest  for  the  period  of  time  the  loan  is  to 
continue  is  usurious,  on  the  ground  that  the  payments  on 
the  stock  is  constantly  reducing  the  amount  the  borrower 
will  ultimately  have  to  pay;  for  a  payment  of  dues  on  the 
stock  has  nothing  to  do  with  the  payment  of  the  interest.4 


without  exception,  to  exact  more 
than  six  per  cent,  interest  for  the 
loan  of  money.  This  latter  act 
was  held  to  repeal  the  right  given  by 
the  former  statute  to  demand  more 
than  six  percent,  interest.  Merony 
v.  Atlanta  National  Building  and 
Loan  Association,  116  N.  C.  882; 
s.  c.  21  S.  C.  Rep.  924.  Where  a 
director  charged  $220  for  procur- 
ing a  loan  of  $600,  and  the  associa- 
tion knew  of  his  exactions,  the 
transaction  was  held  usurious. 
Brown  v.  Archer,  62  JIo!  App.  277  ; 
s.  C.  1  Mo.  App.  Rep.  405. 

1  City  Building  and  Loan  Com- 
pany v.  Fatty,  1  Abb.  Dec.  :'>47  ; 
Massey  v.  Citizens'  Building,  etc., 
Association,  22  Ken.  024. 

2  Bates  v.  People's,  etc.,  Associa- 
tion, 42  Ohio  St.  665;  Parker  v. 
United  States  Building,  etc.,  Asso- 
ciation, 19  W.  Va.  744 ;  Geiger  v. 
Eight  German  Building  Associa- 
tion. 58  Md.  569  ;  Border  State  Per- 
petual Building  Association  v.  Mc- 
Carthy, 57  Md.  555. 

3  Waverly,  etc.,  Association  v. 
Buch,  64  Md.  338  ;  s.  c.  1  Cent.  Rep. 
484 ;  14  Amer.  &  Eng.  Corp.  Cas. 
649. 


4  Citizens'  Mutual  Loan  and  Ac- 
cumulating Fund  Association  v. 
Webster,  25  Barb.  263;  Red  Bank 
Association  v.  Patterson,  27  N.  J. 
Eq.  223;  City  Building  and  Loan 
Company  v.  Fatty.  1  Abb.  Dec.  347. 
See  Seibel  v.  Victoria  Building  As- 
sociation. 43  Ohio  St.  371  ;  s.  c.  1 
West  340;  10  Vmer.  &  Eng.  Corp. 
Cas.  463  :  13  Wkly.  L.  Bull,  242,  265. 

In  Texas  the  legal  limit  of  inter- 
est is  12  per  cent.  In  that  state  a 
member  of  a  building  association, 
in  consideration  of  a  loan  of  $300, 
promised  to  pay  the  association 
$600  on  the  maturity  of  a  certain 
series  of  stock,  and  also $3  monthly 
on  1  lis  stock  and  $3  interest  on  the 
loan.  It-  was  held  that  the  con- 
tract was  usurious;  for  the  only 
rate. of  interest  legally  chargeable 
was  12  per  cent.  International 
Building  and  Loan  Association  v. 
Mayers  (Tex.  Cip.  A.pp.),  25  S. 
W.  Rep.  1132.  In  that  state. 
where  under  the  provisions  of  a 
note  to  a  building  association,  the 
amount  required  to  pay  a  loan  at 
any  time, — it  being  payable  on  or 
before  a  certain  time, — will,  with 
the  interest  already  paid,  amount 


268 


BUILDING    AND   LOAN    ASSOCIATIONS.    Ch.  XIII. 


Sec.  262 — When  Interest  Ceases  to  Run. 

The  terms  of  the  obligation  may  provide  for  the  cessation 
of  interest  at  a  certain  date,  or  at  a  certain  stage  of  the  loan, 
or  when  a  certain  condition  of  the  society  comes  to  pass. 
In  such  an  event  the  interest  will  cease  at  the  time  the  con- 
tract provides  for  its  cessation.1  It,  of  course,  will  cease 
when  the  society  or  t.ie  series  to  which  the  loan  belongs 
covers  the  full  period  for  which  it  was  organized,  or  when 
the  stock  upon  which  the  loan  was  made  has  reached  in  value 
the  amount  of  the  loan.2 


Sec.  263 — Amount  due  on  a  Loan. 

It  is  sometimes  difficult  to  determine  the  amount  due  on  a 
loan,  especially  if  paid  off  before  due.  If  a  statute  or  even 
a  by-law  fixes  the  amount  due,  or  provides  a  rule  for  the 
ascertaining  of  that  amount,  then  the  amount  to  be  paid  or 
recovered  must  be  ascertained  in  the  manner  or  way  there 
prescribed.3  But  if  there  be  no  such  statute  or  by-law  then  the 
courts  must  adopt  some  rule,  and  here  there  has  been  a  wide 


to  more  than  the  loan  and  12  per 
.  per  annum  for  the  use  of  it, 
the  note  is  usurious;  and  the  in- 
paid  is  to  be  applied  in  sat- 
isfaction of  the  principal,  though 
the  amount  required   to  be   paid 
from  year  to  year,  up  to  1  he  I  ime 
i  be  note  is  to  be  paid,  is  less  than 
12  per.   cent,   per  annum.     Inter- 
national Building  and  Loan  Asso- 
ciation v.  Biering,  ^\  Tex.  476;  s. 
C.  25  S.  W.   Rep.  622.     Bu1   if  the 
time  of  payment  is  uncerta  in,  and 
lifference  in  the  interest  paid 
and  I  be   lavs  fu]  rate  may,  at   t  lie 
t  ime  of  t  be  mat  urity  of  i  be  loan 
ed  i  be  bonus,  the  I  rue  acl  ion 
i-     not     usurious.       Internationa] 
Building  and   Loan  Associal  ion  v. 
Biering  (TeJ    Civ.   Ipp.),  23  S.  W. 
Rep,  621  :    \  bbol  I   v.  Internal  tonal 
Building  and  Loan  Association,  '.':! 
s.  \v.   Rep.  629  :  86  Tex.   Wl  ;    16 
V.mer.  <V  Eng.  Corp.  Cas.  508;  Lee 


v.  Ryan  (Tex.  Civ.  App.),  31  S.  W. 
Rep.  1098. 

1  Lime  City  Building,  Saving 
and  Loan  Association  v.  Wagner, 
122  Ind.  78  ;  S.  C  23  N.  E.  Rep.  689  ; 
17  Amer.  St.  Rep.  342. 

2  In  the  case  cited  in  the  pre- 
ceding note  a  by-law  provided 
thai  all  loans  should  " become  due 
in  six  years  from  the  date  of  this 
corporation,  or  on  the  stock  of  the 
association  becoming  of  par  value, 
in  either  of  which  cases  the  note 
given  by  the  borrower,  and  the 
stock  upon  which  the  loan  was 
made,  shall  he  set  off  against  each 
other."  It  was  held  that  a  bor- 
rower who  paid  the  required  dues 
and  instalments  for  a  period  of  six 
years,    thereby    extinguished    his 

ohli-at  ion  tot  lie  associat  ion; 

:!  Eekelnkaemper  v.  German, 
etc.,  Association,  22  Kan.  549. 


§  263.  LOANS    TO   MEMBERS — INCIDENTS.  269 

divergence  of  opinion.  One  of  the  rules  has  been  stated  as 
follows:  Ascertain  by  proof  the  probable  duration  of  the 
corporation,  then  estimate  the  total  amount  of  the  weekly 
and  monthly  instalments  payable  during  that  time,  from 
the  amount  thus  ascertained  allow  a  rebate  of  a  just  amount 
of  interest  and  to  the  remainder  add  the  arrearages  due  after 
allowing  for  payments  made  to  the  societ}r.  The  amount 
thus  ascertained  is  the  sum  the  society  is  entitled  to  receive 
in  presenti  in  satisfaction  of  its  mortgage.1 

A  by-law  provided  as  follows :  "  Any  member  having 
taken  a  loan  may  obtain  a  release  of  his  property  mort- 
gaged to  the  association  by  paying  back  to  the  association 
the  difference  between  the  dues  he  has  paid  in  and  the 
amount  borrowed,  together  with  a  bonus  of  eight  dollars 
per  share,  if  returned  in  the  first  year  of  the  working  of  the 
association ;  if  the  second,  six  dollars  ;  if  the  third,  five  dol- 
lars, etc.,  and  three  dollars  thereafter,  and  their  proportion 
of  the  losses  the  association  may  have  sustained  during  their 
membership,  etc.,  if  returned  before  the  unredeemed  shares 
are  worth  one  hundred  and  twenty  dollars."  A  shareholder 
agreed  to  borrow  $4,800,  being  $120  a  share  on  forty  shares 
of  stock  he  held,  and  to  pay  in  advance  nine  years'  interest 
thereon  at  six  per  cent.,  making  for  interest  $2,592,  which 
was  deducted  from  the  sum  of  $4,800,  and  he  received  the 
sum  of  $2,208,  the  balance.  Proposing,  within  a  year,  to 
redeem,  the  association  paid  him  $2,303.20,  that  sum  being 
exacted  by  the  association,  It  was  held  that  the  proper 
mode  of  ascertaining  the  correct  amount  to  be  repaid  under 
the  contract,  was  to  deduct  the  amount  of  dues  paid  in  from 
the  amount  actually  borrowed,  and  to  this  add  the  bonus 
on  forty  shares  at  eight  dollars.  This  made  the  sum  of 
$2,303.20,  the  correct  amount  due.2 

According  to  the  charter  and  by-laws  of  an  association 
money  was  loaned  to  its  stockholders  on  mortgage,  accord- 
ing to  the  amount  of  their  stock.     These  borrowers  were 

1  This    rule    had    its    origin    in  Cahan  v.  Columbian  Building  As- 

Maryland.      Robertson    v.  Ameri-  sociation,  40  Md.  226. 

can  Homestead  Association,  10  Md.  2  Oak  Cottage  Building  Associa- 

397 ;  s.  c.  69  Amer.  Dec.  145 ;  Mc-  tion  v.  Eastman,  31  Md.  556. 


270  BUILDING   AND   LOAN   ASSOCIATIONS.     Ch.  XIII. 

bound  to  pay  interest  on  the  mortgage  monthly  at  the  rate 
of  six  per  cent,  per  annum,  and  also  to  pay  monthly  dues 
of  sixty  cents  per  share  on  their  stock,  fifty  cents  of  which 
went  into  the  loan  fund  and  the  remaining  ten  cents  to 
defray  expenses.  These  payments  were  to  continue  until 
the  shares  were  worth  the  amount  of  the  loan  when  the 
shares  could  be  surrendered  to  the  association  and  the  debt 
thereb}^  canceled.  Dividends  were  not  payable  on  stock 
held  by  members  to  whom  loans  were  made.  The  mort- 
gagor had  an  option  to  repay  the  loan  at  any  time  on  giving 
thirty  da}'s'  notice.  It  was  held  that  when  a  borrower 
exercised  this  option  the  amount  to  be  paid  by  him  must  be 
ascertained  h}7  charging  him  with  the  amount  of  the  loan 
and  interest,  and  crediting  him  with  his  pigments  into  the 
loan  fund  (each  fifty  cents)  with  interest  on  each  payment 
from  the  time  it  was  made,  but  he  was  not  entitled  to  any 
dividends  on  his  stock.1 

Sec.  264— Amount  due — Ohio  Rule. 

Another  rule,  slightly  differing  from  the  foregoing,  is  one 
announced  by  the  courts  of  the  State  of  Ohio,  and  is  as  fol- 
lows :  By  proof  determine  the  probable  duration  of  the  asso- 
ciation, and  then  calculate  the  interest  and  dues  yet  to  come. 
Alter  this  find  the  principal  which,  with  the  interest  for  the 
estimated  time,  will  equal  the  interest  and  dues  already  esti- 
mated. The  amount  thus  found  will  be  the  present  value 
of  the  anticipated  payments.  To  the  principal  thus  found 
add  the  arrearages  due,  and  the  fines  for  the  period  of  time 
elapsing  between  the  date  of  the  default  and  the  entering  of 
the  decree  of  foreclosure  or  sale  on  the  judgment.  The  sum 
total  will  be  the  present  value  of  the  loan.2  As  a  result  of 
this  rule  the  following  conclusion  was  reached  in  a  case  from 
t  bat  state : 

1  Middle  States  Loan,  etc.,  Co.  proved  in  Hagerrnan  v.  Ohio  Build- 
V.  Bagerstown,  etc.,  Co.,  82  Md.  ing  and  Savings  Association,  25 
506;S.C.  83   Ul.  Rep.  886.  Ohio    St.    186.     Allemania   Loan 

2  Cincinnati    German     Building    and  Building  Association  v-  Mue)- 
\    ociationv.   Flack,  1  Cin.  Supr.    ler,  8  Wkly.  L.  Bull.  97. 

'  i .    Rep.     W8.      A.pparen1  ly    ap- 


§  204.  LOANS    TO    MEMBERS — INCIDENTS.  271 

A  was  the  owner  of  ten  shares  of  stock.  In  186S,  he  drew 
of  the  association  $4000,  giving  ;i  mortgage  to  secure  this 
amount  and  the  dues,  interest  and  fines.  The  amount  of 
the  mortgage  was  $4480,  the  premium  being  $480.  He 
stopped  paying  dues  and  interest  July  27,  1869,  and  in  the 
following  October  the  society  brought  suit  to  foreclose  the 
mortgage.  On  March  3,  1870,  a  decree  ordering  a  sale 
was  entered,  and  November  7,  1871,  the  court  estimated  the 
amount  due  in  the  following  manner : — 

"  Weekly  dues  for  3  years  to  come,  156  weeks  $1638  00 
Interest  for  same  time  on  $4000  720  00 


$2358  00 
Now,  $1998.30  if  put  at  interest  for  3  years 

will  be  2358  00 
Then  the  present  value  of  the  anticipated  pay- 
ment is  $1998  30 
Arrearages  of    weekly  dues,  121    weeks,  at 

$10.50  1270  50 

Arrearages  interest,  2,  4—12  years  560  00 

Fines  for  32  weeks  to  entry  of  decree  of  sale  64  00 


The  present  value  of  mortgage  $3892  86" 

The  weekly  dues  were  $10.50  per  week,  and  the  fines 
$2  per  week  on  these  ten  shares  of  stock.  He  had  paid 
in  cash  $610.  The  association  claimed  that  there  was 
due  $4494.00,  and  the  borrower  that  the  amount  was  only 
$3158.69.  The  association's  calculation  was  as  follows  : 
121  weeks  of  dues  at  $10.50  $  1270  50 

2  years  4  months  interest,  not  paid  560  00 

32  weeks  of  fines  at  $2  64  00 

Principal  sum  $4480  00 

Cash  paid  $  610  00 

Amount  weekly  dues  not  paid     1270  50-1880  50-2599  50 


Total  amount  due  $  4494  00 

The   borrower    claimed   that  the    following  calculation 
was  the  correct  one ": — 


27:2 


BUILDING    AND   LOAN   ASSOCIATIONS.     Ch.  XIII. 


Weekly  dues  for  three  years  to  come,  156  weeks 

at  $10 
Interest  for  same  time  on  $4000  at  $20  a  month 


1560  00 
720  00 


Rebate  interest  on  this  sum  for  one  half  the 
time, 


Add  weekly  arrearages  due  121  weeks  at 
Arrearage  of  interest,   2  and  4-12  vears  on 
$4000  at  $20  per  month, 


Credit  by  61  payments  of  dues  at  $10  $610  00 
By  paid  7  months'  interest  at  $20        140  00 


Add  32  weeks,  fines  at  $2 


$  2280  00 

205  20 

$  2074  80 
1210  00 

560  00 
$  3844  80 

750  00 

$  3094  80 
64  00 


Present  value  of  mortgage,  $  3158  80 

The  court  adopted  the  rule  laid  down  in  Maryland,1 


1  Cincinnati  German  Building 
Association  v.  Flack,  1  Cin.  S.  C. 
Rep.  468. 

In  computing  the  amount  due  on 
distribution  after  foreclosure  of 
a  building  association  mortgage, 
dues  paid  will  not  be  credited  with 
interest  for  the  reason  that  dues 
entitle  the  member  to  dividends 
and  not  to  interest.  In  estimating 
the  time  required  to  pay  the  shares 
probable  profits  may  be  considered 
for  Hi"  dues  for  the  future  are 
being  paid  discounting  for  the  time 
in  advance  ;    the  periods  for  the 

payment  of  prolits  arc  every  six 
months  from  the  organization  of 
the  society  ;in<l  doI  from  the  vari- 
ous dates  of  taking  shares.    Where 


the  interest  each  year  is  only 
reckoned  on  the  amount  remaining 
due  at  the  beginning  of  the  year, 
in  computing  interest  for  the  fu- 
ture the  amount  of  the  shares,  less 
dues  to  date,  will  be  the  principal  to 
the  beginning  of  the  next  corporate 
year,  from  which  for  a  new  princi- 
pal will  be  deducted  the  dues  and 
dividends  of  profits  estimated  as 
accruing  during  the  interval ;  and 
so  on  for  each  successive  year. 

Allemania  Loan  and  Building 
Association  v.  Mueller,  8  Wkly.  L. 
Bull.  07. 

Dues,  interest,  and  fines  should 
lie  included,  up  to  the  date  of  the 
decree,  rather  than  to  the  first  day 
of  the  term,  and  dues  and  interest, 


§  2G5. 


LOANS   TO   MEMBERS — INCIDENTS. 


273 


Sec.  265 — Amount  Due — Canadian  Rule. 

By  one  of  the  rules  of  a  building  society  it  was  provided 
that,  "  If  any  member  shall  desire  to  have  his  property  dis- 


but  not  fines,  would  continue  to 
the  date  of  compensation,  but  in- 
terest on  these  instalments  would 
in  turn  bear  interest  from  tbe  time 
fines  ceased  to  be  computed.  To 
this  may  be  added,  on  compensa- 
tion, the  present  value  of  the  fu- 
ture dues  and  interest  to  the  time 
of  dissolution,  and  only  the  present 
value.  This  may  be  ascertained 
by  summing  up  the  successive 
weekly  instalments,  for  the  prob- 
able future  duration  of  the  society, 
and  discounting  the  amount  for 
the  mean  or  average  time  between 
the  first  and  last  instalments. 
Thus,  if  the  probable  future  dura- 
tion is  122  weeks,  the  average  time 
is  61£  weeks.  Now  if  the  dues  are 
$5  per  week,  and  the  interest  $2.50, 
$9.15  is  entire  amount  of  future 
dues  and  interest,  of  which  the 
present  value  is  $854.36,  for  that 
at  interest  for  61^  weeks  would 
produce  $915.  Windiscli  v.  Kor- 
man,  5  Wkly.  L.  Bull.  364 ;  refus- 
ing to  follow  the  rule  laid  down 
in  Cincinnati  German  Building  As- 
sociation v.  Flack,  1  Cin.  S.  C.  Rep. 
468. 

Where  the  by-laws  provided  that 
if  a  borrowing  shareholder  die 
"  his  or  her  heirs  or  legal  repre- 
sentatives may  return  the  loan  to 
the  association,"  and  receive  from 
it  the  value  of  the  stock  of  the 
decedent,  as  the  same  was  assessed 
at  the  annual  meeting  of  the  asso- 
ciation immediately  preceding  his 
decease,  "or  continue  to  pay  the 
interest  and  monthly  dues,  and  be- 
come in  all  respects  a  member  of 
the  association  until  the  same  shall 
terminate,"  it  was  held,  that  if  the 
18 


heirs  or   legal   representatives   of 

tin'  deceased  shareholder  elect  to 
return  the  loan,  the  amount  to  be 
returned  is  the  money  actually  re- 
ceived plus  the  premium  bid  for 
precedence.  Loan  $800,  bid  $390, 
received  in  fact  $410.  Must  pay 
$800.  Licking  County,  S.  L.  &  B. 
A.  v.  Bebout,  29  Ohio  St.  252. 

In  computing  the  amount  due 
on  a  mortgage  at  the  date  of  con- 
firmation of  a  foreclosure  sale,  it 
was  held  that  the  amount  found 
due  on  the  decree  of  sale  would 
not  be  questioned  on  appeal  from 
the  confirmation,  but  to  that 
amount  should  be  added  any 
unpaid  balance  of  premium,  to- 
gether with  clues  and  interest  to 
date  of  compensation,  without  fines 
and  dues,  and  interest  for  the  es- 
timated future  duration  of  the  so- 
ciety, on  such  sum  at  six  per  cent 
for  the  average  time  between  the 
first  and  last  instalment  will  pro- 
duce the  amount.  Central  Build- 
ing Association  v.  O'Connor,  5 
Wkly.  L.  Bull.  853 ;  s.  c.  9  Amer. 
Rec.  486. 

A  defeasance  clause  in  a  mort- 
gage providing  that  the  amount 
shall  be  ascertained  by  taking  the 
face  of  the  mortgage  and  arrear- 
ages thereon,  and  deducting  the 
credits  paid  in,  is  void  ;  for  it  de- 
prives the  mortgagor  of  the  benefit  s 
he  is  entitled  to  as  a  member.  Mon- 
itor Building  Association  v.  Eggen, 
5  Wkly.  L.  Bull.  752. 

For  other  Ohio  cases,  see  Lick- 
ing County  Savings,  Loan  and 
Building  Association  v.  Bebout, 
29  Ohio  St.  252  ;  State  v.  Oberlin 
Building  and  Loan  Association,  35 


274  BUILDING   AND   LOAN   ASSOCIATIONS.    Ch.  XIII. 

charged  from  a  mortgage  to  the  society  before  the  expira- 
tion of  the  full  time  for  which  it  has  been  taken,  he  shall  be 
allowed  to  do  so  on  payment  of  all  repayments,  any  fines, 
and  other  sums  due  in  respect  thereof  up  to  the  time  of 
redemption  *  *  *  and  of  the  present  value  of  future 
repayments,  calculated  to  the  end  of  the  term,  and  dis- 
counted at  such  rate  of  interest  and  on  such  terms  as  the 
directors  may  determine."  The  effect  of  a  person  obtaining 
a  loan  from  the  society  was  that  he  became  a  member  of 
the  society,  and  as  such  assented  to  all  its  rules.  There- 
fore, where  a  suit  was  instituted  upon  a  mortgage  by  reason 
of  a  default  having  been  made  in  the  repayment,  the  court 
held  that  the  society  had  the  right  to  say  upon  what  terms 
the  future  repayments  should  be  computed  ;  and  that  if 
the  society  saw  fit  to  do  so  they  could  insist  on  repayment 
of  the  whole  amount  of  the  mortgage,  which  included  the 
principal  sum  and  interest  for  the  whole  period  the  mortgage 
had  to  run.1  By  one  of  the  rules  of  a  society,  which  were 
subscribed  by  all  the  members  on  loans  or  advance  of 
shares,  it  was  provided  that  when  a  payment  off  of  a  mort- 

OhioSt.  258;  Wangerrien  v.  Aspel,  arrearages  for  fines,  dues,  and  in- 

47  Ohio  St.  230  ;  S.  C  24  N.  E.  Rep.  terest,    and    deducting   the    dues 

405  ;  23  Wkly.  L.  Bull.  380;  Wind-  paid,  will  he  rejected  by  the  court, 

isch  v.   Kormar,  5  Wkly.  L.  Bull,  for  the  real  transaction    is   a   re- 

364;    Central,  etc.,  Association  v.  demption  of  the  stock  drawn  by 

O'Connor,  5  Wkly.  L.  Bull.  853;  the   member  in  advance,  leaving 

Ohio  Building  Association  v.  Ley-  him  his  right  as  a  corporator  and 

den,  1   Wkly.  L.  Bull.   126;  S.  C.  4  the  association  its  right  to  charge 

Amer.  Rec.  765.  him  dues.     Moreover,  interest  can- 

The   court   will    not  adopt  the  not    be     charged    on     the    whole 

rule  the  parties  have  provided  for  amount  when  part  was  withheld 

estimating  the  amount  due,  if  it  as  premiums.    The  account  is  to 

would     make    the    recovery  alto-  betaken  on  the  basis  of  the  dues 

her  disproportionate  to  the  loss  to  be  paid,  deducting  the  interest 

occa  Loned     by    the   default,    and  already    paid   on    the    premiums, 

would  produce  a  result  contrary  to  charging     the     defendants     with 

the  evident  design  of  the  Legisla-  dues  for  the  time  he  is  in  default, 

ture,  Eagerman  v.  Ohio  Building  and  with  finesand  interest  on  the 

etc.,   Iss'n,  25  Ohio  St.  ls*'>.  amount  actually  advanced.    Ohio 

\     tipulation    in   the   mortgage  B.   \.  v.  Leyden,  1   Wkly.  L.  Bull. 

that  "ii    foreclosure  lli<'  amount  126 ;  s.  C.  4  Amer.  Rec.  765. 

due  shall  be  estimated,  by  adding  '  Western   Canada,  T,.  &  S.  S.  v. 

to  the    consideration    named   the  Eodges,  22  Grant  Ch.  566. 


§  266.  LOANS   TO    MEMBERS  —  INCIDENTS.  275 

gage  was  made  before  it  became  due,  the  present  value  of 
future  repayments  should  be  calculated  to  the  end  of  the 
term,  and  discounted  at  such  rate  of  interest  and  on  such 
terms  as  the  directors  might  determine  ;  and  by  another  of 
the  rules  the  directors,  on  default,  were  empowered  to  sell 
the  mortgaged  estate,  and  on  such  sale  to  retain  and  apply 
so  much  of  the  purchase  money  as  should  be  necessary  to 
redeem  the  property,  pursuant  to  the  provisions  contained 
in  the  foregoing  rule  :  it  was  held  that  the  master  proceeded 
on  an  erroneous  principle  in  calculating  interest  on  the 
sum  advanced  at  9  per  cent  from  the  date  of  its  advance 
until  the  day  appointed  for  payment ;  and  that  lie  was  bound 
to  ascertain  the  amount  necessary  to  discharge  the  mort- 
gage by  the  same  rules,  and  on  the  same  principle,  as  the 
directors  of  the  society  computed  the  same.1 

Sec.  266 — Amount  Due. — A  Georgia  Case. 

The  scheme  of  an  association  was  that  there  should  be 
two  thousand  shares,  no  one  stockholder  holding  over 
thirty  ;  each  share  should  pay  one  dollar  at  each  monthly 
meeting,  and  at  each  meeting  the  amount  then  received 
should  be  sold  to  the  highest  bidder  as  an  advance  to  the 
bidder  upon  his  ultimate  interest.  The  company  was  to  be 
wound  up  when  each  share,  under  the  workings  of  the  asso- 
ciation, should  be  worth  two  hundred  dollars,  or  when  each 
member  had  purchased  an  advance  on  his  stock.  Any 
member  advanced  was  required  to  give  his  note  secured  by 
mortgage  for  the  ultimate  assumed  value  of  his  stock  and 
assign  his  stock  to  the  association  as  collateral  security. 
Each  stockholder  who  received  an  advance  was  required  to 
pay  one  dollar  extra  on  each  advanced  share  as  interest. 
For  any  default  in  the  payment  of  dues,  as  often  as  they 
were  payable,  he  was  to  forfeit  the  additional  sum  of  ten 
cents  for  every  such  failure,  and  for  every  dollar  then  unpaid. 
If  any  shareholder  was  in  default  three  months,  the  associa- 

1  Crone  v.  Crone,  26  Grant  Ch.     Provident  L.   Co.,  31  U.  C.  C.   P. 
459  ;   O'Donahoe's  Estate  L.  R.  10    574. 
Ir.    Eq.  221  ;    Green  v.   Hamilton 


276  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIII. 

tion  could  proceed  to  collect  the  amount  due  from  him.  The 
sum  to  be  collected  by  the  provisions  of  the  charter  and  by- 
laws was  to  be  in  such  an  amount,  at  the  rate  of  advance  at 
the  last  monthly  meeting,  as  would,  if  put  up  for  sale,  have 
brought  the  company  the  same  interest  the  defaulter  was 
paying,  in  no  case  less  than  the  net  amount  received  by 
him  together  with  all  other  payments,  moneys,  and  expenses 
due  the  association  from  him.  A  stockholder  purchased 
an  advance  on  his  thirty  shares.  On  the  books  of  the  asso- 
ciation he  owed  it  forty-nine  dollars,  although  it  did  not 
appear  what  this  was  for.  He  failed  to  pay  his  dues.  A 
year  after  the  association  agreed  to  wind  up  at  $154.00,  the 
then  value  of  the  stock,  and  thereafter  ceased  to  do  busi- 
ness. At  the  last  meeting  the  premium  upon  advances  was 
twenty -three  per  cent.  The  account  bet  ween  the  association 
and  stockholder  was  stated  as  follows : 

$200.00,  less  23  per  cent.  $  154  00 

14  months  dues,  at  $2.00  each  28  00 

14  fines  (10  per  cent  on  $2.00)  2  80 


In  all,  for  each  share  $  184  80 

For  thirty  shares  this  amounted  to  30  times 

1 1 84.80  or  $5544  00 

To  this  add  book  account  49  00 

And  fine  for  that  4  90 


The  gross  amount  due  $5597  90 

But  the  company  had  quit  business,  and  the  stockholder 
was  allowed  a  credit  of  si:>4.00,  the  agreed  value  of  a  share 
of  stock,  making  a  total  of  $4620,00.  This  total  was  de- 
ducted from  the  gross  amount  due,  leaving  a  balance  of 
$977.90,  and  this  amount  wbs  held  to  be  due.1 

1  Ocmulgec  Building,  etc.,  Asso-  was  reversed  and  went  back,  and 

ciation  v.  Thomson,  52  Ga.  427,    It  on   further  hearing,   under  addi- 

was  said  that  if  the  company  went  tional  evidence,  it  was  found  that 

on  doing  business,  then  he  ought  to  the  stockholder  owed  an  additional 

pay  the  gross  sum,  viz.  $5,597,90  sum,  making  a  total  of  $1,634,65. 

and  hold  his  stock  as  the  other  ad-  Thomson  v.   Ocmulgee    Building, 

vanced    members  did.     This  case  etc,  Association,  56  Ga.  350. 


§  267.  LOANS    TO    MEMBERS — INCIDENTS.  277 

Sec.  237.— Amount  Due — English  Kule. 

In  the  earlier  English  cases  no  interest  had  been  reserved 
as  such,  but  in  lieu  of  that  were  monthly  payments  called 
"redemption  money."  The  advancement  was  not  regarded 
as  a  loan,  nor  were  these  monthly  payments  regarded  as  in- 
terest for  the  forbearance  of  the  money  advanced.  In  a 
premature  redemption  the  courts  allowed  no  rebate,  except 
by  way  of  bonus  under  the  rules  of  the  society.1 

In  a  more  recent  case  a  rule  was  adopted  which  is  similar 
to  the  Ohio  rule.  The  rules  of  a  permanent  society  pro- 
vided that  "  any  member  receiving  an  advance  shall  repay 
the  same,  with  interest,  at  the  rate  which  shall  be  deter- 
mined by  the  board,  by  monthly  or  other  instalments."  A 
member  obtained  an  advance  of  £600,  at  a  monthly  pay- 
ment of  £9  13s.,  estimated  to  discharge  the  entire  debt  in 
seven  years.  He  made  default  on  his  third  instalment,  and 
the  mortgage  was  foreclosed  and  the  property  mortgaged 
sold.  The  society  claimed  the  right  to  retain  the  aggregate 
amount  of  the  whole  number  of  instalments  for  seven  years, 
together  with  fines  due  for  payments  in  arrear  down  to  the 
time  of  sale.  The  court  held  that  the  society  was  entitled 
to  retain  out  of  the  proceeds  of  the  sale  all  subscriptions  and 
fines  payable  up  to  the  time  of  the  completion  of  the  sale, 
and  such  further  sum  as  represented  the  remainder  of  the 
principal  sum  remaining  at  that  time  unpaid  ;  but  that  it  was 
not  entitled  to  any  payment  in  respect  of  interest  accruing 
after  the  principal  had  been  all  repaid.  In  passing  on  the 
case  Justice  Cairns  said  :  "  The  manner  in  which  the  mort- 
gage deed  is  expressed  and  in  which  the  rules  are  worded, 
creates  an  unnecessary  amount  of  obscurity ;  but,  after 
careful  attention  to  the  language  of  these  documents,  I  have 
no  doubt  as  to  the  real  nature  of  the  transaction.  Denuded 
of  technicalities,  it  is  an  advance  in  respect  of  the  shares  to 
which  Goldsmith  was  entitled  ;  and  *  *  *  [he]  treated 
as  if  he  had  received  an  advance  of  £600  at  £5  per  cent. ;  but 

1  Seagrave  v.  Pope,  1  DeG.  M.  &  Fleming  v.  Self,  3  DeG.  Mac.  & 
G.  783 ;  16  Jur;  1099 ;  22  L.  J.  Ch.  G.  997  ;  24  L.  J.  Ch.  29 ;  3  Eq. 
258  ;   15  E.   L.   &  Eq.   Rep.   477  ;    Rep.  14 ;  1  Jur.  N.  S.  25. 


278  BUILDING   AND   LOAN    ASSOCIATIONS.     Cll.  XIII. 

the  way  in  which  this  was  done  was  that  it  was  agreed  that 
the  repayment  should  be  spread  over  seven  years,  by 
monthly  instalments,  each  instalment  to  be  made  up  by  a 
portion  of  interest  and  a  portion  of  principal.  If  that  be  so, 
one  would,  in  the  absence  of  any  stipulation  to  the  con- 
trarv,  suppose  that,  if  default  was  made  in  payment  of  any 
of  the  instalments,  and  the  property  was  sold,  all  that  was 
due  for  monthly  instalments  and  for  fines  was  to  be  paid 
out  of  the  proceeds  of  the  sale ;  but  that  with  regard  to  the 
future,  so  much  of  the  principal  sum  as  remained  unpaid  hav- 
ing been  paid  off,  there  would  be  nothing  in  respect  of  which 
interest  could  accrue.  Interest  implies  forbearance,  and, 
therefore,  when  the  whole  sum  is  paid  there  can  be  no 
interest.  That  seems  the  natural  result  of  the  transaction, 
and  the  trust  of  the  sale  moneys  in  the  mortgage  deed  is  con- 
sistent with  that  view.  It  is  there  provided  that  the  trustee, 
after  payment  of  the  expenses  of  the  sale,  shall  '  retain  all 
such  subscriptions,  fines,  and  other  sums  of  money,  and  pay- 
ments which  shall  be  then  due,  or  which  would  afterwards 
become  due,  in  respect  of  the  said  shares  during  the  then 
remainder  of  the  said  period  of  seven  years,  it  being  agreed 
by  the  parties  hereto  that  in  case  any  such  sale  shall  take 
place  all  the  moneys  which  would  at  any  time  afterwards 
1  )(•(•< >me  due  from  the  said  G.  Goldsmith,  his  executors, 
administrators,  or  assigns,  in  respect  of  the  said  shares, 
according  to  the  rules  of  the  said  association,  shall  be  consid- 
ered as  being  immediately  due  and  payable.'  With  regard  to 
the  future,  you  cannot  include  under  '  moneys  which  would 
at  any  time  afterwards  become  due,' any  fine  ;  no  more  can 
you  include  payments  in  respect  of  interest,  for  interest  can 
only  ; i rise  in  respect  of  a  principal  sum  remaining  outstand- 
ing and  forborne.  Therefore,  my  conclusion  is,  that  every- 
thing due,  in  respect  of  monthly  instalments  and  fines,  at 
the  i  ime  of  t  he  sale,  must  he  retained  ;  and  then  it  must  be 
ascertained  how  much  of  the  monthly  payments  represented 
principal  and  how  much  interest;  and  it  will  then  appear 
how  much  of  the  principal  remained  unpaid.  That  must 
also  •><•  retained,  and  that  will  conclude  the  transaction." 
Jn  this  conclusion  Justice  Mcllish  concurred,  saying:    "Ac- 


§  268.  LOANS   TO    MEMBERS — INCIDENTS.  279 

cording  to  the  rules  of  this  society,  this  was  not  strictly  an 
advance  in  anticipation  of  the  sum  eventually  payable  to 
the  member  in  respect  of  his  shares,  as  it  was  in  other  cases 
which  had  been  before  the  courts;  but  the  ninth  rule  says, 
that  any  member  receiving  an  advance  shall  repay  the  same, 
with  interest,  at  the  rate  which  shall  be  determined  by  the 
board,  that  is,  at  £5  per  cent.  He  was,  therefore,  not  only 
to  receive  an  amount  equal  to  his  subscriptions,  but  he  was 
to  repay  any  amount  which  might  be  advanced,  which 
might  be  more  or  less  than  the  amount  of  his  share." 1 

Sec.  268. — Interest  During  Pendency  of  Suit. 

Interest  continues  to  run  during  the  pendency  of  a  suit 
on  the  obligation  given  by  the  borrower  for  a  foreclosure 
of  the  mortgage.  Nor  does  it  suspend  the  payment  of  dues.2 
A  tender  of  the  amount  due  will  also  stop  the  running  of  the 
interest.  If  the  tender  be  after  suit  brought,  the  bor- 
rower will  be  liable  for  all  costs,  at  least  for  those  accrued  up 
to  that  date,  including  the  cost  of  rendering  the  judgment.3 
An  agreement  made  at  some  time  after  the  date  of  tender,  to 
accept  such  tender,  starts  the  interest  to  running  from  the 
date  of  acceptance.4 

1  In  re  Goldsmith,  L.  R.  10  Ch.  204  ;  Union  Building  Loan  Asso- 
App.  41  ;  S.  C.  44  L.  J.  Bank  1  ;  23  ciation  of  New  Brunswick  v.  Ma- 
W.  R.  39  ;  31  L.  T.  N.  S.  366.  sonic    Hall    Association    of  New 

See  Matterson  v.  Elderfield  L.  R.,  Brunswick,  29  N.  J.  Eq.  389  ;  Mc- 

4  Ch.  App.  207  ;  20  L.  T.  N.  S.  503  ;  Cahan  v.  Columbian  Building  As- 

17  W.  R.  422 ;  33  J.  P.  326  ;  Mosley  sociation,  40  Md.  226  ;  Cincinnati 

v.  Baker,  6  Hare,  87;  s.  c.  12  Jur.  German  Building    Association   v. 

551 ;  17  L.  J.   Ch.  25 ;  affirmed  on  Flack,  1  Cine.  Supr.  Rep.  468. 

appeal,  1  Hall  &  T.  301  ;  s.  C.  13  3  Columbian    Building    Associa- 

Jur.  817  ;  18  L.  J.  Ch.  457  :  3DeG.,  tion  of  East  Baltimore  v.  Crumb, 

Mac.  &  G.  1082  ;  Smith  v.  Pilking-  42  Md.  192.     If  the  debtor  borrow 

ton,  1  DeG.  F.  &  J.  120  ;  s.  c.  29  L.  the  money  from  a  bank  to  make 

J.  Ch.  227  ;  Archer  v.  Harrison,  7  the  tender,  and  immediately  on  a 

DeG.,  Mac.  &  G.  404;  3  Jur.  N.  S.  refusal  to  accept  it,  returns  it  to 

194  ;  In  re  O'Donahoe,  10  Ir  R.  Eq.  the   bank,   the   tender    is   invalid 

221  ;  and  Farmer  v.  Smith,  4  H.  &  and  of  no  avail.      Middle  States 

N.  196;  5  Jur.  N.  S.  533,  n.;  28  L.  Loan,   etc.,   Co.    v.    Hagerstown. 

J.  Exch.  226.     See  §  284.  etc.,  Co.,  82  Md.  507  ;  s.  c.  33  Atl. 

2  German  Fair  Hill  Building  As-  Rep.  886. 
sociation  v.  Metzger,  3  W.  N.  Cas.  4  Id. 


280  BUILDING    AND   LOAN    ASSOCIATIONS.     Cll.  XIII. 

Sec.  269.— Kind  of  Security. 

If  a  corporation  has  power  to  make  a  loan  it  has  power 
to  take  security  for  its  repayment ;  this  is  incide'nt  to  the 
power  to  make  a  loan.  And  if  no  statute  forbid  it,  that 
security  may  be  a  mortgage  on  real  estate.1  It  has,  in  fact, 
authority  to  take  any  kind  of  security,  unless  forbidden  by 
statute.2  The  borrower  having  received  the  benefit  of  the 
loan  and  given  security  for  its  repayment,  cannot  defeat  a 
recovery  by  getting  up  as  a  defence  that  the  act  of  the  cor- 
poration was  ultra  vires.2,  Nearly  all  associations  require 
the  borrower  to  assign  his  stock  as  additional  security  for 
the  loan ;  but  a  loan  on  the  shares,  accompanied  by  no 
other  security,  is  usually  unauthorized.4 

If  a  borrower  owns  more  shares  than  the  by-laws  permit, 
and  obtains  a  loan  upon  them,  he  cannot  set  up  as  a  defence 
his  own  violation  of  such  by-laws ;  nor  can  his  creditors.5 
So  a  wife  giving  a  mortgage  for  money  borrowed  on  shares 
is  estopped  from  showing  that  her  husband  subscribed  for 
them  in  her  name.6 

Sec.  270 — Straight  Loans. 

Unless  forbidden  by  a  statute  or  its  by-laws,  a  building 
society  has  full  power  to  make  a  loan  upon  the  same  terms 
as  individuals  make  them.  They  are  not  confined  to  the 
loan  usually  made  by  such  associations.  "  A  building  and 
loan  association  may  lawfully  lend  its  money  to  its  members, 
or  other  persons,  on  adequate  and  proper  security,  in  the 

1  Massey  v.  Citizens'  Building  tion,  47  111.  App.  602 ;  affirmed. 
andSavings  Association  of  Paola,  151  111.  531;  s.  c.  38  N.  E.  Rep. 
22  Kas.  624.  236  :  26  Ch.  L.  News,  239. 

2  Union  Building  and  Loan  As-  4  Cullerner.  London,  etc.,  Build- 
sociation  v.  Masonic  Hall  Associa-  ing  Society,  L.  R.,  25  Q.  B.  Div. 
t  ion,  29  X.  .1.  Eq.  389.  485 ;  s.  c.  59  L.  J.  Q.  B.  525  ;  63  L. 

Central  Building  and  Loan  As-  T.  511  ;  39  W.  R.  88;  6T.  L.  R.  214, 

sociation   v.    Lampson,   60    Minn.  ■!  lit ;  55  J.  P.  148. 

s.    c.    62    N.    W.    Rep.    544;  B Victoria  Building   Association 

Malley  v.  People's  Building,  etc.,  v.  The  Arbiter  Bund,  (»  Wkly.  L. 

•ciation,   85   N.    Y.   Supp.    1 1.  Bull.  823 ;  s.  c.  10  Am.  L.  Rec.  485. 

The  same  is  true  where  one  cor-  'Ohio   Building    Association  v. 

poration  borrows  of  another.      Km-  Neyden,  1  Wkly.  L.  Bull.  126 ;  S.  C. 

disli  v.  Garden   <'i1y.  etc.,  Associa-  1  Amor.  L.  Rec.  7<i5. 


§  272,  LOANS   TO   MEMBERS — INCIDENTS.  281 

ordinary  way,  instead  of  the  way  peculiar  to  sucli  institu- 
tions. That  they  have  failed  to  do  so  is  obviously  to  their 
disadvantage  to  the  extent  of  the  failure,  for  they  have  so 
much  less  security  for  their  debt ;  but,  in  the  absence  of  any 
agreement,  there  was  no  obligation  upon  them,  in  equity, 
as  between  them  and  the  other  building  loan  associations, 
to  obtain  such  security."  1 

Sec.  271 — Loan  on  Member's  and  Outsider's  Security. 

An  association  may  make  a  loan  to  a  member  and  take  a 
joint  obligation  of  himself  and  of  an  outsider  or  non-mem- 
ber ;  and  the  latter  cannot  insist  that  he  is  not  bound  by 
the  security  he  has  given,  on  the  ground  that  if  he  had  pro- 
cured the  loan  it  would  have  been  illegal.2  Where  a  wife 
has  general  power  to  execute  a  mortgage  on  her  separate 
property  to  secure  the  debt  of  her  husband,  she  may  give  a 
valid  mortgage  to  secure  the  payment  of  a  loan  secured  by 
him  from  a  building  association.3 

Sec.  272— Object  of  Loan. 

A  building  association  need  not  inquire  of  an  applicant 
for  a  loan  to  what  use  he  proposes  to  apply  the  money.     It 

1  In  this  case  a  conflict  of  claims  2  Massey  v.  Citizens'  Building 
to  certain  securities  had  arisen  be-  and  Savings  Association  of  Paola, 
tween  certain  building  associa-  22  Kan.  624 ;  Relief  Saving  Fund 
tions,  which  will  explain  the  last  Association  v.  Long  Shore,  8  Luz. 
clause  in  the  sentence  quoted.  Leg.  Reg.  199 ;  People's  Building 
Union  Building  Loan  Association  and  Loan  Association  of  Saginaw 
v.  Masonic  Hall  Association,  29  N.  Co.  v.  Billing,  104  Mich.  186;  s.  c. 
J.  Eq.  389.  It  can  make  no  loan  62  N.  W.  Rep.  373.  See  §  283. 
it  was  said,  except  as  the  statute  3  Juniata  Building  and  Loan 
provides.  Canada  Permanent  Association  v.  Mixell,  84  Pa.  St. 
Building  and  Saving  Society  v .  313  ;  Johnston  v.  Elizabeth  Build- 
Harris,  16  U.  C.  C.  P.  54  ;  Edin-  ing  and  Loan  Association,  104  Pa. 
burgh  Life  Assurance  Co.  v.  Gra-  St.  394;  Tanner's  Appeal,  95  Pa. 
ham,  19  U.  C.  Q.  B.  581.  St.  118;    Building  Association    v. 

It  would  seem  that  the  board  of  McDermott,    2  Kulp.    (Pa.)    203; 

directors  may  authorize  an  officer  Gi-eenfield's  Estate,  1  Chest.    Co. 

to  accept  a  bill  of  exchange  drawn  (Pa.)  356;    Hudson    City  Savings 

on  the  society.     Browning  v.  Brit-  Institute    v.   McArthur,   8    N.   Y. 

ish  American  Friendly  Society,  3  Wkly.  Dig.  63. 
Low.  Can.  Jur.  306. 


282  BUILDING   AND   LOAN    ASSOCIATIONS.     Cli.  XIII. 

is  true  that  the  primary  object  of  a  building  society  is  to 
enable  a  member  to  erect  for  himself  a  building  by  means 
of  the  money  he  receives  from  it ;  but  the  loan  is  not  in- 
validated by  reason  of  the  fact  that  it  is  not  so  applied. 
With  the  object  the  member  had  in  view  in  securing  the 
loan,  the  association  has  no  concern.1 

Sec.  273— Loans  to  Non-Members. 

Unless  authorized  by  a  statute,  a  building  association  has 
no  power  to  make  a  loan  to  a  person  not  a  member  of  the 
organization.2  But  a  loan  obtained  by  a  borrower  for  the 
use  of  a  third  person,  who  is  not  a  member,  is  valid,  and 
the  trust  deed  given  for  it  is  also  valid  ;  although  such  deed 
does  not  operate  to  make  such  third  person  a  member  of  the 
association.3  \Yhere  a  statute  authorized  loans  to  outsiders, 
but  provided  "  that  all  borrowers  from  any  such  societies 
shall  be  subject  to  all  the  rules  of  such  society  in  force  at 
the  time  of  their  becoming  borrowers,  but  not  to  any" other 
rules,"  it  was  held  that  he  could  redeem  his  mortgage  only 
as  an  actual  member  could  redeem.4 

1  Hagerman  v.  Ohio  Building  Where  a  building  association  made 
and  Saving  Association,  25  Ohio  a  loan  to  one  not  a  member,  by 
St.  186  ;  Johnston  v.  Elizabeth  taking  his  note  therefor  and  two 
Building  and  Loan  Association,  per  cent,  per  month  interest 
104  Pa.  St.  394;  s.  c.  41  Leg.  Int.  thereon,  the  transaction  was  held 
233  :  1  1  W.  X.  C.  244  ;  32  Pitts.  L.  to  he  a  discounting,  and  in  viola- 
jr,  .j(;o.  tion  qf  the  charter  providing  that 

2  Freehold  Loan  ami  Saving  So-  it  should  not  lend  money  at  a 
ciety  v.  Farrell,  :il  U.  C.  C.  P.  453  ;  greater  rjate  of  interest  than  twelve 
Canada  Permanent  Building  and  per  cent,  per  annum,  or  to  any 
Saving  Society  v.  lewis,  8  U.  C.  person  other  than  its  own  mem- 
( '.  P.  352.  The  same  is  trueofin-  hers:  and  under  the  Texas  statute 
direct  loans  to  outsiders.  Such  providing  that  no  corporation 
contracts  are  void.  National  In-  should  use  the  stock,  assets,  or 
\,.  i ,,,,,, I  Co.  v.  National  Savings,  other  property,  directly  or  indi- 
I  m  and  Building  Association,  49  rectly,  for  any  purpose  other  than 
Minn.  517;  S.  c.  52  N.  W.  Rep.  138.  the  legitimate  objects  of  its  crea- 

li  i,    /■.   Garden  City,  etc.,  tion.  the  note  was  held  void,  and 

ociation,  47  III.   A  )>|>.  <',<»•_' ;   af-  no  action  allowed  to  be  maintained 

firmed,  L51  III.  531  ;  26  Ch.   I..   N.  upon   it.      Anderson    v.   Cleburne 

38  N.  E.  Rep.  286.  Building    and     Loan     Association 

,,,,,-.   Bamilton    Provident  (Tex.)  16  S.  W.  Rep.  298. 

Loan   Co..  81    U.    < '.  0.    I'.   574. 


§  270.  LOANS   TO   MEMBERS — INCIDENTS.  283 

In  a  Kansas  case  it  was  said: — "Contracts  for  the 
borrowing  of  money  from  building  and  loan  associations 
in  Kansas  are  only  exempt  from  the  provisions  of  the  usury 
or  interest  laws  of  the  state  when  members  of  such  associa- 
tions are  parties  thereto.  It  was  never  intended  that  these 
corporations,  organized  as  this  one  was,  for  the  purpose  of 
giving  to  its  members,  through  their  savings,  an  easy  way 
to  discharge  encumbrances  and  to  build  homes,  should  loan 
their  funds  to  others  than  their  own  members,  or  that  if  they 
did  attempt  the  exercise  of  such  authority,  that  they  could 
disregard  the  wise  and  wholesome  provisions  of  the  statute 
regulating  the  rate  of  interest  collectible  by  law.  It  was 
never  intended  that  these  corporations,  seeking  and  obtain- 
ing privileges  from  the  state  as  useful  and  beneficial  asso- 
ciations from  the  comparative  poor  and  needy,  should  blos- 
som out  as  loan  agencies  and  banking  institutions,  without 
limit  as  to  the  rate  of  interest  they  could  receive  and  col- 
lect. Neither  the  letter  nor  the  spirit  of  the  laws  relating 
to  these  corporations  would  authorize  such  a  construction.' 1 

Sec.  274 — Taking  Several  Securities. 

If  an  association  take  more  than  one  security,  it  may,  at 
its  option,  pursue  one  or  all  of  them  when  default  is  made  ; 
and  a  custom  of  taking  only  real  estate  mortgage  security 
is  no  defence  for  the  sureties  on  the  other  security  when 
sued.2 

Sec.  275 — Purchasing;  Notes  of  Persons  not  Members. 

A  building  association  has  no  power  to  take  its  funds  and 
purchase  notes  of  strangers  to  its  organization.  It  cannot 
discount  notes.3 

Sec.  276 — Subscribing  Articles  of  Association. 

Where,  by  the  charter,  the   right   to   collect   otherwise 

1  St.  Joseph,  etc.,  Building  Asso-  s.  c.  16  Jur.  637  ;  21  I..  J.  Ch.  169  ; 
ciation  v.  Thompson,  19  Kan.  321.  16  J.  P.  116.     See  §  283. 

2  Juniata  Building  and  Loan  As-  3  State  v.  Greenville  Building 
sociation  v.  Hetzel,  103  Pa.  St.  507.  and  Savings  Association,  29  Ohio 
See  Reeves  v.  White,  17  Q.  B.  995  ;  St.  92.     See  §  282. 


284  BUILDING   AND   LOAN   ASSOCIATIONS.      CI).  XIII. 

usurious  interest,  premiums  and  fines  was  qualified  by  a 
proviso,  "that  such  stockholders  shall  have  signed  an 
agreement  containing  the  following  words,"  the  association 
can  only  recover  the  actual  amount  loaned,  with  simple  in- 
terest, if  the  borrowing  member  has  not  signed  the  agree- 
ment to  which  reference  has  been  made.1 

Sec.  277 — Loan  to  One  in  Arrears. 

There  is  nothing  to  prevent  a  loan  being  made  to  a  mem- 
ber when  in  arrears  on  his  stock.  "  If,  when  the  loan  was 
awarded,  they  were  in  arrears,  but  paid  the  arrears  out  of 
the  loan,  in  the  absence  of  bad  faith,  they  would  be 
regarded  as  not  in  arrears  when  the  loan  was  made."2 

Sec.  278 — Varying  Contract  of  Loan. 

After  a  loan  has  been  made,  the  association  cannot  change 
the  terms  of  the  contract,  nor  can  the  legislature.3  The 
provisions  of  the  constitution  of  a  building  association  pro- 
viding for  the  manner  of  payment  by  and  credits  to  borrow- 
ing members,  create  vested  rights  in  such  members  which 
cannot  be  modified  as  to  them  without  their  consent.4  A 
change  of  the  rules  of  a  society,  which  would  otherwise 
affect  their  contracts,  can  have  no  application  to  a  contract 
theretofore  by  them  made  with  the  association.5 

Sec.  270— Oppressive  Contract,  Borrower  not  Relieved 
from. 
A   borrower   cannot  claim  a  right  to  be  relieved  from  a 

1  Anthracite  Building  and  Loan        5  In  re    Norwich    and    Norfolk 

ociation     v.    Lyons,    2    Kulp.  Building  Society,  Smith's  Case,  1 

(Pa.)  409.     But  the  burden   is  on  L.  R.  1  Ch.  Div.  481  ;  s.  e.  45  L.  J. 

the  borrower  to  show  that  he  did  Ch.  1 43  ;  24  W.  R.  103;  Christie  v. 

notsign  the  agreement.     Nicely's  North  Counties,  etc..  Society  L.  R., 

I.  tate,3  Kulp.  (Pa.),  !i.  43  Ch.  Div.  62;  Burke  v.  Home, 

'Citizens'  Building,  etc.,   Asso-  etc.,  Association,  7  Wkly.  L.  Bull, 

ciation  v.  Coriell,  34  N.  J.  Eq.  383.  114;    Home,   etc.,   Association    v. 

BCason  v.  Seldner,  77  Va.  293;  Boning,    7    Wkly.  L.   Bull.    174; 

s.  c  6  A  iik  r.  <V  Eng.  ( !orp.  ( '.-is.  630  ;  Pawlick  v.  Homestead  Loan  Asso- 

li  heru  Patton,  134  Wo.  32;  s.  c.  ciation,  15  N.  Y.  Misc.  Rep.  427; 

:;:;  s.  W.  Rep.   151;  84S.   W.   Rep.  s.  c.  37  N.  Y.  Supp.    L64.     Mueller 

1096.  v.  Madison  etc.,  Ass'n,  7.r>  N.   W. 

1  Betz    v.    Fulton    Building  and  Rep.  277;Hawley«.  Northside,etc, 

Saving  Association,!  Ohio  N.  P.  12.  Ass'n  (Colo.),  52  Pac.  Rep.  408. 


§  279.  LOANS   TO   MEMBERS — INCIDENTS.  285 

contract  of  loan  merely  because  it  is  oppressive,  unless 
he  can  show  that  a  fraud  inducing  him  to  enter  into  the 
loan  has  been  perpetrated  upon  him.1  In  a  New  York  case 
it  was  said:  "That  the  defendant  is  required  to  pay  con- 
siderable sums  of  money,  every  month,  and  that  these  pay- 
ments may  be  increased  by  fines  in  case  of  default,  and  that 
sach  fines  may  be  made  heavier  for  a  continued  default,  forms 
no  sufficient  reason  for  declaring  the  contract  void,  in  the 
whole,  or  even  pro  temto.  It  is  not  shown  or  pretended,  ex- 
cept in  the  arguments  of  counsel,  that  the  defendant  did  not 
fully  understand  the  nature  of  the  bargain  made  ;  or  that 
he  could  not  have  calculated  the  precise  amount  he  would 
be  bound  to  pay;  or  that  he  has  been  in  any  manner 
deceived,  defrauded  or  misled,  either  in  joining  the  associa- 
tion, or  bidding  for  the  shares  and  paying  his  premium. 
His  engagement  may  be  an  onerous  one,  but  all  his  asso- 
ciates entered  into  the  same  engagement  and  assumed  the 
same  burden.  For  aught  that  appears,  they  have  borne 
those  burdens,  and  made  all  their  payments  regularly,  in 
the  expectation  that  the  defendant  and  every  other  mem- 
ber, would  do  the  same,  and  that  the  winding  up  of  the 
association,  and  the  termination  of  the  tax  upon  them, 
would  be  speeded.  To  release  the  defendant  from  his  con- 
tract, or  any  part  of  it,  is  only  imposing  on  each  of  them  so 
much  greater  burden,  and  requiring  a  proportionate  exten- 
sion of  payments,  to  an  early  relief  from  which  they  are 
justly  entitled.  The  defendant  must  continue  to  pay  into 
the  common  fund  the  sum  he  agreed  to  pay  ;  and  if  the 
other  members  of  the  association  comply  with  their  agree- 
ment, all  of  them  will  be,  at  no  very  distant  day,  relieved 
from  the  necessity  of  making  further  contributions."  "  They 
may  not  then  have  realized  the  benefits  they  worked  for. 
They  will,  perhaps,  have  learned  that  the  proprietor  is  the 
best  guardian  of  property ;  that  the  making  of  extravagant 
gains  involves  great  risks  or  great  burdens ;  and  that  the 
steady  accumulations  of  honest  industry  are  the  surest  way 

1  Watkins  v.  Workingmen's  v.  American  Building  and  Loan 
Building  and  Loan  Association,  97  Association,  52  Fed.  Rep.  618  ;  s.  c. 
Pa.  St.  514  ;  See,  however,  Tilley    40  Amer.  &  Eng.  Corp.  Cas.  375. 


286 


BUILDING   AND   LOAN    ASSOCIATIONS.     Cll.  XIII. 


to  wealth.  But  they  will  have  met  with  no  losses  which  a 
reasonable  prudence  would  not  have  enabled  them  to  foresee 
and  measure.*' x 


Sec.  280— Lex  Loci — Effect  on  Foreign  Contracts. 

A  contract  of  loan  is  controlled  by  the  law  of  the  place 
the  same  as  if  it  were  an  ordinary  contract.  Thus,  where  a 
contract  of  loan  was  made  by  a  building  association  in  Vir- 
ginia to  a  citizen  of  that  state  upon  lands  located  there,  but 
the  bond  was  made  payable  in  New  York,  it  was  held  that 
it  was  a  New  York  contract,  and  its  legality  must  be 
determined  by  the  laws  of  that  state.2  And  the  same  rule 
was  adopted  when  the  contract  was  made  in  Pennsylvania 
but  payable  in  Maryland,  where  the  association  was  incor- 
porated ; 3  and  so  when  payable  in  New  York.4     So  a  con- 


1  Citizens'  Mutual  Loan  and  Ac- 
cumulating Fund  Association  v. 
Webster,  25  Barb.  263. 

In  an  action  to  foreclose  a  mort- 
gage on  land,  it  appeared  that  the 
defendant  applied  to  plaintiff,  a 
building  society,  for  a  loan  of 
§3,000 ;  defendant  agreeing  that, 
out  of  that  amount,  he  would  pay 
$ 600  into  plaintiff's  guaranty  fund. 
He  then  owned  fifteen  shares  of 
plaintiff's  stock,  of  the  par  value 
of  sjOOcacli.  Plaintiff,  not  having 
all  the  money,  borrowed  $2,000 
from  one  M.,  and  defendant  at 
plaintiff's  request,  executed  a 
mortgage  to  M.  for  that  amount. 
I ><  Inn  la  nt  then  executed  to  plain- 
tiff  tin;  mortgage  sued  on,  which 
provided  for  tin-  payment  by  de- 
fendant to  plaintiff  of  $30  per 
in. mih  until  such  payments,  with 
the  share  <>f  plaint  id's  profits  to 

Which     defendant      would     be    en- 

titled,  Bhould  amount  to  $3,000, 
when  the  mortgage  should  be  <lis- 
charged,  ami  plaintiff  agreed  to 
discharge  t lie  mortgage  to M.  All 
paj  ments  bo  plaint  iff  enhanced  the 


value  of  defendant's  stock.  De- 
fendant received  from  plaintiff 
$2,400.  It  was  held  that  the  re- 
taining by  plaintiff  of  $600  for  its 
guaranty  fund  did  not  constitute 
usuiy,  and  the  contract  could  be 
enforced.  Granite  State  Provident 
Association  v.  Monk  (N.  J.  Ch.), 
Atl.  Eep.  872. 

2  National  Mutual  Building  and 
Loan  Association,  v.  Ashworth,  91 
Va.  706  ;  S.  C.  22  S.  E.  Rep.  521 ; 
Rowland  v.  Loan  Association,  115 
N.  C.  825  ;  S.  C.  18  S.  E.  965  ;  Row- 
la  nd  v.  Loan  Association,  116  N.  C. 
877  ;  s.  C.  22  S.  E.  Rep.  8  ;  Meroney 
v.  Loan  Association,  116  N.  C.  882  ; 
s.  c.  21 S.  E.  Rep.  924  ;  Pioneer  Sav- 
ings and  Loan  Co.  v.  Cannon,  96 
Tenn.  599  ;  S.  c.  36  S.  W.  Rep.  386. 

3  Baltimore,  etc.,  Ass'n  v.  Titlow, 
19  Pa.  C.  C.  518.  But  see  New 
York,  etc.,  Ass'n  v.  Slaughter,  17 
Pa.  C.  C.  66. 

4  Bennett  v.  Eastern  B.  &  L. 
Ass'n,  177  Pa.  St.  233;  35  Atl.  L. 
684  ;  34  I,.  II.  A.  595.  Ware  v. 
Bankers',  etc.,  Co.  (Va).  29  S.  E* 
Rep.  744. 


§  281.  LOANS   TO    MEMBERS — INCIDENTS.  287 

tract  executed  in  South  Carolina  payable  in  Georgia,  where 
the  association  is  situated,  is  a  Georgia  contract,1  oven 
though  the  company  have  a  local  agent  in  South  Carolina 
to  receive  payments,  the  borrower  having  the  option  to 
make  them  at  the  home  office  if  he  desire.2  A  like  rule  pre- 
vails in  Kentucky.3  But  in  Texas  such  a  contract  is  held  to 
be  a  mere  device  to  evade  the  usury  laws  of  that  stale,  and 
not  a  bona  fide  provision  for  performance  in  another  state  ; 
and,  therefore,  the  contract  is  governed  by  the  law  of 
Texas.4 

Sec.  281 — Validity  of  Statutes  Empowering  Building 
Associations  to  take  what  would  otherwise  be 
Usurious  Interest. 

A  statute  authorizing  building  associations  to  enter  into 
contracts  with  its  members  which  enable  them  to  make  a 
greater  profit  than  the  rate  of  interest  allowed  by  the  gen- 
eral interest  laws  of  the  state  would  produce,  is  valid  and 
not  unconstitutional.5  So,  is  a  statute  rendering  valid  cer- 
tain usurious  contracts  previously  made  and  which  were  void 
in  part.6  Such  a  statute  is  not  invalid,  even  though  the  con- 
stitution of  the  state  prohibits  the  enactment  of  local  or 
special  laws  on  the  subject  of  interest  or  money.7     In  Mary- 

1  Equitable  B.  &  L.  Ass'n  v.  Hoff-  St.  339  ;  Cincinnati  German  Build- 
man  50  S.  C.  303  ;  s.  c.  27  S.  E.  Rep.  ing  Association  v.  Flack,  1  Cin. 
692  ;  Turner  v.  Interstate  B.  &  L.  Supr.  Rep.  468  ;  McLaughlin  v. 
Ass'n  (S.  C.)  27  S.  E.  Rep.  947.  Citizens  Building.  Loan  and  Sav- 

2  Pollock  v.  Carolina,  etc. ,  Ass'n  ings  Association.  62  Ind.  264; 
(S.  C.)  29  S.  E.  Rep.  77.  Smith  v.  Mechanics'  Building  and 

8  Pryse    v.   People's,  etc.,  Ass'n  Loan  Association,  73  N.  C.  37 3. 

(Ky.),  41  S.  W.  Rep.  574.     See  also  6  Mechanics',  etc.,  Association  v. 

Freie  v.  Fidelity,  etc.,  Union,  166  Allen,   28     Conn.    97:    Welch    v. 

111.    128;  s.  C.  46   N.  E.  Rep.  784;  Wodsworth,  30  Conn.  149. 

affirming  66  111.  App.  152.  t  McLaughlin  r.  ( litizens'  Build- 

4  Building,  etc.,  Ass'n  v.  Griffin  ing,  Loan  and  Savings  Association, 
(Tex.  Civ.),  39  S.  W.  Rep.  656.  62  Ind.  264;  Holmes  v.  Smyth,-. 
National  Loan,  etc.,  Co.  v.  Stone  100  111.  413:  Freeman  v.  Ottawa 
46  S.  W.  Rep.  67.  So  in  Kentucky,  Building,  etc.,  Association.  1 1  1  Til. 
Locknane  v.  U.  S.  I.  &  L.  Co.,  44  S.  182  ;  Winget  r.  Quincy  Building, 
W.  Rep.  977.  etc.,  Association.  L28  111.   67  :  S.  C. 

5  Lucas  v.  Greenville  Building  21  N.  E.  Rep.  12 ;  25  Amer.  &  Eng. 
and  Saving  Association,  22  Ohio  Corp.  Cas.  652  ;  Vermont  Loan  and 


288  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  XIII. 

land  it  has  been  intimated  that  a  special  charter  authorizing 
a  building  association  to  take  more  than  ordinary  interest 
was  of  doubtful  validity  ; J  while  in  Kentucky  such  a  statute 
has  been  declared  unconstitutional,  the  court  saying : 

"  The  debt  borrowed  was  secured  by  a  mortgage  on  real 
estate,  and  we  are  inclined  to  adjudge  that  the  appellee  could 
have  had  no  difficulty  in  obtaining  such  a  loan  from  either 
a  natural  or  artificial  person  with  money  to  loan,  especially 
upon  a  mortgage  lien,  with  a  law  protecting  the  lender 
against  any  reclamation  of  usury  by  the  debtor ;  nor  will 
it  be  pretended  that  such  special  privileges  could  be  con- 
ferred on  an  individual  or  corporation  under  our  constitu- 
tion, and  at  the  same  time  deny  to  others  a  like  privilege. 
The  legislature  has  suspended  the  general  law  in  regard  to 
usury  for  the  benefit  of  the  appellant,  seemingly  to  pro- 
mote the  benevolent  objects  in  view.  The  profit  made  does 
not  ultimately  benefit  all  the  stockholders.  Those  who  can 
live  without  borrowing  from  the  association,  and  whose 
stock  is  not  liable  to  be  forfeited  for  the  non-payment  of 
dues,  will  ultimately  realize  the  large  profits  resulting  from 
such  usurious  loans  at  the  expense  of  those  who  have  paid 
from  twenty  to  fifty  per  cent,  for  the  use  of  the  money. 
The  fact  that  the  money  is  loaned  by  the  corporation  to 
one  of  its  members  can  make  no  difference.  The  entire 
transaction  is  against  the  letter  and  spirit  of  the  statute 
against  usury.  The  charter  of  appellant  is  delusive.  It 
proposes  to  practice  benevolence,  and  at  the  same  time 
exacts  the  most  exorbitant  rate  of  interest.  The  borrower 
is  made  the  victim  of  the  delusion,  and  instead  of  being  pro- 
tected by  the  corporation,  is  made  penniless  by  reasons  of 
its  usurious  exactions.  It  is  certain  that  those  who  fail  to 
hoiiow  prosper  under  the  workings  of  this  association,  but 
they  do  so  on  the  needs  and  misfortunes  of  their  fellow 
members.  A  loan  to  members  at  the  legal  rate  of  interest, 
with  reasonable  dues  for  the  maintenance  of  the  organiza- 

Trust.  Co.  v.  Whittled,  2  N.  D.  82  ;  S.  E.  Rep.  241  ;  Smoot  v.  People's, 

s.  c  19  N.  W.  Rep.  818  ;  :;.-,  Amer.  etc.,  Ass'n  (Va.),29  S.  E.  Rep.  746. 
&    Eng.  Corp.  Cas.  250 ;     Archer  v.        l  Birmingham  v.  Maryland  Land, 

Baltimore,  etc.,  Aas'n  CW.Va.),80  etc.,  Association,  45  Md.  541. 


§281. 


LOANS   TO   MEMBERS — INCIDENTS. 


289 


tion,  could  not  be  held  usurious,  but  such  power  as  is  con- 
ferred on  the  corporation  in  this  case,  or  upon  its  managers 
in  the  loan  of  its  money,  evidenced  by  the  transaction  in 
question,  divests  the  appellant  of  its  benevolent  character, 
and  converts  it  into  an  organization,  under  the  forms  of 
law,  for  the  purpose  of  tilling  its  treasury  by  imposing  op- 
pressive burdens  on  its  members,  who  have  been  solicited 
to  become  the  objects  of  its  benevolence."  * 


1  Henderson  Building,  etc.,  Asso- 
ciation v.  Johnson,  88  Ky.  191  : 
s.  c.  3  L.  R.  A.  289  ;  10  S.  W.  Rep. 
787.  See  Gordon  v.  Winchester 
Building  and  Accumulating  Fund 
Association,  12  Bush.  110 ;  Her- 
bert v .  Kenton  Building  and  Sav- 
ings Association  of  Carrington,  11 
Bush.  296. 

Contra,  Vermont  Loan  and  Trust 
15 


Co.  v.  Whithed,  2  N.  D.  82  ;  s.  c. 
49  N.  W.  Rep.  318 ;  35  Amer.  & 
Eng.  Corp.  Cas.  250. 

A  usurious  contract  may  be  ren- 
dered valid  and  binding  by  a  sub- 
sequent act  of  the  Legislature. 
Crabtree  v.  Old  Dominion,  etc., 
Ass'n  (Va.),  29  S.  E.  Rep.  741; 
Smoot  v.  People's,  etc.,  Ass'n  (Va.), 
29  S.  E.  Rep.  746. 


CHAPTEE  XIV. 

MORTGAGES. 

Sec.  282.  Power  to  Take  Security  for  a  Loan. 

283.  Kind  of  Security. 

284.  First  or  Second  Mortgage. 

285.  Validity  of  Mortgage. 

286.  Reformation  of  Mortgage. 

287.  By-laws  a  Part  of  the  Mortgage. 

288.  What  Mortgage  Covers. 

289.  Amount  one  Shareholder  can  Borrow. 

290.  Assignment  of  Mortgage. 

291.  Not  Assets  for  Purposes  of  Withdrawals. 

292.  Tender  of  Amount  Due. 

293.  Marshalling  Assets — Lien  on  Stock — Second  Mortgagee. 

294.  Marshalling  Assets — Pennsylvania  Cases. 

295.  Marshalling  Assets — Judgment  Creditors. 

296.  Marshalling  Assets — Rights  of  Third  Persons  cannot  be  Pre- 

judiced. 

297.  Marshalling  Assets— Notification  of  Prior  Mortgagee  of  Sub- 

sequent Mortgagee's  Rights. 

298.  Pursuing  Two  or  More  Remedies. 

299.  Action  to  Foi'eclose. 

300.  Defenses. 

301.  Abandonment  of  Plan  of  Association. 

302.  Fraudulent  Representations  of  Officers  of  Association. 

303.  Set-Off. 

304.  Evidence  on  Foreclosure  Suit. 

305.  Decree— Sale. 

306.  Decree  Stands  as  Security  for  Future  Payments. 

307.  Foreclosure  and  Sale  Under  Mortgage  does  not  necessarily 

Terminate  Mortgagee's  Membership. 

308.  Rigbts  of  Purchaser  of  Land  Mortgaged. 

309.  Discbarge  of  Debt  by  Sale  of  Land — Assumpsit  for  Remainder 

Due. 

310.  Cancellation  of  Mortgages — May  Show  Maturity  of  Claim. 

311.  Revocation  of  ( 'anccllatioii  improperly  Made. 
'.'>\2.    Foreign  (  'orporal  ion. 

Sec.  282 — Power  to  Take  Security  for  a  Loan. 

J  I'  ;i  corporation  lias  the  power  to  make  a  loan,  it  has  the 
200 


§  283.  MORTGAGES.  291 

power  to  take  security  for  its  payment.  The  latter  power  is 
incident  to  the  former,1  just  as  the  power  of  an  association 
to  borrow  money  shows  with  it  the  incidental  power  to 
execute  a  note  as  evidence  of  the  debt.  But  the  power  to 
loan  does  not  authorize  a  corporation  to  buy  notes  to  sell 
for  gain  ;  for  that  is  beyond  the  scope  of  the  corporation.2 
These  rules  are  as  applicable  to  a  building  association  as  to 
a  corporation.  Indeed,  the  cases  cited  are  building  associa- 
tion cases. 

Sec.  283— Kind  of  Security. 

The  security  almost  universally  taken  is  a  mortgage  upon 
an  unincumbered  freehold  estate ;  but  there  is  nothing  to 
prevent  a  mortgage  being  taken  upon  a  leasehold,3  nor  even 
upon  an  equitable  title.4  It  is  not  essential  that  the  person 
borrowing  the  money  should  give  the  mortgage  upon  his 
own  land ;  for  a  stranger  to  the  association  may  lawfully 
bind  his  land  to  secure  the  loan  made  to  such  borrower.5  If 
a  statute  authorizes  the  taking  of  personal  security,  such 
security  may  be  taken  from  a  person  not  a  member  of  the 
association ; 6  and  it  has  been  held  that  additional  personal 

1  Massey  v.  Citizens'  Building  that  a  mortgage  on  chattels  will 
and  Savings  Association  of  Paola,  be  enforced.  Bismarck  Building 
22  Kan.  624  ;  Union  Building  and  and  Loan  Association  v.  Bolster, 
Loan  Association  of  New  Brims-  92  Pa.  St.  123. 

wick  v.  Masonic  Hall  Association  4  Lincoln   Building  and  Saving 

of  New  Brunswick,   29  N.  J.  Eq.  Association  v.  Haas,  10  Neb.  581  ; 

389.     See  §  269.  s.  c.  7  N.  W.  Eep.  327.     See  §  269. 

2  Manufacturers  and  Mechanics'  5  Massey  v.  Citizens'  Building 
Saving  and  Loan  Association  v.  and  Savings  Association  of  Paola, 
Conover,  5  Phila.  18  ;  19  Leg.  Int.  22  Kan.  624  ;  Relief  Saving  Fund 
116.    See  §  275.  Association  v.   Longshore,  8  Luz. 

3  Sheffield  and  S.  Y.  Permanent  Leg.  Reg  (Pa.)  199  Johnston  v. 
Building  Society  v.  Aizlewood  L.  Elizabeth  Building  and  Loan  As- 
R.,  44  Ch.  Div.  412  ;  s.  c.  62  L.  T.  sociation,  104  Pa.  St.  394  ;  Tanner's 
678Segravev.  Pope,  1  DeG.  M.  &  Appeal,  95  Pa.  St.  118;  Juniata 
G.  783;  20  L.  T.  Rep.  158;  16  Jur.  Building  Association  v.  Mixell,  84 
1099  ;  22  L.  J.  Ch.  258  ;  15  E.  L.  &  Pa.  St.  313  ;  Pfeister  v.  Wheeling, 
Eq.  477.  etc.,  Association,  19  W.  Va.  676. 

Power  to  loan  on  real  estate  does  6  Freehold  Loan  and  Savings 
not  apply  to  a  power  to  loan  on  Society  v.  Farrell,  31  U.  C.  C.  P. 
chattels,  although  it  would  seem    453. 


292  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIV. 

security  may  be  taken  unless  prohibited  by  a  statute,1  al- 
though it  had  been  held  that  a  personal  security  alone  was 
invalid.2  "Where  the  by-laws  provided  that  the  borrowers 
from  the  association  should  "  secure  the  payment  of  said 
loan,  with  legal  interest,  by  satisfactory  bond  or  mortgage 
upon  real  estate,"  it  was  held  that  the  officers  of  the  asso- 
ciation had  the  power  to  take  both  securities,  and  if  both 
were  taken,  with  sureties  on  the  bond,  the  presumption 
would  be  that  the  officers  relied  upon  the  security  of  both  ; 
that  the  association  was  not  restricted  to  the  pursuit  of  one 
before  the  other,  and  that  parol  evidence  that  it  was  the 
custom  of  the  association  to  secure  the  loans  by  real  estate 
security,  which  was  treated  as  a  primary  security  and  was 
first  resorted  to,  was  incompetent.3 

Sec.  284 — First  or  Second  Mortgage. 

Unless  the  charter,  some  statute  or  the  by-laws  prevent 
it,  the  association  is  not  restricted  to  a  first  mortgage 
when  making  a  loan ;  but  it  may  make  such  loan  on  a 
second  or  any  other  mortgage.4  Not  only  may  they  do 
this,  but  they  may  advance  money  to  redeem  a  second 
mortgage  ;  and  when  the  loan  was  on  a  collier,  it  was  held 

1  Hope  v.  Glass,  23  U.  C.  Q.  B.  if  sufficient.  It  was  held  that  the 
86 ;  Sheffield  and  South  Yorkshire  society  could  not  object  to  the 
Building  Society  v.  Aizlewood,  44  security  on  the  ground  they  urged. 
Ch.  Div.  412  ;  S.  C.  59  L.  J.  Ch.  34  ;  In  re  Canada  Mutual  Building  So- 
62  L.  T.  678  ;  6  T.  L.  R.  25.  ciety,  3  Leg.  News.  58. 

2  Canada  Permanent  Building  That  a  building  association  has 
and  Savings  Society  v.  Lewis,  8  U.  the  same  power  to  take  personal 
C.  C.  P.  352.  security  as  an  individual,  see  Union 

3  Juniata  v.  Building  and  Loan  Building  Loan  Association  v.  Ma- 
Association  v.  Hertzel,  103  Pa.  St.  sonic  Hall  Association,  29  N.  J. 
507 ;  s.  C.  41  Leg.  Int.  155 ;  12  W.  Eq.  389. 

N.  Cas.  431  ;  31  Pitts.  L.  Jr.  473.  In  Australia  the  society  is  the 

A  society  refused  to  make  a  loan  owner    of    the    land    mortgaged, 

1  .•■<-. 1 1 1  i-  the  property  offered  as  a  when  default  is  made,  within  the 

security  lay  in  a  part  of  the  city  meaning  of  the  Health  Act.     Port 

where   it  did    nol  desire  to  invest.  Melbourne  v.  Permanent  Savings 

Its  rules  provided  that  the  security  Building  Society   L.    R.,  20   Vict. 

offered  must  be  t<»  the  satisfaction  (Australia),  508. 

of  the  board  as  well  as  of  the  valua-  4  Citizens'    Building    Loan   and 

tion,  and  also  that  all  property  in  Savings  Association  v.  Coriell,  34 

the  city  was  available  as  security,  N.  J.  Ecp  383.     See  §  269. 


§  285.  MORTGAGES.  293 

that  the  directors  could  advance  money  to  run  the  collier, 
if  necessary  to  realize  the  money  advanced.1  But  when  II., 
— a  member  of  a  building  society  which  could  only  lend  on  a 
first  mortgage  on  real  estate,  but  could  release  part  of  a 
piece  of  mortgaged  property,  if  satisfied  that  the  remainder 
would  be  sufficient  security, — borrowed  £17,000  from  the 
society  on  a  first  mortgage  ;  and  the  society  having  ex- 
hausted its  powers,  applied  for  a  loan  from  13.,  who  lent 
£6,000  to  H.  on  security  of  the  property  mortgaged  to  the 
society,  which  joined  in  the  security  to  postpone  its  own 
mortgage ;  and  the  £6,000  was  at  once  handed  to  the 
society  by  H.,  who  was  credited  with  the  amount  in  part 
discharge  of  the  £17,000  ;  it  was  held  (1)  that  the  transaction 
with  B.  was  ultra  vires  the  society  ;  (2)  that  B.'s  security  for 
£6,000  was  postponed  to  the  society's  security  for  £11,000  ; 
and  (3)  that  B.  was  entitled  to  a  security,  as  against  the  so- 
ciety, in  respect  of  any  part  of  the  £6,000  applied  in  its  pay- 
ment of  any  debts  and  liabilities  payable  by  the  society.2 

Sec.  285— Validity  of  Mortgage. 

If  the  loan  was  not  authorized  by  the  statute,  it  seems 
that  the  mortgage  is  invalid ;  for  it  is  only  security  for 
the   payment   of   money   within   the   statute.3     Indeed,   a 

1  Sheffield  &    South    Yorkshire        Notice  to  a  director  borrowing 

Permanent    Building    Society    v.  from  an  association  is  not  notice 

Aizlewood,  L.  R.  44  Ch.  Div.  412  ;  to  the  association  of  a  prior  mort- 

s.  C.  59  L.  J.  Ch.  34 ;  62  L.  T.  678  ;  gage  ;  for  in  borrowing  he  is  act- 

6  T.  L.  R.  25.     Where  money  was  ing  for  himself.     Merchantville  B. 

advanced  by  a  mortgagor  to  can-  &  L.  Ass'n  v.  Zane  (N.  J.  Ch.)  38 

eel  a  mortgage  held  by  a  building  Atl.  Rep.  420. 

society  and  also  paid  to  the  bor-        2  Portsea  Island  Building  Society 

rower,   it  was  held   that   he   had  v.  Barclay,  8  R.  389 ;  s.  c.    [1894]  3 

priority    over     an     intermediate  Ch.  86  ;  63  L.  J.  Ch.  837  ;  10  T.  L.  R. 

mortgage  of  which  the  last  loaner  526  ;  71  L.  T.  Rep.  82  ;  1  Manson, 

had  no  knowledge  when  he  made  339;    on  appeal  affirmed,  12  Eep. 

the  advance  and  paid  the  money.  324 ;  s.  c.  [1895]  2  Ch.  298 ;  64  L. 

Hosking  v.  Smith,  L.   R.  13  App.  J.  Ch.  579  ;  72  L.  J.  744  ;  43  W.  R. 

Cas.  582;  s.  c.  58  L.  J.   Ch.  367;  586;   11   T.   L.    R.   424.      See  also 

59  L.  T.  565  ;  37  W.  R.  257  ;  over-  Small  v.  Smith,  L.  R.,  10  App.  Cas. 

ruling,  Poase  v.  Jackson,  L.  R.,  3  119. 

Ch.  576  ;  and  Robinson  v.  Trevor,        3  Franklin  Building  Association. 

L.  R.,  2  Q.  B.  Div.  423.  v.  Mather,  4  Abb.  Pr.  274. 


291  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIV. 

mortgage  is  not  operative  only  so  far  as  the  charter  of  the 
association,  a  statute,  or  the  by-laws  authorize  it ;  and  it 
must  conform  to  them.1  Thus,  where  the  by-laws  required 
weekly  payments  of  dues  and  instalments,  and  provided 
that  all  its  loans  should  become  due  in  six  years  from  the 
organization  of  the  society,  or  when  its  stock  reached  its 
par  value,  it  was  held  that  the  liability  of  a  borrower  to 
pay  weekly  dues  and  instalments  ceased  six  years  from  the 
date  of  his  loan.2  And  where  the  statute  or  charter  under 
which  a  building  association  is  organized  defines  the  formal 
covenants  or  conditions  which  may  be  embodied  in  the 
mortgage,  with  a  design  of  bringing  about  the  results  con- 
templated by  the  statute  or  charter,  these  details  must  be 
strictly  pursued.3  So  a  reservation  inserted  in  a  mortgage, 
which  is  not  contemplated  by  the  statute  or  the  by-laws, 
cannot  be  enforced.4  Strictly  speaking,  however,  the  form 
of  the  mortgage  is  not  very  material ;  for  it  will  be  inter- 
preted in  the  light  of  the  provisions  of  the  statute  or  charter 
and  the  by-laws  of  the  association.  In  a  Pennsylvania  case 
it  was  said :  "  There  is  no  prescribed  form  for  a  building 
association  mortgage.  Its  validity  as  such  depends  on  the 
facts,  and  these  must  be  taken  as  a  whole.  If  this  trans- 
action was  not  in  fact  a  loan  by  a  building  association  to  a 
member,  no  form  would  save  it  from  the  ordinary  rules  as 
to  interest  and  usury,  and  so  on;  on  the  other  hand,  as  it 
clear!  v  was  in  fact  such  a  loan,  no  mere  form  of  the  instru- 
ment can  deprive  it  of  the  privileges  of  such  loans."5     The 

i  Shannon    v.    Howard    Mutual  5  Wkly.  L.  Bull.  752 ;  Building  As- 
Building  Association,  30  Md.  383.  sooiation  v.  Schuller,  3  W.  N.  Cas. 

2  Lime    City     Building,    Saving  431. 

and  Loan  Association  v.  Wagner,  B  Building  Association  v.  Robin- 

122  Ind.  78;  s.  c.  23  N.  E.  Repr.  son,  1!)   Phila.  358;  S.  c.  46  Leg. 

689  ;   IT  Amer.  St.  Rep.  342.  Int.  5.     See  contra,  Fagan  v.  Peo- 

*  Smith  v.   Mechanics'   Building  pie's  Saving  and  Loan  Association, 
and    Loan    Association,  73  N.   C.  55  Minn.  437 ;  S.  C.  57  N.  W.  Rep. 

142  ;  O'Malley  v.  People's,  etc.,  As- 

*  Shannon    v.    Howard    Mutual    sociation,  36  N.  Y.  Supp.  1016. 
Building  Association,  3('»  M< I .  :is:j ;       a   secret    un<l<'rst,in<ling    how- 
Bagerman  v.  Ohio    Building  and    ever,  especially  if  it  be  unlawful, 
Savings   Association,  35  Ohio  St.     will  not  !><•  held  to  be  a  part  of  the 
186 ;  Building  Association  v.Egger,    mortgage  or  contract  of  borrow- 


§  287.  MORTGAGES.  295 

mortgage  is  not  void  for  uncertainty  on  the  ground  that  it 
runs  during  the  existence  of  the  association  without  fixing 
any  time  for  its  termination.1  It  is  not  necessary  to  express 
in  the  mortgage  how  much  of  the  interest  received  is  a 
bonus  in  respect  of  the  sum  advanced,  and  how  much  for 
interest.2 

Sec.  286 — Reformation  of  Mortgage. 

If,  for  any  reason,  the  mortgage  and  contract  of  borrow- 
ing do  not  conform  to  the  actual  contract  between  the 
association  and  the  borrower,  both  such  mortgage  and  con- 
tract  may  be  reformed,  so  as  to  accurately  express  the  true 
contract.  Where  a  schedule  was  exhibited  to  a  borrower, 
showing  the  amount  of  payments  he  would  be  required  to 
make,  such  schedule  was  used  for  the  purpose  of  showing 
the  actual  contract.8 

Sec.  287— By-Laws  a  Part  of  the  Mortgage. 

The  courts  have  not  been  of  a  unanimous  opinion  whether 
or  not  the  by-laws  of  the  loaning  association  can  be  ex- 
amined as  a  part  of  the  contract  of  borrowing  or  as  a  part 
of  the  mortgage.  In  an  early  Maryland  case  it  was  said 
that  the  courts  could  not  look  beyond  the  mortgage  to  the 
by-laws  in  determining  the  amount  due  where  the  mortgage 
made  no  reference  to  such  by-laws ;  and  even  a  covenant  to 
pay  "  all  fines  imposed  by  the  articles  of  association  "  was 
not  such  a  reference  to  the  by-laws  as  to  make  them  a  part 
of  the  mortgage.4     But  in  a  subsequent  case  the  language 

ing.     Pangborn  v.  Citizens',  etc.,  ciety  v.  Lucas,  44  U.  C.  Q.  B.  106  ; 

Association,  35  N.  J.  Eq.  341.  Hodgins  v.  Ontario  Loan  and  De- 

1  Robertson  v.  American  Home-  benture  Co.,  7  Ontario  App.  202. 
stead  Association,  10  Md.  397  ;  s.  c.  Tbe  fact  that  the  association  is 
69  Amer.  Dec.  145  ;  Merrill  v.  Mc-  wrongly  named  in  the  mortgage 
Intire,  13  Gray,  157 ;  Winchester  does  not  render  the  contract  of 
Building  Association  v.  Gilbert,  23  borrowing  invalid.  Hoboken 
Gratt.  787  ;  Franklin  Building  As-  Building  Association  v.  Martin,  2 
sociatien  v.  Mather,  4  Abb.  Pr.  274.  Beas.  (N.  J.)  Eq.  427. 

2  Freehold  Permanent  Building  4  Robertson  v.  American  Home- 
and  Savings  Society  v.  Choate,  18  stead  Association,  10  Md.  397 ;  69 
Grant  Ch.  412.  Amer.  Dec.  145. 

8  Superior  Saving  and  Loan  So- 


*296  BUILDING  AND  LOAN   ASSOCIATIONS.     Cll.  XIV. 

used  in  the  case  just  cited  was  examined  at  considerable 
length  and  the  conclusion  reached  that  the  by-laws  of  the 
loaning  association  could  be,  and  properly  so,  examined  for 
the  purpose  of  determining  the  amount  due.1  There  are 
other  decisions  to  the  same  effect ;  and  it  may  be  laid  down 
as  a  rule  that  the  by-laws  of  the  loaning  association  are  a 
part  of  the  contract  of  loaning  without  any  specific  refer- 
ence to  them  being  made  in  the  mortgage.2 

Sec.  288— What  Mortgage  Covers. 

Agreements  may  be  inserted  in  the  mortgage  to  the 
effect  that  the  mortgagor  shall  pay  the  taxes  assessed 
against  the  property  mortgaged,  and  if  he  do  not,  the  asso- 
ciation may  pay  them  and  recover  the  amount  from  him  in 
any  decree  of  foreclosure  entered  on  the  mortgage.3 

So  it  is  proper  to  insert  a  clause  providing  for  the  insur- 
ance of  the  property  mortgaged,  for  the  benefit  of  the  asso- 
ciation, and  in  like  manner  providing  that  the  association 
may  pay  it  if  the  mortgagor  do  not,  and  charge  it  up  under 
the  mortgage  or  foreclosure.  Likewise,  it  is  proper  for  the 
association  to  agree  that  it  will  effect  an  insurance  on  the 
property  for  the  benefit  of  the  mortgagor ;  and  if  it  do  not, 
.•mil  the  property  be  destroyed,  the  association  will  be  liable 
for  the  amount  the  mortgagor  would  have  received  if  the 
insurance  had  been  perfected,  and  not  the  amount  agreed 
upon  between  such  association  and  the  mortgagor.  In  such 
an  instance  the  association  is,  having  received  a  benefit 

1  McCahan  v.  Columbian  Build-  States  Savings  and  Loan   Co.   v. 

ing  Association  of  East  Baltimore,  Cade  15  Wash.  38:  s.  c.  45  Pac. 

•1<>  Mil.  226.  Rep.  G56  ;  Mechanics',  etc.,  Ass'n 

-  I. inie    City    Building,    Saving  v.  Vierling,  66  111.  App.  621. 

and  Loan   Association  v.  Wagner,  8  Huntington,  etc.,    Association 

L22    End.  78;  S.  C.  23   N.   E.  Rep.  v.  Melsheimer,  14  W.  N.  Cas.  344. 

689;  17  Amer.  St.  Rep.  342;  Wil-  Usually  such  a  clause  is  unneces- 

soii  v.  Shoenlaub,  99   Mo.  96;  8.  C.  sary   in  order  to  charge  the  land 

12   8.   W.    Rep.   361  ;    O'Malley  v.  mortgaged  with  the  taxes  the  ss- 

People's  Ass'n,   !)2     Him,    572;    72  sociation    lias  had    to  pay  to  pro- 

N.  Y.  St.  Rep.  289;  36  N.  Y.  Supp.  cure  its   security.      Montgomery, 

1016;    Aul'l  r.   Glasgow    Building  etc.,  Association   v.  Robinson,  69 

Society,  12  App.  <  'as.  at  p.  205  ;  56  Ala.  413. 
L.  T.  776;  85  W.  R.  682;  United 


§  288.  MORTGAGES.  297 

under  the  agreement,  estopped  to  deny  the  validity  of  the 
contract.     In  discussing  this  question  the  court  said  : 

"  As  an  incident  to  security  upon  improved  real  estate, 
no  reason  is  perceived  why  it  may  not  be  regarded  as  within 
the  powers  granted,  that  the  corporation  should  have  the 
the  right  to  contract  for  insurance  on  the  improvements  on 
the  property,  to  make  more  available  and  certain  their 
security,  and  such  a  contract  would  be  for  the  benefit  of  the 
company.  It  was  expressly  provided  in  the  deed  of  trust, 
that  appellee  should  keep  the  property  insured  in  such,  com- 
pany, and  for  such  amount,  as  appellant  should  designate, 
not  exceeding  the  amount  of  the  indebtedness,  except  at  the 
option  of  appellee.  It  was  in  pursuance  of  this  provision  in 
his  contract  that  appellee  procured  or  permitted  the  secre- 
tary to  obtain  the  insurance  for  the  first  year,  and  con- 
tracted that  he  should  procure  it  for  the  succeeding  year. 
It  was  for  the  better  securing  of  the  loan  made  to  appellee 
that  the  insurance  was  to  be  procured,  and  in  this  view  iJt 
can  hardly  be  said  that  it  was  not  incidental  to  the  legiti- 
mate purpose  of  the  corporation,  nor  that  it  was  not  for  its 
benefit.  It  was  germane  to  the  business  that  the  corpora- 
tion was  transacting,  and,  in  case  of  loss,  would  inure  to 
its  advantage.  The  liability  of  the  company,  however,  is 
resisted  mainly  on  the  ground  that  there  is  no  authority  in 
the  act  of  the  legislature  authorizing  the  incorporation  of 
the  company,  or  in  the  articles  of  association,  for  making 
the  contract  to  procure  insurance  for  appellee  ;  and  because 
it  is  beyond  the  powers  expressly  conferred,  it  is  insisted 
that  such  contract  is  void,  and  cannot  be  enforced.  It  is 
said  that  there  is  nothing  in  the  act  of  the  Legislature 
authorizing  such  corporations,  or  in  the  articles  of  associa- 
tion, that  would  authorize  appellant  to  engage  in  the  in- 
surance business.  It  may  be  conceded  that  appellant  has 
no  such  power,  but  that  is  not  the  case.  Appellant  did  not 
undertake  to  insure  the  propert}r  of  appellee,  but  only  to  ob- 
tain insurance  for  him  in  some  responsible  company,  as  it 
had  previously  done.  This  is  a  very  different  undertaking, 
and  rests  wholly  on  different  principles.  The  true  construc- 
tion of  the  contract  declared  on  is  that,  by  the  terms  of  the 


298  BUILDING   AND   LOAN   ASSOCIATIONS.      Ch.  XIV- 

original  agreement,  appellee  was  bound  to  keep  the  prop- 
erty insured  in  such  company  as  appellant  should  select ;  and 
because  it  was  supposed  to  be  some  advantage  to  the  com- 
pany to  attend  to  the  insurance  themselves,  that  right  was 
conceded  to  them  on  their  agreement  to  procure  it.  For 
what  reason  the  company  desired  to  attend  to  the  insurance 
is  not  very  clear,  nor  is  it  material.  It  is  sufficient  that  they 
desired  to  have  it  under  their  control,  and  it  may  be  pre- 
sumed to  have  been  to  their  interest  to  have  it,  or  else  they 
would  not  have  sought  the  privilege,  when  appellee  was 
anxious  and  desirous  to  attend  to  it  himself.  No  reason  is 
perceived  why  the  company  could  not  have  obtained  the 
control  of  the  insurance,  which  was  for  the  security  of  the 
loan  to  appellee,  and  to  contract  that  it  would  procure  it  for 
him  in  a  company  that  they  would  select ;  and  to  hold  that 
appellant  would  not  be  liable  for  the  breach  of  such  contract 
simply  because  it  is  beyond  the  express  power  conferred, 
would  be  to  carry  the  doctrine  of  ultra  vires  to  an  unprece- 
dented extent.  This  doctrine  must  have  a  reasonable  con- 
struction."1 

If  a  mortgage  provide  that  on  foreclosure  there  shall  be 
retained  out  of  the  proceeds  of  the  sale  "  the  principal,  in- 
terest, and  premiums  "  then  due,  and  all  fines  and  penalties 
due  under  the  by-laws,  the  association  has  no  right  to  retain 
the  monthly  "  dues  "  on  the  mortgagor's  stock.2  Nor  is  the 
mortgage  a  security  for  the  "  fines  "  unless  it  is  expressly 
stipulated  in  the  mortgage  that  it  shall  be  a  security  for 
their  payment;  and  if  it  does  not  contain  such  a  stipulation, 
and  the  mortgagor  pay  fines,  he  cannot,  on  foreclosure, 
claim  credit  on  his  mortgage  for  the  amount  thus  paid.3 


H'],ir;iL'o    Building    Society    v.  pany,  04  Ga.  5C2  ;   s.  C.  20  S.  E. 

Crowell,  65  Til.  453  ;  Montgomery,  Rep.  101. 

i lion  v.  Robinson,  69  -  Pagan  v.  People's   Saving  and 

Ala.  Loan    Association,    55   Minn.   437; 

bhe  asssociation  to  re-  s.  c.  57  N.  W.  Rep.  142.    New  Jer- 

cover  the  amount  LI   has  paid  for  sey,  etc.,  Co.  v.  Bachelor,  54  N.  J. 

in  urance,    it    must    aver    what  Eq.  600  ;  S.  c.  85  Atl.  Rep.  745. 

amounl  if   paid.     Butler  V.  Mutual  3  Clarkville    Building  and   Loan 

Aid,    Loan    and  Investment  Com-  Association  V.   Stephens,   26  N.J. 


289. 


MORTGAGES. 


209 


The  directors  of  a  building  association  were  empowered, 
after  four  years  had  expired,  to  double  the  amount  of  pre 
iniums  to  be  paid  each  week.     It  was  held  that  the  mort- 
gage did  not  embrace  the  increase,  the  terms  of  the  mort- 
gage not  expressly  covering  it.1 


Sec.  289 — Amount  One  Shareholder  Can  Borrow. 

In   keeping    with    the  original  plan  of  building  associa- 


Eq.  351  ;  Hamilton  Building  Asso- 
ciation v.  Reynolds,  5  Duer  671  ; 
Hazel,  etc.,  Association  v.  Groes- 
beck,  41  Leg.  Int.  16. 

1  Home  Building  Association  v. 
Boning,  7  Wkly.  L.  Bull.  174  ;  S.  C. 
10  Araer.  L.  Rec.  626. 

An  advance  made  after  the  re- 
cording of  the  second  mortgage 
given  for  the  purchase  money,  un- 
der an  agreement  inserted  in  the 
prior  mortgage,  is  subject  to  such 
second  mortgage.  The  first  mort- 
gagee had  no  actual  notice  of  the 
second  mortgage,  although  it  was 
recorded.  Pierce  v.  Canada  Per- 
manent Loan  and  Savings  Co.,  24 
Ontario,  426. 

The  by-laws  of  an  association 
divided  its  stock  into  four  series  of 
500  shares  each,  to  be  paid  for  in 
weekly  payments  of  one  dollar. 
"When  the  funds  amounted  to  §500, 
the  sum  was  assigned  to  some 
share,  which  was  then  termed  a 
"redeemed  share,"'  and  the  holder 
was  thereafter  required  to  pay  in- 
terest on  the  amount  monthly,  be- 
sides the  one  dollar  a  week,  until 
all  the  shares  in  that  series  were 
"  redeemed."  A  shareholder  had 
$500  assigned  to  him,  and  gave  his 
note  for  payment,  served  by  a 
deed  of  trust  authorizing  a  sale  of 
the  propert}r  if  default  be  made  in 
the  monthly  or  weekly  payments. 
It  was  held  that  default  in  the  pay- 
ment of  the  dues  was  the  default 


in  the  weekly  payments  referred 
to  in  the  trust  deed,  and  author- 
ized a  sale  of  the  property.  Wil- 
sons. Schoenlaub,  99  Mo.  96  ;  s.  c. 
12  S.  W.  Rep.  361. 

If  the  bill  or  complaint  to  fore- 
close the  mortgage  proceed  upon 
the  theory  that  only  the  principal 
and  interest  is  due  and  not  that  on 
assessment  on  the  stock  is  due, 
there  can  be  no  recovery  for  the 
latter.  Cummings  v.  Citizens' 
Building,  Loan  and  Savings  Asso- 
ciation, 142  Ind.  600  ;  s.  c.  42  N.  E. 
Rep.  213. 

If  the  mortgage  is  a  security  for 
dues  and  premiums  it  remains  such 
as  long  as  the  shares  of  stock  are 
in  force.  Haynes  v.  People's 
Building,  Loan  &  Savings  Associa- 
tion, 2  Ohio  N.  P.  181  ;  s.  c.  3  Ohio 
Dec.  228.  Concordia,  etc.,  Ass'n, 
v.  Read,  93  N.  Y.  474. 

A  bond  and  mortgage  executed 
by  a  member  to  secure  an  anti- 
cipated loan,  cannot,  if  the  loan  be 
made,  not  be  retained  as  security 
for  items  owing  by  the  mortg 
which  were  to  be  deducted  from 
the  gross  amount  of  the  loan  when 
made,  where  they  were  neither 
given  nor  received  as  security  for 
such  items.  Furey  v.  Knights  of 
Pythias  Building  and  Loan  Asso- 
ciation (N.  J.  Ch.),  34  Atl.  Rep. 
380.  In  such  an  instance  the  mem- 
ber may  maintain  an  action  to  can- 
cel the  mortgage,  although  some 


300  BUILDING    AND   LOAN   ASSOCIATIONS.      Ch.  XIV. 

tions,  it  is  sometimes  provided  that  a  member  can  own  not 
to  exceed  a  certain  number  of  shares.  But,  if  a  shareholder 
own  more  than  the  by-laws  permit  him  to  own,  and  he  ob- 
tain a  loan  by  reason  of  such  ownership  to  the  full  extent 
of  the  number  of  shares  he  owns,  he  cannot,  nor  can  his 
creditors,  set  up  such  by-laws  as  a  defence  to  a  foreclosure 
of  the  mortgage.1  So  a  wife  giving  a  mortgage  for  money 
borrowed  on  the  limited  number  of  shares  in  her  name,  is 
estopped  from  showing  that  her  husband  subscribed  for 
them  in  her  name.2 

Sec.  290 — Assignment  of  Mortgage. 

If  a  building  association  has  the  power  to  borrow  money, 
it  has  the  power  to  assign  mortgages  made  to  it  by  its  bor- 
rowing members,  to  secure  the  amount  borrowed ;  and  the 
power  of  assignment  may  be  said  to  be  measured  by  the 
power  to  borrow.3  Indeed,  it  would  seem  that  an  associa- 
tion is  not  thus  limited  in  assigning  its  mortgaged  securities, 
but  possesses  a  general  power  of  assignment.4  If  the  associa- 
tion be  solvent,  such  an  assignment  may  be  made  for  the 
payment  of  an  order  given  to  a  member  on  his  withdrawal ; 
and  it  does  not  violate  a  statute  providing  that  at  no  time 
shall  more  than  one-half  of  the  funds  in  the  treasury  be  ap- 
plicable to  the  demands  of  withdrawing  stockholders  if  the 
association  receive  the  interest  on  the  mortgage  assigned.5 
Whatever  payments  the  mortgagee  may  make  to  the  as- 
signee will  inure  to  his  benefit,  the  same  as  if  he  had  made  it 

items  or  amounts  were  covered  by  See  Munhall  v.  Boedecker,  44  111. 

the  mortgage,  the  association  in-  App.  L31  ;  and  Murray  v.  Scott  L. 

sistiiiK  that  it  also  cover  items  that  R.,  9  App.  Cas.  519;  s.  C.  53  L.J. 

i:  didnot.     Id.  745;  33  W.  R.  173;  51  L.  T.  462. 

1  Victoria  Building  Association  Manahan  v.  Varnum,  11  Gray, 405. 
/-.  ^.rbeiter  Bund,  6  Wkly.  L.  Bull.  But  not  if  deposited  with  a  state 
823  ;  s.  c.  I"  Amir.  L.  Rec.  485.  official  as  security,  Trowbridge  v. 

2  Ohio  Building  Association  v.  Bamilton (Wash).  52Pac.  Rep.  328. 
Leyden,  1  Wkly  L.  Bull.  126  ;  s.  c.  4  Ulster  v.  Permanent  Building 
■1  A.mer.  L.  Rec.  765.  Society  v.  Glenton  L.  R.  21  Ir.  Ch. 

8  North  Hudson  Mutual  Building  121.     See  Itunmey  &  Smith.      In  re 

and  Loan  Association  v.  First  Na-  66  L.  J.  Ch.  641 ;  s.  c.  [1897]  2  Ch. 

tional   Bank,  79  Wis.  81  ;  S.  C.  47  351  ;  76  I,  T.  800;  45  W.  R.  678. 
•;.  \v.   Rep.  800;  LI  L.  R.  A.  845;        B  Quein  v.  Smith,  108  Pa.  St.  325; 

85    \im.t.  .V   Eng.  Corp.  Cas.  231.  s.  c.  42Leg.  int.  386. 


§  292.  MORTGAGES.  301 

direct  to  the  association  j1  and  if  the  borrower  had  the  right, 
given  him  before  the  assignment,  to  appropriate  his  stock 
to  the  payment  of  the  mortgage,  the  assignment  will  not 
deprive  him  of  such  right.2  Where  it  is  shown  that  the  di- 
rectors or  trustees  made  the  assignment,  it  will  be  presumed 
that  they  had  the  power  to  make  the  assignment  ;3  and  this 
presumption  would  no  doubt  be  entertained  if  the  president 
should  make  the  assignment,  following  the  method  usually 
followed  by  such  officer  in  executing  contracts  on  behalf  of 
the  association. 

Sec.  291 — Not  Assets  for  Purposes  of  Withdrawals. 

If  a  member  desire  to  withdraw  from  an  association,  he 
cannot  insist  that  his  right  to  withdraw  is  applicable  to  the 
funds  loaned  by  the  association,  and  which  are  represented 
by  the  mortgages.  Such  right  is  limited  to  the  funds  on 
hand,  and  is  not  available  as  respects  funds  loaned,  which 
are  to  be  returned  to  the  association  in  small  instalments 
extending  over  a  period  of  years.4  Nor  can  the  mortgages 
be  considered  as  assets  in  determining  the  amount  on  hand 
necessary  to  pay  off  unadvanced  shares  on  winding  up  the 
association.5 

Sec.  292— Tender  of  Amount  Due. 

It  is  sometimes  desirable  to  tender  to  the  mortgagee  the 
amount  due  it  under  the  mortgage  ;  and  in  a  mortgage  be- 
tween private  individuals  the  amount  to  tender  is  easily 
ascertainable.  But  in  the  case  of  a  building  association 
mortgage,  it  is  a  very  difficult  matter  to  determine,  without 
access  to  the  books  of  the  association,  how  much  is  due  when 
default  has  been  made.  The  courts  have,  therefore,  allowed 
an  expressed  willingness  to  pay  the  amount  due,  when  ascer- 
tained, to  be  substituted  for  an  actual  tender ;  and  it  is 

i  North  Hudson  M.  B.  &  L.  As-  L.  R.  A.  752  ;  35  Amer.  &   Eng. 

sociationu.  First  Nat.  Bank,  supra.  Corp.  Cas.  244. 

2  Quein  v.  Smith,  siqira.  5  Lister  v.  Log  Cabin   Building 

3  Manahan  v.  Varnum,  11  Gray,  Association,  38  Md.  115  ;  Barton  v. 
405.  Enterprise  Loan  and  Building  As- 

*  State  v.  Redwood  Falls  Build-  sociation,  114  Ind.  226 ;  s.  c.  16  N. 
ing  and  Loan  Association,  45  Minn.  E.  Rep.  486;  13  West.  Rep.  816; 
154  ;  s.  c.  47  N.  W.  Rep.  540  ;    10    22  Amer.  &  Eng.  Corp.  Cas.  612. 


802  BUILDING   AND    LOAN    ASSOCIATIONS.      Cll.  XIV. 

effectual  for  the  purpose  of  stopping  the  running  of  interest 
and  as  a  bar  to  costs  of  a  suit  to  foreclose  the  mortgage.1 
An  expressed  willingness  to  pay  is  even  sufficient  to  enable  the 
mortgagor  to  maintain  an  action  for  an  injunction  to  restrain 
the  sale  of  the  land  mortgaged  under  a  power  of  sale  inserted 
in  the  mortgage.2  If  the  association,  at  any  time  after  the 
expression  of  a  willingness  to  accept  the  offer,  expresses  its 
intention  to  accept  such  offer,  then  the  interest  will  again 
begin  to  run,  and  will  so  continue  until  the  money  is  brought 
into  court.3 

Sec.  293 — Marshalling  Assets — Lien  on  Stock — Second 
Mortgagee. 

Conflicts  arise  often  between  the  association  and  creditors 
of  the  society  concerning  the  right  of  the  latter  to  resort  to 
securities  held  by  it.  This  is  particularly  true  where  the 
society  holds  the  first  mortgage  and  also  a  lien  on  the 
stock  of  the  borrowing  member,  and  the  creditor  is  a 
second  mortgagee  on  the  same  real  estate.  In  such  a 
case  the  latter  has  the  right  in  equity  to  compel  the  former 
to  look  primarily  to  such  stock.4  The  fact  that  a  creditor 
of  the  mortgagor  has  levied  his  execution  on  the  stock  will 
not  defeat  the  second  mortgagee's  right  to  insist  that  the 
stock  be  first  sold  and  the  proceeds  applied  to  the  building 
society's  mortgage.5 

1  Columbian  Building  Associa-  4  Herbert  v.  Mechanics'  Building 
tion  of  East  Baltimore  v.  Crumb,  and  Loan  Association,  17  N.  J.  Eq. 
42  Md.  192.  497.     This  case  reverses  the  same 

2  Forsyth  v.  Hibernia  Building  case  under  the  name  of  The  Me- 
Association,  1  Mackey  (D.  C.)  205.  chanics'  Building  and  Loan  Asso- 

8  Columbian    Building   Associa-  ciation  of  New  Brunswick  v.  Con- 

tion  of  East  Baltimore  v.  Crumb,  over,  14  N.  J.  Eq.  219.     To  same 

supra.  effect  Phillipsburg    Mutual  Loan 

If  the  mortgagor  borrow  tern-  and  Building  Association?'.  Hawk, 
porarily  from  a  bank  a  sum  sufli-  27  N.  J.  Eq.  355  ;  Red  Bank  Mutual 
cierrl  to  pay  <>ir  the  mortgage,  and  Building  and  Loan  Association  v. 
on  refusal  by  the  association  to  ac-  Patterson,  27  N.  J.  Eq.  223  ;  Wash- 
cept  the  money  tendered,  returns  iugton  Building  and  Loan  Associa- 
te amount  to  tin-  bank-,  (he  ten-  tion  v.  Beaghen,  27  N.  J.  Eq.  99; 
der  is  ineffectual  for  :in\  purpose;.  Moxon  v.  Berkeley,  etc.,  Society, 
Middle  Stales,  etc,  Co.  V.  I  lagers-  59  L.  Jr.  Ch.  524. 
town,  etc.,  Co.,  82  Bid.  506;  s.  c.  6  Phillipsburg  Mutual  Loan  and 
:;:;  At  I.  Rep.  886. 


§  293.  MORTGAGES.  303 

Where  several  building  associations  made  loans  at  the 
same  time  to  an  individual  upon  mortgages  on  the  same 
lot,  and  some  of  them  did  not  require  the  mortgagor  to  as- 
sign them  his  shares  of  stock  as  it  had  habitually  done,  it  was 
held  that  the  other  loaning  associations,  which  had  taken 
assignments  of  their  own  stock  from  the  borrower,  could  not 
insist  that  the  first  associations  should  be  postponed  to  the 
extent  of  the  value  of  their  stock,  on  the  ground  that  if  they 
had  taken  assignments  of  such  stock  the  securities  to  that 
extent  would  have  been  enhanced  and  all  thereby  benefited. 
"  This  claim  of  equity,"  said  the  court,  "  is  based  on  the  as- 
sumption that  the  complainants  and  the  Empire  Association, 
as  between  them  and  the  other  associations  which  obtained 
collateral  security  of  the  stock  to  the  full  extent  of  their  loans, 
were  bound  to  obtain  such  security  to  a  like  extent.  There 
was  no  agreement  between  the  mortgagees  that  any  col- 
lateral security  whatever  should  be  obtained ;  but  it  is  in- 
sisted that  an  implied  agreement  arose  from  the  nature  of 
the  organization,  business,  and  objects  of  the  lenders  of  the 
money.  Such  an  implication,  however,  did  not  arise.  A 
building  loan  association  may  lawfully  lend  its  money  to  its 
members,  or  other  persons,  on  adequate  and  proper  security, 
in  the  ordinary  way,  instead  of  the  way  peculiar  to  such 
associations.  That  the  complainants  intended  to  obtain  col- 
lateral security  on  stock  to  the  full  amount  of  their 
loan  is  not  questioned.  That  they  have  failed  to  do  so  is 
obviously  to  their  disadvantage  to  the  extent  of  the  failure, 
for  they  have  so  much  less  security  for  their  debt ;  but,  in  the 
absence  of  any  agreement,  there  was  no  obligation  upon 
them,  in  equity,  as  between  them  and  the  other  building 
loan  associations,  to  obtain  such  security." l 

But  where  M.  executed  a  mortgage  on  two  lots  to  a  build- 
ing association,  assigning  to  them  stock  as  collateral  ;  and 
he  afterwards  gave  a  mortgage  on  one  of  these  lots,  and, 
after  the  execution  of  the  second  mortgage,  he  assigned  to 
T.  and  O.  his  interest  in  the  five  shares  of  stock  pledged,  it 

Building    Association    v.    Hawk,     tion  v.  Masonic  1 [all,  etc.,  Associa- 
supra.  tion,  29  N.  J.  Eq.  389. 

1  Union  Building  Loan  Associa- 


30-4  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  XIV. 

was  held  that  the  second  mortgagee  could  compel  the  build- 
ing association  to  resort  to  the  lot  on  which  he  had  no 
mortgage  first,  although  he  had  no  equity  to  compel  the 
ajmropriation  of  the  stock  to  the  payment  of  the  first  mort- 
gage. T.  and  O.  were  bona  fide  purchasers,  and  could  not 
be  prejudiced,  although,  if  M.  had  held  the  stock,  the  second 
mortgagee  could  have  also  compelled  the  association  to  first 
resort  to  that.1 

Where  a  person,  whose  shares  had  been  redeemed,  exe- 
cuted a  trust  deed  upon  his  property  to  secure  payment  of 
his  dues,  interest,  fines,  etc.,  and  then  gave  another  deed  of 
the  same  property  to  secure  a  debt  to  a  third  person,  it  was 
held  that  upon  his  default  to  pay  his  dues,  interest,  and 
fines,  and  the  sale  of  the  property  b}T  the  building  associa- 
tion, the  debtors  and  other  creditors  could  elect  to  have  the 
proceeds  of  the  sale  invested,  and  the  unpaid  monthly  dues, 
interest,  and  fines  paid  monthly  out  of  the  interest,  and  as 
much  of  the  principal  as  might  be  necessary,  or  to  have  the 
present  value  of  these  monthly  dues  and  interest  ascer- 
tained, on  the  principle  of  annuities,  and  paid  out  of  the 
proceeds  of  sale  to  the  association.2 

Sec.  294— Marshalling  Assets— Pennsylvania  Cases. 

A  somewhat  different  rule  prevails  in  Pennsylvania  from 
that  prevalent  in  the  cases  cited  in  the  preceding  section, 
which  renders  it  desirable  to  state  it  apart  from  the  doc- 
trine of  that  section.  In  an  early  case  a  building  society 
had  obtained  a  judgment  against  one  Sutton  for  the  full 
amount  of  its  mortgage,  less  the  premiums,  which  were  not 
recoverable.  Sutton  had  assigned  his  shares  of  stock  to  a 
third  person,  but  the  association  refused  to  admit  the 
a  soignee  as  a  stockholder,  and  suit  was  brought  by  him 
;i!_r;iinst  the  association  for  that  reason.  The  court  decided 
that  payments  of  dues  on  the  stock  should  not  be  regarded 
as  working  an  extinguishment  to  that  extent  of  the  amount 
due  on  the  mortgage,-  for  to  so  hold  would  be  giving  the 
association   an   additional    facility  for  obtaining  excessive 

1  Ki-illy  v.  Mayor,  12  Beas.  (N.J.)  2  Winchester  Building  Associa- 
I •;,,.  55.   "  tion  v.  Gilbert,  23  Gratt.  787. 


§  294.  MORTGAGES.  305 

interest.  It  was  also  said  that  the  debtor  was  not  com- 
pelled to  give  up  his  stock  whenever  suit  was  brought 
against  him  on  his  bond  and  mortgage.  The  assignee  was, 
therefore,  entitled  to  maintain  his  suit.1 

From  this  case  arose  the  doctrine  that  only  the  debtor, 
and  in  the  absence  of  an  election  on  his  part,  the  society 
only,  could  make  the  application  of  payments,  and  that  a 
purchaser  at  the  sale  could  not  require  anything  to  be  done 
which  either  the  borrower  or  society  had  not  seen  fit  to 
require.  The  facts  involved  in  this  case  were  these :  One 
C.  had  given  a  mortgage  and  assigned  his  stock  to  the 
Tradesmen's  Loan  Association.  He  was  a  member  of  the 
association.  Subsequently  he  gave  a  judgment  to  the 
Spring  Garden  Loan  Association  upon  the  same  property, 
but  subject  to  the  first  mortgage.  He  then  made  an  assign- 
ment for  the  benefit  of  his  creditors,  and  the  mortgaged 
premises  were  sold  by  the  sheriff  to  the  latter  association, 
subject  to  the  first  mortgage.  C.'s  assignee  then  notified 
the  Tradesmen's  Loan  Assosiation  of  the  assignment,  and 
that  he  claimed  the  stock  assigned  to  it  as  collateral 
security,  demanding  that  it  collect  the  whole  amount  of  the 
mortgage  and  not  allow  any  deduction  for  C.'s  payments  on 
the  stock.  After  that  the  association  brought  an  action  of 
scire  facias  on  its  mortgage,  and  the  Spring  Garden  Asso- 
ciation claimed  that  the  stock  payments  made  by  C.  upon 
the  stock  held  as  collateral  by  the  Tradesmen's  Loan  Asso- 
ciation should  be  applied  to  part  payment  of  the  mortgage 
debt.  As  we  have  seen,  the  right  of  the  Spring  Garden 
Association  to  have  such  an  application  of  these  payments 
was  denied  on  the  ground  that  only  C.  or  the  Tradesmen's 
Loan  Association  could  insist  on  their  application  to  the  dis- 
charge of  the  mortgage.2  In  a  later  case  property  mort- 
gaged to  an  unincorporated  building  association  was  sold 
by  the  sheriff  upon  a  judgment  against  the  owner  to  L., 

1  North  America  Building  Asso-  St.  465 ;  and  Hughes'  Appeal,   30 

ciation  v.  Sutton,  35  Pa.  St.  463 ;  Pa.  St.  471. 

s.  c.  78  Am.  Dec.  349.     See,  on  the  1  Spring  Garden  Association  v. 

right  of  the  association  to  a  bor-  Tradesman's  Association,    46    Pa. 

rower's  stock,  Kupfert  v.  Gutten-  St.  493. 
berg  Building  Association,  30  Pa. 
20 


306  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  XIV. 

who  was  notified  before  the  sale  that  the  purchaser  would 
take  the  property  subject  to  the  building  association's 
mortgage.  The  latter  having  brought  suit,  L.  claimed  credit 
for  the  stock  payments  made  by  the  mortgagor ;  but  the 
court  held  that  there  having  been  no  appropriation  of  the 
stock  to  the  debt  by  either  the  borrower  or  the  association, 
it  could  not  be  compelled  by  the  purchaser  of  the  fee  of  the 
land  mortgaged.1  In  a  case  subsequent  to  this  in  point  of 
time  the  facts  were  substantially  as  follows  :  II.  was  the 
owner  of  property  on  which  a  building  association  held  a 
first,  and  one  R.,  a  second  mortgage.  S.  had  a  judgment 
against  II.  for  §1,400,  and  he  took  out  an  execution,  and 
H.'s  stock,  held  by  the  association  as  collateral  security  for 
the  loan,  was  sold,  he,  S.,  becoming  the  purchaser,  subject  to 
the  association's  claim  upon  it.  The  association  having 
reached  the  limit  of  its  chartered  existence,  and  being  in 
the  process  of  winding-up,  the  board  of  directors  by  resolu- 
tion directed  the  president  and  secretary  to  assign  to  S.  the 
mortgage  given  it  by  H.,  upon  S.  paying  it  the  arrearages 
due  on  the  stock,  amounting  to  $73.14.  This  arrangement 
was  consummated.  Between  the  passage  of  the  resolution 
and  the  assignment  of  the  stock,  suit  was  brought  on  the 
mort^aofe  in  the  name  of  the  association  against  II.  for 
benefit  of  S.  H.  at  no  time  had  ever  been  six  months  in 
arrears  in  the  payment  of  his  dues  or  interest  on  the  mort- 
gage;  but  judgment  was  taken  against  him  by  default  for 
$2,346.37,  and  execution  issued  thereon.  R.,  the  second 
mortgagee,  then  petitioned  the  court  to  open  the  judgment 
and  let  him  defend  ;  but  before  the  trial  heobtained  a  judg- 
ment on  bis  mortgage  and  purchased  the  land  at  sheriff's 
sale  on  an  execution  issued  upon  the  judgment.  On  the 
trial  S.  got  ;i  verdict  for  ssl.7~>  the  amount  he  had  paid 
the  association  for  the  assignment  of  the  mortgage,  wit h 
interest  thereon,  and  judgment  was  entered  on  the  verdict. 
The  court,  reversed  the  case,  and  in  so  doing  said  of  the  ap- 
plication of  tin-  stock-payments  to  the  mortgage:  "Either 
of  the   original    parties   mighl    have    made   such    application 

before  the  levy  of  S.'s  attachment,  but  this  was  done  by 
1  Lint  '•.  Germantown   Building  Association,  89  Pa.  St.  15. 


§  294.  MORTGAGES.  307 

neither  of  these  parties,  and  so  S.,  by  virtue  of  his  attach- 
ment, took  the  place  of  EL,  and  as  the  company  might,  at 
H.'s  instance,  had  he  returned  the  stock,  have  paid  to  him 

the  value  thereof,  and  retained  the  mortgage,  so  might  it 
have  done  with  S.  In  such  a  case,  however,  It.  could  not  In- 
heard  to  complain,  for  his  position  as  second  mortgagee 
could  not  be  in  the  least  affected  thereby.  This  stock  be- 
came collateral  security,  not  for  his  benefit,  but  for  thai  of 
the  association,  hence  its  surrender  would  have  put  him  in 
no  worse  position  than  he  was  when  his  mortgage  was  exe- 
cuted. Surely  then  Ii.  could  not  intervene  to  prevent  the 
disposition  of  collaterals,  in  which  he  had  no  interest." 
Having  then  stated  that  the  borrower  might  elect  to  draw 
his  stock  and  compel  the  association  to  proceed  upon  the 
mortgage,  the  court  says :  "  But  if  the  association  plaintiff 
could  have  paid  the  value  of  the  stock  to  S.  and  retained 
and  collected  the  mortgage,  why  could  it  not  retain  the 
stock  and  assign  the  mortgage?  It  certainly  could  not  put 
R.'s  mortgage  in  a  worse  position  because  S.  held  the  first 
lien  rather  than  the  company.  S.  was  undoubtedly  by  act 
of  law  owner  of  his  stock,  which  was  worth  some  $2,200, 
and  that  amount  he  had  the  right  to  demand  of  the  com- 
pany,  or  its  equivalent.  The  company,  on  the  other  hand, 
had  the  right  to  retain  either  the  stock  or  the  mortgage  ;  it 
chose  to  retain  the  stock,  and  by  assigning  the  mortgage  to 
S.,  as  in  this  case  it  was  bound  to  do,  it  thereby  clothed 
him  with  all  the  rights  it  would  have  had,  had  it  paid  him 
the  value  of  the  collaterals  and  kept  the  mortgage.  This, 
however,  was  a  matter  for  themselves,  a  matter  with  which 
R.  had  nothing  to  do."  1 

1  Economy  Building  Association  7  Phila.  189  ;  Springville  Building 

v.  Hungerbuehler,  95  Pa.  St.  258.  Association  v.  Raber,  24  Pitts.   L. 

Tbe  following  cases  may  also  be  Jr.  23  ;  s.  c.   33  Leg.  Int.  329  :   1 1 

examined,  all  from  Pennsylvania  ;  Phila.  546  ;  Harris'  Appeal,  18   W. 

Selden  v.   Reliable    Savings    and  N.  Cas.  14;  Kingsessing  Building 

Building    Association,    32    P.    F.  Association  v.  Roan,  it  W.  N.  Cas. 

Smith,  336  ;  s.  c.  2  W.  N.  Cas.  481  ;  15;  Association   v.    Wall,  7  Phila. 

Kreamer  v.  Springfield    Building  189;  In  re  Treffeison,  ::  Kulp,  '-'-os  • 

Association,   6  "W.   N.    Cas.    267;  Oliver's  Estate,  1   Del.  (Pa.)  358; 

Building  Associations.  Eshelbach,  Whilden  v.  Broomall,  1  Del.  (Pa.) 


308 


BUILDESTG   AND   LOAN   ASSOCIATIONS.      Cll.  XIV. 


Sec.  295 — Marshalling  Assets — Judgment  Creditors. 

A  mere  judgment  creditor  of  the  borrower  does  not  have 
the  same  right  to  demand  a  marshalling  of  the  assets  as 
does  a  subsequent  mortgagee  or  purchaser  of  the  land  mort- 
gaged. "  A  creditor  who  has  done  nothing  more  than  to 
convert  his  debt,  subsisting  in  the  form  of  a  contract,  into 
a  judgment,  has  no  claim  but  that  of  diligence,  to  the  favor 
of  equity.  Neither  natural  justice  nor  public  policy  enacts 
a  preference  for  him  over  adverse  claimants." 1 

Sec.    296— Marshalling  Assets— Rights   of  Third  Per- 
sons Cannot  he  Prejudiced. 

The  rights  of  third  persons  cannot  be  prejudiced  by  the 

142  ;  Houlett's  Est.  2  Chester.  (Pa.) 
511  ;  Kelly  v.  Accommodation 
Savings  Fund,  2  Phila.  237. 

On  default  of  a  mortgagor  his 
land  was  sold  under  the  mortgage 
for  enough  to  cover  the  entire 
mortgage  debt.  A  judgment 
creditor  of  the  mortgagor  attached 
his  stock  in  lands  of  the  association, 
which  had  been  pledged  for  the 
payment  of  the  mortgage  debt,  and 
therefore  the  mortgagor  elected  to 
apply  his  stock  in  payment  of  his 
debt  to  the  association.  A  second 
judgment  creditor,  who  was  next 
to  the  association,  claimed  that 
the  borrower's  election  was  bind- 
ing. The  court  recognized  the 
doctrine  of  subrogation,  and  lull  I, 
that,  as  at  the  time  of  the  attach- 
ment neither  the  association  nor 
tin-  borrower  had  exercised  any 
rights  over  the  stock,  the  attach- 
m< -tit  gave  a  legal  title  and  that 
t  he  second  judgment  creditor  had 
no  standing  in  court.  Central 
Building  Association  v.  Schmitt, 
12  W.  N.  Cas.  239. 

\  member  of  an  English  Society 
obtained  a  loan  from  it,  in  respect 
of  certain  shares,  an  approprial  ion 
of  a     urn  of  money,  repaymenl  of 


which  was  secured  by  mortgage  to 
the  society.  Afterwards  he  made 
default  in  such  payments,  and 
also  discontinued  his  subscriptions. 
He  was  then  entitled,  by  the  rules 
of  the  society,  to  have  his  subscrip- 
tions placed  to  his  credit  on  his  re- 
payments under  the  mortgage,  but 
he  made  no  requests  therefor,  and 
it  was  not  done  ;  but  the  society  en- 
tered on  the  mortgaged  property, 
and  ultimately  sold  it  for  a  sum 
which  repaid  all  moneys  due  the 
society,  and  left  a  surplus  for  the 
member.  He  had  mortgaged  the 
equity  of  redemption  in  the  prop- 
erty to  A.,  and  his  other  property* 
including  his  subscriptions  to  the 
society,  had  been  assigned  to  B. 
It  was  held  that  as  between  A.  and 
B.,  the  doctrine  of  marshalling  ap- 
plied, and  the  repayments  to  the 
society  must  he  apportioned  rata- 
bly between  the  mortgaged  prop- 
ertyand  I  lie  subscriptions.  Moxon 
v.  Berkeley  Building  Society,  59 
Law  .1.  Ch.  524. 

1  Herbert  v.  Mechanics'  Building 
and  Loan  Association,  17  N.  J.  Eq. 
497;  Weiss's  Appeal,  5  W.  N.  Cas. 
428;  Knell  v.  Green  Street  Build- 
ing Association,  34  Md.  67. 


§  290.  MORTGAGES.  309 

right  of  a-  lienholder  to  Lave  the  mortgaged  securities  so 
marshalled  as  to  protect  his  security.  Thus,  where  a  bor- 
rower executed  a  mortgage  on  two  lots  to  a  building  asso- 
ciation, at  the  same  time  assigning  it  five  shares  of  stock  as 
collateral  security,  and  then  gave  complainant  a  second 
mortgage  on  one  of  these  lots,  and  finally,  after  the  execu- 
tion thereof,  assigned  to  S.  and  O.  his  interest  in  these  five 
shares ;  it  was  held,  that  although  the  complainant  could 
require  the  association  to  sell  first  the  lot  on  which  it  had 
an  exclusive  lien,  he  had  no  equity  to  compel  the  appropria- 
tion of  the  stock  to  the  payment  of  the  debt.  "  The  com- 
plainant had  no  lien  upon  the  property  [the  shares  of  stock], 
either  equitable  or  legal.  He  had  the  right  merely  to 
invoke  the  aid  of  a  court  of  equity  to  marshal  the  securities 
for  his  relief.  This  right  does  not  follow  the  security  into 
the  hands  of  a  bona  fide  purchaser  without  notice.  The 
rule  that  has  been  stated  as  a  general  one  has  its  qualifica- 
tions, and  is  never  applied  except  where  it  can  be  done 
without  injustice  to  the  creditor,  or  other  party  in  interest, 
having  a  title  to  the  double  fund,  or  injury  of  a  third  per- 
son, over  whom  the  party  claiming  the  benefit  of  the 
principle  has  no  superior  equity.  There  certainly  can  be  no 
equity  in  permitting  the  complainant  to  appropriate  the 
property  of  these  innocent  persons  to  relieve  his  security. 
They  purchased  subject  only  to  the  mortgage  of  the  asso- 
ciation. The  contract  between  the  association  and  the 
mortgagor  was,  that  the  stock  should  be  only  additional 
security  to  the  land  embraced  in  the  mortgage.  The  com- 
plainant now  seeks  to  change  the  contract  to  the  prejudice 
of  these  third  persons.  They  purchased  without  notice  of 
his  equities,  if  he  had  any.  They  are  innocent  purchasers. 
There  was  nothing  to  put  them  on  inquiry.  Notice  of  the 
mortgage  to  the  association  did  not  require  them  to  search 
the  record  for  the  purpose  of  ascertaining  whether  there 
might  not  possibly  exist  some  equities  between  that  and 
other  mortgages  to  affect  the  title  of  the  stock."  1 

1  Reilly  v.  Mayer,  12  N.  J.  Eq.  55. 


310  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIV. 

See.   297— Marshalling  Assets  —  Notification  of  Prior 
Mortgagee  of  Subsequent  Mortgagee's  Rights. 

If  the  previous  mortgagee  or  lienholder  desires  to  preserve 
his  rights  and  compel  the  prior  mortgagee  to  resort  to  that 
fund  or  property  to  which  he  has  the  exclusive  right  to  re- 
sort, he  must  notify  such  prior  mortgagee  of  his  right  to 
compel  a  marshalling  of  the  assets  before  such  prior  mort- 
gagee has  exercised  his  right  to  exhaust  that  property  to 
which  only  he  can  resort.1  As  a  logical  result  of  this  rule 
it  follows  that  if  a  building  association  release  its  claim  on 
that  property  to  which  it  has  the  exclusive  right  to  resort 
before  notification  of  the  rights  of  the  persons  who  can  re- 
sort only  to  the  property  not  released,  it  will  not  be  post- 
poned to  the  rights  of  the  latter,  but  can  still  enforce  its 
right  against  the  property.2  But,  it  has  been  held,  that 
where  a  building  association  not  only  held  a  mortgage  on 
certain  land,  but  had  also  taken  an  assignment  of  certain 
shares  of  stock  of  the  borrower  as  collateral  security,  a  re- 
lease of  the  stock  would  postpone  the  association  as  to  a 
second  mortgagee,  to  the  extent  of  the  value  of  such  stock, 
the  association,  at  the  time  of  the  release,  having  actual 
notice  of  the  existence  of  the  second  mortgage.3 

Sec.  298 — Pursuing  Two  or  More  Remedies. 

If  the  association  lias  two  or  more  remedies  it  is  not 
bound  to  pursue  one  to  the  exclusion  of  the  other,  unless  the 
pursuit  of  one  amounts  to  the  election  of  a  cause  of  action 
to  the  exclusion  of  another,  like  the  waiver  of  a  tort  and 
bringing  an  action  in  assumpsit  precludes  a  second  action  in 
toi't  lor  the  same  damages.  Thus,  where  the  rules  of  a 
society  provided  that  if  a  borrowing  member  defaulted  in 
his  payments  for  six  months  the  directors  should  appoint  a 
person  to  collect  the  rents  and  profits  of  the  premises  mort- 
gaged;  and  if  such   rents  and  profits  were  insufficient,  or 

1  [Jniontowu  Building  and  Loan  second  mortgage  is  not  notice  to 

Association's  Appeal, 92  Pa. St. 200.  the  first  mortgagee. ,  Id. 

Quakertow  n  hiiildin^and  Loan  :t  Washington  Building  and  Loan 

iciation  v.  Sorver,  88  Leg.  tnt.  Association   v.   Blaghen,  ~7  N.  J. 

The   mere  recording  of  the  Eq.  '.•'.». 


§  299.  MORTGAGES.  311 

the  member  refused  to  allow  the  person  so  appointed  to 
collect  them,  or  refused  to  collect  them  himself  and  apply 
them  to  the  debt  when  requested,  then  the  directors  should 
absolutely  sell  and  dispose  of  all  or  any  part  of  the  prem- 
ises so  mortgaged,  it  was  held  that  if  the  society  could 
maintain  an  action  upon  the  covenant  at  all  it  might  resort 
either  to  that  remedy  or  to  the  remedy  prescribed  by  the 
rule  at  their  option.1 

Sec.  299 — Action  to  Foreclose. 

Where  the  action  be  at  law  or  in  equity  the  method  of 
computing  the  amount  due  is  the  same.  Where  codes  have 
been  adopted,  the  usual  method  under  them  for  the  fore- 
closure of  ordinary  mortgages  may  be  pursued  ;  but  where 
the  distinction  between  the  practice  at  law  and  in  equity  is 
maintained,  then  a  suit  in  equity  to  foreclose  can  be  main- 
tained. Either  party  has  a  right  to  apply  to  a  court  of 
equity  to  fix  the  amount  actually  due  on  the  security,  with 
the  view,  on  the  one  hand,  to  the  enforcement  of  it  in  case 
of  failure  to  pay  according  to  condition  ;  or,  on  the  other, 
to  a  redemption  by  the  payment  of  the  true  amount  found 
due.2  The  action  may  be  upon  both  the  bond  and  mort- 
gage, or  upon  either  of  them.3  Either  the  amount  due  the 
association,  or  facts  be  stated  from  which  that  amount  can 
be  ascertained,  should  be  stated  in  the  complaint  or  bill.4 
In  an  action  on  the  note  given  for  the  loan,  where  the  pay- 
ment of  the  note  depends  on  the  payment  of  assessments 
made,  it  is  not  necessary  to  allege  the  manner  in  which  the 
assessments  were  made.5  All  that  can  be  included  in  the 
account  is  the  actual  arrears  and  charges  standing  against 
the  borrower  unsatisfied  at  the  time  of  the  decree,  made  up 

i  Reeves  v.  White,  17  Q.  B.  995  ;  ing,  37  111.  App.  274  ;  Buist  v.  Fitz- 

s.  c.  16  Jur.  637  ;  21  L.  J.  Q.  B.  169  ;  simons,  49  S.  C.  130  ;  21  S.  E.  Rep. 

16  J.  P.  115.  610. 

2  Franklin  Building  Association  6,Borchus  v.  Huntington  Build- 
v.  Mather,  4  Abb.  Pr.  274.  ing,  Loan  and  Saving  Association, 

3  Juniata  Building  Associations.  97  Ind.  180  ;  Wohlford  v.  Citizens 
Hetzel,  103  Pa.  St.  507.  Building,  Loan  and  Savings  Asso- 

4  Mutual  Building  and  Loan  As-  ciation,  140  Ind.  CG2  ;  s.  C  40  N.  E. 
sociation  v.  Tascott,  (111.)  28  N.  E.  Rep.  694. 

Rep.  801;  40  Amer.  &  Eng.  Corp.  The  constitution  and  by-laws, 
Cas.  361 ;  25  Ch.  News,  92  ;  modify-    under  the  Indiana  practice,  are  no 


312 


BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIV. 


of  the  items  enumerated  in  the  mortgage,  weekly  instal- 
ments, fines  (usually),  interest,  ground  rent,  taxes,  costs, 
insurance,  and  the  like,  if  any  such  be  in  arrears,  deducting 
whatever  credits  the  borrower  is  entitled  to.1 

Sec.  300 — Defenses. 

It  has  been  said  that  if  a  oorrower  desires  to  set  up  as  a 
defense  that  he  did  not  sign  the  constitution  or  by-laws  he 
has  the  burden  to  show    that  fact.2     But  it  may  well  be 


part  of  the  complaint  and  cannot 
be  made  exhibits.  Newman  v. 
Ligonier  Building,  Loan  and  Sav- 
ings Association,  97  Ind.  295. 

1  Robertson  v.  American  Home- 
stead Association,  10  Md.  397  ;  s.  c. 
69  Amer.  Dec.  145  ;  Montgomery, 
etc.,  Association  v.  Robinson,  69 
Ala.  413. 

Where  a  declaration,  in  an  ac- 
tion by  a  building  and  loan  asso- 
ciation against  a  borrowing  mem- 
ber on  a  bond  secured  by  deed  to 
land,  contains  a  complete  state- 
ment of  the  account  between  the 
parties,  the  notice  required  by  the 
Georgian  Code,  Sec.  3968a,  as  to 
the  status  of  the  account,  may  be 
dispensed  with.  Hawkins?1.  Amer- 
icans National  Building  and  Loan 
Association,  96  Ga.  206;  s.  c.  22  S. 
E.  Rep.  711. 

In  Indiana,  in  an  action  to  fore- 
close a  mortgage,  it  is  not  neces- 
sary to  allege  under  Elliott's  Supp. 
Sec.  854  (Acts  1885  p.  86  see.  15), 
providing  thai  associations  organ- 
ized prior  to  tin'  passage  of  the  act 
of  which  this  section  is  a  part 
"may  accepl  the  provisions  of  this 
act"  by  filing  a  written  acceptance, 
etc.,  it  appearing  from  the  art, 
taken  as  a  whole,  t  hat  its  intenl  ion 
bo  enlarge,  rather  than  re 
st  rid ,  the  powers  of  prior  existing 
;,  ociations.  1  tatfleld  v.  I  [unting- 
ton  <  !ity  Building,  Loan  ami  Sav- 


ings Association,  132  Ind.  149  ;  S.  C. 
31  N.  E.  Rep.  532. 

Where  the  premium  on  the  loan 
is  stated  in  the  bill  at  a  certain 
sum,  which  is  less  than  the  per- 
centage bid,  the  association  cannot 
recover  a  larger  sum  for  the  pre- 
mium than  that  alleged.  Mutual 
Building  and  Loan  Association  v. 
Tascott  (111.),  28  N.  E.  Rep.  801; 
25  Ch.  L.  News,  92 ;  40  Amer.  & 
Eng.  Corp.  Cas.  144. 

Where  the  contract  authorizes 
the  association  to  foreclose  upon 
the  land  mortgaged  to  secure  the 
sum  borrowed  or  rely  upon  the 
shares  of  the  borrowing  member 
when  matured  for  payment  of  the 
loan,  and  the  by-laws  vest  the  dis- 
cretion to  foreclose  in  the  board  of 
directors,  the  board  will  not,  by 
injunction,  be  compelled  to  fore- 
close the  mortgage  after  a  sale  of 
the  bond  by  the  borrowing  mem- 
ber subject  to  the  mortgage,  so  as 
to  release  the  borrowing  member's 
shares  from  liability.  Redhefferv. 
House  and  Home  Building  and 
Loan  Association,  2  Mo.  App.  Repr. 
911  ;  s.  c.  64  Mo.  App.  96. 

For  amount  receivable  in  Kan- 
sas, see  M  nrphy  r.  ( ioodland  Build- 
ing &  Loan  Association,  2  Kan. 
\!T   330;  S.C.  43  Pac.  Rep.  863. 

2  Niceley's  Estate,  8  Kulp.  47; 
Building  Association  v.  Lyons,  2 
Kulp.  109. 


§  300.  MORTGAGES.  313 

doubted  if  that  omission  would  be  a  defense ;  for  the  reason 
that  one  cannot  plead  his  own  neglect  of  duty  as  a  defense 
to  the  right  to  recover.  Nor  can  a  borrower,  to  a  complaint 
or  bill  to  foreclose  a  mortgage,  plead  irregularities  by  the 
association  in  granting  the  loan.1  A  vote  to  close  the  asso- 
ciation does  not  affect  a  borrowing  member ;  nor  impose 
upon  him  a  greater  burden.2  A  building  association  which 
voluntarily  closes  its  business,  in  violation  of  its  charter  and 
by-laws,  requiring  its  continuance  for  ten  years,  unless 
within  that  time  each  share  of  $100  shall,  by  its  earnings, 
reach  the  value  of  $200,  forfeits  its  rights,  it  has  been  held, 
to  foreclose  a  mortgage  given  to  secure  the  purchase  of  its 
stock  or  to  collect  monthly  instalments  subsequently  becom- 
ing due  by  contract  of  sale.3  The  fact  that  the  association 
has  retired  the  outstanding  valid  stock  furnishes  no  defense 
for  a  failure  of  the  mortsra^or  to  refund  the  monev  bor- 
rowed  on  his  notes  ;  for  such  assets  in  the  hands  of  the  bor- 
rower belong  to  those  members  who  kept  their  stock  alive 
by  the  payment  of  dues,  and  the  association  being  entitled 
to  collect  for  their  benefit.4  The  giving  of  the  mortgage 
estops  the  mortgagor  to  deny  that  he  is  not  a  member,  if 
there  be  no  evidence  that  the  bond  and  mortgage  were  taken 
with  a  view  to  evade  the  provisions  of  the  statute  which 
prohibits  loans  to  others  than  members.5  Indeed,  the  ques- 
tion of  estoppel  has  been  pushed  a  little  further  than  this, 
by  holding  that  all  claiming  through  or  under  the  borrower 
are  estopped  to  deny  his  capacity  to  make  the  loan.6  The 
borrower  is  also  estopped  to  show  that  the  association  was 

1  Conservative  Building  and  Loan    Kan.    549.       Mechanics'  B.   Ass'n 
Association  v.  Cady,  55  111.  App.     v.  Stevens,  5  Duer,  676. 

469  ;    Reynolds  v.    Georgia  State,  3  Sumter  Building  and  Loan  As- 

etc,  Ass'n  (Ga.),  29  S.  E.  Rep.  187.  sociation  v.   Winn,  45  S.    C.  381  : 

The  fact  that  the  acknowledg-  s.  c.  23  S.  E.  Rep.  29. 

ment  of  the  mortgage  was  taken  4  Hatfield    v.   Huntington    City 

by  an   officer  and   stockholder  of  Building,  Loan  and  Saving  Asso- 

the  association  is  no  defense.     Hor-  ciation,  132  Ind.  149;  s.  c.  31  N.  E. 

ton   v.    Columbian    Building    and  Rep.  532. 

Loan  Association,  6  Wkly  L.  Bull.  5  Howard  Mutual,  etc.,  Associa- 

141.  tion  v.  Mclntire,  3  Allen,  571. 

2  Hekelnkaemper     v.     German  6  Kadish  v.   Garden  City,    etc., 
Building,      etc.,     Association,     22  Association,  47  111.  App.  602;  af- 


314  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIV '. 

not  legally  incorporated.1  The  adoption  of  an  illegal  by-law 
does  not  absolve  the  debtors  of  the  association  from  com- 
pliance with  their  contracts  unaffected  by  the  objectionable 
by-law.2 

Sec.  301 — Abandonment  of  Plan  of  Association. 

We  have  already  seen  in  the  preceding  section  what  is  the 
effect  of  a  voluntary  closing  of  the  association  upon  a 
mortgage  given  to  secure  the  payment  of  instalments  on 
stock;3  but  where  the  mortgage  is  given  for  money  bor- 
rowed quite  a  different  rule  prevails.  It  is  quite  clear  that 
a  vote  to  close  cannot  add  any  greater  burden  to  the  bor- 
rowing member's  load;4  and  it  may  even  lighten  that  bur- 
den by  requiring  him  to  only  pay  back  the  money  he  actu- 
ally received  with  interest,  indeed,  give  him  the  benefit  of 
the  usury  laws  to  recover  a  penalty,5  and  for  all  fines,  pen- 
alties, or  weekly  dues  he  may  have  paid.6 

Where  a  building  association  loaned  money  which  was  to 
be  paid  at  the  maturity  of  certain  shares  of  its  stock  owned 
by  and  pledged  to  it  by  the  defendant,  which  stock  was  to  be 
paid  for  in  instalments,  and  was  to  be  credited  with  the 
earnings  to  be  paid  from  the  loan  of  the  instalments  so  paid, 
and  the  association  subsequently  ehangedits  by-laws  so  as  to 

firmed,  151  111.  531  :  38  N.  E.  Rep.  Div.  Ill  ;  s.  c.  53  L.  J.  Ch.  774  :  51 

236;  26  Ch.    L.  X.  258;   Conserva-  L.  T.  (X.  S.)  433;  32  W.  R.  773; 

tive    Building  and  Loan  Associa-  Holgate  v.  Shutt,  L.  R.  28  Ch.  Div. 

t  ion  r.  ( !ady,  55  111.  App.  469.     No  111  ;  s.  c.  54  L.  J.  Ch.  436  ;  51    L. 

defense  can    be  urged  to  an  exe-  T.  (X.  S.)  673  ;  49  J.  P.  228. 

cutcd  ultra  fires  contract.     Groh-  8  Sumter  Building  and  Loan  As- 

tnann  v.  Brown,  68  Mo.  App.  630.  sociation    v.   Winn.  45  S.   C.  381; 

1  Williamson   v.  Kokomo  Build-  s.  C.  23  S.  E.  Rep.  29. 

ing  and  Loan  Association,  89  [nd.  4  Hekelnkoemper     v.     German 

389.    Second  Manhattan  B.  Ass 'n,  v.  Building,     etc.,    Association,     22 

Bayes,  I  AM,.  App.  Dec.  L83;  s.  c.  Kan.  549. 

2  Keyes,  192.  B  Sumter  Huilding  and  I. nan  As- 

-  Orangeville     Mutual     Saving  sociation   v.    Winn,  45  S.   C.  381; 

Fund     and     Loan     Association     r.  s.  c.  23  S.  E.  Rep.  29. 

Young,  i)  W.  N.  ('as.  251  :  s.  c.  37  6  Strauss   v.  Carolina  Interstate 

Leg.  Int.   175,  Building.'ind  Loan  Association,  117 

I  or  the  effed   of  auditing  ao-  N.  C.  308;  s.  c.  23 S.  E.  Rep.  450. 

counts  under  the  English  Statute,  As  elsewhere  shown,  the  rule  is 

ee  Holgate  v.  Shutt  L.  R.,  27  Ch.  sometimes  different. 


§  302.  MORTGAGES.  315 

authorize  it  to  read  making  assessments  on  stock  of  non- 
borrowing  members,  and  fix  a  different  time  for  the  matu- 
rity of  the  debts  of  borrowing  members,  the  association 
thereby  rendering  itself  powerless  to  perform  its  contract 
with  the  defendant,  it  was  held  he  entitled  to  be  credited 
with  the  amount  he  had  already  paid  in,  and,  having  paid 
more  than  the  original  debt,  it  was  held  he  was  entitled  to  be 
discharged.1 

Sec.   302 — Fraudulent    Representations  of   Officers  of 
Association, 

An  association  may  be  bound  by  the  representations 
of  its  officers  concerning  its  loans ;  and  so  it  will  be 
bound  if  it  authorize  them  to  make  representations  con- 
trary to  its  by-laws.  Thus  it  was  held  that  a  loan  asso- 
ciation could  be  compelled  to  accept  such  a  sum  in  satisfac- 
tion of  a  mortgage  given  by  one  of  its  members,  and  held 
by  it,  as  accords  with  the  representations  in  reference  to  its 
by-laws,  made  by  the  secretary,  in  his  dealings  with  the 
plaintiff,  at  the  time  of  making  the  loan.2  But  a  representa- 
tion that  the  profits  of  the  association  would  be  shared 
equally  by  all  the  members  cannot  be  held  untruthful  where 
it  appears  that  all  profits  of  a  particular  series  of  stock  were 
accumulated  until  that  series  became  par,  when  all  stock- 
holders in  that  series  were  entitled  to  the  par  value  of  their 
stock;  borrowers  being  credited  with  such  amount,  and 
others  being  paid  cash.  And  a  representation  in  the  asso- 
ciation's circulars  that  it  would  be  better  and  cheaper  to 
borrow  money  of  it  than  elsewhere  is  no  ground  for  relief, 
though   it   prove  untrue,  where  it  appears   that  this   was 

1  International      Building     and  re  Middlesborough    Redcar,   etc., 

Loan  Association  v.  Braden  (Tex.  Building  Society,  58  L.  J.  Ch.  771  ; 

Civ.  App.),  32  S.  W.  Rep.  704.  5  T.  L.  R.  516. 

The  rules  of  an  association  must  2  Sawyer  v.  Menominee  Loan  and 

be  taken  to  contemplate  a  "  going  Building    Association,     103    Mich. 

concern."    Brownlie  v.  Russell,  8  228  ;  S.  C.  61  N.  W.  Rep.  521.     Neu- 

App.  Cas.  235  ;  S.  c.  48  L.  T.  881  ;  man  v.  N.  Y.  Mutual,  etc.,  Ass'n, 

47  J.  P.  757  ;  Sibun  v.  Pearce,  44  17  N.  Y.  App.  Rep.  72  ;  S.  C.   44  N. 

Ch.  Div.  at  p.  370  ;  63  L.  T.  123 ;  Y.  Supp.  896. 
38  W.  R.  658  ;  6  T.  L.  R.  262  ;  In 


316  BUILDING   AND   LOAN    ASSOCIATIONS.      Ch.   XIV 

caused  by  the  high  premium  bid  by  the  complainant  for  the 
loan,  and  the  fines  incurred  by  him  by  failure  to  pay  instal- 
ments at  maturity,  and  that  otherwise  the  loan  would  have 
been  at  less  than  the  usual  rate  of  interest.1 

Sec.  303— Set-off. 

If  a  member  of  a  building  association  hold  distinct  claims 
against  the  association,  he  is  just  like  any  creditor  of  the 
association  who  is  not  a  member ;  and  when  suit  is  brought 
to  foreclose  his  mortgage  he  may  plead  the  amount  of  his 
claim  as  set-off  to  the  same,  as  if  the  association  had  sued 
him  upon  any  other  kind  of  a  contractual  debt.2  So  a  share- 
holder who  has  made  a  mortgage  can  set-off  as  against  the 
amount  due  by  him  to  the  association  under  the  mortgage, 
claims  held  by  him  against  it,  consisting  of  balances  due 
from  the  association  to  members  who  had  withdrawn  from 
the  association  and  assigned  them  to  the  borrower ;  and 
there  being  nothing  in  the  constitution  of  the  association 
which  made  it  inequitable  to  allow  the  set-off,  having  due 
regard  to  all  the  rights  of  others.3  But  he  cannot  prove  as 
a  sot-off,  losses  suffered  by  him  by  reason  of  suspension  of 
business  by  the  association.4 

Sec.  304 — Evidence  on  Foreclosure  Suit. 

The  introduction  of  the  bond  given  for  the  loan  and  the 
mortgage  given  to  secure  it,  together  with  the  entries  in  the 
books  of  the  association  showing  the  amount  due,  is  suffi- 
cient to  authorize  a  decree  of  foreclosure.5  Usually  the  by- 
laws of  the  association  are  introduced,  to  determine  the 
manner  of  carrying  on  the  association,  or  its  plan.6 

1  Winget  v.  Quincy  Building  and  8  Hennighausen    v.     Tisher,    50 

Homestead  Association,  128  01.  67;  Md.  583. 

s.  C.  21  N.  E.  I  ;>•]>.  12.  4  Johnston  v.  Building  Associa- 

Thal   the  fraudulent  representa-  tion,  104  Pa.  St.  394;  s.  c.  41  Leg. 

tionsofa  promoter  may  have  been  [nt.233;  14  W.N.  C.  244;  32Pitts. 

condoned  by  the  stockholder,  sec  L.  Jr.  460. 

Bukerv.  Leightor  Lea  Ass 'n.,  46N.  s  Richards  v.  Bibb  County  Asso- 
rt. Supp.  35;  S.  c.  18  \|.|..  Div.  548.  ciation,  24  Ga.  198. 

-  Remington    v.   Sing,   It    A.bb  9  It  is  error  to  exclude  evidence 

Pr.   278.      Franklin    B.    Ass'n,    v.  that  the  scries  of  stock  to  which 

Blather,    I   Abb.   Pr.  274.  the       dcfendent       belonged       had 


S305. 


MOltTGAGES. 


317 


Sec.  305 — Decree — Sale. 

Where  the  stock  of  the  borrower  is  assigned  as  collateral 
security,  and  its  value  is  not  credited  on  the  amount  other- 
wise due  when  the  decree  of  foreclosure  is  rendered,  such 
stock  should  be  ordered  lirst  sold  and  credited  on  the  decree 
of  foreclosure.  The  shares  should  be  sold  subject  to  all  dues 
which  accrued  before  and  after  trial  and  arc  unpaid,  or  sold 
freed  from  all  dues  which  accrued  prior  to  the  sale.  In 
that  case,  the  dues  which  accrue  after  the  trial  and  before 
the  sale  should  be  paid  first  out  of  the  proceeds  of  the  sale.1 
The  sale  should  be  for  cash,  to  pay  the  expenses  of  the  sale 
and  the  amount  then  actually  due  ;  and  as  to  the  residue,  on 
such  terms  of  credit  as  would  meet  and  discharge  the 
monthly  dues  and  the  interest  on  the  loans,  as  the  same  may 
accrue  from  time  to  time  between  the  date  of  sale  and  the 
winding  up  of  the  association,  whenever  that  may  be.2 

(distinguishing  Licking  County- 
Saving,  Loan,  and  Building  Asso- 
ciation Bebout,  29  Ohio  St.  252 )  ; 
Dominion  Building  and  Loan  As- 
sociation v.  Gordon,  26  N.  S.  551. 

After  breach  of  the  condition  of 
a  mortgage  given  to  secure  the 
payment  of  stated  dues,  interest 
or  loans  advanced,  and  fines,  the 
decree  in  an  action  to  foreclose 
should  be  confined  to  the  amount 
of  such  dues,  interest,  and  fines, 
then  due  and  unpaid.  In  comput- 
ing the  time  for  which  notice  of  a 
sale  on  execution  should  be  adver- 
tised before  the  day  of  sale,  the 
day  on  which  the  notice  was  first 
published  may  be  included,  and 
the  day  of  sale  must  be  excluded. 
Hagerman  v.  Ohio  Building  and 
Saving  Association,  25  Ohio  St.  180. 

"The  sum  for  which  the  mort- 
gage was  to  be  foreclosed  was  such 
a  sum  as  would,  by  the  constitu- 
tion of  the  association,  be  sufficient 
to  redeem  the  property  on  the  day 
of  the  judgment  of  foreclosure. 
'  at  the  rate  of  premium,'  at  which 


matured,  and  that  it  is  with  a  sum 
equalling  the  amount  of  the  bond, 
as  these  facts,  if  true,  are  equiva- 
lent to  a  payment  of  the  bond. 
Charles  Tyrell  Loan  and  Building 
Association  v.  Haley,  139  Pa.  St. 
436  ;  s.  c.  20  Atl.  Rep.  1003. 

A  certificate  referred  to  in  the 
mortgage  is  admissible  in  evidence. 
United  Savings  and  Loan  Co.  v. 
Cade,  15  Wash.  38  ;  s.  c.  45  Pac. 
Rep.  656. 

The  mortgagee  or  purchaser  of 
the  land  mortgaged  cann'ot  compel 
the  association  to  foreclose  the 
mortgage  where  the  right  is  op- 
tional with  it.  Redheffer  v.  House, 
etc.,  Ass'n,  64  Mo.  App.  46. 

1  Massey  v.  Citizens'  Building  and 
Savings  Association,  22  Kan.  624. 

2  Fox  v.  Cottage  Building  Fund 
Association,  81  Va.  677. 

The  recovery  must  be  limited,  in 
the  order  of  sale,  to  the  amount  of 
dues  and  interest  that  had  accrued 
at  the  time  of  rendering  the  decree. 
Risk  v .  Delphos  Building  and  Sav- 
ing Association,  31  Ohio  St.  517  ; 


318  BUILDING   AND   LOAN   ASSOCIATIONS.      CI).    XVI. 

Sec.  306— Decree  Stands  as  Security  for  Future  Pay- 
ments. 

A  decree  of  foreclosure,  where  the  mortgagor  has  asserted 
his  right  to  redeem  before  sale,  by  paying  the  amount  judi- 
cially ascertained,  will  stand  as  security  for  future  instal- 
ments and  liabilities.1 

Sec.  307 — Foreclosure  and  Sale  Under  Mortgage  Does 
Not  Necessarily  Terminate  Mortgagor's  Membership. 

The  foreclosure  of  the  mortgage  and  sale  under  the  decree 
does  not  necessarily  terminate  the  membership  of  the  bor- 
rower in  the  association  nor  extinguish  his  stock.  For  in- 
stance, if  the  association  make  the  whole  amount  of  the 
debt  out  of  a  sale  of  the  mortgaged  premises,  without  ap- 
plying the  member's  stock  interest  to  a  reduction  of  his 
debt,  the  membership  is  not  terminated;  and  more  espe- 
cially is  this  true  if  the  society  continues  to  collect  dues 
from  him  upon  the  shares  originally  advanced.2  But  if  the 
stock  has  been  assigned  as  collateral  security,  and  has  been 
applied  to  a  reduction  of  the  amount  due  under  the  mort- 
gage, then  a  sale  of  the  property  mortgaged  "terminates 
the  membership  of  the  mortgagor  in  the  association,  and 
the  obligation  to  continue  payment  of  dues  in  consequence 
of  membership  ceases." 3 

Sec.  308 — Right  of  Purchaser  of  Land  Mortgaged. 

Where  the  purchaser  of  the  land  mortgaged  to  a  building 
association  took  the  forfeited  shares  of  the  defaulting  bor- 
rower and  agreed  to  pay  a  part  of  the  purchase-money  in 
instalments  of  a  specified  amount,  he  was  subsequently  held 

the    funds     were    then     selling."  sociation,  31  Ohio  St.  517.     See  also 

Richards  v.  Bibb  County   Associa-  Sparrow  v.  Farmer,  26  Beav.  nil 

t  ion,  24  <  la.  198  ;  Ocmulgee  Build-  s.  C.  28  L.  J.  Ch.  537  ;  33  L.  T.  216 

ing,  etc.,  Association  v.  Thomson,  5  Jur.    (N.  S.),  530;    Farmer    v 

I    ;.  Smith,  4  II.  &  N.  196;  S.  c.  28  L 

Robertson  '•.  American   Home-  J. Exch.  226  ;  5  .Jur.  N.  S.  533,  note 
tead  Association,  10  Md.  397  ;  B.C.       2  North  American  Building  As- 

69     \m.    Dec.    M.r)  ;    Eagerman    v.  sociation  v.  Sutton,  35  Pa.  St.  463. 
Ohio  Building  ami   Savings   Asso-        :l  MrCahan  v.  Columbian   Build- 

ci.it  ion.  25   Ohio  St.    L86;  Risk  u.  ing  Association  of  East  Baltimore, 

Delphos  Building  and  Saving  As-  40  Md.  226. 


§  310.  MORTGAGES.  319 

liable  under  the  rules  of  the  society  to  fines  for  non 
payment  of  the  instalments.  By  this  arrangement  he  prac- 
tically became  a  member  of  the  association.1  In  another 
instance  the  purchaser  of  the  mortgaged  property  agreed 
with  the  association  to  pay  off  the  debt  at  the  rate  of  a  cer- 
tain number  of  dollars  per  month,  and  it  was  decided  that 
he  was  not  to  be  treated  as  a  member  of  the  association,  on 
default  made  by  him,  and  that  half  of  his  monthly  pay- 
ments should  be  credited  to  him  on  account  of  dues  on  the 
stock.2 

Sec.    309— Discharge   of  Debt   by   Sale  of  Land — As- 
sumpsit for  Remainder  Due. 

A  building  association  mortgage  is  just  like  any  other 
mortgage  when  sale  of  the  land  mortgaged  has  been  made 
under  it,  or  under  a  decree  of  foreclosure  rendered  upon  it : 
its  lien  is  divested.3  Of  course,  if  the  sale  of  the  land  mort- 
gaged does  not  bring  enough  to  liquidate  the  amount  due  the 
association,  the  debt  is  not  discharged  ;  and  implied  assump- 
sit will  lie  for  the  remainder  due.4  In  England  it  is  held, 
however,  that  assumpsit  will  not  lie  for  the  mortgage- 
money,  if  there  be  a  covenant  for  its  repayment.5 

Sec.  310— Cancellation  of  Mortgages— May    Show   Ma- 
turity of  Stock. 

A  mortgagor  when  sued  on  his  mortgage  may  alwrays 
show  that  it  has  been  satisfied.  Thus,  a  mortgagor  may 
show  as  a  defense  that  if  the  profits  wTere  divided  in  the 
manner  provided  by  the  constitution  and  by-laws  the  stock 
would  have  matured  and  the  debt  therefore  be  extinguished. 

1  Handley  v.  Farmer,  29  Beav.  4  McCahan  v.  Columbian  Build- 
362.  ing  Association,  40  Md.  226. 

2  Capital  Hill  Building  Associa-  5  Middleditch  v.    Ellis,  2   Exch. 
tion  v.   Hilton,  1  Mackey  (D.   C.)  623;  s.  c.  17  L.J.  Exch,  365  :  Sher- 
107.     See  Hemperly  v.  Tyson,  170  iff  v.  Glenton,  28  L.  T.  (N.  S.)  65. 
Pa.  St.  385  ;  s.  c.  37  W.  N.  Cas.  301  ;  It  would  seem  that  the  suit  rnus  I 
32  Atl.  Rep.  1081.  be   upon   the   covenant   to  repay. 

3  Germania  Building  Association  Rudge  v.  Richens  L.  R..  8  C.  P. 
v.  Neill,  93  Pa.  St.  322.  358  :  S.  C.  42  L.  J.  C.  P.  127  ;  28  L. 

T.  537. 


320  BUILDING  AND   LOAN   ASSOCIATIONS.     Ch.  XIV. 

He  is  not  compelled  to  resort  to  a  mandamus  or  suit  in 
equity  to  compel  the  association  to  divide  and  apply  the 
profits  to  the  proper  series  of  stock,  and  to  declare  the  series 
matured.  The  association  may  show  that  the  stock  has  not 
matured  or  it  has  met  with  losses.  His  answer  in  such  a 
case  is  equivalent  to  a  bill  in  equity.1 

The  mortgagor  may  maintain  an  action  for  an  accounting 
and  cancelation  of  his  mortgage ;  and  in  such  a  case  the 
court  will  ascertain  the  amount  due  thereon  and  name  a 
reasonable  day  for  its  payment,  and  order  the  property 
mortgaged  sold  on  default.2  Upon  such  a  bill  the  mort- 
gagor may  allege  that  he  was  induced  to  become  a  borrower 
of  the  association  by  false  and  fraudulent  representations  of 
its  officers,  and  may  pray  that  his  stock  be  canceled ;  but 
he  must  make  out  a  clear  case  and  not  have  been  guilty  of 
unnecessary  delay,  at  least  until  he  had  experimented  with 
the  association  a  few  years  and  not  found  it  as  profitable  as 
he  had  supposed.3  Equity  will  grant  a  prayer  for  discovery, 
an  accounting,  an  injunction,  and  the  appointment  of  a  re- 
ceiver where  a  complainant  alleges  that  the  association,  by 
its  constitution  and  by-laws,  promised  that  when  each 
shareholder  had  made  payments  upon  his  shares  of  stock, 
making  such  shares  of  a  certain  value,  it  would  declare  the 
institution  closed,  and  deliver  to  those  who  had  taken 
loans  their  securities  to  be  canceled,  and  pay  to  those  who 

1  Charles  Tyrell  Loan  and  Build-  s.  c.  21  N.  E.  Rep.  12  ;  25  Amer.  & 

ing  Association  v.  Haley,  139  Pa.  Eng.  Corp.  Cas.  652  ;  affirming,  29 

St.  470 ;  s.  c.  48  Leg.  Int.  345  ;  27  111.  App.  173. 

W.  N.  Cas.  244  ;  20  Atl.  Rep.  1063  ;        The  declarations  of  the  secretary 

Buist    v.    Bryon,  S.    C,   21    S.    E.  as  to  the  amount  due  does  not  bind 

Rep.  537  ;  Everman  v.  Schmitt,  24  the  association,  unless  it  be  shown 

Wkly.  L.  Bull.  56  ;  Buist  v.  Fitz-  that  he  had  authority  to  make  such 

imons,  44  S.  C.  130  ;  21  S.  E.  Rep.  an  admission.    It  is  not  sufficient 

610.  alone  to  show  that  he  had  charge 

-  Kirks  ?\  Durant  Building  and  of  the  hooks  and  accounts  of  the 

Loan    Association,   (Miss.),  is  So.  association  to  render  such  declara- 

Rep.  859;  Hempstead  Building  As-  tions  admissible.    Johnston  v.  Eliz- 

sociation   v.    King,    58    Md.    279;  abeth  Building  and  Loan  Associa- 

i   .(■    v.  Schoyer,  20  D.  C.  254.  lien,  nil   Pa.  St.  394 ;  s.  C.  41  Leg. 

swingel  v.  Quincy Building  and  Int.  238;    11  W.  N.  Cas.  244;  32 

Homestead  Association,  128  111.  67  ;  Pitts.  L.  Jr.  460. 


§310. 


MORTGAGES. 


321 


had  simply  invested  their  money  the  full  value  of  their 
shares ;  that  he  had  made  such  payments,  and  the  company 
had  declared  the  institution  closed;  and  that  the  company 
has  in  its  possession  assets,  and  refuses  to  pay  him  after 
the  lapse  of  ten  years.1 


1  Amer.  v.  Union  Building  and 
Loan  Association,  50  N.  J.  Ch.  170  ; 
S.  c.  24  Atl.  Rep.  552. 

In  England  the  indorsement  of 
the  statutory  receipt  of  cancela- 
tion on  a  borrower's  mortgage  pre- 
cludes the  association  from  mak- 
ing further  claim  against  the  mort- 
gagor in  respect  of  the  debt.  Har- 
vey v.  Municipal  Permanent  In- 
vestment Building  Society  L.  R., 
26  Ch.  Div.  273  ;  s.  C.  53  L.  J.  Ch. 
1126  ;  51  L.  T.  N.  Y.  408  ;  32  W.  R. 
557  ;  affirming,  52  L.  J.  Ch.  349  ; 
Sangster  v.  Cochrane  L.  R.,  28  Ch. 
Div.  298  ;  s.  c.  54  L.  J.  Ch.  301 ;  51 
L.  T.  N.  S.  889  ;  33  W.  R.  221 ;  49 
J.  P.  327  ;  Robinson  v.  Trevor  L.  R. , 
12  Q.  B.  Div.  423 ;  S.  C.  53  L.  J.  Q. 
B.  85 ;  50  L.  T.  N.  S.  190  ;  32  W. 
R.  374 ;  Carlisle  Banking  Co.  v. 
Thompson  L.  R.,  28  Ch.  Div.  398  ; 
S.  c.  53  L.  T.  N.  S.  115 ;  33  W.  R. 
119. 

Parts  of  a  loan  as  year  by  year 
dues  are  paid  cannot  be  canceled  ; 
but  such  loan  must  be  settled,  with 
such  dues  and  other  credits,  when 
the  share  is  fully  paid  ;  and  desig- 
nating the  ordinary  dues  as  "  dues 
paid  on  loans  awarded "  does  not 
change  their  nature  or  application. 
Seibel  v.  Building  Association,  43 
Ohio  St.  371  ;  S.  C.  10  Amer.  &  Eng. 
Corp.  Cas.  460  ;  reversing,  13  Wkly. 
L.  Bull.  265. 

In  an  action  by  a  shareholder  for 
an  accounting,  no  inquiry  can  be 
had  into  the  association's  general 
affairs,  nor  settle  the  respective 
and  mutual  rights  of  the  stock- 
21 


holders   and  creditors.     Myers  v. 
Schoyer,  20  D.  C.  254. 

Plaintiffs,  as  trustees  of  a  Build- 
ing Society,  advanced  to  defendant 
a  sum  of  money  on  the  security  of 
five  mortgages,  the  foreclosure  of 
which  was  sought  in  the  suit. 
Defendant  answered  that  lie  was 
entitled  to  a  release  of  a  portion  of 
the  mortgaged  property  under  the 
6th  rule,  providing  "  that  the  trus- 
tees shall  be  empowered,  by  direc- 
tion of  the  board,  at  any  period, 
to  release  any  portion  of  the  prop- 
erty mortgaged,  on  being  satisfied, 
in  manner  before  mentioned,  *  *  * 
that  the  remaining  property  is  suf- 
ficient value  to  secure  the  society. 
Defendant  alleged  that  the  direc- 
tors had  refused  such  release,  al- 
though the  amounts  due  under  the 
mortgages  had  been  largely  re- 
duced and  had  further  refused  to 
submit  the  matter  to  arbitration, 
as  demanded  by  him  under  the 
29th  rule,  providing,  "that  the 
board  for  the  time  being,  *  *  * 
shall  determine  all  disputes  con- 
cerning the  affairs  of  the  soci- 
ety, *  *  *  which  shall  or  may 
hereafter,  arise  between  the  trus- 
tees, officers,  or  other  shareholders 
of  the  society  *  *  *  and,  if  the  de- 
cision be  not  satisfactory,  reference 
shall  be  made  to  arbitration."  De- 
fendant also  pleaded  usury,  as  in- 
validating the  mortgages,  the  so- 
ciety having  taken,  by  way  of  a 
bonus  or  premium,  a  sum  exceed- 
ing the  legal  rate  of  interest.  It 
was  held  that  the  rule  providing 


322  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XIV. 

Sec.     311  —  Revocation    of    Cancelation    Improperly 
Made. 

If  the  association  has  improperly  canceled  a  mortgage  it 
may  maintain  an  action  to  have  the  cancelation  revoked. 
Thus  where  the  defendant  was  a  director  of  an  association 
and  obtained  a  loan  from  it,  secured  by  mortgage ;  and  a 
by-law  provided  that  whenever  the  shares  of  any  series 
were  ascertained  to  be  worth  $200  each,  each  shareholder 
should  receive  that  amount  in  cash,  or  have  his  securities 
satisfied ;  and  the  association,  the  defendant  voting,  passed 
a  resolution  directing  the  satisfaction  of  the  defendant's 
mortgage,  being  deceived  by  the  secretary's  false  report 
that  the  stock  of  the  defendant's  series  was  worth  $200  ;  it 
was  held  that  he  had  no  cause  to  complain  of.  a  decree 
striking  off  the  satisfaction.1 

Sec.  312 — Foreign  Corporations. 

In  many  of  the  states  a  building  association  of  another 
state  is  required  to  file  with  an  officer  of  the  state  where  it 
desires  to  do  business  a  statement  of  its  financial  condition. 
This  is  for  the  benefit  of  those  who  desire  to  deal  with  it. 
Certain  penalties  are  often  inflicted  if  failure  in  this  respect 
should  be  made.  Where  such  a  statute  was  in  force,  a  for- 
eign association  doing  business  in  that  state  was,  in  a  fore- 
closure proceeding,  restricted  to  the  principal  sum  actually 
loaned  with  simple  interest  thereon  and  taxes  paid  to  pro- 
tect the  lien  of  the  mortgage.  No  recoveiy  was  allowed 
for  bonuses  or  premiums  and  other  dues  allowed  under  its 

for  the  partial  release  of  the  prop-  formed  all  the  conditions  of  the 

city  li  It  tin'  matter  to  the  disc-re-  mortgage  given  to  secure  his  loan, 

tion  of  the  directors;  that  the  de-  was  entitled  to  a  cancelation   of 

tnand  and    refusal  did   not  consti-  the  mortgage  on   the  association 

tute  a  " difference "  or  "dispute."  becoming  insolvent,  though  lie  is 

which  the  defendant  could  insist  on  not  relieved  from  personal  liability 

having  referred  to  arbitration  un-  on  his  shares,    Evermanv.  Schraitt, 

der  the  39th  rule.     Aimon  v.  Fair-  24  Wkly.  L.  Bull.  56. 

banks,  1  It.  &  C.  (N.  S.)  407.  «  Appeal  of  Callahan,  124  Pa.  St. 

[n  Ohio  it  was  held  that  a  share-  L38;  S.C.  16  Atl.  Rep.  638  ;  46  Leg. 

bolder  who  had  fully  repaid  in  dues  Int.  200;  23  W.  N.  Cas.  233;  19 

and  dividends  the  amount  advanced  Pitts  L.  Jr.  411. 

to  him,  and  hail  in  good    fait  h  per- 


§312. 


MORTGAGES. 


323 


by-laws.1  Such  a  statute,  however,  does  not  affect  loans 
entered  into  before  it  was  enacted.2  A  suit  will  not  lie  to 
cancel  a  mortgage  given  to  a  foreign  association  that  lias 
not  complied  with  the  law  before  the  mortgagee  has  paid 
what  is  justly  due  the  association.3  Nor  can  a  shareholder 
and  borrower  defend  on  the  ground  that  the  association  had 
not  complied  with  the  law  if  it  has  done  so  at  the  time  of 
the  loan.4 


1  Maine  Guarantee  Co.  v.  Cox, 
Ind        ;  s.  c.  42  N.   E.  Rep.   915  ; 
New  York,  etc.,  Ass'n  v.  Slough- 
ter,  17  Pa.  C.  C.  66. 

2  Amer.  Building  and  Loan  As- 
sociation v.  Rainbolt,  48  Neb.  434  ; 
s.  c.  67  N.  W.  Rep.  493. 

3  New  York  National,  etc.,  Ass'n 
v.  Cnnaon  (Tenn),  41  S.  W.  Rep. 

1054. 


4  Illinois  B.  &  L.  Ass'n  v.  Walker 
(Tenn.),  42  S.  W.  Rep.  191. 

The  statute  of  Illinois  requiring 
a  foreign  association  to  make  cer- 
tain deposits  within  the  state  be- 
fore doing  business,  does  not  ap- 
ply to  the  taking  of  additional  se- 
curities for  loans  made  before  the 
act  went  into  effect.  Rhodes  v. 
Missouri  S.  &  L.  Co.,  63  111.  App. 
77. 


CHAPTEE  XV. 

WITHDRAWALS. 

Sec.  313.  Right  to  Withdraw. 

314.  Members  Cannot    be   Deprived  of  the  Privilege  of  With- 

drawing. 

315.  Notice  of  Withdrawal. 

316.  Canceling  Notice  of  Withdrawal. 

317.  Order  of  Withdrawal. 

318.  No  Funds  to  Pay  Withdrawing  Members. 

319.  Suit  by  Withdrawing  Member — Lack  of  Funds. 

320.  Status  of  Member  Giving  Notice. 

321.  Effect  of  Withdrawal. 

322.  Suit  to  Recover  Amount  Due — Defence. 

323.  Amount  to  be  Withdrawn. 

324.  Amount  Standing  to  Member's  Credit. 

325.  Interest  on  Withdrawal  Amount. 

326.  Payment  of  Amount  Due. 

327.  Withholding  Right  to  an  Execution  to  Enforce  Judgment. 

328.  Pledged  Stock. 

329.  Insolvency  of  Associations. 

330.  Matured  Stock. 

331.  Foreign  Associations. 

Sec.  313— Right  to  Withdraw. 

The  right  to  withdraw  from  a  building  association  has 
always  been  esteemed  a  valuable  privilege.  In  this  respect 
there  is  no  corresponding  privilege  in  an  ordinary  corpora- 
tion. A  member  desiring  to  withdraw  must  comply  with 
the  terms  of  the  articles  of  association,  or  the  by-laws,  or 
the  statute,  as  the  case  may  be.1  It  is  not  necessary  to  first 
obtain  the  consent  of  the  association  or  its  officers  before  a 
withdrawal  can  be  effected.     Thus,  under  a  by-law  provid- 

1  Carter  v.   Aetna  Loan  Co.,  1  ciety,  5  L.  T.  Rep.  211  ;  Hartford 

Mo.    A  pp.  I.vpr.    :;."»,",:  s.  c.  61   Mo.  v.  Co-operation  Mutual  Homestead 

App.  218;  Security  Loan   Associa-  Co.  128  Mass.  494;  Booz's  Appeal, 

linn   r.   Lake,  69   Ala.  456;  S.  C.  1  109  Pa.  St.  592  ;  s.  c.  16  W.  N.  Cas. 

Amer.  &  Eng.  Corp.  Cas.  418.     On  3(55.     Tims  if  the  by-laws  require 

second  appeal,  72   Ala.  207;  In  re,  a  withdrawing  stockholder  to  pro- 

Sliellielil   Permanent  Building  So-  duce    his  pass  book  before  he  is 

324 


§  313.  WITHDRAWALS.  325 

ing  that  "in  case  any  member,  by  reason  of  sickness  or 
removal,  or  through  misfortune,  is  unable  to  continue  the 
payment  of  his  subscription,  he  may  give  notice  to  the  sec- 
retary of  an  intention  to  withdraw  from  the  association  ; 
and  in  case  the  directors  are  satisfied  as  to  the  grounds  of 
withdrawal,  his  whole  amount  of  subscription  shall  be 
returned,  except  the  fee  ; "  and  that  "  any  person  wishing  to 
withdraw  for  the  above  reasons,  or  otherwise,"  and  who 
shall  have  been  a  member  for  a  certain  time,  "  and  be  clear 
of  the  books,"  shall  be  entitled  to  a  certain  interest  on  that 
amount ;  it  was  held  that  any  person  having  been  a  mem- 
ber for  that  time,  and  "clear  of  the  books,"  may  withdraw 
without  leave  of  the  directors."  1 

"Where  the  by-laws  of  an  association  and  the  certificate  of 
membership  issued  fix  the  rights  of  a  member  to  withdraw 
therefrom,  parol  evidence  of  the  "  customary  practice "  in 
such  cases  is  not  admissible.2 

Under  a  like  provision,  where  a  member  gave  notice  of 
an  intention  to  withdraw  on  account  of  "losses  in  business, 
sickness  in  his  family,  and  the  rigor  of  the  times,"  it  was 
held  that  he  could  maintain  an  action  to  recover  back  his 
funds,  although  the  directors  did  not  consent  to  his  with- 
drawal, if  he  proved  that  he  was  totally  unable  to  continue 
the  payment  of  his  subscription,  and  that  there  was  nothing 
in  the  pecuniary  condition  of  the  association  furnishing  any 
reason  why  the  money  paid  to  it  by  him  should  not  be 
returned.  To  exclude  evidence  of  these  facts  was  held  to 
be  error.  Nor  had  the  directors  the  arbitrary  power  to  say 
that  he  should  not  withdraw  on  the  pretence  that  they 
were  not  satisfied  as  to  the  grounds  of  his  withdrawal.3 

The  right  to  withdraw  usually  refers  to  members  in 
good  standing  ;  and  a  statute  giving  a  withdrawing  member 
certain  rights  has  no  reference  to  a  defaulting  member.4 

paid,  the  production  is    a  condi-  2  American  Building  and  Loan 

tion  precedent.     Atkinson  v.  Brad-  Association  v.   Mordock,  39  Neb. 

ford,  etc.,  Building  Society  L.  R.,  413 ;  s.  C.  58  N.  W.  Rep.  107. 

25  Q.  B.  Div.  377  ;  59  L.  J.  Q  B.  360.  3  Wetterwulgh  v.  Knickerbocker 

1  Fuller  v.  Salem  and  Dan  vers  Building  Association,  2  Bosw.  381. 

Loan    and    Fund  Association,    10  4    Watkins     v.     Workingmen's 

Gray,  94.  Building  and  Loan  Association,  97 


326  BUILDING  AND   LOAN   ASSOCIATIONS.        Ch.  XV. 

After    stock    lias    matured    the    right   to   withdraw   has 
ceased.1 

Sec.  314 — Member  Cannot  be  Deprived  of  the  Privilege 
of  Withdrawing. 

Any  by-law  in  force  at  the  time  a  person  becomes  a 
member  of  the  association  granting  to  a  member  the  right 
of  withdrawal,  enters  into  and  becomes  a  part  of  his  con- 
tract with  the  association  which  cannot  be  taken  away  from 
him  without  his  consent.2  A  person  has  the  right  to  treat 
the  by-laws  given  him  on  his  becoming  a  member  of  the 
association  as  all  the  by-laws  such  association  had,  and  he 
is  not  bound  to  take  notice  of  modifications  of  such  by-laws, 
with  respect  to  withdrawing,  on  the  record  of  the  company 
simply ;  unless  further  notice  be  given  him,  which  notice 
must  be  proven  by  the  company  to  have  been  given.3  A 
resolution  providing  that  the  value  of  all  stock  borrowed 
on,  to  a  certain  amount,  should  be  allowed  to  such  holders 
as  desired  to  redeem,  cannot  be  rescinded  to  the  prejudice 
of  a  member  who  had  made  application  to  withdraw,  and 
had  refrained  from  paying  his  monthly  dues,  in  the  belief 
that  his  application  had  been  accepted.4  Where  the  articles 
of  association  provided  that,  after  notice  of  withdrawal  of 
shares,  the  amount  "  shall  be  refunded  to  such  member  as 
soon  as  the  necessaiy  funds  are  in  the  treasury,"  the  asso- 
ciation, it  was  held,  could  not  lend  any  of  its  funds  while 
withdrawal  notices  were  on  file;  and  the  right  of  the  with- 
drawing member  to  receive  payment  was  not  affected  by  a 

Pa.  St.  514;  S.  C.  38  Leg.  Int.  333  ;  tion,  25  N.  Y.  Supp.  835;  S.  c.  5 

ID    W.   N.   (as.    114;   Laurel  Run  Misc.    Rep.  518;   Bergman  v.    St. 

Building  Association  v.  Sperring,  Paul,  etc.,  Association,  29    Minn. 

106 Pa.  St.  334  ;  s.C.  15  W.  N.  Cas.  275  ;  S.  c.  13  N.  W.  Rep.  120  ;  Mil- 

340  :  32  Pitts.  L.  Jr.  394.  ler  v.  Jefferson  Building  Associa- 

1  Laurel    Run,  etc.,    Association  t  ion,  50  Pa.  St.  32. 
v.  Sperring,  106  Pa.  St.  334  ;   15  \V.        8  McKenney  v.   Diamond    State 

N.  Cas.  340;  41  Leg.  Int.  38*3  ;  32  Loan    Association,   7    Houst.   557 

Pitts.  L.  Jr.  894.  (Del.);    s.  c.   18    Atl.   Rep.   905; 

-  Bolyoko Building  and  Loan  As-  Murray  v.  Scott,  9  L.  R.  App.  Cas. 

.lion   v.    Lewis,    l   <'<>lo.   A.pp.  519 ;  S.  C.  53   L.J.  Ch.  715;  51  L. 

1  r,  .  ...  o.  .';  Pac.  Rep.  872  ;  Bngle-  T.  (N.  S.)  462  ;  83  W.  R.  173. 
hardl   v.    Fifth  Ward    Permanent        '  Eyre   v.  Building  Association, 

Dime  Saving  and    Loan   Associa-  17  Leg.  Int.  148. 


§  315.  WITHDRAWALS.  327 

resolution  by  the  board  of  directors  that  only  one-half  of  the 
receipts  of  the  association  should  be  applied  for  the  pay- 
ment of  withdrawals,  and  the  other  half  should  be  loaned 
to  members.1  An  association  may  authorize  a  borrowing 
member  to  withdraw  and  be  released  upon  the  payment  of 
dues,  interest,  and  fines  up  to  a  specified  time,  and  it  may 
afterwards  resolve  that  such  permission  shall  remain  open 
only  to  a  certain  date  ;  and  borrowing  members  who  fail  to 
avail  themselves  of  their  opportunity  before  the  date  so 
determined  cannot  do  so  afterwards.2  But,  under  its  power 
to  change  its  by-laws,  a  building  association  may  vary  the 
order  or  postpone  the  time  of  withdrawal.  In  all  such  in- 
stances as  this  it  is  considered  that  only  the  remedy  is 
affected  and  not  the  right  of  the  member  or  the  contract 
between  him  and  the  association.3 

Sec.  315— Notice  of  Withdrawal. 

The  statute  or  by-laws  provide,  almost  universally,  for 
the  giving  of  notice  of  an  intention  to  withdraw.  Usually 
this  notice  must  be  in  writing,  although  the  association, 
through  its  officers,  may  waive  the  written  and  accept  an 
oral  notice.4  But  the  secretary  of  the  association  cannot 
waive  a  written  notice.5  If  the  constitution  or  by-laws  re- 
quire the  notice  be  given  "  to  the  directors,"  a  notice  to  the 
stockholders,  assembled  at  their  annual  meeting,  is  not  suf- 
ficient, although  every  officer  and  director  of  the  association 
be  present.  "  They  attend  the  meetings  as  stockholders, 
members  of  the  corporation,  individually,  not  officially." 6 

1  Wolfe  v.  Conkey  Avenue  Sav-  Misc.  Rep.  427  ;  Wilson  v.  Society 
ings  Aid  and  Loan  Association,  82  L.  R.,  22  Q.  B.  Div.  381,  note; 
Hun,  201  ;  s.  c.  27  N.  Y.  Supp.  44  ;  Rosenberg  v.  Society,  Id.  373; 
58  N.  Y.  St.  Rep.  606.  Bradbury  r.  Wild    [1893],    1    Ch. 

2  Booz's  Appeal,  109  Pa.  St.  592  ;  377  ;  41  W.  R,  361. 

s.  C.  16  W.  N.  Cas.  365.  *  McKenney   v.  Diamond  State 

3  Englebardt  v.  Fifth  Ward  Per-  Loan  Association,  7  Houst.  557, 
manent  Dime  Saving  and  Loan  (Del) ;  s.  c.  18  Atl.  Rep.  905. 
Association,  148  N.  Y.  281 ;  s.  c.  42  5  jnre  Sheffield  Permanent  Build- 
N.  E.  Rep.  710  ;  reversing,  25  N.  Y.  ing  Association,  5  L.  T.  Rep.  211. 
Supp.  835  ;  5  Misc.  Rep.  518  ;  Paw-  6  Brown's  Estate,  12  W.  N.  Cas. 
lick  v.  Homestead  Loan  Associa-  207.  Some  of  the  stockholders 
tion,  37  N.  Y.  Supp.  164  ;  s.  c.  15  were  not  present  at  the  meeting. 


328 


BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  XV. 


A  notice  of  withdrawal  cannot  be  dispensed  with,  if  the 
member  desires  to  change  his  relation  to  the  society  as  a 
member  to  a  lender,  when  his  share  matures.1  If  the  by- 
laws provide  for  notice  to  be  given  to  the  secretary  of  the 
association,  a  notice  given  to  anyone  acting  for  him  in  his 
absence,  and  at  his  place  of  business,  is  held  to  be  as  effec- 
tual as  if  given  to  the  secretary  himself.2 


1  In  re  Sheffield  Permanent 
Building  Society,  5  L.  T.  Rep.  811. 

The  31st  rule  of  an  English  So- 
ciety authorized  the  board  to  issue 
a  deposit  on  paid  up  shares  for  301, 
each  at  5  per  cent  interest,  with 
the  right  of  withdrawing  the  whole 
or  part  of  the  deposit  upon  notice, 
in  preference  to  all  other  shai'es. 
This  rule  was  struck  out  by  the 
certifying  barrister,  but  the  direc- 
tors printed  and  acted  upon  it  by 
issuing  shares  accordingly.  Some 
years  afterwards  the  rule  was 
amended,  by  altering  301  into  11, 
and  the  amendment  was  certified 
by  the  barrister  ;  and  those  who 
had  taken  301  shares  had  them  ex- 
changed for  11  shares,  and  other 
1 1  shares  were  issii<'<l  to  new  share- 
holders. The  moneys  paid  by 
these  shareholders  were  applied 
for  the  purposes  of  the  society.  It 
was  held  tliat  such  shareholders, 
whether  they  had  bec<  >me  so  before 
or  after  the  amendment  was  certi- 
fied, and  whether  they  had  given 
DOtice  of  withdrawal  or  not,  wen; 
<mi!  it  Led  to  lif  paid  in  the  wind- 
ing up  in  preference  to  the  unad- 
vanced  members.      Murray  r.  Scott 

L.  I,'..  9  App.  Cas.  519;  s.  c.  53  L. 
.1.  Ch.  :  15;  51  L.  T.  (N.  S.)468;  33 
\V.  I'.  L73;  varying  sonic  case  in 
<  <Miit  of  A ppeal.  /»  re  < luardian 
Permanent  Benefit  Building  So. 
eitey  L.  I:.,  28  Ch.  Div.  440;  8.  c. 
12  L.  J.  Ch.  857;  48  I,.  T.  (N.  S.) 
i:;i  ;  82  w.  i;.  :■',. 


2  McKenney  v.  Diamond  State 
Loan  Association,  7  Houst.  557 
(Del);  s.  c.  18  Atl.  Rep.  905. 

Where  the  notice  is  given  to  the 
secretary,  the  proper  person  to  re- 
ceive it,  and  he  makes  no  objec- 
tion thereto,  and  does  not  inform 
the  person  giving  it  that  the  trans- 
fer to  him  of  the  stock  must  be  en- 
tered on  the  corporation's  books, 
such  objection  cannot  afterwards 
be  made.  Reynolds  v.  New  York 
Building  Loan  Banking  Co.,  35  N. 
Y.  Supp.  80. 

The  charter  and  by-laws  of  a 
building  and  loan  association  con- 
ferred upon  a  borrowing  member 
"  the  privilege  of  repaying  his  loan 
at  any  time  upon  30  days'  notice, 
and  the  right  to  withdraw  from 
the  association  at  any  time  after 
90  days  ;  "  the  repayment  of  his 
debt,  it  was  held,  was  not  on  con- 
1 1  it  ion  precedent  to  his  right  to 
wit  In  haw,  but  the  two  privileges 
might  be  executed  and  demanded 
by  one  and  the  same  transaction. 
Southern  Building  and  Loan  Asso- 
ciation  of  Tennessee  v.  Harris, 
98  Ky.  41  ;  s.  c.  32  S.  W.  Rep. 
261. 

A  member's  stock  may  be  at- 
tached at  the  suit  of  his  creditor  al- 
though he  has  not  given  any  notice 
of  his  intention  to  wit  hdraw.  At- 
wooil  r.  Dumas,  I  I!)  Mass.  Ki7  ;  s.  C. 
21  N.  E.  Rep.  286  ;  At  wood  v.  Wesi 
Roxbury,  etc.,  Bank,  L56 Mass.  166; 
s.  c.  SON.  E.  Rep.  558. 


§  317.  WITHDRAWALS.  329 

Sec.  316— Cancelling  Notice  of  Withdrawal! 

Any  member  who  has  given  a  notice  of  withdrawal  may 
cancel  it.  And  if  the  circumstances  arc  such  that  it  may 
fairly  be  gathered  that  the  notice  was  cancelled  only  on  the 
understanding  that  other  members  took  back  their  notices, 
then  any  such  cancelation  will  be  deemed  to  be  conditional 
only ;  and  if  the  condition  is  not  satisfied  the  cancelation 
will  have  no  effect,  and  the  notice  of  withdrawal  accord- 
ingly will  still  be  operative.1  A  member  gave  notice  of 
withdrawal  of  half  the  realized  (paid-up)  shares  held  by 
him,  and  after  that  the  society  duly  resolved  to  make  a 
deduction  on  account  of  a  prospective  loss  from  the  amount 
standing  to  the  credit  of  each  member  ;  and  the  withdraw- 
ing member  without  taking  legal  advice  stated,  in  reply  to  a 
circular  from  the  secretary,  that  he  would  allow  the  "  amount 
to  remain;"  it  was  held  that  he  did  not  intend  to  withdraw 
his  notice,  and  that  the  deduction  was  to  be  made  only  from 
the  amount  of  the  shares  winch  were  not  withdrawn.2 

Sec.  317 — Order  of  Withdrawals. 

Where  the  rights  of  members  to  withdraw  conflict  be- 
cause of  a  lack  of  funds,  then  the  member  first  giving  notice 
of  an  intention  to  withdraw  has  preference.     The  rule  is 

If  the  association  accept  a  notice  stock  ;  and  two  weeks  after  stated 
not  in  form  as  required  by  the  by-  he  had  decided  to  remain,  and  the 
laws,  it  will  still  be  bound.  In  re  secretary  gave  him  a  new  pass- 
Blackburn  and  District  Benefit  book  with  credit  therein  for  the 
Building  Society,  24  Ch.  Div.  421  ;  amount  he  had  paid  as  shown  in 
S.  C.  52  L.  J.  Ch.  894  ;  49  L.  T.  730  ;  the  old  book,  and  thereafter  he 
32  W.  R.  159;  Reynolds  v.  New  paid  additional  dues,  he  receiving 
York  Building  Loan  Banking  Co.,  no  money  under  the  by-laws  as  in 
89  Hun,  609;  s.  c.  35  N.  Y.  Supp.  case  of  actual  withdrawals  ;  it  was 
80;  69  N.  Y.  St.  Rep.  259.  held  that  the  loss   occasioned  by 

1  Scottish  Property,  etc.,  Build-  the  secretary  drawing  the  money 
ing  Society  v.  Stewart,  12  Rettie,  such  stockholder  would  have  re- 
925  ;  s.  C.  22  Sc.  L.  R.  619.  ceived  on  actual  withdrawal,  and 

2  Meiklejohn  v.  Glasgow  Work-  embezzling  it,  must  be  lost  by 
ingmen's,  etc.,  Building  Society,  the  association  and  not  by  the 
13  Rettie,  144.  stockholder.      Prairie  State  B.  & 

Where   a   stockholder  stated  to  L.  Assn  v.  Nubling,   170  111.   240; 

the  secretary  that  he  desired  to  s.  c.  48  N.  E.  Rep.  1016  ;  affirming, 

withdraw,   and   delivered  to  him  64  111.  App.  329. 
his    pass-book    and   certificate   of 


330 


BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  X  V. 


"  first  come,  first  served." x  This  is  true,  even  though  the 
association  in  the  meantime  has  been  dissolved.2 

"Where  a  statute  gives  the  right  to  withdraw,  a  by-law  re- 
quiring members  to  compete  for  the  right  of  withdrawal  is 
void.3  But  where  the  association  has  the  power  to  alter 
and  change  its  by-laws,  it  may  change  the  order  of  with- 
drawal.4 As  between  those  desiring  to  withdraw  and 
those  desiring  to  secure  loans,  the  former  must  be  preferred, 
and  the  society  cannot  deprive  them  of  that  right.5 

The  rules  of  an  association  may  be  so  formed   as  not  to 

ciety,  3  Report  471 :  s.  C.  [1893],  3 
Ch.  Rep.  811;  41  W.  R.  548. 

5  Engelhardt  v.  Fifth  Ward  Per- 
manent Dime  Saving  and  Loan  As- 
sociation. 148  N.  Y.  281  ;  s.  C.  42  N. 
E.Rep.710.  Nor  can  a  member  buy 
up  another's  right  and  insist  on  be 
ing  substituted.  Ward  v.  North 
Fairmont  B.  &  S.  Co.  5  Ohio  N.  P. 
133. 

A  by-law  providing  that  when 
applications  for  withdrawal  shall 
exceed  the  weekly  receipts,  such 
applications  shall  be  numbered  in 
the  order  in  which  they  are  re- 
ceived, and  paid  in  the  same  order 
as  fast  as  the  receipts  of  the  asso- 
ciation  shall  permit,  moans  that 
withdrawing  members  shall  be 
paid  in  accordance  with  the  order 
of  their  notice  of  withdrawal,  so 
that  the  association  may  iini  prefer 
one  to  another  in  an  ordinary  man- 
ner. Pawlick  v.  Homestead  Loan 
Association ,  15  Misc.  Rep.  427  ; 
s.  c.  37  N.  Y.  Supp.  184.  See 
Wolfe  v.  Conkey  Avenue  Savings, 
etc.,  Association,  75 Hun,  201  ;  s.  c. 
27  N.  V.  Supp.  41  ;  58  X.  V.  St. 
Rep.  656 

"Although  a  member  may  not 
under  t  he  rules  be  en1  Ltled   to  re 

payment  until  after  t  he  I'Xpiral  ion 

<>r  a  specified  period  from  the  time 
of  the  establishment  of  the  society, 

his  righl  to  give  notice  would  seem 


1  Botten  v.  City  and  Suburban 
Benefit  Building  Society,  98  L.  T. 
326  ;  s.  C  on  appeal,  98  L.  T.  349  ; 
Hoyt  v.  Inter-Ocean  Building  As- 
sociation, 58  Minn.  345  ;  S.  C.  60  N. 
W.  Rep.  678  ;  Wolfe  v.  Conkey 
Avenue  Savings,  etc.,  Association, 
75  Hun,  201  ;  s.  c.  58  N.  Y.  St.  Rep. 
656  ;  27  N.  Y.  Supp.  84  ;  Brett  v. 
Monarch  Investment  Building  So- 
.  9  Reports,  141  ;  S.  C.  [1894], 
1  Q.  B.  367  :  63  L.  J.  Q.  B.  237  :  70 
L.  T.  Rep.  146;  Siburn  v.  Pearce, 
44  Ch.  Div.  354;  S.  C.  63  L.  T.  123  : 
38  W.  R.  658;  6  T.  L.  Rep.  262; 
A  ul  1  v.  Glasgow  Workingmen's. 
etc.,  Building  Society,  12  A  pp.  Cas. 
at   p.   20 1  :    In  re   Blackburn  and 

I  >is1  rici  I  lenefit  Building  Society, 
24  Ch.  Div.  421  ;  52  L.  J.  Ch.  894  ; 
49L.T.  730;32W.  R.  159  ; affirmed, 
sub.  num.  Walton  v.  Edge,  10  App. 

54   L.   .1.  Ch.  362  ;  52   L. 

T.666  :   33  W.  R.  1 17  ;    19  J.  P.  468. 

-  Botten  v.  <  !ity   and   Suburban 

Building  Association  [1895],  2  I  !h. 

441;  64  L.J.Ch.  609;   72  LT.  722 ; 

II  W.  R.  12;  ///  re  Middlesborough 
Building  Society,  53  L.  T.  (N.  S.) 
203. 

•  Rodgers  v.  Soul  hwesl  era   M  a 
tual   Savings   Fund   and   Building 
laiion,  7  W.  X.  <'as.  95.    See 
Building    Association    '•.   Jones,  '2 
La  ■  Time    I  Pa.)  I  \.  S.)  17. 

4  1'epe  r.  (  !ity  ami   Suburban  So- 


§  318.  WITHDRAWALS.  331 

require  notice  and  yet  the  withdrawing  member  be  entitled 
to  priority.  Thus,  where  a  rule  provided  that  all  unad- 
vanced  members  should  have  issued  to  them  certificates,  at 
the  meeting-  of  the  directors  next  after  the  realization  of 
their  shares,  entitling  them  to  be  paid,  and  such  certificates 
should  be  paid  in  order  according  to  their  date,  as  the  funds 
in  hand  should  from  time  to  time  be  sufficient  for  the  j air- 
pose  ;  it  was  held  that  the  holders  of  the  realized  shares 
and  the  withdrawing  members  had  priority  in  the  winding- 
up  of  the  society  over  those  members  who  had  not  given 
notice  of  withdrawal.1 

Sec.  318 — No  Funds  to  Pay  Withdrawing  Members. 

Where  a  member  has  the  right  to  withdraw,  it  is  the  duty 
of  the  association  to  keep  itself  in  a  condition  to  meet  his 
demand.  Usually  the  time  between  the  giving  of  the  no- 
tice of  withdrawal  and  that  lixed  for  payment  is  sufficient 
to  enable  the  association  to  accumulate  a  fund  amply  large 
to  meet  the  member's  demand.  The  society  cannot  set  up 
as  a  defense  that  it  has  no  funds  applicable  to  the  payment 
of  the  member's  claim,  because  it  has  invested  them  in  real 
estate  ;  for  such  action  is  an  abuse  of  its  [towers.2     A  lack 

not  to  be  affected.     Thus,  where  among  them  pro  rata.     The  regis- 

by  one  of  the  rules  of  a  building  trar  held  that  as  there  was  nothing 

society,    incorporated    on   the   2d  in   the   rules    fixing    the   date    at 

January,  L889,  it  was  provided  that  which  the  member  must  give  no- 

'  after  the  society  lias  been  incur-  tice  to  withdraw,  the  member  was 

porated   five   years,   any   member  entitled  to  rank  for  withdraw;;!  as 

may  withdraw  his    shares.     *    *  from  the  date  of  his  actual  notice." 

All  withdrawals  shall  be    repaid  Davis  on  Building  Societies,  (4 

only  from  sums  received  from  re-  p.  201,  citing,  Hinton  v.  First   Bir- 

payments  made  subsequent  to  the  mingham  Perfect  Thrift  Building 

notice  of  withdrawal  on  advances  Society.      Report     of     the     Chief 

by  ballot,  and  they  shall  be  paid  Registrar  for  1894,  p.  64. 

in  order  of  notice  given,  of  which  1  These  were  realized  sha res.     /*/ 

a  register  shall  be  kept,"  a  member  re  Norwich  and  Norfolk  Building 

gave   notice    on    17th   September,  Society,  45  L.  J.  Ch.  785.     SeeCar- 

1892,  and  claimed  to  rank  for  with-  rick  v.  Wills,  12  Rettie,  1271  ;  S.  C. 

drawal  as  from  that  date  ;  the  so-  22  Scot.  L.  R.  833. 

ciety  claimed  that  all  notices  re-  2  Second     National     Loan    and 

ceived    before  2d  January.    1894,  Homestead  Association  v.  Hubley 

should  rank  as  of  that  date,  and  34  Leg.  Int.  6 ;  s.  c.  24  Pitts.  L. 

the  available  funds  be  distributed  Jr.  50. 


332  BUILDING   AND   LOAN   ASSOCIATIONS.        Ch.  XV. 

of  funds  is  no  defense.1  The  right  of  a  withdrawing  mem- 
ber to  receive  payment  cannot  be  affected  by  a  resolution  of 
the  board  of  directors,  adopted  after  he  has  put  his  notice 
on  file,  that  only  half  of  the  receipts  shall  be  applied  to  the 
payment  of  withdrawals,  and  the  other  half  should  be  loaned 
to  members.2 

Sec.    319 — Suit    by     Withdrawing    Member— Lack    of 
Funds. 

Where  no  funds  applicable  to  the  satisfaction  of  the  with- 
drawing member's  claim  are  in  the  treasury,  it  has  been 
held  that  that  fact  was  no  defense,  even  though  all  the  funds 
in  the  treasury  were  withdrawn  for  the  legitimate  business 
of  the  association  and  according  to  its  by-laws.  Thus,  where 
a  statute  provided  that  at  no  time  should  more  than  one- 
half  of  the  funds  in  the  treasury  be  applied  to  the  demands 
of  withdrawing  stockholders,  except  by  the  consent  of  the 
directors,  it  was  held  no  defense  that  fifty  per  cent,  of  its 
funds  had  been  so  applied,  and  the  directors  refused  to  give 
their  consent  to  the  withdrawal  of  any  part  of  the  remain- 
ing fifty  per  cent.  In  passing  on  the  question,  the  court 
said :  "  That  he  may,  upon  the  refusal  of  the  company  to 
pay  him,  sue  it,  and  recover  judgment,  just  as  any  other 
litor,  is  not  doubtful.  It  is  urged,  however,  that  he  is 
•  stopped  by  the  proviso,  from  legal  process  for  therecoverv 
of  his  money,  until  the  treasury  has  funds  sufficient  to  meet 
ids  claim.  If  this  be  the  true  interpretation  of  the  statute, 
then  is  this  creditor  in  a  most  unfortunate  position;  for  the 
corporation  may  never  choose  to  make  the  necess;irv  provi- 
sion for  such  purpose,  and  therefore  he  can  never  have  pro- 
cess to  compel  it  to  do  so.  It  is  a  fact  now  alleged  that  this 
company  has  no  money  t<>  apply  to  the  claim  in  suit.     When 

1  Beethoven    Building    Associa-  hardt  v.    Fifth  "Ward   Permanent 

tion  v.  Weber,  5  Atl.  285  (Pa.)  S.  C.  Dime  Saving  ami    Loan    Associa- 

3  Cent.    Rep.   '.Hi;.     See  however  tion,  148  N.  Y.  281 ;  s.  c.  42  N.  E. 

ions  following.  Rep.   710  ;  Schout  v.  Conkey  Ave. 

-  Wolfe  '•.  Conkey  Avenue  Sav-  etc.,  Ass'n  87  Hun,  568;  s.  c.  :!2  N. 

ings  Aid  and  Loan  Association,  75  Y.  Supp.  7K5;  11  Misc.  Rep.  45-1; 

I  lut,.   '.'Ill  ;  s.   c.  27   X.   Y.   Sup.    II  ;     66  N.  Y.  SI.  Rep.  70. 

58  X.  Y.  si.  Rep.  656.    See  Engel 


§  319.  WITHDRAWALS.  333 

will  it  have?  in  one,  six,  or  ten  years,  or  ever?  And  will 
the  statute  of  limitations  be  suspended  in  the  mean  time  \ 
To  these  questions  the  defendant  but  answers  :  The  proviso 
interposes  to  prevent  the  plaintiff  from  all  compulsory  pro- 
cess, though  his  claim  be  recognized,  in  the  body  of  the 
statute,  as  just  and  proper,  as  long  as  the  corporation  man- 
age to  maintain  an  empty  treasury,  or,  which  is  the  same 
thing,  as  long  as  prior  drafts  leave  no  money  to  be  applied 
to  his  debt.  Looking  at  the  statute  as  a  whole,  we  are  not  pre- 
pared to  adopt  an  interpretation  so  contrary  to  the  spirit  and 
the  plain  dictates  of  justice.  Whilst  it  certainly  intended 
that  the  operations  of  the  corporation  shall  not  be  embar- 
rassed by  having  the  whole  amount  of  its  cash  assets  taken, 
in  order  at  once  to  pay  the  withdrawing  stockholders,  yet 
it  certainly  does  not  intend  that  no  provision  shall  be  made 
for  their  payment,  and  that  they  may  be  indefinitely  post- 
poned, even  from  judgment,  by  a  plea  of  quasi  insolvency."  1 
A  conclusion  has  been  reached  by  other  courts,  in  passing 
judgment  upon  statutes  almost  identical  with  that  of  Penn- 
sylvania, that  is  diametrically  opposite  to  the  opinion  quoted 
above.  Thus,  in  Minnesota,  a  statute  provided  that  "  not 
more  than  one-half  of  the  amount  received  in  payment  on 
stock  by  "  a  building  association  "  in  any  one  month  shall 
be  used  to  pay  withdrawals  without  the  consent  of  the  board 
of  directors."  In  construing  this  statute,  it  was  held  that 
a  non-borrowing  member  of  an  association,  who  had  given 
notice  of  withdrawal,  could  not  bring  an  action  and 
take  judgment  against  the  association  for  the  amount  due, 
when,  under  the  section,  there  was  no  money  in  the  treasury 
legally  applicable  to  the  payment  of  his  claim.2  A  similar 
conclusion  was  reached  in  Texas,  where  it  was  held  that  the 
plaintiff  must  allege  and  prove  that  there  were  funds  applica- 
ble to  the  payment  of  his  claim.3   In  England  the  by-laws  of  an 

1  United  States  Building  Asso-  Loan  Association  v.  Kerr  (Tex.), 
ciation  v.  Silverman,  85  Pa.  St.  13  S.  W.  Rep.  1020  ;  Printers' Build- 
394.  ing  and  Loan  Association  v.  Pax- 

2  Heinbokel  v.  National  Saving,  ton.  (Tex.  Civ.  App.)  33  S.  E.  Rep. 
Loan  and  Building  Association,  59  389;  Hawley  v.  North,  etc.,  Ass'n 
Minn.  340  ;  s.  C.  59  N.  W.  Rep.  1050.  (Colo.)  52  Pac.  Rep.  408. 

3  Texas  Homestead  Building  and  In  this  case  the  plaintiff  set  out 


334  BUILDING    AND   LOAN   ASSOCIATIONS.        Ch.  XV. 

association  provided  that  "  if  the  available  balance  in  hand 
shall  be  at  any  time  insufficient  to  pay  all  the  depositors 
wishing  to  withdraw,  they  shall  be  paid,  in  rotation,  accord- 
ing to  the  priority  of  their  notices."  The  plaintiff  received 
a  deposit  note  from  the  defendant  association,  which  stated 
that  the  deposit  was  received  subject  to  fourteen  days'  no- 
tice of  withdrawal.  It  was  held  that,  where  the  available 
balance  in  hand  was  insufficient  to  pay  all  the  depositors 
who  had  given  notice  to  withdraw,  the  condition  did  not 
merely  regulate  the  mode  of  distributing  that  balance  among 
those  depositors,  but  postponed  the  depositors'  right  of  ac- 
tion to  recover  his  deposit  until  the  available  balance  was 
sufficient  to  pay  him,  in  rotation,  according  to  the  priority 
of  his  notice.1  The  right  of  action  cannot  be  defeated  by 
an  unauthorized  application  of  the  funds  to  loans  in  prefer- 
ence to  withdrawals,  and  if  it  appear  that  but  for  such  appli- 
cation there  would  have  been  the  necessary  funds  in  the 
treasury  during  the  intervals  between  the  filing  of  his  no- 
tice and  the  commencement  of  his  action,  to  pay  all  previous 
applications  as  well  as  his  own,  the  plaintiff  can  recover.2 

Sec.  320 — Status  of  Members  Giving  Notice. 

"Whenever   a   member  gives   notice   of  his  intention  to 

the   by-law   without  the  proviso,  was  no  controversy  in  regard  to 

which  latter  contained  the  liniita-  the   loans    of    the    association,   a 

tion,  and  this  was  held  to  consti-  withdrawing  stockholder  could  not 

tute  such  a  variance  as  to  leave  maintain  an  action  against  the  as- 

the  plaintiff  without  proof.  sociationfor  the  valueof  hisstock. 

1  Brett  v.  .Monarch  Investment  Maloney  v.  Real  Estate  Building  & 
Building  Society,  9  Report,  141;  Loan  Association,  57  Mo.  App.  384. 
s.  c.  [1894],  1  Q.  B.  367;  63  L.  J.  Q.  The  same  resull  has  been  reached 
li.  237  :  70  L.  T.  Rep.  146.  in  New  York.     Engelhar'dt  v.  Fifth 

2  Wolf e  v.  Conkey  Avenue  Sav-  Ward   Permanent    Dime   Savings 

etc.  Association,  75  Hun,  201;  and  Loan  Association,  148  N.  Y. 
s.  C.  27  N.  Y.  Supp.  II  ;  58  N.  Y.  281  ;  s.  C.  42  N.  E.  Rep.  710;  re- 
st. Repr.  656;  Englehardt  v.  Fifth  versing,  25  N.  Y.  Supp.  835;  and 
Ward,  etc.,  Association,  1  is  N.  Y.  citing,  Brett  v.  Society  [1894],  1  Q. 
281  ;  s.  c  12  N.  E.  Rep.  710.  B.  367  ;  Barnard  v.  Tonson   [1894], 

In    Missouri  it    was  held  that  if  1  Ch.  374. 

the  associal  ion  was  honestly  apply-  Sufficiency  of  complaint.  White- 

ing  the  shares  of  its  funds  required  footu.  National  Fraternity  Build- 

bj    tatute  to  the  paymenl  ofwith-  ing  &  Loan  Association,  18  Mont- 

drawing    shareholders,  and    there  ana,  164  ;  S.  C.  44  Pac.  Rep.  514. 


§  320.  WITHDRAWALS.  335 

withdraw  be  stops  paving  dues.  lie  has  then  announced 
his  intention  to  sever  his  relation  to  the  society.  Should 
he  thereafter  participate  as  a  stockholder  in  a  stockholders' 
meeting,  even  if  held  six  and  ten  months  after  giving  such 
notice,  he  will  waive  his  right  to  withdraw.1  Mere  delay 
in  closing  up  the  transaction,  occasioned  by  the  society 
demanding  a  greater  sum  than  that  due  it,  and  which  per- 
sists in  such  demand  after  its  attention  has  been  called  to 
the  error,  does  not  work  a  forfeiture  of  the  right  of  the 
member  giving  the  notice  to  withdraw,  even  though  a 
period  of  several  }7ears  elapses,  if  such  member  offered  to 
pay  the  amount  actually  due  the  association  at  the  time  of 
his  proposed  withdrawal,  and  has  been  ready  and  willing  to 

settle  on  that  basis  ever  since.2     A  member's  right  to  with- 
es 

draw  cannot  be  transferred  to  another  member.3  The 
member  giving  notice  of  an  intention  to  withdraw  does 
not,  however,  cease  to  be  a  member  of  the  association; 
but  that  relationship  is  not  severed  until  the  end  of 
the  period  required  to  transpire  between  the  giving  of  the 
notice  and  the  time  he  is  entitled  to  his  money.  Thus, 
where  a  sixty  days'  notice  is  required,  membership  does 
not  terminate  until  the  end  of  the  sixty  days.4  But 
where  the  rules  of  a  society  provided  that  members  giving 
notice  of  withdrawal  should  cease  to  take  part  in  the 
affairs  of  the  society,  it  was  held  that  this  left  them  mem- 
bers in  ascertaining  the  statutory  majority  of  members 
required  to  sign  an  instrument  of  dissolution.5  And  while 
it  has  been  held  that  a  member  cannot  be  affected  by  rules 
adopted  by  the  society  after  he  gave  notice  of  his  intention 
to  withdraw6 ;  yet  in  a  more  recent  case  it  has  been  held 

1  Decatur  Building  and  Invest-  4  Siburn  v.  Pearee,  L.  R.  44  Ch. 
ment  Co.  v.  Neal,  97  Ala.  717  ;  s.  c.  Div.  354 ;  s.  c.  62  L.  T.  388  ;  63  L. 
12  So.  Rep.  780;  Hawley  v.  North,  T.  123  ;  38  W.  R.  658;  6  T.  L.  R. 
etc.,  Ass'n  (Colo.),  52  Pac.  Rep.  262;  United  States  Building  and 
408.  Loan  Association  v.  Silverman,  85 

2  People's    Building    and    Loan  Pa.  St.  394. 
Association  v.  Furey,  47  N.  J.  Eq.  5  Siburn  v.  Pearee.  supra. 

410 ;  s.  C.  20  Atl.  Rep.  890.  6  Armitage  v.  Walker,  2  K.  &  J. 

3  Hennighausen  v.  Tisher,  50  211  ;  s.  c.  20  J.  P.  53  ;  2  Jur.  (N. 
Md.  583.  S.)  13  ;  26  L.  T.  Rep.  182. 


336  BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  XV. 

that  a  society,  after  a  member  has  given  notice  of  an  inten- 
tion to  withdraw,  may  adopt  a  resolution  varying  the  order 
of  withdrawal,  by  preferring  claims  of  a  small  amount, 
though  by  such  rule  the  right  of  the  member  seeking  to 
withdraw  has  been  postponed  to  the  right  of  the  members 
having  small  amounts.1 

"  "When  the  plaintiff  gave  notice  of  withdrawal,"  said  the 
court  in  the  case  last  cited,  "  he  had  a  vested  right  to  be 
paid  according  to  the  then  existing  rule  ;  but  this  does  not 
settle  the  question,  because  there  existed  also  against  him 
the  power  of  altering  the  rule,  so  that  the  question  assumes 
this  form,  that  he  had  a  vested  right  liable  to  be  divested  by 
any  later  rule  duly  passed."  2 

Sec.  321— Effect  of  Withdrawal. 

As  soon  as  the  time  fixed  by  the  statute  or  rules  of  the 
society  necessary  to  elapse  after  notice  given  of  an  inten- 
tion to  withdraw  has  expired,  and  the  member  has  done  all 
on  his  part  required  of  him  to  perfect  his  withdrawal,  he 
ceases  to  be  a  member  of  the  association,  and  becomes  a 
mere  creditor,  having  relations  to  the  society  somewhat  like 
other  general  creditors.3  If  the  association  be  solvent  he  is 
entitled  to  be  paid  in  his  turn,  and  is  not  bound  pro  rata 
with  members  giving  notice  of  an  intention  to  withdraw 

1  Pepe  v.  City  and  Suburban  Building  and  Investment  Co.  v. 
Permanent  Building  Society  (1893)  Neal,  97  Ala.  717  ;  s.  C.  12  So.  Rep. 
2  Ch.  311;  S.  C.  3  Rep.  471;  62  L.  J.  780;  Engelhardt  v.  Fifth  Ward 
Ch.  501 ;  68  L.  T.  846;  41  W.  R.548.  Permanent  Dime  Saving  and  Loan 

2  Upon  an  analogous  subject  see  Association,  25  N.  Y.  Supp.  835  ; 
Stohr  v.  San  Francisco  Musical  s.  c.  5  Misc.  Rep.  518;  Browne  v. 
Fund  Society,  82  Cal.  557  ;  S.  C.  22  Sanders,  20  D.  C.  455;  s.  c.  20 
Pac.  Rep.  1125.  Wash.    L.    Rep.    277;    Haigh    v. 

For  tin'    purpose  of  arbitration  United  States,  etc.,  Association,  19 

under  the  English  statute  a  mem-  W.  Va.  792  ;  Hartford  v.  Coopera- 

ber  having  given   notice  of  with-  tion  Homestead  Co.,  128  Mass.  494. 

drawal    is    still   subject    to    tbat  McNab  v.  Southern  Ass'n,  50  S.  C. 

statute.     Walkeru.  General,  etc.,  89;  27  S.  E.  Rep.  543;  Lepore  v. 

Building  Society.    I,.    I:..   36   Ch.  Twin  Cities, etc.,  Ass'n,  5 Pa.  Supr. 

Div.  777;  67  L.  T.  574.  Ct.  270  ;  s.  c.  40  W.  N.  C.  548  ;  Gas- 

Brown'a  Estate,  12  W.  N.  Cas.  paro  v.   Same,  40  W.   N.   C.    551  : 

United    states    Building  As-  Prairie  State,  etc.,  Ass'n  v.  Nub- 

ation   v.  Silverman,  85  Pa.  St.  ling,  170  111.  240 ;  s.  c.  48  N.  E.  Rep. 

.  i  .  :::.  Leg.  Int.  53  :  Decatur  Mini;  affirming,  64111.  App.  329. 


§  322. 


WITHDRAWALS. 


337 


after  he  has  given  notice.1  He  is,  however,  not  like  an  out- 
side creditor,  and  is  therefore  a  creditor  in  a  qualified  sense; 
for  he  cannot  enforce  his  claim  regardless  of  the  conse- 
quence to  the  association.2 

Sec.  322 — Suit  to  Recover  Amount  Due — Defense. 

In  an  action  to  recover  the  amount  due  the  withdrawing 
member,  he  must  show  that  he  has  complied  with  the  by- 
laws of  the  association,  and  that  payment  was  refused  him. 
This  is  usually  an  action  at  law.3  Thus,  where  one  by-law  of 
an  association  provided  that  "if  any  member  wishes  to 
withdraw  *  *  *  he  shall  give  notice  *  *  *  of 
such  intention,  when  the  company  shall,  within  one  year 
after  the  receipt  of  such  notice,  pay  to  said  member  the 
sum  of  money  which  he  has  paid  as  instalments,  and  the 
$100  which  he  originally  paid  for  the  stock  ;  "  and  another 
by-law  provided  that,  "  if  any  member  wilfully  neglects  his 
1  Hoyt   v.    Interocean    Building 


Association,  58  Minn.  345 ;  S.  c. 
60  N.  W.  Rep.  678. 

2  Christian's  Appeal,  102  Pa.  St. 
184.  In  re  Blackburn  and  District 
Benefit  Building  Society,  48  L.  T. 
(N.  S.)  134 

See  on  the  subject  of  this  section, 
generally,  see  Wittnian  v.  Build- 
ing Association,  7  W.  N.  Cas.  80. 

A  member  of  a  building  society 
cannot  be  a  withdrawal  stock- 
holder so  long  as  his  stock  is  held 
in  pledge  by  the  association.  Wad- 
linger  v.  Washington,  etc.,  Asso- 
ciation, 153  Pa.  St.  622  ;  s.  c.  26 
Atl.  Rep.  647  ;  Dennison  v.  Alpena, 
etc.,  Ass'n,  75  N.  W.  Rep.  300. 

' '  That  he  is  not  an  ordinary 
creditor,  is  plain.  He  cannot  come 
into  competition  with  outside  cred- 
itors. On  the  other  hand,  as  be- 
tween himself  and  the  continuing 
members,  he  is  entitled  to  be  paid 
the  amount  due  to  him  before  they 
can  divide  the  assets."  Siburn  v. 
Pearce,  44  Ch.  Div.  at  p.  371  ;  s.  C. 
22 


63  L.  T.  123 ;  38  W.  R.  658 ;  6  T. 
L.  Rep.  262. 

3  United  States  Building  and 
Loan  Association  v.  Silverman,  85 
Pa.  St.  394 ;  Carter  v.  iEtna  Loan 
Co.,  61  Mo.  App.  218;  1  Mo.  App. 
Rep.  355;  Engelhardt  v.  Fifth 
Ward  Permanent  Dime  Saving 
and  Loan  Association,  25  N.  Y. 
Supp.  835  ;  s.  c.  5  Misc.  Rep.  5 1  s  ; 
O'Rouke  v.  West  Pennsylvania 
Loan  and  Building  Association,  93 
Pa.  St.  308  ;  s.  c.  14  Pbila.  145  ;  37 
Leg.  Int.  27  ;  Laurel  Run  Building 
Association  v.  Sperring.  106  Pa. 
St.  334;  s.  C.  3  Kulp,  67:  Atwood 
V.  Dumas,  149  Mass.  167  :  21  X.  E. 
Rep.  236;  Wetterwulgh  V.  Knick- 
erbocker Building  Association,  2 
Bosw.  381  :  Baer  v.  Hudson,  etc., 
Assn,  75  Hun.  419:  S.  C.  56  N.  Y. 
St.  Rep.  760;  27  N.  Y.  Supp.  102. 

Before  suit  brought  the  certifi- 
cate of  stock  must  be  surrendered 
ortendered.  Ballouz\  Manhattan, 
etc.,  45  N.  Y.  Supp.  10;  s.  C.  19 
Misc.  Rep.  698. 


338  BUILDING   AND  LOAN   ASSOCIATIONS.        Ch.  XV. 

payments,  he  shall,  after  one  year,  take  what  money  lie  has 
paid  into  the  company  as  instalments  and  for  stock;"  it 
was  held  that  the  two  by-laws  must  be  construed  together, 
and  that  a  member  who  had  not  given  notice  of  an  inten- 
tion to  withdraw  until  within  less  than  a  year  before 
bring-inff  suit,  could  not  maintain  his  action  for  the  amount 
of  stock  and  instalments  paid  by  him.1  Actual  insolvency, 
not  mere  apprehension  of  insolvency,2  is  a  good  defence, 
which  must  be  pleaded,3  and  be  shown  affirmatively  by  the 
association,  upon  whom  rests  the  burden  of  establishing 
that  fact.4  If  the  withdrawing  member  has  assigned  the 
balance  due  him,  his  assignee  may  recover  it,  although  he  be 
a  member  of  the  association  at  the  time  of  bringing  the  suit.5 
The  society  may  show  as  a  defence  that  it  has  sustained 
losses  at  and  before  the  time  of  the'  withdrawal,  and  that 
the  amount  due  the  member  could  not  then  be  ascertained  ; 
but  this  will  merely  have  the  effect  of  postponing  the  day 
of  trial  or  judgment  until  that  amount  can  be  ascertained.6 

Sec.  323 — Amount  to  be  Withdrawn. 

The  amount  the  withdrawing  member  is  entitled  to  re- 

1  Hartford  v.  Co-operative  Home-  6  Wittman  v.  Building-  Assucia- 

steadCo.,  128  Mass.  494.  tion,  7  W.  N.   Cas.  80;  Hawley  v. 

2Jungkuntz   v.    Building   Asso-  North  etc.,  Ass'n.   (Colo.)  52  Pac. 

ciation,  6  Wkly.  L.  Bull.  428.  Rep.  408, 

3  United  States  Building  and  In  Maloney  v.  Real  Estate,  etc., 
Loan  Association  v.  Silverman.  85  Association,  57  Mo.  App.  384;  it 
Pa.  St.  394;  Wittman  v.  Building  was  held  that  a  withdrawing  mem- 
Association,  7  W.  X.  Cas.  80.  ber  had  only  the  right  to  proceed 

4  National  Building  Association  in  equity,  and  could  not  do  so  al 
v.  EJottenstein,  10  Pitts.  L.  J.  (N.  law.     [t  was  also  held  that  he  could 

S.)  225.  not  sue    at    all    if   the    association 

5  I  [ennighausen  v.  Tisher,  50  Md.  was  honestly  applying  thesharesof 
583.  Bui  if  the  assignee  be  in  its  funds,  required  by  the  statute, 
debt  to  the  security  on  stork  ho  to  the  payment  of  withdrawing 
holds  (for  which  no  notice  of  with-  shareholders,  there  being  no  con- 
drawal  has  been  given),  no  doubl  troversy  in  regard  to  the  losses. 

Such    30Ciety   may    plead    or   Bel    oil'  Ii     has    also    hern     held    that    as- 

to  ill.'  suit  on  thr  withdrawn  stock  sumpsit  lies  to  recover  the  with- 

anamounl  mfncienl  to  cancel  the  drawal  value,  although H  had  been 

member's  indebtedness  to  it.     Td.  fraudulently    represented    to    the 

St.  Louis,  etc.,  <  !o.  v.  Yantis,  72  111.  plaintiff  the  stock  belonged  to  an- 

A.pp.597;  Dennison  v.  Alpena  etc.,  other  series.     Prairie   State,  etc., 

;;,  n.  \v.  Rep.  BOO.  Ass'n   v.  Conic,  167  111.  414;  s.  c. 


§  323.  WITHDRAWALS.  '■'•■ ':» 

ceive  is  largely  governed  by  the  by-laws  of  the  association. 
The  ordinary  by-law  for  withdrawals  does  not  entitle  the 
withdrawing  member  to  withdraw  his  premium,  interest, 
lines,  transfer  fees  and  charges.  In  such  an  instance  he  re- 
ceives back  only  the  money  he  has  paid  in  on  his  stock, 
usually  paid  in  monthly  instalments.1  If  there  be  a  statute 
upon  the  subject,  of  course  that  will  control.  And  where 
the  constitution  of  a  society  provided  that  a  withdrawing 
member  "  shall  receive  the  amount  of  dues  actually  paid  in, 
first  deducting  all  fines  and  charges,11  and  the  society  ceased 
to  lend  its  funds,  which  began  to  accumulate,  and  accord- 
ingly passed  a  by-law  granting  to  each  withdrawing  mem- 
ber "the  amount  of  dues  actually  paid  in  and  15  per  cent. 
per  annum  interest  thereon,  first  deducting  all  fines  and 
charges ; "  and  this  15  per  cent,  was,  at  the  time  the  by-law 
was  adopted,  a  fair  hona  fide  estimate  of  the  accumulated 
profits  ;  it  was  held  that  it  was  a  valid  regulation  under  the 
statute,  Avhich  authorized  withdrawing  members  to  receive 
the  amount  paid  in  by  first  deducting  all  fines  and  charges 
"  and  such  proportion  of  profits  as  the  by-laws  may  deter- 
mine."2 Sometimes  it  is  left  to  the  board  of  directors  or 
committee  to  determine  what  amount,  if  any  interest,  the 
withdrawing  member  shall  be  entitled  to  receive;  in  which 
event  the  member  will  be  bound  by  the  allowance  made 
him.3  A  fear  on  the  part  of  the  association  that  it  will  be- 
come insolvent  will  not  justify  it  in  withholding  a  part  of  the 
money  otherwise  due  the  withdrawing  shareholder ;  and  if 
the  association  pay  him  part  cash  and  give  a  note  for  the  re- 
mainder, payable  at  the  final  winding  up  of  the  association, 
in  the  proportion  due  among  all  creditors,  his  taking  the 
cash  and  the  note,  but  not  assenting  to  such   settlement, 

47  N.  E.  Rep.  739;    affirming,   64  s.  C.  16  W.  N.  Cas.  365;  Seibel  v. 

111.    App.    625  ;   St.    Louis  etc.,   v.  Building  Association.  -13  Ohio  St. 

Yantis,  173  111.  321  ;  s.  c.  50  N.  E.  371  ;  s.  C.  10  Amer.  &  Eng.  Corp. 

Rep.  807.  Cas.  460. 

1  Security  Loan  Association  v.  3  In  re  Sunderland,  etc.,  Build- 
Lake,  69  Ala.  456  ;  1  Amer.  &  Eng.  ing  Society  L.  R.  24  Q.  B.  Div.  39  I  ; 
Corp.  Cas.  418;  same  case  on  s.  c.  57  L.  J.  Q.  B.  017;  62  L.  T. 
second  appeal,  72  Ala.  207.  293  ;  38  W.  R.   509  ;  54  J.  P.  613  ; 

2  Booz's  Appeal,  109  Pa.  St.  592  ;  6  L.  T.  Rep.  199. 


uo 


BUILDING   AND   LOAN   ASSOCIATIONS.        Ch.  XV. 


will  not  be  an  accord  and  satisfaction  nor  binding  upon 
him.1 

See.  324 — Amount  Standing  to  a  Member's  Credit. 

In  a  Scottish  case  the  meaning  of  the  phrase,  "  the  amount 
standing  to  the  credit  of  a  member"  was  discussed.  It  was 
claimed  that  the  amount  depended  upon  the  mode  in  which 
the  society  had  invested  the  funds  out  of  which  the  with- 
drawing member  was  to  be  paid,  and  that  the  sum  standing 
to  the  credit  might  be  a  mere  figure.  The  court  held  that 
the  argument  was  entirely  fallacious,  that  it  was  the  amount 
standing  at  the  credit  of  the  member  by  reason  of  the  monies 
which  he  had  paid;  and  that  although  the  society  might 
have  badly  invested  their  funds,  and  therefore  have  a  diffi- 
culty in  obtaining  the  means  of  paying  the  amount  stand- 
ing at  any  member's  credit,  that  could  not  alter  the  amount 
standing  to  his  credit,  or  justify  the  society  in  saying  that 


1  Jungkuntz  v.  West  Liberty 
Building  Association,  6  Wkly.  L. 
Bull.  428. 

The  by-laws  of  an  association 
provided  that  any  stockholder  de- 
siring to  withdraw  unpledged  stock 
should  give  thirty  days'  written 
notice,  when  he  should  be  entitled 
to  the  amount  actually  paid  in, 
with  such  interest  or  profits  as  the 
directors  should  determine,  de- 
duct ing  all  dues  and  fines,  and  that, 
if  the  interest  on  any  loan  or  any 
dues  remain  unpaid  more  than 
three  months,  the  directors  might 
compel  the  payment  of  principal, 
interest  and  fines  by  proceeding 
on  l  lie  securil  ies  according  to  law. 
It  was  held,  that  where  the  asso- 
ciation proceeded  under  the  latter 
clause  to  compel  payment,  the 
i  tockholder  was  fn\  [tied  to  have 

credit     for    t  lie     u  il  lidra  wal     value 

of  bis  stock-  under  the  prior 
clause.  International  Building 
anl    Loan  Association  v.  Biering, 


(Tex.  Civ.  App.)  23  S.  W.  Rep. 
1025. 

As  a  rule  it  may  be  stated  that 
withdrawing  stockholder  is  not 
entitled  to  any  interest  on  the  sums 
he  lxas  paid  in  ;  but  the  by-laws 
may  provide  for  interest.  Thus 
the  constitution  of  a  building  asso- 
ciation provided  that  any  borrower 
might  repay  a  loan  at  any  time, 
and,  in  case  the  repayment  was 
made  before  the  expiration  of  the 
eight  years  after  the  series  in 
which  his  stock  was  issued,  such 
borrower  should  be  given  credit 
for  "  whatever  interest  he  may  be 
entitled  to  receive  in"  a  certain 
other  article,  which  provided  that 
OH  withdrawal  of  a  non-borrowing 
stockholder,  he  should   be  repaid 

the  amount-  of  his  instalments,  to- 
gether with  specified  rates  of  in- 
terest. It  was  held  that  aborrow- 
Lng  member,  who  had  mad"  ad- 
vance payments  on  his  loan,  was 
cut  it  led,  on  withdrawal,  to  interest 
on  such  advance  payments,  at  the 


§324. 


WITHDRAWALS. 


341 


what  did  stand  at  his  credit  no  longer  stood  at  his  credit.1 
In  a  Scottish  case  the  society,  on  the  28th  of  July,  adopted 


same  rate  as  a  withdrawing  non- 
borrowing  stockholder  on  his  in- 
stalments. People's  Building  and 
Loan  Association  v.  Furey,  47  N. 
J.  Eq.  410  ;  S.  C.  20  Atl.  Rep.  890. 
Under  a  by-law  which  gives  to 
withdrawing  stock  five  per  cent, 
interest,  unless  the  directors  fix 
a  larger  sum,  borrowing  stock- 
holders are  entitled  to  such  inter- 
est as  well  as  non-borrowing  mem- 
bers. Winterer  v.  Fairmont  Build- 
ing Association,  44  Leg.  Int.  122. 

The  plaintiff  was  a  member  and 
a  shareholder  of  the  defendant 
building  society,  and  in  March 
1887,  was  the  holder  of  £250  paid 
up  investment  shares.  On  22d 
March  he  gave  notice  of  with- 
drawal of  £125,  part  levy  at  a 
month's  date,  and  that  sum  was 
duly  paid  to  him.  On  the  15th  July, 
1887,  the  directors  apportioned  to 
the  paid  up  investment  shares  then 
on  the  register,  an  interim  dividend 
at  the  rate  of  5  per  cent  per  annum, 
for  the  half  year  ending  the  30th 
June,  1887  ;  but  they  refused  to 
pay  any  interest  or  dividend  to  the 
plaintiff  on  the  £125  withdrawn. 
Thereupon  the  plaintiff  claimed 
15s.  as  interest  on  that  sum  from 
the  first  of  January,  the  date  of 
the  last  dividend,  to  the  22d  March, 
1887,  the  date  of  notice  of  with- 
drawal, at  the  rate  allowed  on  de- 
posit, namely  4  per  cent,  pursuant 
to  rules,  19  and  21  of  the  society. 
The  directors  had  passed  the  fol- 
lowing resolutions,  on  the  5th 
November,  1886,  that,  "  subject  to 


the  rules  the  interest  allowed  on 
moneys  withdrawn  do  not  for  the 
present  exceed  2£  per  cent  per  an- 
num ;  "  and  on  the  18th  February, 
1887,  that  "  no  interest  be  allowed 
upon  interim  withdrawals  until 
further  consideration."  The  plain- 
tiff had  no  notice  of  the  resolution. 
By  rule  9  of  the  society,  "paid  up 
shares  may  be  withdrawn  or  re- 
paid upon  the  terms  set  forth  in 
rule  21."  By  rule  19  "  interest 
shall  be  allowed  on  investment 
shares  at  such  rates  as  the  board 
shall  from  time  to  time  fix."  By 
rule  21,  "  any  member  may  with- 
draw the  subscriptions  in  respect 
of  investment  shares,  subject  to 
the  conditions  specified  below,  af- 
ter one  month's  notice  in  unity. 
*  *  *  A  member  withdrawing  a 
portion  only  of  the  amount  at  the 
credit  of  his  share  account,  shall 
not  be  paid  interest  thereon  at  a 
rate  exceeding  that  for  the  time 
being  allowed  on  deposits.  Inter- 
est on  all  shares  shall  cease  at  the 
date  of  notice  of  withdrawal." 
For  the  defendants  it  was  con- 
tended that,  as  there  was  no  con- 
tract to  pay  interest,  the  only  in- 
terest fixed  by  the  board,  and  here 
the  board  had  fixed  no  interest, 
and  that  the  resolution  of  the  18th 
Febuary.  1887,  was  fatal  to  the 
plaintiff's  claims.  It  was  held  the 
plaintiff  was  entitled  to  interest  on 
the  £125  withdrawn,  from  the  date 
of  the  last  dividend  up  to  the  date 
of  notice  of  withdrawal,  and  that 
such  interest  ought  to  be  at  the 


1  Auld    v.    Glasgow    Working-    776 ;    35    W.    R.    632  ;    14    Rettie 
men's,   etc.,  Building  Society,  12    H.  L.)  27;  24  Scot.  L.  R.  486. 
App.  Gas.  at  p.  204 ;  s.  C.  56  L.  T. 


342 


BUILDING   AND   LOAN   ASSOCIATIONS.       Cll.  XV. 


an  amended  balance-sheet,  showing  the  true  state  of  the 
society's  affairs  for  the  year  ending  on  the  previous 
January  31st.  It  was  held  that  the  claims  of  unadvanced 
members,  whose  notices  expired  previously  to  the  issuance 
of  such  amended  balance-sheet,  must  be  dealt  with  on  the 
basis  of  such  accounts.  According]}7,  the  particular  amounts 
standing  to  their  credit  were  subject  to  deduction  on  ac- 
count of  loans,  and  were  not  to  be  dealt  with  on  the  basis 
of  an  incorrect  balance-sheet  showing  a  profit,  issued  by  the 
directors  prior  to  the  amended  accounts.1 

Sec.  325 — Interest  on  Withdrawal  Amount. 

If  a  considerable  time  elapse  between  the  time  of  with- 
drawal and  the  payment  of  the  money  the  question  of 
interest  becomes  important.  In  every  case  the  rules  of 
the  company  must  be  examined  to  determine  if  they  pro- 
vide for  interest  in  such  an  instance,  or  if  they  deny  it.     If 

rate  allowed  on  deposit,  namely  4 
per  cent.  Perratt  v.  London  Scot- 
tish Permanent  Benefit  B.  S.,  59 
L.  T.  31. 

A  member  of  a  building  associa- 
tion alleged  that  he  had  paid  on 
his  stock  a  certain  amount,  and 
given  the  notice  of  withdrawal  re- 
quired by  the  by-laws;  that  tlie 
directors  had  failed  to  ascertain 
the  withdrawal  value  of  his  stock  ; 
and  that,  under  the  by-laws,  he 
was  at  least  entitled  to  all  he   had 

paid  ;  and  prayed  judgment  there- 
for and  general  relief.  The  de- 
fendant had  thereunder  ascer- 
tained the  value  of  the  stock  at  a 
certain  sum.     It  was  held  that  I  he 

coiiit  properly  allowed  the  plain- 
tiff such  admitted  value,  though 
more  i  ban  t  bal  alleged  by  him. 
[nternationa]  Building  and  Loan 
\  ocial  ion  v.  Biering,  86  Tex.  176  ; 
s.  c.  26  S.  W.  Rep.  89. 

A  ay   < i < •  I >t    the    a    i  icial  ion    had 

t   the  withdrawing  member 

may  be  sef  -off  againi  I    the   wii  h- 


drawal  value  of  the  stock,  even  in 
the  hands  of  an  assignee  for  the 
benefit  of  creditors.  Wetherell  v. 
Thirty-First  St.  Building  and  Loan 
Association,  153  111.  361 ;  s.  C.  39 
N.  E.  Rep.  143. 

1  Scottish  Property  Investment 
Company  Building  Society  v. 
Stewart,  12  Rettie  925;  S.  C.  22 
Scot.  L.  R.  019. 

Where  a  mortgage  was  to  secure 
a  loan  made  on  stock,  with  a  pro- 
vision that  upon  failure  to  pay  any 
monthly  dues  on  the  stock  or  in- 
terest continuing  for  three  months, 
the  whole  loan  might,  at  the  elec- 
tion of  the  association,  be  declared 
due,  an  election  to  mature  the  loan 
for  such  default,  whenever  actually 
made,  must  be  as  of  the  date  of 
three  months  after  such  default, 
and  the  amount  due  on  the  stork 
and  the  withdrawal  value  of  the 
shares  must,  be  calculated  as  of 
that  date.  United  Stales,  etc.,  Co. 
V.  Sullivan., SI)  Fed.  Rep.  762.  Loses, 
may  be  deducted.  I  I.iwley  v.  North, 


§  326.  WITHDRAWALS.  343 

they  make  no  provision  upon  the  subject,  it  would  seem 
that  interest  cannot  he  successfully  demanded.  If  there  be 
a  rule  that  a  withdrawing  member  shall  receive  interest  at 
a  designated  rate  on  the  amounts  withdrawn,  such  member 
■will  be  entitled  to  interest,  as  well  as  to  their  subscription 
monies,  in  priority  to  members  who  have  not  withdrawn. 
A  rule  providing  that  withdrawing  shareholders  should  be 
entitled  to  receive  interest  at  the  rate  of  five  per  cent,  per 
annum,  entitles  such  holder  to  compound  interest  under 
a  winding-up  order.1  Under  a  similar  rule  interest  was 
allowed,  in  winding  up  the  company,  until  the  date  of  pay- 
ment of  the  money  due.2  So  have  preference  shareholders 
been  alio wred  interest  in  winding  up  the  company.3  In  a  case 
the  rules  of  the  society  provided  that  interest  should  be 
allowed  on  investment  shares  at  such  rates  as  the  board 
should  from  time  to  time  fix,  and  that  a  member  withdraw- 
ing a  portion  only  of  the  amount  at  the  credit  of  his  share, 
should  not  be  paid  interest  thereon  at  a  rate  exceeding  that 
for  the  time  being  allowed  on  deposits.  A  member  with- 
drawing part  only  of  his  shares  was  allowed  interest  up  to 
the  date  of  the  last  declaration  of  dividend,  but  nothing- 
after  that  date,  the  court  holding  that  interest  at  four  pen- 
cent.,  being  the  deposit  rate,  was  to  be  allowed  to  the  mem- 
bers, and  that  certain  resolutions  of  the  directors  that 
interest  should  not  be  paid  on  interim  withdrawals  were  in- 
operative.4 

Sec.  326 — Payment  of  Amount  Due. 

If  the  withdrawing  member  owe  the  association,  that 
may  be  deducted  from  what  would  be  otherwise  due  him  ; 5 
but  when  that  is  done  the  remainder  must  be  paid  in  cash. 


etc.,  Ass'n,  (Colo.)  52 Pac.  Rep.  408.  fit  Building  Society.  61  L.  J.  Ch. 

Vincent  v.  Harrison  B.  &  D.  Co.  5  453  ;  s.  C.  66  L.  T.  823  ;  8  T.  L.  R. 

Ohio  N.  P.  Rep.  273.  525. 

1  In  re  Doncaster  Building  So-  4   Perratt    v.    London     Scottish 

ciety,  14  L.  T.  13.  Building  Society.  59  L.  T.  31. 

-  In  re  Middlesbrough  Building  5  Wetherell  v.  Thirty-First  Street 

Society,  53  L.  T.  Rep.  203.  Building   and     Loan    Association, 

8  In  re  Reliance  Permanent  Bene-  153  111.  361  :  s.  c.  39  N.  E,  Rep.  143. 


344  BUILDING   AND   LOAN    ASSOCIATIONS.       Cll.  XV. 

and  lie  cannot  be  required  to  take  payment  in  the  assets  of 
the  association.1 

Sec.  327 — Withholding  Right  to  an  Execution  to  En- 
force Judgment. 

The  relation  of  a  withdrawing  member  as  compared  with 
an  outside  creditor  of  the  association  is  more  sharply  brought 
into  contrast  than  in  any  other  manner  by  a  comparison  of 
their  respective  rights  to  an  execution  upon  a  judgment  re- 
covered by  them, — the  one  on  a  judgment  to  recover  the 
value  of  his  stock  withdrawn,  and  the  other  on  a  general 
debt.  The  latter  is  entitled  to  have  an  execution  forth- 
with, or  as  soon  as  a  creditor  of  an  individual ;  but  such 
is  not  the  case  with  the  stockholder.  In  his  case  the  judg- 
ment is  confined  to  the  funds  which  the  statute  subjects  to 
the  payment  of  withdrawing  stockholders,  and  the  court 
may  reasonably  suspend  the  issuance  of  an  execution  until 
a  fund  sufficient  to  pay  the  judgment  can  be  accumulated 
in  the  ordinary  transaction  of  the  business  of  the  associa- 
tion.2 

1  Mercer  v.  Ami )ler  Building  and  W.  N.  Cas.  546;  35  Leg.  Int.  51. 
Loan  Association,  10  Pa.  C.  C.  51;  In  re  National  Saving  Loan  and 
S.  C.  48  Leg.  Int.  277:  Plymouth  Building  Association,  9  W.  N.  Cas. 
Building  Association  v.  Mangan,  79  ;  S.  c.  37  Leg.  Int.  299,  the  fol- 
2  Kvdp.  210.  lowing    quotation    is   made   from 

2  Maloney  v.  Real  Estate,  etc.  Silverman's  case  :  "  The  design  of 
Association,  57  Mo.  A  pp.  384;  En-  the  act  can  be  better  met  by  giv- 
gelhardl  v.  Fifth  Want  Permanent  ing  the  plaintiff  judgment,  and 
Dime  Saving  and  Loan  Associa-  then,  should  it  seem  equitable  to 
1  ion.  25  N.  V.  Supp.  835;  S.  C.  5  the  court  below,  it  may  restrain 
Misc.  Rep.  518 ;  Chapman  v.  Young,  execution  in  order  that  the  defend- 
65  111.  App.  131  :  Christian's  Ap-  ant  may  have  a  reasonable  time 
peal,  102  Pa.  St.  184.  within  which  to  raise  the  money 

Touching  upon  the  point  under  for  the  payment  of  such  judgment, 
di  cussion,  the  following  cases  so  that  there  may  be  no  undue  de- 
may  be  examined.  Banney  v.  rangement  of  its  affair. 
Building  Association,  16  W.  X.  A  different  rule  seems  to  pre- 
150;  Eennighausen  v.  Tisher,  vail  in  Australia.  Browne  v. 
50  M<l.  583  :  Wetterwulgh  v.  Royal  Permanent  Building  So- 
Knickerbocker   Building   Associa-  ciety,    L.    !>'.    Eq.    18  Vict.   (Aus- 

tioii.    2    I'.osw.    881;    United    Stales     t  ia  1  ia )  397.      See  a   recent    Pennsyl- 

Building  and  Loan  Association  v.     vaniacase.     Lepore  v.  Twin  Cities 
Silverman,  88  Pa.  St.  894;  B.C.    I    etc.,  Ass'n,  5   Pa.   Sup.-.   Ct.   276; 


§  329.  WITHDRAWALS.  345 

Sec.  328— Pledged  Stock. 

Stock  that  the  owner  has  pledged  to  the  association  in 
order  to  secure  a  loan  or  advance  cannot  be  withdrawn 
until  he  first  pays  off  his  loan.1 

Sec.  320 — Insolvency  of  Association. 

The  rig-ht  of  withdrawal  is  subject  to  the  condition  that 
the  association  is  solvent.  We  have  already  seen2  that  the 
association  cannot  set  up  as  a  defense  that  it  may  become 
insolvent;  for  that  would  allow  a  judgment  to  stand  upon. 
a  mere  probability,  or  even  on  a  possibility.  But  if  the 
association  be  insolvent  at  the  time  judgment  is  to  be 
entered,  or  at  least  when  the  trial  is  had,  that  will  be  a  good 
defense  ;  for  to  allow  the  withdrawing  member  to  obtain  a 
judgment  for  the  par  value  of  his  stock  and  then  enforce 
its  payment  would  be  manifestly  unjust  to  the  remaining 
stockholders,  who  would  not  receive  the  full  par  value  of 
their  stock.3  "  The  right  of  withdrawal,"  said  the  Supreme 
Court  of  Pennsylvania,  "  presupposes  that  at  least  a  relative 
proportion  of  the  assets  will  remain  for  the  benefit  of  those 
who  continue  to  be  active  members  of  the  association."4 
In  an  English  case  it  was  said  :  "  It  would  be  altogether 
unreasonable  to  suppose  that  it  was  intended  in  the  event 
of  insolvency  to  permit  one  set  of  members  to  escape  from 
liability  at  the  expense  of  the  others.     "::"     *     *     The  rule  [as 

s.  c.  40  W.  N.  C.  548;  Gasparo  v.  334;  S.  C.  15  W.   N.  Cas.  340;  32 

Same,  40  W.  N.  C.  551.  Pitts.  L.  Jr.  394  ;  Stater.  Redw 1, 

The  association  is  chargeable  in  Falls  Building  and  Loan   Associa- 

attachment  as  trustee  of  a  mem-  tion,  45  Minn.  154  ;  s.  C.  47  N.  W. 

beratthe  withdrawal  of  his  shares,  Rep.  540;  35  Amer.  &  Eng.  Corp. 

although  lie  has  given  it  no  notice  Cas.   244;    10  L.  R.   A.   752;   Ply- 

of  his  desire  to  withdraw    such  mouth    Building     Association    v. 

shares.      Atwood  v.    Dumas,    149  Mangan,  2  Kulp.  210. 

Mass.  167  ;  s.  c.  21  N.  E.  Rep.  236  ;  2  Jurngkents    v.    West    Liberty 

Atwood  v.   West    Roxbury,    etc..  Building  Association,  6  Wkly.  L. 

Bank.  156  Mass.   160  ;  S.  C.   30  N.  Bull.  428. 

E.  Rep.  558.  3  Friel  v.  Gilberton   Savins  As- 

1  Wadlinger      v.    Washington,  sociation,  1  Leg.  Rec.  (Pa.)  217. 

etc.,  Building  Association,  153  Pa.  4  Christian's  Appeal,  102  Pa.  St. 

St.   622 ;   s.   c.   26  Atl.    Rep.    647.  184 ;  Hanney  v.  Building  Associa- 

See  also  Laurel  Run  Building  As-  tion,  16  W.  N.  Cas.  450. 
sociation  v.  Sperring,  106   Pa.  St. 


346  BUILDING   AND   LOAN    ASSOCIATIONS.       Cll.  XV. 

to  withdrawals]  seems  *  *  *  not  to  contemplate  any 
such  contingency  as  a  suspension  of  its  business,  and,  there- 
fore, only  provides  for  a  withdrawal  from  the  society  while 
it  was, or  was  believed  to  be,  still  solvent."  1  But  where  the 
society  is  solvent  when  the  notice  of  withdrawal  is  given, 
and  insolvency  subsequently  intervenes  before  payment  is 
made,  the  stockholder  so  giving  the  notice  is  entitled  to  be 
paid  in  full,  although  the  members  not  having  given  notice 
will  not  be  paid  in  full.3  Nor  is  a  stockholder  who  has 
withdrawn  and  been  paid  in  full  liable  to  refund  any  part 
of  the  amount  received  when  it  is  subsequently  discovered 
that  the  association  is  insolvent.3  A  building  association 
has  the  right  to  retain  from  a  withdrawing  stockholder  his 
proportion  of  the  probable  loss  sustained  even  before  the 
loss  it  has  sustained  has  been  finally  determined.4 

In  a  recent  (1896)  English  case  the  question  under  consid- 
eration in  this  section  was  discussed  at  length.  There  the 
directors  issued  a  balance-sheet  which  showed  a  surplus,  and 
also  a  report,  in  which  they  suggested  that  the  society 
should  be  dissolved  by  reason  of  withdrawals  which  had  been 
made,  and  the  failure  to  get  new  business.  This  report  was 
dated  28th  January,  and  on  the  5th  of  the  next  month  the 
secretary  sent  notice  to  the  members  convening  a  meeting 

>  In   re  Sunderland,  etc..  Build-  s.  C.  58  L.  J.  Q.  B.  263;  60  L.  T. 

ing  Society,  L.  R.,  24  Q.  B.   Div.  186;  53  J.   P.  375;  5  T.  L.   R.  192; 

394  :  Kemp  v.  Wright  [1894]  2  Ch.  Christian's  Appeal,  102  Pa.  St.  184; 

462.  Browne  v.  Sanders,  20  D.  C.  455; 

-  Walton  r.  Edgar,  L.  R.,10App.  s.  c.  20  Wash.  L.  Rep.  277. 

Ca  .33;  S.  C.  54   I,.  J.  Ch.  362 ;  52  Upon    the    binding  effect  of    ;i 

L.  T.  (N.  S.)  666  ;  33  W.  R.  417  ;  49  compromise  and   subsequent    dis- 

.1.  P.  468  ;  affirming  same  ad  nom.  covery     of     a    prior    insolvency, 

In  re  Blackburn  Building  Society,  sec     Wangerien    v.      Aspell,      42 

L.    R.,  '.'I    Ch.    Div.    121  ;  52  L.  J.  Ohio  St.  655;  s.  c.  24    N.    E.   Rep. 

Ch.  894  :   I'.)   I..  T.    730;  32   W.   R.  405. 

159;  s.   P.    In  re  Mutual  Society,  l  Knoblanck    v.    Blum   Building 

L.  R.  24  Ch.   Div.    \5&5,note;  Bar-  and  Loan  Association,  25  I'iits.  L. 

nard  v.  Thomson  [1894],  1  Ch.  374.  Jr.   39;   Pafferi    y.    Blum   Building 

Contra.     In  re  Progressive  [nvest-  and  Loan  Association,  25  Pitts.  L. 

mentand    I  ',\  i  i  Id  ing  Society,  .">!   L.    Jr.  K).     But  see  contra,  McKei y 

T.    15.  V.    Diamond    State    Loan    Associa- 

Tn  re  Sheffield,  etc.,   Building    tion,  8  Houst.  557;    s.   c.  18  Atl. 
Society,  L.   R.,  22  R.  B.   Div.   170;     Rep.  905. 


§  329.  WITHDRAWALS.  347 

on  the  12tb  of  the  same  month  to  consider  resolutions  for 
the  dissolution  of  the  society.  Ultimately  the  society  was 
wound  up  under  the  proper  supervising-  officer,  and  the 
assets  proved  insufficient  to  pay  all  the  members  in  full. 
The  court  held  that  a  notice  of  withdrawal  which  expired 
before  the  date  of  the  meeting  was  effectual  and  conferred 
priority.  Justice  Vaughan  Williams,  after  stating  the  cita- 
tion of  many  cases  often  tending  to  confuse  a  judge  rather 
than  aid  him,  refers  to  a  case  by  name1  and  says  :  "  I  do 
not  propose  to  go  into  the  facts  of  that  case  at  length,  be- 
cause when  one  looks  at  the  judgment  delivered  in  it  by 
North,  J.,  it  is  evident  that  he  is  only  recognizing  and  act- 
ing on  the  principles  laid  down  in  the  judgment  delivered 
by  Matkew,  J.,  in  In  Re  Sunderland  26th  TJnvOi  rsal  Bu  tid- 
ing Society!1  But  it  would  seem,  if  North  J.'s,  judgment  is 
carefully  considered,  that  the  view  which  he  takes  is  that 
the  line  ought  to  be  drawn  at  the  time  when  there  is  a 
stoppage  of  the  business  of  the  society,  or  it  is  recognized 
that  the  business  must  be  stopped.  There  had  in  that  case 
been  a  report  by  an  accountant,  and  a  defalcation  by  a 
secretary  had  been  discovered.  The  society  had  sustained 
great  losses,  and  it  might  very  well  be  a  question  whether 
the  society  ought  not  to  dissolve  and  stop  its  business  ;  but 
the  officers  of  the  society  in  their  report  to  the  members  did 
not  recognize  the  necessity  for  the  society  stopping,  but 
thought  it  ought  to  go  on,  for  in  one  clause  of  their  report 
they  said  :  '  There  is  no  reason  why  the  society  should  not, 
with  careful,  judicious  and  economical  management,  have  a 
good  future  before  it.'  That  being  a  case  in  which  a  ques- 
tion had  obviously  been  raised  as  to  the  desirability  of 
stopping  business,  and  the  officer  had  reported  against  it. 
North,  J.,  says :  'The  result  is,  that  I  find  nothing  what- 
ever, prior  to  the  instrument  of  dissolution,  to  indicate  such 
a  state  of  things  as  would  put  an  end  to  the  operation  of 
the  existing  rules  upon  the  principles  laid  down  in  the  case 
to  which  I  have  referred.    I  have  no  material  for  drawing 

1  Barnard  v.  Thomson,  8  Rep.  2  24  Q.  B.  Div.  394  ;  .7.)  L.  J.  Q. 
585  ;  s.  c.  [1894]  1  Ch.  374  ;  63  L.  B.  217  ;  62  L.  T.  293 ;  38  W.  R. 
J.  Ch.  488  ;  70  L.  T.  306.  509  ;  6  T.  L.  R.  199  ;  54  J.  P.  613. 


348  BUILDING   AND   LOAN    ASSOCIATIONS.       Cll.  XV. 

a  line  earlier  than  the  date  of  the  instrument  of  dissolution. 
It  seems  to  me,  therefore,  that  all  the  notices  to  withdraw 
are  good  down  to  that  time.'  What  were  the  materials  for 
which  North,  J.,  looked,  and  which  he  could  not  find  ?  He 
means  that  there  had  been  neither  a  stoppage  of  business  in 
fact,  nor  a  recognition  by  the  officers  of  the  society  of  the 
necessity  for  stoppage  of  its  business.  The  question  whether 
the  society  was  solvent  or  insolvent  at  the  date  of  a  notice 
of  withdrawal  was  evidently  not  one  which  appeared  to 
him  to  be  material.  North,  J.,  follows  the  decision  in  In 
He  Sunderland  36th  Universal  Building  Society.1  In  that 
case  Mathew,  J.,  who  delivered  the  judgment  of  the  court, 
states  what  the  question  was,  namely,  whether  the  mem- 
bers who  had  withdrawn  from  membership  before  the 
winding-up  order  had  thus  become  creditors,  or  whether,  as 
the  liquidator  contended,  the  notices  became  inoperative, 
because  insolvency  had  become  notorious  before  the  notices 
had  been  given,  or  become  effective.  After  referring  to  the 
rule  as  to  withdrawal,  the  answer  is  given  as  follows :  '  We 
are  of  opinion  that  this  rule  was  not  intended  to  apply, 
where  the  society  was  no  longer  able  to  carry  on  its  busi- 
ness, and  when  it  had  become  notorious  that  the  society 
could  not  meet  its  liabilities.  It  would  be  altogether  un- 
reasonable to  suppose  that  it  was  intended  in  the  event  of 
insolvency  to  permit  one  set  of  members  to  escape  at  the 
expense  of  the  others.  There  would  seem  to  be  no  adequate 
consideration  or  motive  for  such  an  arrangement.  The 
rule  seems  to  be  not  to  contemplate  any  such  contingency 
as  to  a  supension  of  its  business,  and,  therefore,  only  to 
provide  for  a  withdrawal  from  a  society  while  it  was,  or 
was  believed  to  be,  still  solvent.'  A  great  deal  of  argument 
has  been  addressed  to  me  as  to  the  meaning  of  that  judg- 
ment, and  in  particular  as  to  what  was  meant  where  it  re- 
ferred to  the  insolvency  of  the  society  being  notorious,  or 
the  society  being  no  longer  able  to  carry  on  its  business. 
The  court  did  not  mean  to  define  in  this  portion  of  the 
judgment  the  conditions  the  happening  of  which  would 
bring  to  an  end  the  power  of  members  to  withdraw.  The 
1  8  B.  at  p.  596. 


§  829.  WITHDRAWALS.  349 

judgment  means  that  the  society  in  that  particular  case  was 
unable  longer  to  carry  on  its  business,  and  that  it  was 
notorious  that  it  was  unable  to  meet  its  liabilities  ;  but  it 
docs  not  lay  down  a  rule  that  the  right  to  withdraw 
depends  on  the  knowledge  of  the  members  or  officers  of  the 
society  that  the  society  is  in  an  insolvent  condition,  although 
that  condition  was,  no  doubt,  present  in  that  case,  and  the 
society  must  be  considered  as  having  at  that  time  stopped 
business.  That  is  how  I  understand  the  judgment  in  the 
Sunderland  Case  •  and  when  I  refer  to  Walton  v.  Edge} 
and  Carriek  v.  North  British  Building  Society?  on  which 
the  judgment  in  the  case  of  the  Sunderland  society  is 
based,  I  find  that  the  real  question  proposed  by  the  judges 
was  :  '  Had  there  been  a  stoppage  of  the  business,  or  any- 
thing equivalent  to  it?'  And  they  decided  that,  if  there 
had  been,  the  right  to  withdraw  was  determined.  But  it 
has  not  been  held  that  insolvency  of  the  society,  even  if 
known  to  its  officers,  is  equivalent  to  stoppage  of  business; 
and  I  propose  to  deal  with  the  present  case  on  that  basis. 
Lord  Shandy  in  Carriek  v.  North  British  Building  Society, 
says:  'In  the  case  of  Tennent  v.  City  of  Glasgow  Bank,8 
in  which  a  number  of  authorities  were  cited  and  considered 
as  to  the  effect  of  the  stoppage  of  a  business  on  the  declared 
insolvency  of  the  company,  it  was  held  that  no  change  could 
thereafter  be  made  in  reference  to  the  rights  or  status  of 
the  members  of  the  company,  so  that  at  least  the  rights  of 
creditors  might  be  preserved.'  That  seems  to  me  to  show 
that  he  recognized  that  the  condition  which  would  deter- 
mine the  right  to  withdraw,  was  the  stoppage  of  business, 
or  its  equivalent.  When  it  is  considered  who  are  the  per- 
sons whose  mutual  rights  are  intended  to  be  regulated  by 
Rule  2f  [the  rule  relating  to  withdrawal],  it  seems  plain 
that  stoppage  of  business  or  recognition  of  the  fact  that  it 
is  inevitable — and  not  insolvency — is  the  proper  point  at 
which   to  draw  the  line.     The  relations  of  these  persons 

1  10  App.  Cas.  36  ;  s.  c.  54  L.  J.   3  4  App.  Cas.  615  ;  s.  c.  40  L.  T. 
Ch.  36  ;  52  L.  T.  66  ;  33  W.  R.  417.  694 ;  27  W.  R.  649. 

2  12  Rettie,  1271 ;  s.  c.  22  Scot, 
L.  R.  837. 


350  BUILDING   AND    LOAN   ASSOCIATIONS.       Cll.  XV. 

must  be  borne  in  mind.  They  have  in  common  put  their 
capital  into  an  adventure  or  concern,  which  it  was  hoped 
would  yield  a  profit.  There  is  a  proviso  enabling  capital  to 
be  withdrawn.  How  long  is  the  right  to  withdraw  capital 
to  continue  ?  It  must  continue  so  long  as  the  adventure 
continues,  or  its  continuance  is  contemplated  ;  but  as  soon 
as  the  adventure  comes  to  an  end,  or  the  adventurers  or 
their  officers  recognize  that  it  must  come  to  an  end,  from 
that  moment  every  principle  of  justice  requires  that  all  who 
have  joined  in  the  common  adventure  shall  in  common  bear 
the  loss — and  from  that  time  the  rule  as  to  withdrawal 
ceases  to  operate,  and  there  ought  to  be.no  applications  for 
withdrawals.  Had  that  point  been  arrived  at  in  any  of  the 
cases  now  before  me  ?  It  clearly  had  been  arrived  at  on 
February  12,  when  the  resolution  for  dissolution  was 
passed ;  but  had  it  been  reached  before  that  date  ?  It  did 
not  arrive  simply  because  the  society  was  insolvent,  for  a 
company  which  is  insolvent  ma}^  still,  in  the  hands  of  san- 
guine adventurers,  carry  on  its  business.  It  did  not  arrive 
when  the  directors  published  their  report  on  January  28, 
because,  although  the  directors  did  not,  as  in  Barnard  v. 
Tomson}  positively  recommend  the  continuance  of  the  busi- 
ness, they  clearly  put  the  case  before  the  members  as  one  in 
which  it  was  perfectly  reasonable  for  them  either  to  go  on 
or  dissolve.  Therefore,  the  report  does  not  show  any  recog- 
nition of  the  necesshvv  for  stopping  the  business.  Then 
what  is  the  effect  of  issuing  the  circular  ?  The  report  con- 
templated that  the  members  would  be  called  together  to 
decide  the  question  one  way  or  another,  and  the  fact  that 
the  meeting  was  convened  to  consider  it  leaves  matters 
exactly  where  the  report  Left  them."2 

1  Supra.  W.  Rep.  948.     In  re  Corporation, 

2  In  re  Ambition  Building  So-  etc.,  Society,  22  Vict.  L.  Rep.  (Aus- 
ciety  [1896J,  I  Oh.  89;  B.C.  65  L.  tralia)  47;  Gibson  v.  Safety,  etc., 
.1.  ( !h.  l  L3  ;  73  L.  T.  508  :  1 1  W.  R.  Assn.  170  111.  44  ;  s.  c.  48  N.  E. 
III.  Rep.  580. 

The  recent  cases  have  followed  The  right  cannot,  of  course,  be 

the   rule   then    laid   down   in  this  exercised  after  the  association  has 

quotation.      Bohenshell  v.    Home,  been  judicially  declared  insolvent. 

c\<-..  Ass'n,  no  Mo.  •"»('.(•>;  s.  c  ll  S.  Chapman  v.  Yonng,  G5  111.  App. 


§  330.  WITHDRAWALS.  351 

Sec.  330— Matured  Stock. 

When  stock  has  matured,  an  unadvanced  stockholder  is 
entitled  to  have  his  stock  paid  off  and  canceled.  In  the  case 
of  a  terminating  society,  this  period  happens  at  the  end  of 
the  existence  of  the  society;  but  in  the  case  of  a  serial 
association,  where  the  series  to  which  the  stock  belongs  has 
come  to  a  termination  according  to  the  by-laws  and  plan  of 
the  association.  If  the  charter,  a  statute,  or  the  by-laws 
require  a  share  of  stock  to  be  paid  at  its  maturity,  the  holder 
of  it  cannot  be  required  to  compete  with  other  stockholders 
for  a  preference  in  payment,  according  to  a  rule  adopted  by 
the  directors  after  they  had  declared  the  shares  fully  paid 
up.1  And  if  a  shareholder  has  the  right  to  demand  pay- 
ment in  full  in  cash,  he  cannot  be  compelled  to  elect  between 
a  less  sum  in  cash  and  mortgages  of  a  subsequent  series,  or 
take  other  securities  in  place  of  cash.2  Nor  can  a  stockholder 
be  compelled  to  submit  to  a  postponement  of  the  date  of  his 
payment  so  that  real  estate  held  by  the  society  will  ad- 
vance, his  payment  of  dues  in  the  meantime  going  on.3 
If  stock  in  one  series  has  matured,  the  holders  of  it  cannot 

131.  A  member  who  has  obtained  held,  that  where  the  association 
a  judgment  on  a  notice  given  after  was  insolvent  and  more  than  the 
insolvency  has  intervened  is  in  no  30  per  cent  had  been  paid  out  when 
better  position  than  if  he  had  no  notices  of  withdrawals  had  been 
judgment.  Id.  Belief  in  solvency  given,  shareholders  giving  such 
when  notice  is  given,  does  not  notices  were  not  creditors  with 
change  the  rule.  Id.  The  associa-  claims,  and  entitled  to  be  paid  in 
tion  must  be  a  going  concern  when  full  the  amount  by  them  paid  to 
the  notice  matures.  In  reCorpor-  the  loan  fund  before  other  share- 
ation,  etc.,  Society,  22  Vict.  L.  Rep.  holders  were  entitled  to  anything, 
(Australia)  47.  but  were  on  a  parity  with  them. 
The  by-laws  of  an  association  Rabbitt  v.  Wilcoxen,  103  la.  35  ; 
provided  for  a  loan  fund  and  an  s.  c.  72  N.  W.  Rep.  306. 
expense  fund,  and  that  any  share-  1  Appeal  of  Mechanics  and  Work- 
holder,  after  giving  30  days' notice,  ingmen's  Building  Association 
might  withdraw  the  full  amount  (Pa.)  7  Atl.  Rep.  728  ;  6  Cent.  Rep. 
of  his  payments  to  the  loan  fund,  580. 

with  earnings  up  to  the  last  div-  2  Mercer  v.  Ambler  Building  and 

idend  period  ;  and  that  the  asso-  Loan   Association,  20   Phila.    351  : 

ciation  should  not  be  liable  to  pay  s.  c.  48  Leg.  Int.  277  :  10  Pa.  C.  C. 

out  on  account  more  than  30  per  51. 

cent  of  the  cash  receipts  of  the  loan  3  Burns  v.  Metropolitan  Building 

fund  during  such  month.     It  was  Association,  2  Mackey  (D.  C.)  7. 


352  BUILDING   AND   LOAN    ASSOCIATIONS.        Cll.  XV. 

be  required  to  compete  for  payment  with  holders  of  stock 
in  a  later  series,  which  has  also  matured  ;  but  a  provision  in 
the  articles  of  association  that  the  amount  applicable  to  the 
holders  of  matured  stock  in  a  series  shall  be  limited-to  one- 
half  of  the  association's  revenues  and  giving  priority  in  pay- 
ment to  those  willing  to  bid  the  highest  premium  therefor, 
in  the  mean  time  denying  interest  on  the  unpaid  amounts, 
is  valid,  unless  some  statute  forbids  it.  "  He  is  obliged  to 
forego  interest,"  said  Yice-Chancellor  Bird.  "  This  surely  is 
sufficient  penalty  for  delay.  In  addition  to  this,  he  should 
not  be  subject  to  the  hardship  which  might  ensue  if  he  were 
obliged  to  yield  to  the  exactions  which  subsequent  share- 
holders might  impose,  who  perhaps  could  afford,  since  they 
lose  no  interest,  to  supply  their  necessities  by  offering  high 
premiums  for  the  money.  If  the  principle  contended  for  by 
the  defendant  should  prevail,  then  the  owner  of  the  stock  in 
the  first  series  might  be  postponed  until  the  owner  of  the 
stock  in  the  last  series  was  satisfied.  In  such  case,  were 
there  to  be  eight  or  ten  series,  the  owner  of  stock  in  the  first 
would  not  only  be  deprived  of  his  principal  until  the  liquida- 
tion of  the  owners  of  stock  in  the  last  series,  but  also  of  his 
interest;  so  that,  in  case  each  series  should  not  commence 
until  the  expiration  of  two  years  after  the  last,  the  loss  of 
interest  to  the  owner  of  stock  in  the  first  series  would  ex- 
ceed the  amount  of  his  principal.  Certainly  there  is  not  only 
nothing  mutual  in  this,  but  it  is  in  every  respect  highly 
inequitable."1  Suit  to  recover  the  amount  due  on  matured 
or  prepaid  stock  must  be  brought  in  equity  and  not  at  law.2 
"  It  is  not  necessary,  or  at  least  not  indispensable,  that  the  as- 
sociatioi]  should  resolve  that  the  shares  have  matured;  if  it, 
does  any  act  which  it  could  not  do  except  upon  the  basis  that 
the  shares  have  matured,  then  the  implication  is  irresistible 


1  Deering  v.  Bishop  Bale;  Build-  2  O'Rourke  v.  West  Penn.  Loan 

inguml    Ln.in  Association  (N..J.),  and  Pudding  Association,  N  AV.  N. 

'.'I  At  I.  Rep.  575.  Cas.  170;  S.C.  37   Leg.  Int.  20;  af- 

In    tin's    case   the    company    was  firmed,  !»:;  Pa.  St.  308  ;  S.  0.  37  Leg. 

rcxtrnhietl  from  accepting  bids  of-  Int.  190. 
I'i  red  l>y  ;niy  members  of  any  sub- 
equenl  series. 


§  331. 


WITHDRAWALS. 


353 


that  they  are  matured."  l     The  stock  can  only  be  paid  off  in 
cash.2 


Sec.  331 — Foreign  Associations. 

An  Illinois  statute  declares  that  "  foreign  corporations 
doing  business  in  this  state  shall  be  subjected  to  all  liabili- 
ties, restrictions,  and  duties  that  are  or  may  be  imposed  upon 
corporations  of  like  character,  organized  under  the  general 
laws  of  this  state;"  and  the  statute  for  incorporation  of 
homestead  loan  associations  provides  that  any  stockholder 
may  withdraw  from  such  corporation  on  thirty  days'  notice. 
It  was  held  that  an  Illinois  stockholder  in  a  foreign  home- 
stead loan  association  doing  business  in  that  state  might 
withdraw  his  stock  on  thirty  days'  notice,  regardless  of  the 
provisions  of  his  stock  certificate.3 


1  Mercer  v.  Amber  Building  and 
Loan  Association,  10  Pa.  C.  C.  51  ; 
s.  c.  48  Leg.  Int.  277. 

2  Id.  ;  Plymouth  Building  Asso- 
ciation v.  Mangan,  2  Kulp.  210. 

Where  a  by-law  provided  that 
"  The  certificate  of  any  member  is 
redeemable  in  cash  after  twenty- 
four  payments  thereon  have  been 
made,  the  shareholders  being  en- 
titled to  receive  the  amount  paid  in 
on  his  shares,  together  with  six  per 
cent ;  "  this  was  held  to  render  the 
stock  as  redeemable  only  at  the  op- 
tion of  the  association.  Peters  v.  As- 
sociation, 12  Pa.  C.  C.  192.  Where 
the  rules  provided  a  member  might 
withdraw  if  he  had  a  certain  cause 
23 


and  the  trustees  were  satisfied  such 
cause  existed,  it  was  held  that  they 
could  not  arbitratily  refuse  him 
the  permission.  Wettervvoulgh  v. 
Knickerbocker  B.  Ass'n,  2  Bosw. 
381. 

3  Granite  State  Provident  Asso- 
ciation v.  Lloyd,  145  111.  620  ;  s.  C. 
34  N.  E.  Rep.  142  ;  affirming,  48 
111.  App.  429  ;  Granite  State  Prov- 
ident Association  v.  Sonderman ,  48 
111.  App.  433  ;  affirmed,  145  111.  App. 
624 ;  s.  C.  34  N.  E.  Rep.  143 ;  St. 
Louis  etc.,  Co.  v.  Yantis,  72  111. 
App.  597  ;  S.  C.  173  111.  321  ;  s.  C.  50 
N.  E.  Rep.  807  ;  Rhodes  v.  Missouri, 
etc.,  Co.,  173  111.  621 ;  s.  C.  50  N.  E. 
Rep.  998  ;  reversing  63  111.  App.  77. 


CHAPTEK  XYI. 

REDEMPTION   AND    THE    EIGHT   TO   EXERCISE   IT. 

Sec.  332.  Right  to  Redeem  a  Valuable  One. 

333.  Terminating  and  Permanent  Societies. 

334.  The  Right  of  Redemption— English  Cases. 

335.  Right  to  Property  Released. 

336.  Rules  as  to  Redemption. 

337.  Equitable  Scheme  for  Redemption. 

338.  American  Scheme. 

339.  Redemption  Discouraged. 

340.  Permanent  Societies. 

341.  Whole  Premium  Charged  with  Interest. 

342.  Provision  for  Losses. 

343.  Costs  of  Redemption  Action. 

Sec.  332 — Right  to  Redeem  a  Valuable  One. 

It  is  evident  that  the  right  to  redeem  a  mortgage  before 
it  becomes  due  is  quite  a  valuable  one;  for  thereby  the 
mortgagor  is  able  to  relieve  his  land  of  the  burden  imposed 
upon  it  by  the  loan.  But  it  is  also  equally  clear  that  unless 
either  the  terms  of  the  mortgage  reserve  the  right,  or  the 
rule  or  some  statute  give  it,  the  mortgagor  cannot  exercise 
the  right  to  redeem,  unless  the  society  consent.1 

Sec.  333— Terminating  and  Permanent  Societies. 

In  the  case  of  a  permanent  association  the  date  when  the 
mortgage  will  become  extinguished  is  well  known;  but  not 
so  with  a  terminating  association.  From  the  very  nature  of 
these  latter  associations  it  is  impossible  to  know  with  cer- 
tainty how  long  it  may  be  necessary  to  continue  the  period- 
ical payments.  These  must  be  made  until  the  sum  necessary 
to  give  every  unadvanced  member  the  full  amount  of  his 
share   has   hern   accumulated.     The  time  required  for  this 

1  See  Ch.-ipttT  XV.  <>n  withdrawals. 

354 


§  334.  REDEMPTION    OF    MORTGAGES.  355 

purpose  would  be  more  or  less,  according  to  the  amount  of 
beneiit  which  the  society  may  derive  from  the  discount 
given  on  the  shares,  and  from  the  interest  made  by  the  in- 
vestments— in  other  words,  as  the  profits  realized  by  great 
or  small.  "  If  the  society  be  successful,  and  the  tables  upon 
which  its  operations  are  based  have  been  properly  calculated, 
the  object  of  its  existence  will  be  accomplished  within  the 
tonus  originally  contemplated  by  its  members.  If,  on  the 
other  hand,  it  be  unfortunate,  the  society  may  last  for  years 
beyond  the  time  when  it  wTas  expected  to  close.  The  settle- 
ment of  the  terms  upon  which  a  member  should  be  allowed 
to  redeem  before  the  close  of  the  society  will  therefore  de- 
pend upon  the  position  and  prospects  of  the  society ;  and 
unless  the  rules  be  very  clear  some  intricate  calculations 
may  be  required." 2 

Sec.  334 — The  Right  of  Redemption — English  Cases*, 

The  right  to  redeem  a  mortgage  or  other  security  given 
to  secure  an  advancement  or  loan  has  been  before  the  Eng- 
lish courts  quite  frequently,  and  received  careful  considera- 
tion at  their  hands.  A  resume  of  these  decisions  has  been  so 
well  stated  in  a  recent  English  work,  that  we  beg  the 
reader's  indulgence  because  of  the  following  lengthy 
quotation : 

Mosley  aga/inst  Baker. — "The  first  case  on  the  subject 
was  Mosley  v.  Baker.2  There,  a  rule  of  the  society  pro- 
vided, '  That  if  any  member  of  this  association  shall  be  de- 
sirous of  paying  off  and  redeeming  any  security  or  securi- 
ties which  he  shall  have  given  to  this  association,  and  shall 
give  notice  of  such  his  desire  to  the  manager,  the  direc- 
tors shall  allow  such  member  the  profits  of  his  share  or 
shares  made  up  to  such  a  time,  and  shall  make  a  deduction 
of  such  profits,  and  of  the  amount  of  subscriptions  paid  in 
by  such   member,  from  the  full  amount   expressed   to  be 

1  Davis    on  Building  Societies,        2  Davis    on   Building   Societies, 

(4  ed.)  p.  238  ;  Flemming  v.  Self,  (4  ed.)  pp.  238-256. 
3  De  G-.  M.  &  G.  997  ;  s.  c.  24  L.  J.        3  12  Jur_  551  .  10  L.  T.   O.  S.  461 ; 

Oh.  29  ;  24  L.  T.  O.  S.  101  ;  3  W.  R.  6  Hare,  87  ;  17  L.   J.   Ch.  25  ;  on 

89  ;  1  Jur.  N.  S.  25  ;  3  Eq.  Rep.  14  ;  appeal  18  L.  J.   Ch.  457  ;  s.  C.   13 

18  J.  P.  772.  L.  T.  O.  S.  317  ;  1  Hall.  &  T.  301. 


356  BUILDING   AND   LOAN   ASSOCIATIONS.     Cll.  XVI. 

secured  in  and  by  the  mortgage ;  and  the  directors  are 
hereby  authorized  and  empowered  to  receive  the  balance, 
*  *  *  and  upon  payment  of  the  balance,  together  with 
all  fines  due  in  respect  of  such  share  or  shares,  the  directors 
shall  authorize  the  trustees  to  deliver  all  deeds  and  *  *  * 
indorse  a  receipt.  *  *  *  Mosley  became  an  advanced 
member,  and  executed  a  mortgage  deed  whereby,  after  re- 
citing that  he  (plaintiff)  was,  according  to  the  rules,  entitled 
to  receive  a  certain  sum,  it  was  Avitnessed,  that  in  considera- 
tion of  such  sum  he  assigned  to  the  trustees  the  property  in 
question,  to  secure  the  monthly  subscriptions,  etc.,  upon 
trust  that  if  Mosley  should  duly  pay,  observe,  and  perform 
all  the  subscriptions,  payments,  redemption  monies  and 
regulations  according  to  the  articles  of  the  association,  to 
permit  him  to  hold  and  enjoy  the  premises,  and  to  receive 
the  rents  and  profits  thereof  for  his  own  benefit ;  but  if 
Mosley  should  fail  to  do  this,  then  it  should  be  lawful  for 
the  trustees  to  appoint  a  person  to  collect  the  rents  and 
profits  thereof,  and  thereout  to  pay,  satisfy,  and  effect  all 
the  purposes  before  mentioned  ;  but  in  case  the  rents  and 
profits  of  the  premises  should  be  insufficient  to  satisfy  such 
purposes,  then  upon  trust  that  the  trustees,  with  or  without 
the  concurrence  of  the  mortgagor,  should  sell  the  premises. 
The  trusts  of  the  money  to  arise  from  such  sale  were  de- 
clared to  be,  first,  to  retain  and  pay  all  expenses  of  execut- 
ing the  trust ;  then  to  retain  for  the  association  '  all  such 
subscriptions  and  other  payments  as  shall  be  then,  or  si  1  all 
hereafter  become  due  and  owing  and  payable  in  respect  of 
the  said  shares  by  him  the  said  (J.  Mosley,  his  executors, 
etc.,  calculating  the  probable  duration  of  tin'  said  associa- 
tion, it  being  hereby  declared  and  agreed,  that  in  case  such 
sale  as  aforesaid  shall  take  place,  all  monies  which  shall  at 
any  time  afterwards  become  due  in  respect  of  the  said 
shares,  shall  be  considered  as  due  at  the  time  of  such  sale, 
and  thai  the  same  shall  be  fully  deducted  and  paid  out  of 
the  monies  received  by  virtue  of  the  aforesaid  powers  or 
trusts,  and  t  hat t  he  said  trustees,  or  board  of  directors  of 
t  he  said  assoeiat  ion,  shall  calculate  the  amount  accordingly,' 

and  upon  trust  to  |>ay  the  surplus,  if  any,  to  the  mortgagor. 


§  334.  REDEMPTION   OF   MORTGAGES.  357 

Mosley  having  become  in  arrears,  the  trustees  exercised  the 
power  of  sale  in  respect  of  part  of  the  premises  comprised 
in  the  mortgage.  Mosley  then  made  a  tender  to  pay  a  cer- 
tain  sum  to  redeem,  which  was  refused,  except  as  on 
account.  Upon  a  bill  to  redeem,  praying  that  an  account 
might  be  taken  of  what  was  due  to  the  defendants,  the 
trustees,  on  the  mortgage  security;  and  that  it  might  be 
declared,  that  in  taking  such  account  he  ought  not  to  be 
charged  with  any  sums  for  redemption  monies,  subscrip- 
tions, fines  or  other  payments  on  his  said  shares  accruing 
after  such  tender,  the  plaintiff  offering  to  confirm  the  sale 
that  had  been  made,  and  to  pay  what  should  be  found  due 
from  him  ;  and  that,  upon  such  payment,  the  trustees  might 
indorse  a  receipt  or  acknowledgment  upon  the  mortgage 
according  to  the  62d  rule  ;  the  trustees  by  their  answer 
insisted  that  the  plaintiff  could  not  redeem  the  property 
except  upon  payment  of  all  the  future  subscriptions,  etc., 
and  that  the  price  of  the  redemption  must  be  ascertained 
upon  the  same  principle  as  was  provided  by  the  mortgage 
deed  in  case  of  a  sale  of  the  premises  by  the  association  in 
consequence  of  the  default  of  the  mortgagor.  The  Vice- 
Chancellor  decided  in  favor  of  the  claim  of  the  association, 
and  the  order  eventually  was  for  the  Master  to  ascertain 
the  full  value  of  the  plaintiff's  future  contributions  accord- 
ing to  the  terms  of  the  deeds.  This  decision  was  after- 
wards affirmed/' 1 

Seagrave  against  Pope. — "  In  Seagrave  v.  Pope  2  the  rules 
and  security  were  very  much  in  the  same  terms  as  in  Mosley 
v.  Baker.  The  mortgage  deed  contained  no  covenant  or 
stipulation  for  the  repa\^ment  of  the  money  advanced  to  the 
borrower  upon  his  shares ;  and  the  articles  of  the  society 
provided  that  at  the  termination  of  the  society  the  mort- 
gage should  be  indorsed  as  satisfied.  The  rule  which  pro- 
vided for  the  case  of  an  advanced  member  being  desirous  to 
redeem,  was  nearly  the  same  as  that  in  Mosley  v.  Baker 
(ubi  supra).     Lord  Truro,  L.  C,  held,  that  an  advance  made 

i  18  L.  J.  Ch.  457  ;  13  L.  T.  O.  S.  Ch.  258 ;  16  Jur.  1099 ;  20  L.  T.,  O. 
317  ;  1  Hall  &  T.  301.  S.  173. 

2  1  De  G.,  M.  &  G.  783 ;  22  L.  J. 


358  BUILDING    AND    LOAN   ASSOCIATIONS.     Cll.  XVI. 

to  the  plaintiff  upon  bis  shares  was  not  a  loan,  but  an  an- 
ticipatory payment,  by  way  of  discount,  of  the  shares  he 
would  otherwise  have  been  entitled  to  at  the  termination  of 
the  society  ;  and  that  the  deed  was  to  secure  his  future  sub 
scriptions,  etc.,  until  that  period,  and  that  ho  was  entitled 
to  redeem  upon  the  terms  of  repayment  of  the  advance, 
minus  the  amount  of  subscriptions  paid  by  him  up  to  the 
notice  to  redeem  ;  and  the  bill  was  dismissed,  on  the  ground 
that  the  plaintiff  was  bound  to  continue  his  payments  until 
every  member  had  satisfied  his  shares,  there  being  no  cove- 
nant for  repayment  or  proviso  for  redemption  in  the  deed. 
This  case  is  considered  to  have  decided  that  the  member 
could  only  redeem  upon  payment  of  his  subscriptions  down 
to  the  end  of  the  estimated  duration  of  the  society,  and  not 
that  the  "member  was  unable  to  redeem  upon  any  terms/' 1 

Finn in'j  against  Self. — "In  Fleming  v.  Self,2  the  14th 
rule  provided,  '  That  if  any  member  should  be  desirous  of 
satisfying  the  securities  which  should  have  been  given  for 
any  shares  which  he  might  have  purchased,  and  should  give 
notice  of  such  desire,  then  that  the  directors  should,  within 
one  month,  award  him  the  same  proportion  of  profit  per 
share  ;is  was  allowed  on  the  withdrawal  of  unpurchased 
shares  ;  and  the  directors  should  make  a  deduction  of  such 
profits  and  of  the  amount  of  subscriptions  paid  in  by  such 
member  from  the  full  amount  expressed  to  be  secured  in  and 
by  tin'  mortgage;  and  the  directors  were  thereby  authorized 
to  receive  the  same,  etc'  By  the  33d  rule,  'When  all  the 
payments  mentioned  in  the  rules  hereinbefore  contained, 
that  is  to  say,  when  the  full  sum  of  £100  for  each  share, 
with  nil  other  expenses  and  liabilities  of  the  society,  shall  be 
fully  paid  and  satisfied,'  the  society  should  then  cease.       By 

the  h'-th  rule,  members  wishing  to  withdraw  unpurchased 
shares  were  to  be  allowed  such  bonus  upon  withdrawal  as 
the  directors  should  from  time  to  time  appoint.  The  plain- 
till'  became  an  advanced  member,  and  subsequently  the 
directors  passed  a  resolution  that  the  society  should  termi- 

1  See  2  I  !..  .1.  <  li.  81.  R.  89;  1  Jur.  N.  S.  25  ;  3  Eq.  Rep. 

.;  De  <;..  M.   &  <;.  997;   -M  I-  •»•     14;  18  J.  P.  77'.'. 
Ch.  29;  -M   l>.  T.  0.  S.  101  ;  8  W. 


§  334.  REDEMPTION    OF   MORTGAGES.  359 

natc  and  its  affairs  be  wound  up  after  the  period  of  eleven 
years  from  its  foundation.  Several  meetings  of  the  society 
were  held,  and  it  was  resolved  '  that  the  bonus  or  share  of 
profits  to  be  allowed  to  withdrawing-  members  should  be 
£32  per  share.'  At  the  end  of  the  term  of  eleven  y<';w>, 
from  the  formation  of  the  society,  the  plaintiff  gave  notice 
to  withdraw,  and  claimed  to  have  the  bonus  awarded  to 
him,  and  to  have  his  security  discharged  without  any  fur- 
ther payment  on  his  part.  In  reply,  after  consideration,  the 
trustees  told  the  plaintiff  that  he  could  not  be  allowed  any 
bonus  or  share  of  profits  on  his  shares,  nor  could  he  be 
allowed  to  redeem  upon  any  other  terms  than  payment  of 
£180,  that  sum  being  the  calculated  amount  payable  by  him 
from  the  time  of  his  giving  notice  to  redeem  down  to  the 
estimated  period  of  the  society's  termination.  The  plaintiff 
then  filed  the  claim,  praying  a  decree  for  redemption  and 
the  delivery  up  of  his  title-deeds,  without  any  further 
payments  being  made,  and  also  praying  a  declaration  that 
he  was  entitled  to  the  amount  of  bonus  which  he  had  sought, 
and  for  the  payment  of  the  same.  It  was  eventually  held 
that  the  plaintiff  could  only  redeem  upon  the  terms  of  pay- 
ing the  amount  of  subscriptions  and  redemption  money, 
which  would  become  payable  by  him,  during  the  longest 
period  that  the  society  could  possibly  last,  having  regard  to 
the  state  of  its  assets,  but  that  he  was  entitled  to  the  same 
share  of  profits  as  would,  at  the  time  of  his  notice,  have 
been  payable  to  a  withdrawing  member  under  the  rules. 
As  to  the  last  part  of  the  order,  the  Lord  Chancellor,  in 
making  it,  varied  the  decree  of  the  court  below,  where  the 
Y ice-Chancellor  had  decided  that  the  plaintiff  was  not  en- 
titled to  any  share  of  the  profits." 

Mosley  against  Baker  Distinguished. — "  In  the  case  just 
cited,  the  Lord  Chancellor  referred  to  Mosley  v.  Baker  ( ubi 
supra)  ;  he  pointed  out1  that  in  that  case  no  question  as  to 
profits  in  fact  arose,  inasmuch  as  the  bill  to  redeem  was 
filed  before  the  expiration  of  the  period  required  to  run  be- 
fore the  member  would  be  entitled  to  profits.  Also,  that  as 
to  the  period  during  which  the  plaintiffs  liability  to  con- 
i  Fleming  v.  Self,  3  De  G.,  M.  &  G.  at  p.  1028. 


360  BUILDING   AND   LOAN    ASSOCIATIONS.     Cll.  XVI. 

tribute  was  to  be  treated  as  enduring,  the  mortgage  there 
expressly  stipulated  that  in  case  the  mortgagees  should  ex- 
ercise their  power  of  sale,  they  should  out  of  the  proceeds 
retain  the  full  amount  thereafter  to  become  due  from  the 
mortgagor,  calculating  the  probable  duration  of  the  associa- 
tion. There  the  mortgagees  did  exercise  their  power  of  sale, 
and  the  decree  gave  to  both  parties,  mortgagor  and  mort- 
gagees, the  precise  benefits  for  which  they  bargained. 
Assuming,  therefore,  such  provision  in  the  mortgage  deed 
to  have  been  not  inconsistent  with  the  rules  of  the  society, 
it  did  not  seem  to  the  Lord  Chancellor  to  govern  the  case 
(Fleming  v.  Self)  then  under  consideration,  where  profits 
were  payable  to  withdrawing  members,  and  where  the 
power  of  sale  had  not  been  exercised,  nor,  on  its  being  ex- 
ercised, was  there  the  provision  as  to  calculating  the  prob- 
able duration  of  the  society.'" 

Archer  against  Harrison. — "  In  Archer  v.  Harrison1  the 
question  involved  was  the  same  as  that  which  arose  in  Flem- 
ing v.  Self,  namely,  the  right  of  a  borrowing  member,  when 
he  redeems,  to  the  benefit  of  any  bonus  that  had  been  de- 
clared on  the  shares  prior  to  the  notice  to  redeem,  and  the 
rules  were  similar  in  all  respects.  'A  bonus  of  £23  per 
share  had  been  declared  in  April,  1849,  that  was,  prior  to 
the  decision  of  the  Lord  Chancellor  in  Fleming  v.  Self,  and 
upon  the  assumption  that  borrowing  members  were  not  en- 
titled to  participate  in  the  bonuses.  The  calculation  was 
consequently  erroneous  ;  and  accordingly,  after  the  decision 
in  Fleming  v.  Self,  but  subsequently  to  the  plaintiff's  notice 
to  redeem,  the  directors  made  another  calculation,  and  de- 
termined that  67  per  share  was  the  proper  amount  of  the 
bonus,  in  older  to  enable  the  directors  to  pay  all  borrowing 
members,  subsequently  coming  to  redeem,  the  same  bonus 
of  L'7  per  share.  The  defendants  offered  the  plaintiff  this 
bonus,  but  he  declined  to  lake  it,  contending  that,  upon  the 
principle  of  Fleming  v.  Self,  he  was  entitled  to  the  amount 
of  the  bonus  declared  prior  to  his  giving  notice  to  redeem. 
The  Lord  Chancellor  held  that  he  was  entitled  to  the  actual 

i  7  Do  G.  M.  &<:.  W4;  8  Jur.  N.     S.  194;  29  L.  T.  O.  S.  71  ;  21  J.  P. 

515. 


§  334.  REDEMPTION   OF   MORTGAGES.  361 

bonus  declared,  namely,  £23  per  share,  saying:  'The  rule 
being  implicit,  I  cannot  say  that  the  plaintiff  is  not  to  have 
the  bonus  which  has  been  declared;  but  the  amount  ulti- 
mately to  come  to  him  will  be  diminished  to  some  extent  by 
the  payment  of  the  entire  monthly  and  other  charges  in 
consequence  of  the  prolongation  of  the  existence  of  the 
society.' " 

Smith  against  Pilkington. — "Smith  v.  Pilkington  1  was 
another  redemption  suit,  in  which  the  point  was,  whether 
credit  should  be  given  for  redemption  monies  which  had 
been  paid  by  the  plaintiff.  Smith  in  1846  became  a  borrow- 
ing member  of  '  The  Gloucestershire  and  Cheltenham  Mu- 
tual Benefit  Society,'  the  rules  of  which  were  similar  to 
those  in  Fleming  v.  Self  (  ubi  supra).  In  July,  1855,  a  bonus 
of  £'25  per  share  was  declared  by  the  directors.  Prior  to 
June,  1856,  Smith  gave  notice  of  his  intention  to  redeem 
his  securities,  in  accordance  with  the  rules  of  the  society. 
In  July,  1S56,  meetings  of  the  society  were  held,  Smith, 
who  was  a  director,  being  present,  at  which  redemption  of 
the  securities  was  proposed  upon  certain  terms,  and  all 
the  borrowing  members,  some  of  whom  Smith  had  con- 
sulted, applied  to  redeem,  and  subsequently  did  redeem,  on 
the  terms  of  the  resolutions  passed  at  these  meetings. 
Smith,  however,  refused  to  adopt  these  terms,  and  filed  a 
bill  against  the  trustees  of  the  society,  whereby  he  prayed 
that  it  might  be  declared  that  he  was,  on  the  24th  of  Oc- 
tober, 1856,  on  redeeming  his  mortgage  security,  entitled  to 
the  bonus  of  £25  per  share  on  each  of  his  shares  in  the 
society  ;  that  certain  accounts  might  be  taken  and  the  plain- 
tiff credited  with  the  amount  of  the  said  bonuses  ;  that  the 
defendants  might  be  decreed  to  pay  the  plaintiff  out  of  the 
funds  of  the  society  what,  upon  taking  the  accounts,  should 
appear  to  be  payable  on  redeeming  his  mortgage  security, 
with  interest,  etc.  The  defendants,  the  trustees  of  the 
society,  contended  that  Smith  was  by  his  conduct  precluded 
from  redeeming,  except  upon  the  terms  proposed  at  the 
above-mentioned  meetings,  and  granted  to  all  other  borrow- 

1  4  Jur.  N.  S.  56 ;  30  L.  T.  O.  S.  De  G.  F.  &  J.  120 ;  29  L.  J.  Ch. 
196 ;  22  J.  P.  5  ;  S.  C.  on  appeal,  1  227 ;  24  J.  P.  227. 


362  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XVI. 

ing  members  who  had  retired  or  withdrawn.  But  the  Vice- 
Chancellor  held  that  the  plaintiff  was  not  bound  by  the 
resolutions  of  July  and  the  terms  granted  to  the  retiring 
members;1  that  there  was  no  new  agreement  entered 
into  between  Smith  and  the  directors  ;  and  therefore  that 
the  plaintiff  was  entitled  to  the  relief  pra}Ted  for,  the  ac- 
counts to  betaken  upon  the  principle  of  the  decision  in 
Fleming  v.  Self.2 

"  The  accounts  were  taken,  and  it  appeared  that  a  sum  of 
about  £28  was  required  to  make  up  the  amount  payable  by 
the  plaintiff  in  respect  of  his  shares  from  October,  1856, 
up  to  the  calculated  time  of  the  expiration  of  the  society. 
This  being  deducted  from  £100,  the  amount  of  bonuses  on 
the  plaintiff's  four  shares  left  a  sum  of  £72  due  to  him. 
The  defendants,  however,  contended  that  the  redemption 
monies,  amounting  to  £96,  and  payable  by  the  plaintiff  in 
respect  of  the  advance  made  to  him,  must  be  brought  into 
the  account  and  charged  against  him  ;  and  accordingly  they 
appealed  from  the  Yice-Chancellor's  decision.  If  the  ac- 
count were  made  out  according  to  the  defendants'  conten- 
tion it  would  be  thus:  — 

Dr.  Cr. 

Subscriptions £240  Subscriptions  paid £240 

Redemption  monies 96  Profits  on  the  four  shares 100 

Amount  to  be  made  up 28  Balance  due  lrom  plaintiff. . .      24 


£364  £364 

But  if  the  account  were  made  out  in  accordance  with  the 
Vice-Chancellor's  decree,  it  would  stand  thus  : 
Dr.  Or. 

Subscriptions £240    Subscriptions  paid £240 

Redemption  monies 96     Redemption  monies  paid 96 

Amount  to  be   made  up 28    Profits 100 

Balance  due  to  plaintiff 72 

6436  6436 

"The  full  Court  of  Appeal   in  Chancery  held,3  affirming 

1  See  ^.rmitagev.  Walker,  2 Jur.        2  Ubi,  supra. 

N.  S.  13  :   .'<;  L.  T.  L82  ;  2  Kay  .V  .1.         ;  I  De  <i.    F.  &  J.   120;  29  L.  J. 
-.'II  ;  20  J.  I'.  58.  cii.  '-'•;  :  21  .1.  I'.  227. 


§  330.  BEDEMPTION   OF   MORTGAGES.  3G3 

the  decision  in  the  court  below,  that  credit  must  be  given 
to  Smith  for  the  redemption  monies  paid  by  him,  in  accord- 
ance with  the  spirit  of  the  decision  in  Fleming  v.  Self." 

Sec.  335— Right  to  Property  Released. 

" In  Farmer  v.  Smith,1  the  rule  for  redemption  provided 
that  an  advanced  shareholder  might  at  any  time  satisfy 
the  security  by  paying  the  subscriptions  to  the  end  of  the 
thirteenth  year  of  the  society's  existence,  and  it  was  never 
doubted  but  what  he  had  the  power  to  do  so,  so  far  as  the 
security  of  the  land  was  concerned ;  and  the  same  thing 
was  expressly  decided,  in  another  case,  in  equity.2  And 
so,  if  by  the  rules  a  period  is  fixed  for  the  termination  of 
the  society,  and  that  time  has  elapsed  without  the  objects 
of  the  society  having  been  accomplished,  the  member  will 
nevertheless  be  entitled  to  have  his  property  discharged 
from  the  mortgage,3  though,  as  will  presently  be  seen. 
possibly  he  will  not  be  discharged  from  his  covenant  to  pay 
the  subscriptions." 

Sec.  336— Rules  as  to  Redemption. 

"  From  the  foregoing  cases,  the  following  rules  as  to  re- 
demption or  the  application  of  the  proceeds  of  a  sale  in 
terminating  societies  seem  to  be  derivable  : — ■ 

"  1.  That  unless,  either  in  the  deed  or  by  the  rules,  there 
is  something  to  show  that  a  right  of  redemption  is  intended, 
a  security  to  a  terminating  society  is  irredeemable,  and  the 
sum  received  by  the  member  is  to  be  considered  as  an  anti- 
cipatory payment  of  a  sum  hereafter  to  become  due,  and 
not  as  a  loan. 

"  2.  That  in  taking  the  accounts,  the  member  is  entitled 
to  be  credited  with  all  sums  (other  than  fines)  actually  paid 
by  him  to  the  society  by  regular  periodical  instalments. 

"  3.  And  also  with  a  share  of  the  profits,  if  the  rules  so 

1  28  L.  J.  Ex.  22G  ;  32  L.  T.  O.  S.  s  Sparrow  v.  Farmer,  26  Beav. 
371  ;  5  Jur.  N.  S.  533,  n.  ;  4  H.  &  N.  511  ;  28  L.  J.  Ch.  537  ;  5  Jur.  N.  S. 
196  ;  7  W.  R.  362.  530  ;  33  L.  T.  O.  S.  216  ;  23  J.  P. 

2  Handley  v.    Farmer,  29  Beav.  500. 
362. 


364  BUILDING   AND   LOAN   ASSOCIATIONS.      Cll.  XVI. 

provide,  notwithstanding  the  inexpediency  of  the  pro- 
vision. 

k'4.  That,  unless  the  rules  provide  otherwise,  the  member 
can  only  redeem  upon  the  terras  of  paying  all  subscriptions, 
etc.,  hereafter  to  become  due,  taking  into  account  the  long- 
est possible  estimated  duration  of  the  society. 

"  5.  That  when,  by  the  rules,  a  period  is  fixed  as  the  basis 
of  all  calculations  as  to  redemption,  the  members  may  at 
any  time  redeem  by  paying  their  subscriptions  up  to  that 
period ;  and  at  the  expiration  of  that  period  they  are  en- 
titled to  have  their  deeds  given  up,  and  a  statutory  receipt 
endorsed  upon  the  mortgage. 

"  6.  Also  it  would  seem  to  be  doubtful  whether,  in  the 
case  of  the  society  not  having  accomplished  its  object  by 
the  time  contemplated  by  the  rules,  the  members  will  not 
remain  liable  on  their  covenants  although  the  land  has  been 
discharged." 

Sec.  337 — Equitable  Scheme  for  Redemption. 

"  The  following  equitable  plan  has  been  suggested  for  the 
redemption  of  securities  to  terminating  societies,  in  a  work 
treating  exclusively  of  the  subject  of  redemption  of  such 
securities : * 

'"  Let  an  account  be  taken  of  all  the  losses  and  expenses 
incurred  by  the  society  from  its  commencement;  against 
this  amount  place  the  sum  of  the  fines,  fees,  and  other  prof- 
its (not  including  interest  receivable  or  any  payments  made 
in  respect  of  interest)  received  during  the  like  period.  If 
the  balance  be  in  favor  of  the  society,  and  the  operations 
have  continued  during  a  number  of  years,  of  which  an  aver- 
age of  results  may  be  reasonably  expected  to  have  occurred, 
it  is  fair  to  presume  upon  such  an  average  of  years,  that  i  he 
future  operations  of  the  society  will  not  be  less  favorable; 
but,  to  guard  against  unforeseen  contingencies,  let  this  profil 
remain  to  the  credil  of  the  society  as  a  rest  or  reserve  fund. 
If  the  balance  be  against  the  society,  ascertain  to  what 
amount  this  sum,  accumulated  at-  a.  given   rate  of  interest 

1  James,  on  tin-  Righl  and  Cost  t<>  Building  Societies,  etc.,  p 
of  Redeeming  Property  Mortgaged    53. 


§  337.  REDEMPTION    OF    MORTGAGES.  365 

(assumed  in  the  tables  which  are  the  basis  of  the  society), 
for  half  the  period  during  which  the  society  has  been  in 
operation,  would  reach;  treat  that  amount  as  positive 
present  loss,  and  therefore  to  that  extent  a  diminution  of 
the  subscribed  capital,  which  must  be  made  good.  In  such 
case,  according  to  the  number  of  years  which  are  unexpired 
out  of  the  anticipated  term  of  operation,  add  to  this  loss,  in 
like  manner,  a  proportionate  sum  in  respect  of  further  loss 
for  those  years.  In  accordance  with  the  primary  principle 
adopted  in  these  societies,  namely,  that  oC  the  subscriptions 
accumulating  at  compound  interest,  no  such  accumulations, 
or  any  moneys  received  in  respect  of  interest,  must  be 
passed  to  the  management  or  contingent  fund,  these  ac- 
cumulations being  strictly  portions  of  the  capital  fund.  In 
the  rule  suggested  for  ascertaining  profit  or  loss,  it  is  sup- 
posed that,  where  losses  do  occur,  they  arise  at  intervals  ; 
and  therefore  it  is  deemed  sufficient  to  take  the  sum  of  such 
loss  to  be  accumulated  during  half  the  period  in  which  such 
loss  has  occurred.  Thus,  if  we  ascertain  its  amount  up  to 
the  time  of  inquiry,  and  allow  a  proportionate  sum  for  the 
future  unexpired  term,  it  is  reasonable  to  suppose  that  such 
sums,  put  together,  will  cover  the  total  deficit  for  the  whole 
period  of  the  society's  anticipated  existence  ;  and  by  deduct- 
ing at  the  time  of  inquiry  this  amount  from  the  amount  of 
the  existing  investing  shares  in  force,  that  is,  from  their 
gross  ultimate  value,  we  shall  find  an  approximation  to  the 
actual  amount  of  capital  which  will  subsist  at  the  end  of 
the  term,  and  consequently,  by  comparing  this  loss  with  the 
proportion  of  capital  which  ought,  on  an  arithmetical  ratio, 
to  accumulate  in  each  year,  the  additional  time,  if  necessary, 
may  be  found  which,  would  require  to  be  superadded  to  the 
original  duration  of  the  society,  and  within  which,  in  all 
likelihood,  it  would  really  terminate.  It  will  then  be  neces- 
sary to  ascertain  the  source  of  this  deficit,  whether  it  arises 
from  the  investments  (loans)  or  from  an  excess  of  expenses 
over  the  receipts  from  the  fee  fund,  or  their  relative  pro- 
portions. Then  assess  as  a  present  charge  upon  all  the 
shares,  whether  investing  or  anticipated,  a  proportion  of  the 
loss  accruing  from  management  expenses  ;  and  upon   the 


366  BUILDING  AND   LOAN   ASSOCIATIONS.      Cll.  XVI. 

advanced  (or  borrowed)  shares  exclusively,  a  proportion  of 
the  loss  derived  from  investments.  Then  proceed  to  dis- 
count, at  the  given  rate  of  interest,  the  future  payments  of 
the  borrowing  members  about  to  redeem,  for  the  unexpired 
term  ;  this  will  give  the  present  value  of  such  payments  ;  to 
the  present  value  of  the  sum  so  found  add  their  proportions 
of  the  loss  accounts  respectively,  as  previously  ascertained, 
and  let  the  amount  be  the  value  or  price  of  the  redemption 
of  the  property  mortgaged.  In  case  of  a  balance  of  profit 
accruing  as  before  explained,  the  same  will  be  retained  on 
behalf  of  the  society,  and  the  present  value  of  the  future 
payments  of  the  borrowers,  without  such  addition,  will  of 
course  be  the  sum  to  be  paid  by  them.'  " 

Sec.  338— American  Scheme. 

"  The  following  is  the  plan  of  redemption  in  the  State  of 
Philadelphia,  where  the  societies  receive  a  premium  at  the 
time  of  the  advance  being  made ;  the  shares  being  issued  in 
series,  and  continuing  in  force  until  completion.  First  of 
all,  the  member  is  credited  with  the  amount  of  the  subscrip- 
tions paid  by  him,  and  of  the  profits  thereon  allowed  by  the 
rules  of  the  society.  Then  he  is  credited  with  a  certain 
proportion  of  the  premium  originally  paid  by  him,  this 
being  determined  by  the  number  of  years  the  mortgage  has 
been  on  foot,  and  decreasing  every  year.  The  sum  ascer- 
tained to  be  the  total  amount  of  subscriptions  and  profits  to 
which  the  member  is  entitled,  plus  the  portion  of  the  premium 
returned,  is  deducted  from  the  amount  of  the  original  loan, 
and  the  balance  remaining  is  the  amount  of  cash  required 
to  pay  oil'  the  loan.1  A  slight  modification  of  this  plan 
would  render  it  available  for  those  societies  which  put  up 
i  heir  approprial  ions  for  sale  to  the  members." 

Sec  :{:>'.>     Redemption    Discouraged. 

"Iu  all    terminating  societies  the  practice  of  redeeming 

mortgages  is  discouraged  ;  '  it  is  by  staying  in  and  holding 

on   to  the   loan  and   working  through  the  shares  until  the 

ultimate  value  is  reached,   that  the  prolits  and  losses  are 

1  Wrigley  on  Building   Associations,  6th  ed.  68. 


§  340.  REDEMPTION    OF    MORTGAGES.  367 

equalized,  and  the  advantages  gained,  which  reduce  the 
premium  and  interest  paid  on  a  loan  to  an  equality  with  a 
transaction  made  in  the  ordinary  way.'  '  It  is  a  system  re- 
quiring a  certain  period  of  time,  certain  combinations,  and 
tin1  united  and  harmonious  action  of  its  members  to  work 
out  its  results,  and  it  is  very  apparent  that  to  pay  bade  a 
loan  before  the  ultimate  result  is  attained,  disturbs  the  even 
flow  of  the  scheme,  and  therefore  it  is  not  desired,  and  is 
required  to  be  paid  for  as  a  privilege  by  the  repaying 
member.' "  *• 

Sec.  340 — Permanent  Societies. 

"  In  a  permanent  society  the  question  as  to  redemption  is 
generally  very  simple.  For  although  the  particular  rules  of 
the  society,  especially  as  to  any  provision  for  losses,  must 
in  each  case  be  considered  in  order  to  arrive  at  the  terms 
upon  which  an  advanced  member  may  redeem,  yet  as  the 
payments  are  fixed  independently  of  the  period  of  the 
existence  of  the  society,  it  is  always  easy  to  calculate  the 
amount  which  ought  to  be  paid  as  the  price  of  redemption." 

Browrdie  against  Russell. — "In  Brownlie  v.  Russell?  the 
position  of  an  advanced  member,  who  sought  to  redeem  after 
the  society  was  ordered  to  be  wound  up,  was  considered  by 
the  House  of  Lords.  The  respondent  Russell  was  the  holder 
of  twenty-eight  shares  in  a  Scotch  incorporated  society.  In 
respect  of  these  shares  he  received  an  advance  of  £700,  giv- 
ing what  is  known  in  Scotland  as  a  disposition  in  security, 
the  effect  of  which  was  to  charge  certain  real  estate  with 
the  payment  of  £700,  and  interest  at  £'5  per  cent.  There 
was  also  a  bond  for  payment  of  principal  and  interest ;  and 
at  the  same  time  the  respondent  received  from  the  society 
a  memorandum  in  which  it  was  stipulated  that  the  bond 
was  not  to  be  enforced  so  long  as  he  continued  the  regular 
pa}nnent  of  the  instalments,  interest,  and  other  sums  to  be- 
come due  on  his  shares,  as  provided  by  the  rules.  For  some 
years,  and  down  to  the  date  of  the  winding-up  order,  he,  by 
monthly  instalments,  regularly  paid  up  to  the  society  interest 

1  Wrigley,  p.  66.  47  J.  P.  7-->7  :  10  Rettie  (H.  L.)  19 ; 

2  8  App.  Cas.  235  ;  48  L.  T.  881 ;    20  Scot.  L.  R.  481. 


368  BUILDING   AND   LOAN   ASSOCIATIONS.      CI).  XVI. 

at  £5  per  cent,  on  the  full  sum  of  £700,  and  also  all  subscrip- 
tions and  other  payments  on  account  of  his  shares,  as  pre- 
scribed by  the  rules,  and  in  his  share  account  in  the  ledger, 
and  in  a  separate  account  at  the  end  of  his  pass-book,  he  was 
credited  annually  with  a  share  of  what  was  termed  contin- 
gent profits,  which  were  allocated  to  him  in  proportion  to 
his  capital  arising  from  subscriptions  and  profits,  and  to  the 
time  such  capital  has  been  in  the  society.  The  shares  were 
to  mature  when  the  subscriptions  paid,  with  the  profits  allo- 
cated thereon,  amounted  together  to  £25. 

"  It  may  be  observed  that  although  the  rules  seem  to  have 
been  very  loosely  drawn,  and  to  have  been  silent  as  to  re- 
demption by  advanced  members,  in  the  sense  usually  under- 
stood in  England,  there  was  a  rule  (the  12th),  which  was 
much  referred  to  in  the  course  of  the  case.  It  provided  that 
all  advances  should  be  repaid  by  monthly  instalments,  with 
interest  at  the  rate  of  £5  per  cent,  per  annum,  such  interest 
to  be  paid  monthly,  in  advance,  and  at  the  same  time  as  the 
instalments  ;  that  any  member  failing  to  pay  his  instalments 
or  interest  should  be  fined,  and  that  it  should  be  lawful  at 
all  times  for  a  member  who  had  obtained  an  advance  to 
withdraw  from  the  society  upon  giving  the  manager  one 
month's  notice  in  writing,  and  paving  up  the  whole  of  his 
debt,  interest,  and  fines,  after  deducting  the  amount  of  the 
monthly  instalments  paid  upon  his  shares,  with  interest 
thereon  calculated  as  provided  by  the  rules.  There  was  a 
corresponding  rule  empowering  unadvanced  members  to 
withdraw  their  shares  at  any  time  after  twelve  months  from 
the  date  of  entry  on  giving  one  month's  notice,  when  the 
whole  instalments  were  to  be  repaid  with  interest.  Mem- 
bers—both advanced  and  unadvanced — withdrawing  before 
the  completion  of  their  shares,  forfeited  the  contingent 
profit  allocated  to  them,  but  in  lieu  thereof  they  received 
interest  on  their  subscriptions,  at  certain  varying  rates 
according  to  the  duration  of  their  membership. 

'•  As  events  turned  out,  although  in  the  earlier  years  of 
the  currency  of  the  security  the  society  made  profits,  a  pro- 
portion of  which  was  carried  to.  the  credit  of  the  borrowers' 
Bhare  account,  losses  ultimately  ensued,  and  a  winding-up 


§  340.  REDEMPTION    OF   MORTGAGES.  369 

order  was  made.  The  liquidators  of  the  society  toot  this 
view  of  the  dealing-,  between  the  respondent  and  the  society  : 
That  the  advance  of  £700  was  an  absolute  loan  at  £5  per 
cent,  made  upon  the  bond  and  disposition  in  security,  and 
continuing  all  along  as  a  debt  due  from  the  respondent  to 
the  society.  That,  simultaneously  with  this,  but  virtually 
as  a  separate  transaction,  the  respondent  was  subscribing 
for  shares  in  the  society,  which  were  entitled  to  share  in  its 
profits,  and  were  liable  to  share  also  in  its  losses,  but  which 
he  hoped  and  expected  would  within  a  certain  number  of 
years  entitle  him  to  receive  from  the  society  a  sum  suffi- 
cient to  discharge  all  liability  in  respect  of  the  bond  and 
disposition. 

"  Further,  that  the  society  not  having  succeeded  accord- 
ing to  the  hopes  and  expectations  of  the  members,  and  a 
winding-up  order  having  been  made,  the  respondent,  if  he 
wished  to  obtain  a  release  of  his  property  after  the  winding- 
up  order,  could  not  withdraw  his  shares,  but  must  pay  back 
to  the  society  the  full  amount  originally  borrowed  (£700), 
leaving  the  subscriptions  paid  by  him  upon  his  shares  as  his 
stake  in  the  society,  and  taking  his  chance  equally  with  the 
other  members  of  obtaining  a  dividend  upon  the  amount 
thus  invested. 

"  The  court  of  sessions  held  that  the  advance  of  £700 
obtained  by  the  advanced  member  (Mr.  Eussell),  had  been 
pro  tanto  extinguished  by  the  sum  of  £414,  being  the 
amount  of  the  instalments  paid  by  him  down  to  the  date  of 
the  wTinding-up  order,  and  that  the  liquidators  were  bound 
to  impute  towards  reduction  of  the  advance  all  instalments 
paid  or  that  might  yet  be  paid  subsequent  to  the  date  of  the 
winding-up  order;  and  further,  that  Mr.  Eussell  was  enti- 
tled, under  the  rule  above  referred  to,  to  withdraw  from  the 
society  upon  payment  of  the  difference  between  the  advance 
of  £700  and  the  amount  of  the  instalments  paid  by  him  in 
respect  thereof,  with  interest  added  to  these  instalments  in 
terms  of  the  rule.1  The  House  of  Lords  practical  ly  affirmed 
this  judgment,  but  their  judgment  is  based  on  slightly  dif- 
ferent grounds.     Their  lordships  held  that  after  the  wind- 

1  8  Rettie,  917. 
24 


370  BUILDING    AND   LOAN   ASSOCIATIONS.     Cll.  XVT. 

ing-up  order  the  advanced  member  had  no  better  right  to 
withdraw  than  the  unadvanced  member;  that  the  winding:- 
up  order  was  equivalent  to  a  compulsory  withdrawal  against 
all  members;  but  that  it  could  not  take  away  from  an  ad- 
vanced member  his  right  to  redeem  his  mortgage  by  paying- 
all  that  was  due  upon  it.  '  I  cannot  but  think,'  said  the  lord 
chancellor,  '  that  the  true  effect  of  the  winding-up  order  is 
very  much  that  which  was  put  to  }Tour  lordships  by  Mr. 
Davey  in  his  able  argument.  I  think  the  winding-up  order 
prevents  the  exercise  of  those  options  of  retirement  or  with- 
drawal given  to  all  members,  to  the  unadvanced  members 
under  the  9th  rule,  and  to  the  advanced  members  under  the 
12th  rule ;  as  to  which  the  rules  must,  I  think,  be  taken  to 
contemplate  a  going  concern.  That  is  perfectly  consistent 
with  the  opinion  of  Yice-Chancellor  "Wood  in  the  Doncaster 
Case,1  who  spoke  of  the  winding-up  order  as  substantially 
putting  a  stop  to  the  whole  affair.  But,  my  lords,  what  is 
the  effect  of  a  winding-up  order  ?  It  takes  away  the  option 
of  retirement  or  withdrawal,  which  otherwise  while  the  con- 
cern was  going  would  have  belonged  to  each  member.  If  a 
vis  'major,  as  the  vice-chancellor  said,  puts  a  close  to  the 
whole  concern,  it  terminates  at  the  date  of  the  winding-up 
order  the  account  on  each  share.  *  *  *  It  is  really  equi- 
valent not  to  an  optional  withdrawal  or  retirement  by  the 
member,  but  a  compulsory  withdrawal  by  the  operation  of 
the  winding-up  order  against  them  all.  But  it  cannot  take 
away  from  a  shareholder  the  right  to  redeem  his  mortgage 
by  paying  up  all  thai  is  due  upon  it,  of  course  in  that  way 
getting  rid  of  future  interest.' 

"In  Brownlie  v.  Russell,  above  cited,  the  society  was  in- 
corporated, but  from  the  subsequent  case  of  Tosh  v.  North 
British  Building  Society?  which  also  went  to  the  House  of 
Lords,  ii  appears  that  the  principles  as  to  the  redemption 
laid  down  in  the  former  case,  apply  equally  to  an  incorpo- 
rated society." 

1  3  Eq.  158;  S.  0.  15  L.  T.  270;  413;  14  Rettie  (H.  L.)  6;  24  Scot. 
15  W.  I.\  L02  ;  81J.  P.  810.  L.  R.  128. 

-  II    A  pp.    Cas.     ts'.i;    85    W.     R. 


§   343.  KEDEMPTION    OF    MORTGAGES.  371 

Sec.  341 — Whole  Premium  Charged  with  Interest. 

"  Where  the  borrowing  member  agrees  to  pay  a  premium 
for  his  advance  as  part  of  the  capital  sum,  the  payment  of 
such  advance  and  premium  being  spread  over  a  number  of 
years,  the  society  is  entitled,  on  redemption,  to  require  pay- 
ment of  the  whole  of  the  premium,  making  no  rebate  to  the 
member  in  respect  of  any  unexpired  period;  also,  in  such  a 
case,  interest  up  to  the  date  of  redemption  will  be  payable 
upon  the  total  amount  made  up  of  the  cash  advanced,  and 
the  whole  premium  charged." 1 

Sec.  312 — Provision  for  Losses. 

"  If  there  is  any  provision  made  in  the  rules  that  ad- 
vanced members  shall  contribute  to  losses  suffered  by  the 
society,  this  will  of  course  have  to  be  taken  into  considera- 
tion when  settling  the  amount  to  be  paid  on  redemption. 
It  is  to  be  observed  that  such  provision  need  not  necessarily 
be  contained  in  the  rules  in  force  at  the  time  the  mortgage 
was  executed,  but  the  member's  position  may  be  affected  by 
alterations  of  rules  made  subsequently  to  his  receiving  an 
advance." 

Sec.  343 — Costs  of  Redemption  Action. 

"  Generally  the  costs  of  a  redemption  action  are  borne  by 
the  mortgagor,2  but  they  may  be  specially  dealt  with  by 
the  court.  This  was  done  in  Durham,  etc.,  Working  Men'* 
Building  Society  v.  Davidson?  when  Lindley,  L.J.,  said 
that  under  ordinary  circumstances  a  mortgagor  seeking  to 
redeem  pays  the  costs  of  an  action  to  redeem.  But  the 
case  before  the  court  was  peculiar  and  exceptional.  The 
costs  of  the  counterclaim  were  entirely  caused  by  the  unten- 
able position  taken  up  by  the  society.     The  society  refused 

1  Harvey  v.  Municipal  Perma-  redemption  suit  against  a  building 
nent  Investment  Building  Society,  society.  See  also  Morgan  and 
26  Ch.  D.  273  ;  52  L.  J.  Ch.  349.  Wurtzburg  on  costs,  p.  221,  et  seq. 

2  See  Cotterell  v.  Stratton,  8  Ch.  3  61  E.  J.  Q.  B.  473  :  s.  C.  67  E. 
295  ;  45  L.  J.  Ch.  417  ;  28  L.  T.  J.  269 ;  56  J.  P.  660 ;  8  T.  L.  R. 
218  ;  21  W.  R.  234;  37  J.  P.  4 ;  a  428. 


372  BUILDING   AND   LOAN   ASSOCIATIONS.    Ch.  XVI. 

to  allow  the  defendant  to  redeem  unless  he  complied  with 
their  terms,  and  those  terms  were  wholly  inconsistent  with 
any  fair  construction  of  the  rules  of  the  society.  Under 
these  circumstances  the  society  ought  to  pay  to  the  de- 
fendant his  costs  of  his  counterclaim,  and  of  his  appeal." 


CHAPTER  XYII 

LIABILITY     OF     MEMBERS       TO     CONTRIBUTE     WHEN     LOSSES     OR 
INSOLVENCY    INTERVENES. 

Sec.  348.  Different  Relations  of  Members  to  Association. 

349.  Members  Must  Contribute  to  Losses — Amount. 

350.  Compromise  with  Members  and  Release  from  Liability. 

351.  Cannot  Evade  Liability  by  Transfer  of  Stock. 

352.  Insolvency  Intervening  after  Notice  of  Withdrawal  Given. 

353.  Members  Who  have  Withdrawn. 

354-  Withdrawal  Members  Preferred  to  Those  Remaining  by  Rules 
of  Society. 

355.  Borrowing    Members     Equally     Liable    with     Unadvanced 

Members. 

356.  Borrowing  Members  Equally  Liable  with  Unadvanced  Mem- 

bers, Continued. 

357.  Advanced  Shareholder  Ceasing  to  be  Member  of  Society — 

Paid-up  Stock. 

358.  Preference  Shareholders. 

359.  Amended  Rules  Imposing  Liability. 

360.  Liability  of  Borrower  on  his  Note  and  Mortgage. 

361.  Liability  of  a  Minor   or  Married  Woman  to  Contribute  to 

Losses. 

362.  Liability  of    Deceased   Member's    Estate    to  Contribute   to 

Losses. 

363.  Outside  Creditors  Paid  First. 

364.  Director  Postponed  to  Stockholders. 

365.  Subrogation  of  Shareholder  having  Advanced  Shares. 

See.  348 — Different  Relations  of  Members  to  Associa- 
tion. 

The  liability  of  members,  and  their  liability  to  contri- 
bute to  the  general  fund  of  the  society  when  it  becomes 
insolvent  or  suffers  losses  may  be  considered  with  reference 
to  the  six  different  statuses  members  may  have  assumed 
when  insolvency  intervenes,  viz. : 

First. — Those  who  are  members  in  full  standing  when 
insolvency  intervenes. 

373 


374  BUILDING   AND    LOAN    ASSOCIATIONS.  Cll.  XVII. 

Second. — Those  who  have  given  notices  of  an  intention  to 
withdraw  before  insolvency  intervenes,  but  who  have  not 
yet  withdrawn,  either  by  reason  of  their  own  failure  to 
complete  it,  or  by  reason  of  the  failure  of  the  association  to 
perfect  it. 

Third. — Those  who  gave  notices  after  insolvency  of  an 
intention  to  withdraw,  but  before  the  insolvency  was  ascer- 
tained or  known. 

Fourth. — Those  who  had  given  notices  and  completed 
their  withdrawals  before  insolvency  was  known,  although 
the  association  was  either  actually  insolvent  before  the 
notice  was  given  or  the  withdrawal  perfected. 

Fifth. — Those  who  had  given  notices  and  completed  their 
withdrawals  before  the  association  became  insolvent. 

Sixth. — Those  who  have  become  borrowers. 

Sec.  349 — Member  Must  Contribute  to  Losses — Amount. 

Inasmuch  as  every  member  is  entitled  to  share  in  the 
profits  of  his  building  association,  he  is  justly  held  liable  to 
contribute  to  its  losses  and  the  expense  incident  to  its  man- 
agement.1 The  extent  of  this  liability  is  the  amount  of  the 
par  value  of  the  stock  standing  in  his  name  on  the  books  of 
the  association,  and  the  amount  of  unpaid  subscription  he 
owes  on  such  stock.2  If  he  has  not  paid  anything  on  the 
stock  he  is  liable  then  to  pay,  if  it  be  necessary  to  cancel 
the   debts    of  the  association,    the  full  amount   he   would 

1  McGrath  v.  Hamilton  Building  Association  v.  Zucker,  48  Md.  448  ; 

Association,  44  Pa.  St.   383 ;  In  re  Wohlford    v.    Citizens'    Building, 

Saint   John   Building    Society,    28  Loan  and  Savings  Association,  140 

N.  B.  597;  Mechanics'  Mutual  So-  Ind.  662  ;  s.  c.  40  N.  E.   Rep.  694; 

i-i'ty  v.   Lefebvre,    12   Rev.   Leg.  Browne  v.  Sanders,  20  D.   C.  455 ; 

294;    Wilson     v.     CTpper    Canada  Brown  v.  Archer,  62  Mo.  App.  277  ; 

Building    Society,    12    Grant  Ch.  S.  C.  1  App.  Mo.  Rep.  165.     Hut  see 

206;  fn  re  National  Saving  Loan  Brownlie  v.  Russell,  8  App.  Cas. 

and  Building  Association,  9  W.  N.  235;  s.  c.  48  L.  T.  881  ;  47  J.  P. 

('as.   79;  s.  C.    37   Leg.    Inf.   299;  757;  10  Rettie  (H.  L.)  19 ;  20  Scot. 

Chri  tian's    Appeal,    102    Pa.    St.  L.  Rep.  481,  on  this  point. 
184;  s.  c.    L8    W.    \.   Cas.    L81 ;  30        *  In  re  West  London  and  Gen- 

Pitts.  L.J.  435;  40  Leg.  Int..  261;  era]  Permanent  Benefit  Building 

Hanney  v.  Enterprise  Saving  Fund  Society  [1894]  2  Ch.  352 ;  s.  c.  63 

and    Building  Association,    If.  W.  L.  J.  Ch.  506;  70  L.  T.  Rep.  146. 
>'•'.  Ca  .  150;  Low  Street  Building 


349. 


CONTRIBUTION    TO   LOSSES. 


375 


otherwise  have  been  liable  to  pay ;  and  if  he  has  paid  the 
stock  up  in  full,  then  that  stock  is  liable  to  be  sold  if  neces- 
sary to  pay  the  debts  ;  but  if  any  of  the  proceeds  of  the  sale 
remain  after  the  debts  have  been  satis  lied,  then  he  is  entitled 
to  the  return  of  such  amount.1     En  an  English  case  the  rule 


1  State  Savings  Association  v. 
Kellogg,  63  Mo.  540.  In  re  Saint 
John  Building  Society,  28  N.  B. 
597  ;  s.  c.  9  Occ.  N.  348. 

After  declaring  that  all  the  mem- 
bers of  a  building  society  were 
partners  in  relation  to  each  other. 
it  was  declared  by  a  Canadian 
court  "  and  losses,  as  well  as  the 
profits,  all  the  partners  or  mem- 
bers must  share.  The  borrowing 
or  advanced  members  have  no 
equity  as  against  the  non-borrow- 
ing or  unadvanced  members.  Both 
classes  have  the  same  control  over 
the  operations  of  the  society. 
Both  have  the  same  right  of  voting 
for  directors  ;  and  both  have,  in 
proportion  to  their  shares,  the 
same  number  of  votes  at  all  gen- 
eral meetings  of  the  society.  The 
borrowing  members  did  not  cease 
to  be  members  when  they  obtained 
payment,  or  what  they  accepted 
as  payment,  of  their  shares  in  ad- 
vance." Wilson  v.  Upper  Canada 
Building  Society,  12  Grant.  Ch. 
206. 

There  is  no  order  of  priority  in 
their  liability  to  contribute  towards 
outside  creditors,  as  between  the 
holders  of  fixed  or  permanent  cap- 
ital stock,  holders  of  unmatured 
investing  stock,  and  holders  of 
matured  shares  who  have  accepted 
dividends.  In  re  Saint  John  Build- 
ing Society,  28  N.  B.  597  ;  S.  C.  9 
Occ.  N.  348. 

A  member  cannot  escape  liabil- 
ity by  pleading  that  no  account 
has  been  rendered  him,  and  that 


he  has  not  been  offered  any  ex- 
planation why  the  liquidation  is 
necessary.  Mechanics'  Mutual  So- 
ciety v.  Lefebvre,  12  Rev.  Leg. 
294. 

The  double  liability  of  a  stock- 
holder only  arises  when  there  are 
outside  creditors.  In  re  Provincial 
Building  Society,  30  N.  B.  628. 

An  officer  of  the  association  can- 
not secure  a  preference.  Quein  v. 
Smith,  108  Pa.  St.  325 ;  s.  C.  42 
Leg.  Int.  386. 

A  member  borrowed  on  5  shares 
$800  and  gave  his  bond  for  $1000 
($200  being  for  premium)  secured 
by  mortgage.  The  association 
made  an  assignment.  The  mem- 
ber had  paid  up  all  his  dues  and 
was  able  and  willing  and  desirous 
to  continue  payment,  It  was  held 
that  the  object  of  the  association 
having  failed,  he  was  required  to 
only  pay  back  the  $800  with  legal 
interest  thereon.  "  After  this  has 
been  done  he  is  entitled  to  the  re- 
assignment of  Ms  shares  of  stock, 
upon  which  he  may  perhaps  realize 
something  after  the  creditors  have 
been  fully  paid."  State  Saving 
and  Loan  Association  v.  Carroll,  15 
Pa.  C.  C.  522. 

The  English  statute  of  1874,  pro- 
vided that  "  the  liability  of  any 
member  of  any  society  under  this 
act  in  respect  of  any  share  upon 
which  no  advance  has  been  made 
shall  be  limited  to  the  amount  ac- 
tually paid,  or  in  arrear  on  such 
share,  and  in  respect  of  any  share 
upon  which  an  advance  has  been 


376  BUILDING  AND   LOAN   ASSOCIATIONS.    Cll.  XVII. 

was  laid  down  as  follows  :  "  Where  a  compulsory  winding- 
up  supervenes,  a  line  is  to  be  drawn  at  the  date  of  the  wind- 
ing-up, and  that  thereupon,  as  it  is  put  by  Lord  Watson,1 
the  liability  of  the  shareholder  is  put  an  end  to,  so  far  as 
regards  all  liability  beyond  the  amount  which  he  was  bound 
to  contribute  up  to  that  date.  That  is  the  time  at  which 
you  are  to  ascertain  the  liability  of  the  members  and  their 
interest  in  the  society."  2 

Sec.  350 — Compromise  with  Member  and  Release  from 
Liability. 

A  building  association  has  power  to  compromise  with  a 
member  and  to  release  him  from  further  obligation  to  it, 
whether  the  indebtedness  has  arisen  from  a  loan  or  on  a 
subscription  for  stock  ;  and  if  the  parties  to  the  compromise 
act  in  good  faith,  the  transaction  will  not  be  rescinded  be- 
cause the  released  member  has  been  paid  a  greater  sum 
than  he  would  have  received  upon  &pro  rata  distribution  of 
the  assets.3  Nor  can  the  members  of  the  association  im- 
pugn it  if  it  has  been  acted  upon  in  good  faith.4 

But  where  the  members  passed  a  resolution  that  if  every 
one  would  pay  up  his  dues  to  June  2,  1879,  the  association 
might  dissolve  and  each  one  would  be  paid  off  his  share 

made    shall    be     limited    to    the  47  J.  P.  757  ;  10  Rettie  (H.  L.)  19  ; 

amount  payable  thereon  under  any  20  Scott  L.  R.  481. 

mortgage  or  other  security  or  un-  x  Ubi  supra. 

der  the  rules  of  the  society,"  37  &  2  In  re  Middlesbrough,  Redear, 

38   Vict.    (1874),  chap.  42  sec.  14.  etc.,  Society,  58  L.  J.  Ch.  at  p.  778  ; 

In    construing   this  section   Lord  s.  c.  5  T.  L.  Rep.  51(5. 

Watson  said  :    "The  effect  of  the  8  Wangerian  v.  Aspell,  47  Ohio 

liquidation,  so  far  as  regarded  such  St.  250  ;  s.  c.  24  N.  E.  Rep.  405  ;  23 

a  shareholder  (/.  e.,  unadvanned],  Wkly  L.  Bull.  380;  State  v.  Ober- 

was,  in  my  opinion,  to  put  an  end  lin  Buildingand  Loan  Association, 

to  all  liability  on  his  pari    beyond  35  Ohio  St.  258. 

the  amount  which   hie  was  bound  4  Hoboken   Building  Association 

tocontribute  up  to  that  date.    So  v.  Martin,  13  N.  J.  Eq.  428  ;  Miller 

far  as  he  had   paid,   he   was  doI  v.  Jefferson  Building  Association, 

bound  to  pay  again  ;  bui   he  was  :,n  Pa.  St.  32;  Booz's  Appeal,  lot) 

bound  to  pay  so  far  as  he  had  pre-  Pa.  St.  592;  s.  c.    16  W.  N.  Cas. 

vion-lv   failed  to  pay  In  terms  of  865;  42  Leg.  Int.  501  ;  38  Pitts.  L. 

the  ml.-."     Brownlie  v.  Russell,  8  Jr.  389.    Contra,  Heggie  t>.  Build- 

App.  ('as.    275;   S.  C.    tM    L.  T.    SSI  ;      ing  and    Loan    Association,  107   N. 

C.  r,si  ;  s.  C.  12  S.  B.  Rep.  275. 


§  351.  CONTRIBUTION   TO   LOSSES.  377 

with  a  premium ;  and,  in  accordance  with  this  resolution, 
most  of  the  members  having  paid  up  their  dues,  were  so 
paid  off  and  went  out  of  the  association  ;  but  approaching 
the  time  of  final  distribution,  it  was  found  that  there  were 
not  sufficient  funds  in  the  treasury  to  pay  off  all  the  mem- 
bers; it  was  held  that  the  case  being  one  of  mistake  of  cal- 
culation, and  there  being  no  element  of  fraud  in  the  trans- 
action, those  who  were  not  paid  could  recover  their  share 
from  those  who  had  gone  out;  that  all  who  had  not  paid 
should  pay  in  an  amount  that  would  pay  thorn  up  to  June 
2,  1879,  and  as  there  were  different  classes,  if  the  amount 
paid  in  by  requiring  all  to  pay  up  to  June  2,  1879,  was  not 
sufficient  to  pay  off,  those  who  had  received  the  highest 
amount  of  profit  were  to  be  first  assessed  until  they  had 
been  assessed  an  amount  which  would  reduce  their  profit 
down  to  those  who  had  received  the  next  highest  amount, 
and  so  on.1 

Sec.  351 — Cannot  Evade  Liability  by  Transfer  of  Stock. 

It  is  a  well-settled  rule  that  a  stockholder  cannot  evade 
his  liability  to  contribute  to  the  association's  indebtedness 
by  a  transfer  of  his  stock,  even  for  full  value,  after  such 
indebtedness  has  arisen  or  been  incurred.2  But  a  statute 
may  provide  that  if  the  transfer  is  executed  according  to 
certain  rules  to  be  adopted  by  the  society,  and  those  rules 
are  adopted  and  the  transfer  made  according  to  their  pro- 
visions, the  transferer  of  the  stock  will  not  be  liable  for 
debts  owed  by  the  association  at  the  time  of  the  transfer.3 
And  the  exemption  extends  to  him,  even  though  he  made 
the  transfer  to  escape  liability,  knowing  that  the  debts  had 
been  previously  incurred,   that  the  society  was  insolvent, 

1  McKeown  v.  Irish  B.  A.,  12  Building,  Loan  ami  Savings  Asso- 
Wkly.  L.  Bull.  6.  And  see  also  ciation,  140  Ind.  G62  ;  s.  c.  40  N.  E. 
McKeown  v.  Irish  Building  Asso-    Rep.  694. 

ciation.  5  Wkly.  L.  Bull.  52.  3  In  re  Saint  John  Building  So- 

2  McGrath  v.  Hamilton  Building  ciety,  28  N.  B.  597 ;  s.  c.  9  Occ.  N. 
Association,  44  Pa.  St.  383  ;  Friel  348.  Of  course,  if  the  transfer  be 
V.  Association,  1  Leg.  Rec.  Rep.  not  made  according  to  the  rules  he 
(Pa.)    217;   Wohlford  v.  Citizens'  will  be  liable. 


378  BUILDING  AND   LOAN   ASSOCIATIONS.    Cll.  XVII. 

that  the  transferee  would  not  be  able  to  meet  the  calls,  and 
though  he  paid  such  transferee  to  accept  the  stock.1 

If  a  member  has  been  illegally  released  by  the  association, 
that  will  not  discharge  him  from  liability  to  the  creditors. 
Such  an  instance  is  where  he  has  received  a  sum  that  should 
have  been  applied  to  then  existing  losses.2  And  if  an  associa- 
tion has  suffered  losses  by  real  estate  having  depreciated 
which  it  had  bought  in  on  foreclosure  sales  against  its  mem- 
bers,  it  has  a  right  to  deduct  a  withdrawing  member's  pro- 
portion of  the  loss,  his  proportion  being  determined  by  the 
association  having  the  real  estate  appraised  by  a  committee 
and  then  a  pro  rata  amount  assigned  to  each  of  his  shares.3 
A  society  may,  however,  provide  that  a  member  may  with- 
draw in  a  specified  manner,  so  as  to  be  free  from  all  liability 
in  the  event  of  winding  up  ;  and  it  would  seem  that  a  statute 
is  not  necessaiy  to  authorize  the  adoption  of  a  by-law  to 
that  effect.4 

See.  352 — Insolvency  Intervening  after  Notice  of  With- 
drawal Given. 

If  a  stockholder  has  given  notice  of  his  intention  to  with- 
draw, and  insolvency  intervene  before  he  has  perfected  his 
withdrawal,  he  must  stand  upon  a  footing  with  those  who 
have  given  no  notice,  and  is  not  entitled  to  a  preference.5 

1  In    re   Provincial    Building  So-  Pitts  L.   Jr.   39;  Paffert  v.  Some, 

ciety,  30  N.  B.  628.     Of  course,  the  Id.  40. 

transfer  must  be  bona  fide  '  In  re  Borough  Commerce  and 
ited  Slides  Building  and  Building  Society  [1893],  3  Ch.  242. 
Loan  Association  v.  Silverman,  85  It  lias  been  held,  however,  that 
Pa.  St.  394.  It  has  been  elsewhere  after  a  society  is  known  to  he  in- 
stated thai  a  plea  of  insolvency  solvent,  an  advanced  shareholder 
is  a  sufficient  bar  to  a  withdrawing  cannot  withdraw  and  (-scape  lia- 
member's  action  to  recover  whal  is  bility.  Sunderland,  etc.,  Society 
due  him.  Wiiimaii  v.  Building  v.  Rawlings,  etc. ,  Society  L.  R.  24 
A  ociation,7  W.  N.  Cas.  80 ;  Han-  Q.  B.  394  ;  59  L.J.  Q.  B.  217;  62 
v.  Enterprise  Saving  Fund  and  L.  T.  293;  38  W.  R.  509 ;  54  J.  P. 
Building  A.ssocia1  ion,  16  W.  N.  ( 'as.  613  ;  6  T.  L.  R.  199. 
150.  6  In   re   Progressive  Investment 

a  Cason  v.  Seldner,  71  Va.  298.  and   Building  Society,  54  L. T.  45 ; 

:;   Knoblauch    v.    Roberl     Blum  Mechanic's  Mutual  Society  v.  Le- 

Buildingand  Loan  Association,  25  febvre,  12  Rev.  Leg.  294;  TTanney 


§  352.  CONTRIBUTION   TO    LOSSES.  379 

But  where  the  rule  provided  that  the  investing  shares  (both 
paid-up  and  monthly)  should  mature  in  four  years,  when 
the  holders  were  entitled  to  withdraw  ;  by  statute,  joint 
stock  and  property  of  the  society  were  responsible  for  the 
debts  thereof,  and  "the  holder  of  stock  in  any  such  society 
shall  be  chargeable  in  their  private  and  individual  capacity 
for  all  debts  and  liabilities  of  any  such  society  in  which  they 
may  hold  stock,  in  proportion  to  the  stock  they  respectively 
hold ;  provided,  however,  that  in  no  case  shall  any  stock- 
holder be  liable  to  pay  a  sum  exceeding  the  amount  of  stock 
actually  held  by  him;"  it  was  held  that  holders  of  shares 
of  investing  stock  which  had  not  matured  at  the  time  of  the 
winding-up  proceedings  were  liable  to  be  placed  on  the  list 
of  contributions  for  any  balance  due  on  their  shares,  and 
also  for  a  sum  equal  to  the  shares  held  by  them ;  that  hold- 
ers of  such  stock  which  matured  previous  to  the  commence- 
ment of  the  winding-up  proceedings,  but  who  never  de- 
manded payment  thereof,  were  not  liable ;  that  holders  of 
such  matured  stock,  who  had  made  a  demand  of  payment 
of  such  stock  after  maturity,  but,  alter  making  such  de- 
mand, accepted  payment  of  dividends,  and  never  in  any 
other  manner  did  anything  to  determine  their  connection 
with  the  society,  were  liable  ;  and  that  holders  of  such  ma- 
tured stocks  who  had,  since  the  maturity  of  the  stock, 
demanded  payment  and  had  refused  to  accept  any  new 
certificates  or  dividends,  but  had  done  nothing  further  to 
determine  their  connection  with  the  society,  were  not 
liable.1 

v.  Enterprise  Saving  Fund  and  A  member  giving  notice  of  with- 
Building  Association,  16  W.  N.  drawal  is  not  liable  for  losses  oc- 
Cas.  450  ;  Vincent  v.  Harrison,  B.  curving  aftev  he  has  given  such  no- 
&  D.  Co.,  5  Ohio  N.  P.  273.  tice.  Christian's  Appeal,  13  W.  N. 
In  Laurel  Run  Building  Associa-  Cas.  181  ;  S.  C.  102  Pa.  St.  184  ;  40 
tionv.Sperring,106Pa.  St.  334;  s.c.  Leg.  Int.  261;  30  Pitts.  Leg.  Jr. 
15  W.  N.  Cas.  340  ;  32  Pitts.  L.  Jr.  435.  But  he  would  as  to  outside 
394  ;  it  would  seem  that  the  court  creditors.  In  re  Saint  John  Build- 
was  of  the  opinion  that  if  insol-  ing  Society,  28  N.  B.  597  ;  s.  c.  9 
vency  intervened  after  notice  of  an  Occ.  N.  348. 

intention  to  withdraw  and  before  x  In  re  Saint  John  B.  S.  28  N.  B. 

actual  withdrawal,  the  withdraw-  597  ;  s.  c.  9  Occ.  N.  348. 

ing  member  would  not  be  liable.  The  rules  of  a  benefit  building 


380 


BUILDING   AND   LOAN   ASSOCIATIONS.    Cll.  XVII. 


Sec.  353 — Members  who  have  Withdrawn. 

Where  a  member  has,  in  good  faith,  withdrawn  from  and 
severed  his  connection  with  the  association  before  insolvency 
intervened,  and  perhaps  before  a  receiver  for  the  association 
is  appointed,  or  there  is  a  formal  declaration  of  insolvency 
made  by  the  directors  of  the  association,  he  cannot  be  re- 
quired to  contribute  to  the  losses  of  the  association.1  If 
the  effect  of  borrowing  money  from  the  association  is  to 
cancel  the  borrower's  stock  and  sever  his  relationship  as  a 
member  with  the  association,  he  cannot  be  required  to  con- 
tribute to  losses  that  afterwards  are  incurred.2  So  where 
a  stockholder,  under  a  resolution  of  an  association  permit- 
ting borrowers  to  withdraw  on  the  payment  of  a  stipulated 


society,  under  the  building  societies 
act,  1874,  provided  that  the  unad- 
vanced  members  might  withdraw 
the  sum  of  their  credit  in  the  so- 
ciety's books  after  certain  notice. 
The  society's  property  fell  in  value, 
and  a  majority  of  the  members 
I  a  resolution  that  7s.  6a7.  per 
i  x  >und  should  be  deducted  from  the 
amounts  at  the  credit  of  the  mem- 
b  rs  and  placed  to  an  expense  ac- 
•  ,iiiit.  No  proceedings  for  wind- 
ing up  the  society  had  been  com- 
menced ;  ami  there  was  no  rule  as 
to  the  manner  in  which  losses  were 
to  be  borne  ;  it  was  held  that  the 
ill  ion  was  ultra  vires  :  and 
i  hal  the  members  who  had  .- 
notice  of  withdrawal  after  the 
i  i ilution  were  entitled  to  be  paid 
the  whole  amount  ;it  1  heir  credil . 
ViM  /■.  Glasgow  Working  Men's 
B.  S..  I'.'  A|>|>.  Cas.  197;  s.  c  56  L. 
.1.  P.  C.  57;  56  I-  T.  T7C ;  35  W.  R. 

'  Eversmann  v.  Sohmitl  (<  »!ii..  ,  1 1 

N.  E.  Rep.  L39.    The  language  of  the 

courl   in  thisca  e  i  ,  hov <-\ er,  ob- 

■•  Ii  ishowever,  found  t  hal  ;i 

number  of  members,  borrow- 

.1  non-borrowing,  who 


such  during  the  time  the  losses  oc- 
curred, had  withdrawn  prior  to  the 
time  the  association  went  into  the 
hands  of  a  receiver.  In  the  absence 
of  bad  faith,  such  persons  as  had, 
according  to  the  constitution  and 
by-laws  of  the  association,  with- 
drawn or  ceased  to  be  members,  can 
not  be  brought  into  the  association 
forthe  settlement  of  losses.  The 
withdrawal,  being  an  executed 
transaction,  can  only  be  recalled  by 
the  association,-  and  a  remedy  had 
in  conformity  to  the  rules  of  equity 
jurisdiction.  See  preceding  sec- 
tion. Christian's  Appeal,  102  Pa. 
St.  184;  s.  c.  13  W.  N.Cas.  LSI  :  30 
Tills.  L.  dr.   |:;.->  :  40  Leg.  int. 

2  Bowker  v.  Mill  River  Loan 
Fund  Association,  7  Allen,  100; 
In  re  West  Riding  of  Yorkshire 
Permanenl  Building  Society  L.  R., 
45  Ch.  Div.  163;  S.  C.  .V.)  L.  Jr.  Ch. 
823;  63  L.  T.  483;  39  W.  R.  71. 
In  re  Sheffield  iV-  South  Yorkshire 
Building  Society,  22  Q.  B.  Div.  470; 
s.  c.  58  L.  .1.  (,).  B.  265;  00  L.  T. 
ISO;  53  J.  P.  875;  5  T.  I..  Rep.  192; 
In  re  I >oncaster  Permanent  Bene- 
lii  Building  Society.  4  Eq.  179  ;  s.  c. 
:;;;  L.  J.  Ch.  871  ;  32  J.  I'.  3. 


§  353.  CONTRIBUTION   TO   LOSSES.  381 

amount,  the  stock  to  be  then  "  withdrawn  and  cancelled," 
withdrew,  paid  off  his  loans  and  stock,  which  was  then 
marked  on  the  books  as  "canceled"  and  "  withdrawn,"  it 
was  held  that  the  association  could  not  afterwards  recover 
for  dues  which  subsequently  accrued,  the  position  of  the 
parties  being  from  thence  debtor  and  creditor,  and  after  an 
acceptance  of  the  terms  of  the  resolution,  payment  by  the 
debtor  of  sums  found  thereby  to  be  due,  the  new  contract 
was  executed,  and  a  case  of  accord  and  satisfaction  was 
made  out.1  A  society  resolved  that  its  members  might 
redeem  their  mortgages  on  payment  of  so  much  per  share, 
and  the  defendant  paid  the  amount  and  secured  a  release  of 
his  mortgage.  It  was  held  that  his  shares  were  extinguished 
by  the  payment,  and  he  was  released  from  any  further 
liability  to  the  society,  and,  consequently,  that  he  could  not 
be  called  on  under  the  covenant  in  his  mortgage  to  pay  all 
subscriptions  and  other  payments  to  become  due  in  respect 
of  the  shares  by  the  rules  of  the  society,  to  contribute  to- 
wards a  deficiency  afterwards  found  to  be  occasioned  by 
the  society  having  fixed  the  amount  to  be  paid  at  too  low  a 
figure.2  If  the  withdrawal  of  a  shareholder  be  illegal, 
he  will  be  liable  for  losses  occurring  after  such  with- 
drawal.3 Where  the  constitution  of  a  building  society 
provided  that  all  shareholders  must  remain  members  until 
the  association  was  dissolved,  it  was  held  that  a  member 
could  not  withdraw  and  escape  liability  to  an  assessment  to 
equalize  the  members  remaining  in  the  association.4 

1  Miller  v.  Second  Jefferson  Build-  Div.  463  ;  s.  c.  59  L.  J.  Ch.  823  ;  63 
ing  Association,  50  Pa.  St.  32.  L.  J.  483  ;  In  re   Britannia,  etc., 

2  Priestly  v.  Hopgood,  10  L.  T.  Society,  65  L.  T.  196 ;  s.  c.  39  W. 
(N.  S.)  646  ;4N.R.  239  ;  28  J.  P.  R.  74. 

268  ;  12  W.  R.  1031.    See  also  Archer  4  McKeown  v.  Irish  Building  As- 

v.  Harrison,  7  De  G.  Mac.  &  G.  404  ;  sociation,  5  Wkly  L.  Bull.  52. 

S.c.  3  Jur.  (N.  S.)  194;  21  J.P.  515.  By  statute    in   Ohio    advanced 

3  Carson  v.  Seldner,  77  Va.  293.  members  who  have  made  full  pay- 
That  if  the  withdrawal  is  legal  ments  in  dues  and  dividends  of  the 
there  is  no  liability,  see  Tosh  v.  amount  loaned  to  them  are  not 
British,  etc.,  Society  L.  R.,  11  App.  thereby  relieved  of  personal  liabil- 
Cas.  489  ;  s.  C.  34  W.  R.  413  ;  14  C.  ity  on  such  shares,  until  there  has 
of  S.  Cas.  (H.  L. )  6;  In  re  West  been  an  actual  adjustment  between 
Riding,  etc.,  Society  L.  R.,  45  Ch.  the  shareholder  and  the  association 


382  BUILDING   AND   LOAN   ASSOCIATIONS.    Ch.  XVII. 

Holders  of  orders  on  the  treasurer  of  the  association, 
issued  to  withdrawing  stockholders  more  than  six  months 
before  the  date  of  the  assignment  of  the  association,  and 
also  stockholders  who  gave  notice  of  their  intention  to 
withdraw  several  months  prior  to  the  assignment,  but  re- 
ceived no  order  for  the  amount  of  their  stock,  were  held 
not  to  be  liable  to  share  their  losses  resulting  from  bad  in- 
vestments made  after  they  withdrew  from  the  association 
as  active  members.1 

Sec.  354 — Withdrawal  Members  Preferred  to  those  Be- 
maining  by  Rules  of  Society. 

It  is  no  uncommon  thing  to  find  that  those  who  have 
withdrawn  from  an  association,  or  who  have  given  notice 
of  an  intention  to  withdraw,  or  have  taken  steps  entitling 
them  to  withdraw,  if  they  have  received  or  will  receive  the 
full  amount  of  their  shares  there  will  not  be  a  sufficient 
amount  of  assets  to  pay  off  in  full  those  remaining  in  the 
association  until  the  limited  period  of  its  existence,  or  whose 
shares  have  subsequently  matured,  although  there  are  no 
outside  creditors.  In  other  sections  of  this  chapter  a  num- 
ber of  illustrations  have  been  given  where  advanced  share- 
holders have  been  compelled  to  pay  in  or  refund  an  amount 
sufficient  to  equalize  all  the  shareholders  of  the  association 
or  all  the  shareholders  of  the  series  to  which  they  belonged. 
But  the  rules  of  the  association  may  be  such  as  to  release 
the  retiring  members  from  all  liability  to  contribute  to  the 
deficiency  of  assets,  so  that  their  fellow  non-retiring  mem- 
bers  may  be   put  on  an  equal  footing  with  them.     This   is 

as  provided  by  the  statute.     Ever-  ration  were  solvent.     It  was  in  fact 

m.iii   r.   Schmitt   (Ohio),  24  Wkly.  insolvent  at  the  time.     The judg- 

L.  Bull.  56.  ment,  by  neglect  of  the  attorney, 

1  Christian's   Appeal,    13  W.  N.  was   not    satisfied.      It   was  held 

Cas.   L81 ;  s.  c.  102  Pa.  St.  184 ;  40  that,    after    the    insolvency    was 

Leg.  Iiit.  261  :  30  Pitts.  L.  Jr.  135.  shown,  he  was  not  entitled  to  have 

\  borrowing  stockholder  paid  to  the    judgmenl     representing    the 

a  building  association  his  debt,  as     debt       satisfied.         Mecbanies'      & 

shown  by  a  judgmenl  note,  on  the  Workingmen's    Building   &  Loan 

basis  of  a  settlemenl   in  which   be  Association  r.  Swart/,  2  Lack.  Leg. 

allowed  credits  for  payments  N.  120;  s.  c.  5  Pa.  Dist.  R.  318. 
on  hia    tock  a  -  I  hough  t  he  oorpo- 


§  354.  CONTRIBUTION    TO   LOSSES.  383 

particularly  true  of  a  number  of  instances  involved  in 
English  decisions.  Thus  a  building  society,  registered  under 
the  Building  Societies  Act,  1874,  had  for  its  objects — 1,  to 
form  a  good  investment  for  investors  ;  2.  To  advance  to 
shareholders  money  for  building  and  other  purposes,  to  a 
not  greater  extent  than  the  amount  of  their  shares,  on  their 
granting-  a  bond  for  the  same  over  heritable  security.  The 
rules  provided  that  the  shares  were  to  be  limited  to  £25 ; 
that  a  shareholder  who  had  not  received  an  advance  was  to 
pay  up  his  shares  by  monthly  instalments;  and  when  such 
instalments  with  profits  amounted  to  £25  per  share  he  was 
to  be  paid  out.  As  to  a  member  who  had  received  an  ad- 
vance, it  was  provided  that  he  should  pay  up  his  advance 
by  monthly  instalments  on  his  shares  with  interest  at  the 
rate  of  5  per  cent,  on  the  loan.  It  was  also  provided  that 
members  could  withdraw  on  giving  a  month's  notice.  On 
withdrawal  by  an  unadvanced  member,  he  was  to  receive 
the  whole  instalments  paid  on  his  share  with  interest.  On 
withdrawal  by  a  borrowing  member,  he  was  to  pay  up  the 
whole  of  his  debt,  interest,  and  penalties,  after  deducting 
the  amount  of  the  monthly  instalments  paid  upon  his  shares 
with  interest  calculated  thereon.  A.  took  shares  for  the 
sole  purpose  of  obtaining  an  advance.  He  executed  a  bond 
in  common  form  as  security,  and  the  society  granted  him  a 
back-letter  to  the  effect  that  they  agreed  not  to  enforce  the 
bond  so  long  as  the  regular  payments  of  the  instalments, 
interest  and  other  sums  due  upon  his  shares  were  paid.  A. 
regularly  paid  his  instalments  with  interest  charged  on  the 
whole  sum  lent.  Losses  having  been  incurred,  the  society 
was  in  February,  1880,  ordered  to  be  wound  up  voluntarily. 
There  were  no  outside  creditors.  In  July,  1880,  A.  gave 
notice,  under  the  rules,  of  withdrawal  to  the  liquidators, 
and  claimed  a  discharge  of  his  bond  on  his  paying  to  them 
the  difference  between  his  loan  and  the  amount  in  cumulo 
of  the  instalments  paid  by  him,  with  interest  added.  The 
liquidators  denied  his  right  to  withdraw  after  liquidation, 
unless  he  paid  up  the  whole  loan  and  left  the  instalments  to 
be  refunded  according  to  the  result  of  the  liquidation.  It 
was  held  that  the  advance  had  pro  tanto  been  extinguished 


384  BUILDING  AND   LOAN   ASSOCIATIONS.    Cll.  XVII. 

by  the  total  amount  of  the  instalments  paid  by  A. ;  that 
from  and  after  the  date  of  the  winding-up  order  A.  had  a 
right  to  redeem  his  security  by  paying  to  the  liquidators 
the  difference  between  his  advance  and  his  instalments,  with 
interest  added  thereon,  as  against  excess  of  interest  which 
he  had  been  charged ;  and  on  payment  of  such  difference, 
with  interest  thereon,  he  was  entitled  to  be  relieved  of  all 
further  liability  as  a  contributory  or  otherwise.1 

By  the  rules  the  directors  were  empowered  to  deduct 
annually  from  the  amount  standing  to  the  credit  of  each 
member,  whether  unadvanced  or  advanced,  such  a  sum  as 
might  be  necessary  to  meet  the  current  expenses  and  con- 
tingencies of  the  society,  the  amount  of  such  deduction  to 
be  calculated  pro  rata,  according  to  the  shares  or  interest  of 
the  members  in  the  societ}\  Upon  discovery  that  the  funds 
of  the  society  had  been  misappropriated  by  a  former  secre- 
tary it  was  resolved  by  the  society  to  make  good  the  loss 
by  deducting  27  per  cent,  from  the  amounts  standing  to  the 
credit  of  the  unadvanced  shares,  and  by  adding  27  per  cent, 
to  the  amounts  at  the  debit  of  the  advanced  members.  It 
was  held,  that  assuming  that  the  loss  was  a  contingency 
within  the  rules,  and  that  it  dated  from  its  discovery,  the 
directors  had  no  power  to  compel  members  to  contribute 
beyond  the  amount  standing  to  their  credit.2 

In  another  instance  one  of  the  rules  of  a  society  gave 
power  to  investing  members  to  withdraw  their  money,  if 
the  funds  permitted,  on  giving  notice  according  to  a  pre- 
scribed form  printed  in  the  schedule.  The  society  was 
ordered  to  be  wound  up,  and  it  was  found  that  the  assets 
were  not  sufficient  to  pay  investing  members  in  full.  Sev- 
eral of  flu;  investing  members  had  given  notice  of  with- 
drawal, and  their  notices  had  expired  before  the  commence- 
ment of  the  winding-up,  but  they  had  not  been  paid.  Some 
of  those  giving  notice  had   not  used   the  printed  form,  but 

1  Brownlie  v.    Russell,  8  L.  R.  2  Durham    Workingmen's    Per- 

A|.|>.  Cas.  235  ;  48  L.  T.  X.  S.  481  ;  manent  Building  Society  v.  David- 

i;  .1.    r.   757.     See  also  Tosh    v.  son,  61  L.  J.  Q.  B.  473;  s.  c.  67  L. 

North    British,    etc.,  Society,    li  T.  (N.  S.)  369;  56  J.  P.  660. 
A  P|..  Cas.  189;  8.  c.  35  W.  R.  413  ; 
V4C.  of  S.  Ca  .  6. 


§  354.  CONTRIBUTION   TO   LOSSES.  385 

their  notices  had  been  accepted  by  the  directors.  The  court 
decided  that  the  rule  as  to  the  withdrawal  of  members 
must  not  be  confined  to  the  society  as  a  going  concern,  but 
was  applicable  to  adjust  the  rights  of  the  withdrawing  and 
continuing  members  inter  se  in  the  winding-up ;  that  the 
members  who  had  given  notice  to  withdraw,  either  in  the 
prescribed  form  or  otherwise,  and  whose  notice  had  expired 
before  the  commencement  of  the  winding-up,  were  entitled 
to  be  paid  out  of  the  assets  next  to  the  outside  creditors, 
and  in  priority  to  the  other  investing  members  who  had 
not  given  notice  of  withdrawal,  notwithstanding  that  at  the 
date  of  the  winding-up  there  w7 ere  no  funds  in  hand  for  their 
payment.1  In  another  case  the  rules  of  the  society  allowed 
any  investing  member  to  withdraw,  "  provided  the  funds 
permit,"  upon  giving  notice  ;  and  declared  that  "  no  further 
liabilities  shall  be  incurred  by  the  society  till  such  member 
has  been  paid."  In  winding  up  the  society  it  was  found 
that  the  assets  wrere  not  sufficient  to  pay  all  the  stock- 
holders, and  it  was  decided  that  the  investing  members 
who  had  given  notice  of  withdrawal,  and  whose  notices 
expired  before  the  wrinding-up  had  begun,  wTere  en- 
titled, after  the  outside  creditors,  to  pay  out  of  the 
assets  before  the  members  who  had  given  no  notice  of  with- 
drawal,  notwithstanding  the  fact  that  between  the  giving 
of  the  notices  and  the  winding-up  there  never  were  any 
funds  for  payments.2 

An  advanced  member  may  be  debarred  from  participa- 
tion in  the  surplus  assets  of  the  society  when  it  is  wound 
up ;  and  the  test  is  whether  he  would  be  liable  to  assess- 
ments if  the  unadvanced  shareholders  are  not  paid  in  full. 
Thus,  in  a  case  where  all  the  debts  had  been  paid,  and  there 

1  In  re  Blackburn,  etc.,  Society,  9  App.  Cas.  519  ;  s.  c.  53  L.  J.  Ch. 
L.  R.  24  Ch.  Div.  421 ;  s.  c.  52  L.  745 ;  51  L.  T.  462  ;  33  W.  R.  173 ; 
J.  Ch.  894 ;  32  W.  R.  159  ;  S.  P.  In  re  Middleborough  Building  So- 
In  re  Mutual  Society,  L.  R.  24  Ch.  ciety,  53  L.  T.  203  ;  In  re  Sheffield, 
Div.  425,  note.  etc.,  Society,  L.  R.  22  Q.  B.  Div. 

2  Walton  v.  Edger,  L.  R.  10  App.  470  ;  s.  C.  58  L.  J.  Q.  B.  265  ;  60  L. 
Cas.  33 ;  s.  c.  54  L.  J.  Ch.  362 ;  52  T.  186  ;  53  J.  P.  375  ;  5  T.  L.  Rep. 
L.  T.   666  ;  33  W.  R.  417  ;  49  J.  P.  192. 

468 ;  S.  P.  Murray  v.  Scott,  L.  R. 
25 


386  BUILDING  AND   LOAN   ASSOCIATIONS.    Cll.  XVII. 

was  a  surplus  of  assets  for  division,  the  rules  provided 
that  when  it  should  be  deemed  advisable  to  bring  the  oper- 
ations of  the  society  to  a  close,  a  general  meeting  should  be 
held,  which  should  have  power  to  dissolve  the  society  ;  and 
when  all  payments  due  the  society  had  been  satisfied,  and 
the  debts  of  the  society  paid,  the  stock  of  the  society  should 
be  divided  among  the  members  according  to  the  respective 
number  of  unadvanced  shares  which  each  member  might 
have  standing  to  his  credit  on  the  books,  and  allowing  the 
fair  and  proportionate  rate  of  profit  upon  each  such  share 
according  to  the  duration  of  their  payments  to  the  society. 
The  court  held  that  as  the  rules  of  the  society  did  not 
expressly  provide  for  the  use  of  a  compulsory  winding-up, 
the  assets  must  be  divided,  as  near  as  could  be,  according  to 
the  interests  existing  at  the  commencement  of  the  com- 
pulsory winding-up  ;  that  the  unadvanced  members  were 
free  from  all  liability  beyond  what  they  were  bound  to  con- 
tribute up  to  that  date,  but  that  they  could  not  participate 
in  the  distribution  of  the  surplus  assets  before  paying  or 
bringing  into  account  all  that  was  due  from  them  down  to 
the  date  of  the  winding-up ;  and  that  the  advanced  mem- 
bers were  not  liable  to  be  put  upon  the  list  of  contributors, 
but  were  entitled  to  redeem  upon  the  terms  expressed  in  the 
rules,  as  if  no  winding-up  order  had  been  made.1 

Sec.   .355 — Borrowing    Members   Equally   Liable   With 
Unadvanced  Members. 

Borrowing  members  are  equally  liable  to  contribute  to 
losses  with  unadvanced  members  ;  and  the  fact  that  they 
have  paid  all  the  dues  upon  their  slock  assigned  as  collat- 
eral  lor  t  he  loan,  and  which  lias  been  sunk  or  merged  in  the 
amount  advanced,  will  not  release  them.    "  A  large  number 

1  ///  /(■   Middlchorough,  etc..  So-  hi   re  West  Riding  of  Yorkshire 

ciety,  58    L.  J.  Ch.  771 ;  B.C.   5  T.  Permanent  Benefit    Building  So- 

I..  Rep.  516.    See  also  In  re  Nor-  ciety,  L.  R.  45  Ch.  Div.  463;  s.  c. 

wich  and  Suffolk  Provident  Build-  59  L.  J.  Ch.  H23  ;   03  L.  T.  Rep. 

ingSooiety,  L.  R.  I  Ch.   Div.  481;  488;  89  W.  R.  74  (the  rulesofthe 

Barnard   v.  Tomson,    [1894]    I    Ch.  association  being  a  contract  among 

874  ;  s.   o.  H  Rep.  585  ;  68  L,  j.  <  !h.  the  members). 
488  j  70  L.  T.  806  ;  48  W.    R.   2  ; 


§  355.  CONTRIBUTION   TO   LOSSES.  887 

of  borrowers,  and  a  few  non-borrowers,  were  left.  Its  re- 
maining assets  were  affected  by  the  shrinkage  and  losses 
incident  to  all  property  at  that  time.  All  of  this  Loss  fell 
upon  those  who  remained  in.  The  association  could  not 
wind  up  at  the  102d  meeting,  as  was  a!  one  time  contem- 
plated. The  borrowing  members  now  want  their  loanscan- 
celled  and  their  liens  satisfied,  although  their  stock  had  not 
matured.  This  would  let  them  out  without  having  paid  up 
in  full,  and  throw  the  Avhole  loss  on  the  non-borrower.  It 
needs  no  argument  to  show  that  this  cannot  be  done.  The 
appellants  have  no  equity  to  make  such  a  demand,  nor  have 
any  power  to  grant  it.  The  owners  of  the  free  shares  pro- 
posed to  pay  up  until  the  stock  matured,  and  ask  that  the 
appellants  do  likewise.  There  is  perfect  justice;  in  this.1' 1 
In  another  case  it  was  said :  "  The  insolvency  of  the  com- 
pany, as  before  observed,  puts  an  end  to  its  operations  as  a 
building  association  ;  to  a  certain  extent  it  also  ends  the 
contract  between  it  and  its  owners  respectively,  and  noth- 
ing remains  but  to  wind  it  up  in  such  a  manner  as  to  do 
equity  to  creditors,  and  between  the  members  themselves. 
As  regards  the  latter,  care  should  be  taken  to  adjust  the 
burdens  equalty,  and  not  to  throw  upon  either  borrowers  or 
non-borrowers  more  than  their  respective  share.  The  result 
may  be  reached  by  requiring  the  borrower  to  repay  what 
he  actually  received  with  interest.  He  would  then  be  en- 
titled, after  the  debts  of  the  corporation  are  paid,  to  a  pro 
rata  dividend  with  the  non-borrowers  for  what  he  has  paid 
upon  his  stock.  He  will  thus  be  obliged  to  pay  his  proper 
share  of  the  losses.  To  allow  him  to  credit  upon  his  mort- 
gage his  payments  on  his  stock  would  enable  him  to  escape 
responsibility  for  his  share  of  the  losses,  and  throw  them 
wholly  upon  the  non-borrowers.  In  other  words,  the  bor- 
rower would  escape  without  loss.  It  will  not  do  to  admin- 
ister the  affairs  of  an  insolvent  corporation  in  this  manner."  2 

1  Booz's  Appeal,  109  Pa.  St.  592  ;  and  Loan  Association,  115  Pa.  St. 
S.  c.  16  W.  N.  Cas.  765  ;  Wilson  v.  273  ;  S.  C.  8  Atl.  Rep.  843  ;  6  Cent. 
Upper  Canada  Building  Society,  Repr.  779  ;  34  Pitts.  L.  J.  327  ;  44 
12  Grant.  Ch.  206.  Leg.  Int.  103 ;  19  W.  N.  Cas.  200. 

2  Strohen    v.    Franklin    Saving 


388  BUILDING    AND   LOAN    ASSOCIATIONS.  Cll.  XVII. 

In  Ohio  a  building  association  loaned  a  member  $5,000,  the 
estimated  value  of  twelve  shares  held  by  him,  and  he  then 
executed  to  it  a  mortgage  on  real  property  to  secure  the 
prompt  payment  of  his  weekly  dues,  interest,  premiums  and 
assessments,  "  until  such  time  as  the  weekly  dues  paid  and 
dividends  declared  and  unpaid  shall  amount  to  said  83,000." 
All  this  was  in  accordance  with  the  constitution.  For  sev- 
eral years  he  kept  the  conditions  of  his  obligation  and 
mortgage  up  to  November  27,  1889,  on  which  day,  at  a 
regular  meeting,  in  good  faith,  he  made  the  regular  weekly 
payment  of  the  dues,  and  so  forth,  owing  to  the  association. 
"With  this  payment  the  aggregate  of  weekly  dues  paid  by 
him  and  the  dividends  declared  and  unpaid,  amounted  to 
$3,000.  Before  the  next  meeting  day  the  corporation  was 
dissolved  because  it  was  insolvent,  and  placed  in  the  hands 
of  a  receiver.  By  calculation  it  was  ascertained  that  the 
losses  were  such  as  to  require  an  assessment  upon  all  the 
members  of  31  per  cent.,  to  make  an  equitable  adjustment 
and  distribution  of  assets  among  all  members,  both  the  bor- 
rowing and  non-borrowing.  The  receiver  brought  suit 
against  this  borrowing  stockholder  for  31  per  cent,  of 
$3,000,  and  a  recovery  was  allowed.  There  was  no  fixing 
of  the  per  cent,  necessary  to  cancel  the  indebtedness  of  the 
board  of  directors,  but  that  was  done  by  the  receiver.  A  stat- 
ute of  the  State  provided  as  follows  :  "  So  much  of  the  earn- 
ings as  may  be  necessary  shall  be  set  apart  to  defray  the  cur- 
rent expenses  of  the  association,  and  a  portion  of  the  earnings, 
to  he  determined  by  the  board  of  directors,  shall  be  reserved 
annually  or  semi-annually,  for  the  payment  of  contingent 
losses,  and  the  residue  of  such  earnings  shall  be  transferred 
as  a  dividend,  annually  or  semi-annually,  in  such  propor- 
tions t<>  the  credil  of  all  members  as  the  association,  by  its 
constitution  and  by-laws,  may  provide;  also  in  case  of  a 
lo  3  all  Losses  shall  be  assessed  in  Hie  same  proportion  and 
manner  on  all  members  after  the  amount  in  the  reserve 
fund  has  been  applied  to  the  payment  of  such  loss,  and  upon 
tin;  cancelation  of  any  share  or  shares  that  have  been  fully 
paid,  the  corporation  shall  pay  t<»  such  member  or  members 
their jpro  rata  share  of  so  much  of  the  reserve  fund  as  has 


§  356.  CONTRIBUTION    TO   LOSSES.  389 

been  accumulated  during  the  membership  and  remains 
therein  at  the  time  of  the  termination  of  the  membership  of 
such  member  or  members."  Another  provision  provided 
that  "  All  adjustments  of  losses  between  such  corporation 
and  its  borrowing  members  shall  be  upon  the  following 
terms,  to  wit :  After  the  premiums  for  one  year  have  been 
paid,  and  also  the  interest  and  premiums  on  such  loan  up  to 
the  day  of  settlement,  the  borrowing  member  shall  pay  to 
the  corporation  an  amount,  which,  added  to  the  shares  and 
dividends  credited,  will  equal  the  sum  actually  borrowed  ; 
and  also  such  fines  and  other  assessments  as  provided  by  the 
constitution  and  by-laws  of  such  corporation."  In  passing 
upon  the  case  it  was  said  by  the  lower  court :  "  In  the 
absence  of  any  actual  adjustment  or  compromise  with  the 
corporation,  the  borrower,  however,  as  a  stockholder, 
retains  his  right  to  participate  in  the  earnings,  in  accord- 
ance with  the  Revised  Statute  [above  quoted],  and  con- 
tinues under  the  obligation  to  pay  his  stock  in  full  and  his 
proportion  of  the  losses.  The  contention  of  the  defendant 
that  his  membership  has  ceased,  and  that  he  is  not  to  bear 
his  proportion  of  the  losses,  cannot,  therefore,  be  sus- 
tained." 1 

Sec.   356 — Borrowing   Members   Equally   Liable   With 
Unadvanced  Members — Continued. 

In  another  Pennsylvania  case  it  was  said  :  "  "While  the 
plaintiff  in  error  remained  a  member  of  the  association,  he 
was  under  obligation  to  contribute  his  share  of  the  ex- 
penses. What  he  had  invested  in  its  funds  was  chargeable 
with  its  proportion  of  the  necessary  expenditure.  In  a 
limited  sense,  he  was  a  partner  with  the  other  stockholders. 
Though,  as  a  mortgagor,  he  could  not  be  compelled  to  pay 
more  than  the  sum  actually  borrowed  by  him,  with  legal 
interest  thereon ;  it  was  only  as  a  member  that  he  could 
claim  a  share  of  the  profits  of  the  company,  or  any  benefits 
from  payments  made  by  others.  If  he  may  now  set  off 
against  his  mortgage  a  share  of  the  profits  made  equal  to 

1  Everman  v.  Schmitt,  24  W.  L.  another  point,  (Ohio)  N.  E.  Rep. 
Bull.    56 ;    reversed    in    part,    on     139. 


390  BUILDING   AND   LOAN   ASSOCIATIONS.    Cll.  XVII. 

the  liability  which  he  has  incurred  for  expenses,  he  will,  in 
effect,  recover  more  than  he  has  paid  in,  and  will  throw 
upon  his  associates  the  whole  of  a  burden,  which  in  truth  is 
his  as  much  as  theirs.  This  cannot  be.  The  association  has  a 
right  to  treat  his  payments  while  his  membership  continued, 
as  his  contribution,  so  far  as  they  are  needed,  to  the  discharge 
of  the  expenses  incurred  in  the  management  of  the  enterprise, 
in  which  he  had  a  joint  interest  with  others.  Nor  has  he  now 
any  title  to  the  premiums  and  fines  paid  by  other  bor- 
rowers." 2  Speaking  of  the  right  to  retain  from  a  withdraw- 
ing member's  share  a  portion  to  meet  losses,  it  was  said  in 
the  same  state  :  "Has  a  building  and  loan m association  the 
right  to  retain  or  hold  back  from  a  retiring  member  a  rea- 
sonable amount  to  meet  his  share  of  the  probable  losses  that 
may  arise  from  loans  made  while  he  was  a  member  ?  This 
is  the  question  presented  by  the  special  verdict  of  the  jury. 
Under  the  act  of  the  assembly,  and  the  by-laws  of  this  asso- 
ciation, a  member  has  the  rig-lit  to  withdraw,  after  giving1 
thirty  days'  notice  to  that  effect,  and  is  entitled  to  receive 
back  the  money  paid  in,  with  a  share  of  the  profits  during 
the  time  he  was  a  member.  But  suppose  the  association 
made  no  profits  and  met  with  severe  losses  ?  Shall  the  with- 
drawing members  get  back  all  they  paid,  and  cast  the  whole 
burden  of  losses  upon  those  who  remain,  or  who  may  not 
know  of  losses,  and  not  be  so  quick  in  giving  notice  of  with- 
drawal \  Certainly  not.  That  would  be  unjust  and  in- 
equitable. '::'  ::"  *  To  allow  a  member,  under  such  cir- 
cumstances, to  retire  and  demand  all  lie  paid  in,  without 
contributing  anything  to  losses  which  are  manifest  and  im- 
pending, would  be  unjust  toward  his  fellow-members.  And 
it  would  be  bad  faith  in  him.  He  has  a  right  to  share  the 
profits  while  a  member,  and  hie  must  also  bear  his  propor- 
tion of  the  losses."2  In  Virginia  it  has  been  held  that  a 
court  of  equity,  at  the  suit  of  members  holding  unredeemed 

1  McGrath   V.    Hamilton   Savings     See  ;i.ls<>    I'.-iflVrt  v.  Robert    Blum, 
and    Loan    Association.    I!    I'.i.   St.     etc.,    Associ.it  ion,   25    Pitts.    L.    J. 

In,  and    Wittman    r.   Corncordia, 

2  Knoblauch   v.     Robert    Blum,    etc.,  Association,  7  W.  N.  Cas.  80; 
etc.,  ,\    lociation,  25  Pitts.  L.  J. 89.    8.  c.  an  Leg.  Int.  72. 


§356. 


CONTRIBUTION   TO   LOSSES. 


391 


shares,  may  call  those  holding  redeemed  shares  to  an  account 
and  en  force  payment  of  what  they  respectively  own,  distri- 
bute the  fund  among  the  unredeemed  shareholders,  and  wind 
up  the  association.1  The  rules  of  an  English  society  pro- 
vided (1)  that  advanced  members  could  redeem  their  securities 
on  payment  of  the  amount  fixed  by  the  tables  of  the  society, 
together  with  the  full  amount  which  should  then  be  due  "  for 
subscriptions,  fines,  and  other  payments;"  (2)  that  surplus 
profits,"  after  providing  for  all  liabilities,"  should  be  appropri- 
ated equitably  and  equally  between  the  investing  and  borrow- 
ing members  ;  and  (3)  that  "  in  the  event  of  the  directors  deter- 
mining," at  a  special  meeting  to  be  held  every  three  years, 
that  there  was  a  deficiency  of  income  by  which  the  society 
might  be  prevented  from  meeting  its  anticipated  expendi- 
ture and  liabilities,"  the  amount  of  such  deficiency  should 
be  "  apportioned  b}r  the  directors  between  the  investing  and 
borrowing  members."  The  assets  being  insufficient  to  pay 
investing  members  the  full  value  of  their  shares  (although 


i  Edelin  v.  Pascoe,  22  Gratt,  826. 
See  Wittman  v.  Building  Associa- 
tion, 7  W.  N.  Cas.  80. 

A  rule  of  a  building  society  pro- 
vided that,  in  the  event  of  a  "  de- 
ficiency of  income  by  which  the 
society  may  be  prevented  from 
meeting  its  anticipated  expendi- 
ture and  liabilities,"  the  amount 
should  be  apportioned  between  the 
investing  and  borrowing  members. 
It  was  held  that  the  term  "  liabili- 
ties "  included  sums  due  to  the  in- 
vesting members  in  respect  of  their 
shares,  and  that  the  borrowing 
members  were  liable  to  contribute 
ratably  to  losses  incurred  thereon 
by  the  investing  members.  In  re 
West  Riding  Building  Society,  L. 
R.  43  Ch.  Div.  407  ;  59  L.  J.  Ch. 
823  ;  63  L.  T.  483  ;  39  W.  R.  74 ; 
In  re  Albion  Mutual  Permanent 
Benefit  Building  Society,  L.  R.  43 
Ch.  Div.  410,  note. 

Insolvencv  puts  the  association 


to  an  end,  and  nothing  remains 
but  to  wind  up  its  affairs  without 
throwing  on  borrowers  and  non- 
borrowers  more  than  their  respec- 
tive shares,  which  result  may  be 
reached  by  requiring  the  borrower 
to  repay  what  he  received  with  in- 
terest. Then,  after  payment  of 
the  debts  of  the  corporation,  he 
would  be  entitled  to  a  jjro  rata 
dividend  with  the  non-borrower 
for  what  he  has  paid  upon  his 
stock.  Brown  v.  Archer,  62  Mo. 
App.  277  ;  s.  C  1  App.  Mo.  Rep . 
40.-,. 

If  a  borrowing  member  has  as- 
signed his  stock  as  collateral,  he  is 
entitled  to  have  it  reassigned  to 
him  on  paying  his  portion  of  the 
losses,  upon  the  theory  that  he 
may  share  in  any  of  the  assets  that 
may  be  left.  State  Savings  and 
Loan  Association  v.  Carroll,  15 
Pa.  C.  C.  522. 


392  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  XVII. 

there  were  no  outside  creditors),  the  liquidator  applied  to 
place  advanced  members  on  the  list  of  contributories,  no 
apportionment  of  loans,  however,  having  been  made  by  the 
directors.  The  court  decided  that  the  "liabilities"  to  be 
provided  for  under  Rule  2  included  sums  payable  to  in- 
vesting members ;  that  "  income "  in  Rule  3  was  not  used 
in  contradistinction  to  capital,  but  meant  what  was  coming 
in  from  all  sources,  and  that  "liabilities"  in  the  same  rule 
also  included  sums  payable  to  investing  members  ;  that  under 
these  rules  advanced  members  were  liable  to  contribute  to 
any  losses  together  with  the  investing  members,  and  that 
any  member  seeking  to  redeem  could  only  do  so  upon  pay- 
ing what  might  be  due  from  him  in  respect  of  liability.  The 
fact  that  the  directors  had  not  "  determined  "  and  "  appor- 
tioned "  the  loss  made  no  difference  now  that  the  society  was 
being  wound  up  by  the  court.  The  court  also  decided  that 
rules  similar  to  Rule  3  constitute  a  special  contract  be- 
tween the  members,  under  which  advanced  members  are 
liable  to  contribute  rateably  with  investing  members,  both 
towards  paying  outside  creditors  and  also  in  bearing  the 
other  losses  incurred  by  the  society,  which  but  for  such  con- 
tract would  fall  on  investing  members  alone.1  A  mortgage 
executed  by  an  advanced  member  of  an  English  building 
society  registered  under  the  Building  Societies  Act  of  1874, 
provided  that  the  advances  should  be  repaid  by  certain  in- 
stalments. By  the  rule  an  advanced  member  could  redeem 
on  payment  of  a  lump  sum,  to  be  calculated  in  a  certain  man- 
ner. The  society  was  ordered  wound  up,  there  being  outside 
creditors.  It  was  held  that  advanced  members  ought  to  be 
placed  on  the  list  of  contributories,  and  were  liable  to  pay 
immediately  the  sum  which  would  entitle  them  under  the 
rules  to  redeem.2  A  building  society  issued,  under  its  rules, 
paid-up  preference  shares  al  a  guaranteed  rate  of  interest, 
the  holders  not  being  liable  to  contribute  to  losses,  nor  to 

1  /"   re   We  I    Riding,   etc.,  S<>-  cietyv.  Morgan,  5  Rep.  510;  s.  c. 

.  L.   R.  18  Ch.  Div.   Ki?:  s.  c.  [1893]2Q.    I'..   266;  62   L.   J.   Ch. 

59  I,.  .1.  ch.  L97  ;  62   L.  T.  486;  88  544  ;  69  L.  'I'.  595;  57  .1.  I'.  696  ;  46 

W.  R.  876;  'I 'I'.  I-  Rep.  160.  Amer.  &  Eng.  Corp.  Cas.  512. 
London  Providenl  Building  So- 


§  350.  CONTRIBUTION   TO   LOSSES.  393 

participate  in  profits.  The  ordinary  members  were  liable 
under  the  rules,  whether  on  withdrawing  their  shares,  or 
on  repaying  advances  thereon,  or  on  redeeming  their  securi- 
ties, for  a  fair  proportion  of  the  losses,  expenses,  bad  debts, 
and  other  charges  of  the  societj^.  It  was  held,  on  a  defi- 
ciency of  assets  in  winding  up,  that  the  ordinary  members 
were  liable  for  the  full  amount  due  on  the  preference  shares, 
interest  thereon  since  the  date  of  the  winding-up  order;  and 
that  those  members  who  had  received  advances  on  their 
shares  must  satisfy  this  liability  by  payment,  and  the  other 
members  by  submitting  to  a  deduction  from  their  claim 
against  the  assets.1  A  building  society  had  lent  to  its  ad- 
vanced members  in  respect  of  their  shares  in  the  society. 
Some  of  the  mortgages  by  the  advanced  members  secured 
the  principal  advanced,  and  such  sums  as  might  become  pay- 
able to  the  society  under  the  mortgage,  or  the  rules  or  by- 
laws, or  "  in  any  other  way."  The  other  mortgage  secured 
the  mortgagor's  instalments,  subscriptions,  fees,  and  other 
sums  payable  according  to  the  rules.  The  rules  provided 
for  the  release  of  a  member's  security  on  his  paying  the 
amount  due  for  principal,  interest,  fines,  and  other  pay- 
ments ;  and  empowered  the  trustees,  for  the  purposes  of  the 
society,  to  borrow  sums  up  to  a  certain  limit,  at  interest, 
and,  in  order  to  secure  such  loans,  to  give  their  personal 
security,  with  a  right  to  be  indemnified  out  of  the  first  funds 
of  the  society  which  should  be  received ;  but  neither  the 
rules  nor  the  deposit  receipts  given  under  them  purported  to 
give  any  security  to  the  depositors  upon  the  funds  of  the 
society.  The  shares  of  both  advanced  and  unadvanced 
members  were  of  the  same  nominal  value.  The  assets  of  the 
society,  when  it  was  ordered  to  be  wound  up,  were  suffi- 
cient to  pay  the  ordinary  creditors,  but  not  the  depositors 
also,  in  full.  It  was  held  that  the  actual  costs  of  realizing 
the  properties  as  they  existed  at  the  commencement  of  the 
winding-up  must  first  be  paid  out  of  the  assets  as  they  then 
existed,  and  that  the  rest  of  such  assets  must  be  applied  in 
paying  ordinary  debts  and  loans  on  deposits,  ^7*0  rata  ;  that 

1  In  re  Reliance  Permanent  Ben-    453;  s.  c.  66  L.  T.  (N.  S.)  823;  8 
efit  Building  Society,  61  L.  J.  Ch.     T.  L.  R.  525. 


394  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XVII. 

to  meet  the  estimated  costs  (other  than  the  costs  of  realiza- 
tion), a  call  must  be  made  on  all  the  members,  both  advanced 
and  unadvanced,  in  proportion  to  their  shares  ;  that  the 
deficiency  due  to  the  ordinary  creditors  must  also  be  met  by 
calls  on  all  the  members.  But  it  was  also  held  that  neither 
advanced  nor  unadvanced  members  were  liable  to  contribute, 
beyond  the  amounts  payable  upon  their  shares  under  the 
interest  tables,  to  pay  the  deficiency  due  to  the  depositors  ; 
and  that  the  advanced  members  were  entitled  to  redeem  on 
paying  the  calls  above  mentioned  and  the  amounts  due  under 
their  mortgage  and  the  rules  and  tables.1 

Sec.  357— Advanced  Shareholder  Ceasing  to  be  Member 
of  Society — Paid-up  Stock. 

The  effect  of  advancing  a  member,  under  the  rules  of 
some  associations,  is  to  cancel  his  membership  and  turn  him 
into  an  ordinary  debtor  of  the  association, — a  debtor,  it  is 
true,  of  a  peculiar  kind,  but  still  a  debtor ;  and  the  question 
arises  whether  or  not  such  an  individual  is  liable  to  contribute 
to  the  losses  of  the  society.  Another  class  is  often  composed 
of  individuals  who  have  withdrawn  and  received  orders  for 
payment  of  the  amount  due,  but  whose  orders  have  not  been 
paid  when  insolvency  intervenes.  Of  such  classes  of  in- 
dividuals the  Supreme  Court  of  Pennsylvania  has  said  : 
""When  a  building  association  has  failed  to  fulfil  the  object 
of  its  creation  and  has  become  hopelessly  insolvent  "::"  *  ::' 
after  expenses  incident  to  the  administration  of  its  assets 
are  deducted,  the  general  creditors,  if  any,  should  be  first 
paid  in  full,  and  the  residue  of  the  fund  should  be  dis- 
tributed, pro  rata,  among  those  whose  claims  are  based 
upon  stock  of  i  he  association,  whether  they  have  withdrawn 
and  sold  orders  for  the  withdrawal  value  thereof,  or  not. 
Both  classes  are  equally  meritorious,  and  in  marshalling  the 
assets  neither  is  entitled  to  priority  over  the  others.  The 
claims  of  each  are  alike  based  upon  their  relation  to  the  as- 
sociation as  members  thereof."2    So  if  a  series  of  stock  1ms 

i  TnreWesi    LondonA  General     L.  T.  Rep.  796;   I.'  W.   R.  535;  LO 
Permanenl    Benefit    B.S.,  [1894J  2    T.  I,.  K.  280;  8  Rep.  764. 
Ch.  852;  s.  o.  68   L.  J.  Ch.  506;  70       2  Christian's  Appeal.  102  Pa.  St 


§  357.  CONTRIBUTION    TO    LOSSES.  395 

matured  and  insolvency  then  intervenes,  its  holders  must 
share  in  the  losses  with  the  holders  of  the  scries  unmatured.1 
These  cases  proceed  upon  the  theory  that  the  rules  of  an  as- 
sociation are  framed  with  a  view  of  fulfilling  the  purpose  for 
which  it  was  organized,  and  when  that  purpose  is  thwarted 
all  members  are  cast  upon  a  level  and  must  share  benefits 
and  losses  alike.  "Equality  is  equity,"  say  the  courts. 
But  these  views  have  not  always  prevailed;  and  there  are  a 
number  of  English  cases  to  the  contrary,  as  is  stated  in 
paragraphs  below. 

By  the  Building  Association  Act  of  1874,  sec.  141,  of  Eng- 
land, the  liability  of  any  member  of  any  society  under  the 
act  in  respect  of  any  shares  upon  which  no  advance  had 
been  made  is  limited  to  the  amount  actually  paid  or  in 
arrear  on  such  share.  By  sec.  16,  the  rule  of  every  such 
society  shall  set  forth  "  the  terms  upon  which  shares  may 
be  withdrawn."  By  the  Companies  Act,  1862  (25  and  26 
Vict.,  c.  89),  sec.  200,  "  In  the  event  of  an  unregistered  com- 
pany being  wound  up,  every  person  shall  be  deemed  to  b 
contributory  who  is  liable  at  law  or  in  equity  to  pay  or  con- 
tribute to  the  payment  of  any  debt  or  liability  of  the  com- 
pany." Members  of  a  building  society  incorporated  under 
the  Building  Society  Act  of  1871,  who  had  investing  shares 
payable  by  monthly  subscriptions,  and  upon  which  no  ad- 
vance had  been  made,  gave  due  notice  of  withdrawal  and 
received  the  estimated  amount  of  their  shares  under  the  rules 
of  the  society,  before  the  shares  were  fully  paid  up  or  ma- 
tured. The  society  was  within  a  year  thereafter  wound  up 
under  the  winding-up  clauses  of  the  Companies  Act.  It 
was  held  that,  on  withdrawal  of  their  shares,  the  holders 
ceased  to  be  members  of  the  society,  and  no  amount  was  "in 
arrear"  within  sec.  11  of  the  Building  Society  Act  of  1871, 

184;  s.  C.  13  W.  N.  Cas.  181;  30  Leg.  Int.  132.  See  also Seibelr.  Vic- 
Pitts.  L.  Jr.  435  ;  40  Leg.  Int.  261  ;  toria  Building  Association,  43  Ohio 
Hennighausen  v.  Tisher,  50  Md.  St.  371 ;  S.  C.  1  West.  Repr.  340 ;  10 
583.  Amer.  &  Eng.  Corp.  Cas.  460  ;  13 
i  Criswell's  Appeal,  100  Pa.  St.  Wk.  L.  Bull.  (242)  265  ;  2  N.  E. 
488  ;  s.  C   12  W.  N.  Cas.  483  ;  40  Rep.  371. 


396  BUILDING    AND   LOAN    ASSOCIATIONS.    Ch.  XVII. 

and  that  they  were  not  liable  to  contribute  to  the  debts 
within  the  meaning  of  sec.  200  of  the  Companies  Act.1 

A  building  society  formed  under  6  and  7  Will.  4,  c. 
32,  but  not  registered  under  the  Building  Society  Act, 
L874,  was  ordered  to  be  wound  up.  Under  the  rules  of  the 
society,  the  advanced  members  were  not  made  liable  to 
contribute  to  losses  ;  but  the  directors  were  at  liberty  to 
allow  to  an  advanced  member,  upon  discharging  any  mort- 
gage, a  fair  proportion,  to  the  best  of  their  judgment,  of 
the  surplus  profits  of  the  society,  in  respect  of  his  advanced 
shares.  At  the  date  of  the  winding-up  order  J.  D.,  an  ad- 
vanced member,  was  indebted  to  the  society  in  respect  of 
the  advance  made  to  him,  which  was  secured  upon  a  mort- 
gage of  leasehold  property.  J.  D.  died  subsequently  to  the 
date  of  the  winding-up  order,  and  the  executors  and  trustees 
of  his  will  were  settled  upon  the  list  of  contributories  of  the 
society.  The  mortgage  given  by  J.  D.  was  to  secure  pay- 
ment of  "  all  shares  or  subscription  money,  expenses,  fines, 
forfeitures,  and  moneys  whatsoever  to  be  paid  by  the  mort- 
gagee pursuant  to  the  rules  of  the  said  society  in  respect  of 
the  shares  so  received  by  him  in  advance  as  aforesaid,  or 
otherwise  in  respect  of  his  being  a  member  of  the  said 
society."  It  was  held  that  an  advanced  shareholder  was 
the  debtor  of  the  society  in  respect  of  the  moneys  which  he 
was  bound  to  pay  back,  and  was  not  a  shareholder  liable  as 
a  contributory  ;  and,  therefore,  that  the  executors  and 
trustees  of  J.  D.  were  not  liable  to  be  put  on  the  list  of 
contributories.2 

In  1867,  the  plaintiff,  who  was  an  advanced  member,  gave 
a  mortgage  to  secure  such  principal  or  interest  moneys  and 
other  payments  as  he  ought  to  pay,  according  to  the  rules. 
The  plaintiff  made  all  the  required  payments,  the  term  of 
which  expired  in  L884.  The  rules  of  the  society  provided 
that  disputes  were  to  be  referred  to  arbitration,  and  that 

i  ///  re  Sheffield  &  South   York-  eflt  B.  S.,  65  L.  T.  196;  s.  c.  W.  N. 

shire  Permanenl  B.  S..22Q.  B.  Div.  (1891)  123  :  following  Tn  re  Middles- 

170;  58   L.  J.  Q.    B.  265;  60  L.  T.  borough,  Kedcar  &  Saltburn  B.  S., 

58  -I.  P.  575;  5  L.T.  Rep.  192.  58  L.  J.  Ch.  771. 

1  in  re  Britannia  Permanent  Ben- 


§  357.  CONTRIBUTION    TO    LOSSES.  397 

when  any  advanced  member  had  made  all  his  payments 
during  the  term,  they  were  to  cease,  and  the  trustees  were 
to  return  his  title-deeds  and  indorse  a  receipt  on  them  ; 
and  on  completion  of  his  term  the  member  was  entitled  to 
share  in  surplus  profits.  The  rules  were  silent  as  to 
losses.  After  the  advance  to  the  plaintiff  the  society  suf- 
fered losses,  and  the  defendants  claimed  to  retain  the  mort- 
gage as  a  security  for  the  share  of  those  losses,  to  which, 
they  contended,  the  plaintiff  was  liable  to  contribute.  The 
society  was  not  incorporated.  There  were  no  outside  credi- 
tors, and  the  society  was  solvent.  In  an  action  by  the  plain- 
tiff for  a  discharge  of  his  mortgage  and  delivery  up  of  his 
title-deeds  and  repayment  of  moneys  alleged  to  have  been 
paid  him  in  excess  of  the  proper  amount  through  mistake  of 
fact:  It  was  held  that  the  subject  of  the  action  was  not 
within  the  arbitration  clause,  that  the  plaintiff  could  not  be 
called  on  to  contribute  to  losses,  and  was  entitled  to  the 
relief  claimed.1 

By  the  rules  of  a  society,  advances  were  made  only  to 
members.  Mortgagors  were  required  to  subscribe  their 
names  in  a  book  containing  the  rules,  by  which  they  agreed 
to  become  holders  of  shares  to  the  amount  of  the  loan,  and 
in  the  mortgages  it  was  recited  in  the  printed  forms  used  by 
the  society  that  the  mortgagors  were  members  for  a  num- 
ber of  shares  equal  to  the  loan.  It  was  not  intended  that 
they  should  make  payment  on  the  shares,  and  they  never 
did  so,  the  object  of  the  managers  in  inserting  the  recital  in 
the  mortgage  evidently  being  an  attempted  compliance  with 
the  rule  that  advances  were  only  to  be  made  to  members. 
It  was  held,  when  the  society  went  into  liquidation,  that 
the  mortgagors  were  not  contributories  as  members  of  the 
society,  because  not  members.2 

1  Buckle  v.  Lordonny,  56  L.  J.  man  v.  International,  etc.,  Union, 
Ch.  437  ;  56  L.  T.  273 ;  35  W.  R.  67  111.  App.  550  ;  it  is  held  that,  in 
360  ;  51  J.  P.  422.  case  of  insolvency,   all   kinds   of 

2  In  re  Saint  John  B.  S.,  28  N.  B.  stock  must  be  put  upon  tbe  same 
597  ;  s.  c.  9  Occ.  N.  348.  basis,  and  one  kind  cannot  be  given 

As  equality  among  the  members  preference  over  another.  Latimer 
of  a  building  association,   Wier-     v.  Equitable,  etc.,  Co.,  81  Fed.  Rep. 


398  BUILDING   AND   LOAN    ASSOCIATIONS.  Cll.  XVII. 

Sec.  358 — Preference  Shareholders. 

Where  preference  shares  carried  with  them  a  guaranteed 
rate  of  interest,  and  it  was  one  of  the  conditions  of  the 
issue  that  the  holders  were  to  be  under  no  liability,  as  were 
the  other  shareholders,  to  contribute  towards  any  losses  ; 
and  in  winding  up  the  society  the  assets  were  insufficient  to 
pay  the  claims  of  the  preference  creditors :  it  was  held  that 
such  shareholders  were  exempt  from  making  any  payment 
(or  suffering  any  deduction)  in  respect  of  any  loss  ;  and 
also,  that  for  the  purpose  of  paying  their  shares  in  full  with 
interest,  each  advanced  or  unadvanced  shareholder  must 
contribute — the  advanced  shareholders  by  payment,  and  the 
unadvanced  by  way  of  deduction  from  any  monies  which 
would  otherwise  be  payable  to  them — a  just  proportion  of 
the  whole  of  the  loss,  present  and  prospective  (including  so 
much  of  such  loss  as  should  fail  to  be  met  by  the  advanced 
shareholders  liable  to  contribute  thereto),  and  including 
also  the  expenses  of  winding  up,  and  interest  on  the  prefer- 
ence shares.1 

Sec.  359 — Amended  Rules  Imposing  Liability. 

By  the  power  to  amend  its  rules  the  society  may  impose 
additional  liability ;  for  the  contract  of  membership  carries 
in  <//■<  in 'm  the  right  on  the  part  of  the  society  to  alter  the 
rules  from  time  to  time.2  Thus,  after  the  execution  of  a 
mortgage  the  rules  were  altered  by  a  provision  that  an 
advanced  member  should  not  be  entitled  to  redeem  his 
mortgage  without  paying,  in  addition  to  what  would  have 
been  due  from  him  under  the  original  rules,  his  proportion 
of  the  losses  of  the  society.     The  court  held  that  the  new 

TTi; :  Hohenshall  v.  Borne  Savings,  Gibson  v.  Safety,  etc.,  A ss'n,  170111. 

etc.,  Ass-. i,  I  10  Mo.  566;  8.  C.  II  S.  44;  s.  c.  48  N.  E.  Rep.  580. 

W.     Rep.    IMS;  Sills    r.    North     <&         x  hi  re  Reliance  R>uil<ling  Society, 

South   B.   L.  Ass-n,  Chicago  Daily  61  L.  J.  Ch.  453;  s.  c.  66  L.  T.823; 

Law  Bull.,  January  16,  L896;  Towle  8  T.  L.  R.  525. 

V.   American  B.&   l>.  A.SS'n,  75  Fed.         2  Rosenberg   r.   NorthuiiiherIan<l 

Rep.  938.     Nor  can  a   holder  of  LI-  Building  Society,  22  Q.  B.  Div.  at 

i  ■:,n.    i    ued   andpaid   up  stock  p.  380 ;  s.  c.  60  L.  T.  558  ;  87  W.  R. 

i  its  illegality  and  have  him  368  ;  5T.  L.  R.  265. 
self  declared  an  ordinary  creditor. 


§  360.  CONTRIBUTION   TO   LOSSES.  399 

rules  applied  to  the  mortgage,  and  that  redemption  could 
take  place  only  on  that  basis.1 

Sec.  360— Liability  of  Borrower  on  his  Note  and  Mort- 
gage. 

Having  stated  the  proposition  that  a  borrower  is  equally 
liable  to  contribute  toward  the  losses  with  an  unadvanced 
member,  unless  in  some  way  relieved  by  the  b}r-laws  or  a 
statute,  the  question  then  arises  whether  or  not  he  is  liable 
on  his  bond  or  note  and  the  mortgage  given  to  secure  it. 
In  Indiana  an  association  had  reached  the  limit  prescribed 
by  its  articles  of  association  for  the  maturity  of  its  stock, 
and  it  was  found,  owing  to  losses  incurred,  that  advanced  or 
borrowing  members  had  received  the  Cull  value  of  their 
shares  of  stock  pledged  for  the  loan,  but  unadvanced  or  non- 
borrowing  members  would  not  receive  the  full  amount  of 
their  shares  when  the  assets  were  distributed.  The  by-laws 
of  the  association  provided  "  that  the  notes  and  mortgages 
given  by  members  who  receive  loans  must  secure  the  re- 
payment thereof,  interest  and  premium  thereon,  with  all 
weekly  dues,  together  with  all  fines  and  assessments  on 
stock  held  by  the  member."  A  statute  provided  "that 
every  share  of  stock  shall  be  subject  to  a  lien  for  the  pay- 
ment of  unpaid  instalments  and  other  charges  incurred 
therein,  under  the  provisions  of  the  constitution  and  by- 
laws " ;  that  "good  and  ample  real  estate,  or  personal 
security,  as  prescribed  by  the  by-laws  of  the  corporation, 
shall  be  given  by  the  borrower  to  secure  the  repayment  of 
the  loan  with  interest,  and  also  for  the  payment  of  the 
dues,  fines  and  assessments  that  may  be  assessed  on  his 
share  of  stock  upon  which  the  loan  is  made  "  ;  that  "  a  bor- 
rower who  is  not  in  arrears  for  clues,  interest,  fines,  or  assess- 

1  Wilson  v.  Miles  Platting  Build-  T.  50  ;  41  W.  R.   361  ;  57  J.  P.  68  ; 

ing  Society,   L.   R.   22  Q.  B.   Div.  In  re  Norwich  and  Norfolk  Provi- 

381,  note;  Rosenberg  v.  Northum-  dent  Building-society,  L.  R.  1  Ch. 

berland  Building  Society,  L.  R.  22  Div.  481  ;  45  L.  J.  Ch.  143  ;  24  W. 

Q.   B.  Div.  373;  60  L.  T.  558;  37  R.  103;  Pepe  v.  City  and  Suburban 

W.  R.  368  ;  5  T.  L.  Rep.  265  ;  Brad-  Building   Society,   3   R.  471  ;  s.  c. 

bury  v.  Wild,  3  R.  195  ;  s.  C.  [1893]  [1893]  3  Ch.  311  ;  62  L.  J.  Ch.  501  ; 

1  Ch.  377  ;  62  L.  J.  Ch.  503  ;  68  L.  68  L.  T.  846  ;  41  W.  R.  548. 


400  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  XVII. 

ments,  may  pay  his  loan  at  any  time,  and  withdraw  from 
the  association  "  ;  and  that  all  such  associations  "  shall  have 
power  to  assess  in  addition  "  to  the  powers  above  enumer- 
ated, "  aud  shall  also  have  the  powers  to  provide  in  their  by- 
laws for  the  assessment  of  fines  and  penalties  *  *  in- 
terest, instalments  and  assessments."  This  was  held  to 
authorize  the  assessment  by  the  directors  upon  each  share  of 
stock,  whether  pledged  for  a  loan  or  not,  its  proportionate 
amount  of  the  losses  of  the  associations  so  as  to  equalize  the 
borrowing  and  non-borrowing  shareholders.  Another  sec- 
tion provided  that  "  all  such  corporations  shall  have  power 
to  charge,  in  addition  to  the  amount  heretofore  provided 
for  by  this  act,  a  sum  not  exceeding  twenty-five  cents  per 
month  upon  each  share  of  stock,  for  the  purpose  of  defray- 
ing the  expenses  of  the  association,  which  sum  shall  be 
payable  with  the  regular  instalments,  to  make  assessments 
upon  the  capital  stock  to  cover  losses,"  etc.  The  note 
given  for  the  loan  contained  the  stipulation  provided  for  in 
the  by-laws  and  the  statute  above  quoted,  being  an  express 
agreement  to  pay  any  assessment  that  might  be  made  upon 
the  member's  stock  ;  and  this  was  held  to  authorize  a  re- 
covery on  the  note  and  on  the  mortgage  given  to  secure  it 
of  the  assessment  made  to  equalize  the  several  stockholders 
of  the  association.1  The  constitution  of  an  association  pro- 
vided that  "all  members  shall  pay  for  every  share  fifty 
cents  initiation  fee,  and  an  instalment  of  fifty  cents  per 
week"  ;  that  "every  shareholder  shall  be  entitled  to  a  sum 
equal  to  the  amount  of  $250  for  each  share";  that  "every 
share  for  which  the  money  lias  been  drawn  shall  be  consid- 
ered as  a  paid-out  share,  and  shall  bear  six  percent,  interest 
annually,  and  the  premium  must  be  paid  in  weekly  rates;" 
that  ki  the  interest  and  premiums  shall  be  payable  pro  rata, 
as  soon  as  any  part  of  the  money  is  ready  to  be  paid  out"; 
and  that  "interesl  will  only  be  charged  on  the  amount  re- 
maining  due  at  the  beginning  of  each  year."    It  also  pro- 

'  Wohlford   r.  Citizens' Building  175;  s.  c.  22  N.  E.  Rep.  1016;  31 
Loan  and  Savings  Association,  1  lo  Amer.  &  Eng.  Corp.  ('as.  349;  re- 
in.I.  862;  S.  C.  40  X.  E.   Rep.  694.  versing,  47  Hun,  577. 
i  o  People  v.  Lowe,  l  IT  X.  v. 


§  3G0.  CONTRIBUTION   TO   LOSSES.  401 

vided  as  follows  :  "  Every  member  who  wishes  to  draw  the 
amount  of  his  or  her  share  shall  secure  the  payment  by  the 
execution  of  an  acceptable  mortgage  on  real  estate,  and  this 
mortgage  shall  remain  in  force  until  the  weekly  dues  and 
undrawn  dividends  make  up  the  sum  of  £250  for  each  share. 
The  mortgage  shall  then  be  canceled,  and  such  a  member 
shall  then  cease,  on  the  ground  of  such  shares,  to  be  a  mem- 
ber. Those  members  who  have  not  yet  drawn  money  can 
have  their  dividend  paid  to  them.  They  may  also  draw 
their  money  before  six  months  without  the  dividends."  A 
stockholder  borrowed  money  of  the  association,  and  exe- 
cuted to  it  a  mortgage  in  accordance  with  the  provisions  of 
its  constitution ;  and  on  the  intervention  of  insolvency  it 
was  held  that  such  member  was  liable  to  an  assessment  to 
equalize  the  stockholders,  and  that  his  mortgages  could  be 
foreclosed  for  the  amount  assessed  against  him.  "  Can,  then, 
a  borrower,  under  these  circumstances,  claim  the  cancela- 
tion of  his  mortgage  ?  "  asked  the  court. 
"  We  think  not.  To  do  so  would,  as  we  have  shown,  under- 
mine the  principles  upon  which  these  associations  are  organ- 
ized. By  the  laws  of  the  constitution  of  the  association,  on 
the  cancelation  of  the  mortgage,  the  borrower  ceases  to 
be  a  member,  and  all  liability  to  it  is  at  an  end.  "We  see  no 
reason  why  the  remaining  members  should  be  left  to  bear 
all  the  burden  resulting  from  losses  for  which  they  are  no 
more  to  blame  than  he  is.  It  is  wholly  unlike  a  savings 
society  where  the  borrower  is  not  a  member  or  otherwise 
interested  in  its  business.  Having  no  voice  in  the  manage- 
ment, nor  interest  in  the  earnings  of  the  society,  the  bor- 
rower and  it  sustain  the  simple  relation  of  debtor  and 
creditor.  Here,  as  shown,  the  borrower  is  also  interested  as 
a  creditor.  The  loan  is  for  no  definite  period  of  time.  It 
depends  upon  the  management  of  the  association  in  which 
he  continues  as  a  member  and  has  a  voice.  It  is,  in  view  of 
the  relation  of  the  borrower  to  the  association  and  the 
possibility  of  losses  that  the  mortgage  stipulates  that,  in 
addition  to  the  specific  condition  mentioned,  the  borrower 
shall  pay  all  '  assessments  '  that  may  be  levied  on  him."   It 

was  therefore  held  that  the  member  was  liable  to  the  re- 
26 


402 


BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  XVII. 


ceiver  appointed  for  the  association,  when  it  became  insol- 
vent, for  an  amount  sufficient  to  equalize  all  the  stockholders 
of  the  association.1  So,  where  a  mortgage '  contained  a 
clause  that  the  borrowing  member  should  be  liable  under 
it  for  all  subscriptions,  fines  and  other  moneys  which,  ac- 
cording to  the  rules  of  the  society  for  the  time  being 
should  from  time  to  time  become  due  and  payable  to  him 
in  respect  of  the  security  or  the  shares  by  virtue  of 
which  the  advance  was  made  to  him.  The  proviso  for  re- 
demption was  expressed  in  similar  terms.  The  rules  in  force 
at  the  date  of  the  mortgage  did  not  render  advanced  mem- 
bers liable  to  contribute  to  the  losses  of  the  society.  The 
rules  were  afterwards  altered  by  the  introduction  of  a  pro- 


1  Eversrnann  v.  Schmitt,  (Ohio) 
41  N.  E.  Rep.  139  ;  reversing,  so 
far  as  it  held  that  there  was  no 
liability  under  the  mortgage,  24 
Wkly.  L.  Bull.  56.  McGrath  v. 
Hamilton  Saving  and  Loan  As- 
sociation, 44  Pa.  St.  383. 

In  a  Maryland  case  the  liability 
under  the  mortgage  was  upheld, 
but  was  much  more  restricted. 
"As  to  the  charge  made  3  *  for 
losses  sustained  by  the  association, 
and  apportioned  to  each  share  of 
the  stock,  by  estimation,  we  can 
perceive  no  warrant  for  it.  The 
covenant  in  the  mortgage  does  not 
justify  it  in  terms,  nor  does  it 
authorize  the  charge  by  any  fair 
implication.  The  covenant  is  to 
pay  weekly  dues  and  tines  until 
such  I  inie  as  I  he  assoeiat  ion  nn'.^ht 

have  sufficient  funds,  to  pay  all  the 
holders  of  unredeemed  .shares  of 
slock  the  [par  value  thereof], 
clear  of  :ill  losses  and  liahilit  ies. 
This,  of  course,  contemplates  1  he 

con!  ii d  existence  and  operal  ion 

of    tin-    association,  and    thai    it 
hold. I   terminate  in    the   regular 

course  and  mode  ;is  provided  in  I  hi' 

arl  ides  of  association.  It  is  only 
in  i hat  event,  t hat  t he  mortgagors 


could  be  required,  by  the  terms  of 
this  covenant,  to  contribute  to 
losses  and  liabilities  of  the  associa- 
tion, and  then  only  by  the  pro- 
longed or  extended  payment  of  the 
weekly  dues.  Losses  by  the  asso- 
ciation are  chargeable,  by  virtue 
of  this  covenant,  and  in  no  other 
way."  Low  Street  Building  Asso- 
ciation v.  Tucker,  48  Md.  448. 

A  mortgage  executed  by  an  ad- 
vanced member  of  a  building  soci- 
ety registered  under  the  building 
society  act  of  1874,  pi'ovided  that 
the  advances  should  be  repaid  by 
certain  instalments ;  by  the  rules 
an  advanced  member  could  redeem 
on  payment  of  a  lump  sum  to  be 
calculated  in  a  certain  manner. 
The  society  was  ordered  to  be 
wound  up.  and  there  were  outside 
creditors.  It  was  held  that  ad- 
vance! 1  members  ought  to  be  placed 
on  the  list  of  contributories,  and 
were  liable  to  pay  immediately  the 
sum  which  would  entitle  them 
uiiiler  the  rules  to  redeem.  Lon- 
don Provident  Pudding  Society  v. 
Morgan,  5  Rep.  rdO  ;  s.  c.  [1893]  2 
Q.  B.  266  ;  62  L.  J.  Q.  B.  544  ;  69  P. 
T.  595;  57  .1.  1'.  696  ;  46  Amer.  & 
Eng.  Corp.  Cas.  512  ;  9  T.  L.  R.  576. 


§  362.  CONTRIBUTION   TO   LOSSES.  403 

vision  that  an  advanced  member  should  not  be  entitled  to 
redeem  without  paying,  in  addition  to  what  would  have 
been  due  from  him  under  the  original  rules,  his  proportion 
of  the  losses  of  the  society.  It  was  held  that  the  new  rule 
applied  to  the  mortgage,  and  that  the  plaintiff  desiring  to 
redeem  his  mortgage  must  do  so  in  accordance  with  those 
rules.1 


Sec.  361 — Liability  of  a  Minor  or  Married  Woman  to 
Contribute  to  Losses. 
Even  though  a  minor  may  become  a  member  of  an  asso- 
ciation according  to  its  rules,  his  parent  is  not  liable  on  his 
obligation,  nor  is  he  liable  to  contribute  when  the  society 
winds  up.  Nor  is  the  husband  of  a  married  woman  share- 
holder liable  when  she  becomes  a  member.2 

Sec.  362 — Liability  of  Deceased  Member's  Estate  to 
Contribute  to  Losses. 
Where  a  statute  provides  that  on  the  death  of  a  member 
his  personal  representative  shall  be  entitled  to  his  share  and 
all  benefits  and  advantages  accruing  thereupon,  and  subject 
to  the  rules,  and  liable  to  the  same  payments  as  if  they  were 
original  members,  his  estate  is  liable  to  contribute  to  the 
losses  in  winding  up  the  association,  but  such  personal  rep- 
resentative is  not  personally  liable  for  payments  or  assess- 
ments due  or  made  on  such  shares.3  But  if  two  persons  hold 
stock  jointly  and  one  die,  the  estate  of  the  deceased  is  not 
liable  to  contribute  to  the  losses.4 

1  Rosenberg  v.  Northumberland  On  married  women  loans,  see 
B.  S.,  22  Q.  B.  Div.  373  ;  60  L.  T.  Wolbach  v.  Lehigh  Building  Asso- 
558 ;  37  W.  R.  368  ;  5  T.  L.  R.  265  ;  ciation,  84  Pa.  St.  211  ;  and  Build- 
distinguishing  Smith's  Case,  L.  R.  ing  Association  v.  Rice,  8  W.  N. 
1  Ch.  Div.  481.     See  Callahan's  Ap-  Cas.  12. 

peal,  124  Pa.  St.  138 ;  S.  C.  16  Atl.  3  In  re  Saint  John  Building  So- 

Rep.  638  :  19  Pitts.  L.  Jr.  411  ;  23  ciety,  28  N.  B.  597 ;  S.  C.  9  Occ.  N. 

W.  N.  Cas.  233.  348. 

2  In  re  Saint  John  Building  So-  4  Id. ;  Hill's  Case,  L.  R.  20  Eq. 
ciety,  28  N.  B.  597  ;  s.  c.  9  Occ.  N.  585. 

348. 


404  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XVII. 

Sec.  3G3— Outside  Creditors  Paid   First. 

It  is  quite  clear  and  well  settled  that  outside  creditors,  or 
creditors  who  were  not  members  of  the  association,  must  be 
paid  first ;  and  it  is  equally  clear  that  a  member  who  has  a 
distinct  and  separate  claim  against  his  association,  such  a 
claim  as  any  person  not  a  member  of  it  may  hold,  must  be 
paid  his  claim  before  any  member  is  entitled  to  be  paid  a 
debt  due  him  from  the  association  by  reason  of  his  member- 
ship. The  property  of  a  building  association  is  a  trust  fund 
for  its  creditors  and  then  for  its  members ;  and  if  a  stock- 
holder accept  property  of  the  association  in  payment  of  his 
debt,  he  will  be  liable  to  its  creditors  for  its  value.1  But  in 
a  recent  English  case,  concerning  an  incorporated  society, 
it  was  held  that  an  advanced  member  was  not  affected  by 
the  presence  of  outside  creditors,  and  that  he  was  entitled 
to  redeem  his  security,  in  the  event  of  winding  up,  and  thus 
extinguish  his  liability.'2  Yet  in  the  case  of  an  unincor- 
porated society,  the  advanced  members  were  held  person- 
all  v  liable,  where  there  were  outside  creditors,  the  liability 
depending  not  on  the  terms  of  the  contract  inter  se,  but  on 
the  fact  of  all  the  members  being  principals,  and  of  the  di- 
rectors being  their  agents,  in  relation  to  the  necessary  busi- 
ness of  the  society.3  In  this  case  the  court  decreed  that 
the  costs  of  the  case  be  first  paid,  it  being  a  test  case;  it 
then  decreed  that  both  the  ordinary  and  the  loan  creditors 
ought  to  rank  pari  passu  in  relation  to  the  assets,  there 
being  no  consent  to  prefer  the  ordinary  creditors,4  and  the 
assets  having  been  swollen  by  the  loan  deposits.  Any 
deficiency  due  the  ordinary  creditors  was  ordered  to  be 
made  up  by  contributions  from  all  the  members,  advanced 

1  Chambersburg  Woolen  Co.  v.  8  In  re  West  London  and  General 

Chambersburg  Manufacturing  and  Building  Society,  8  R.  764;  s.  c. 

Building  Association,  81  Leg.  Int.  [1894]  2  Ch.  352  ;  63  L.  J.  Ch.  506 ; 

857.    See  Bennighausen  v.  Tisher,  70  L.  T.  796;  42  W.  R.  535;  10  T. 

50  M.I.  588.  L.  R.  280. 

-  London  Provident  Building  So-  '  As   in  Murray  v.  Scott,  9  App. 

ciety  v.  Morgan,  5  Rep.  540;  8.  C.  Cas.  519  ;  s.  c.  53  L.  J.  Ch.  745;  51 

[1898]  2  <,'.  I'..   366  ;  62  L.  J.  Q.  B.  L.  T.  462  ;  33  W.  R.  173. 
544;  69  L.  T.  595;  42  W.  R.  157;  57 
.J.  P.  696;  9T.  L.  R.  576. 


§  3G5.  CONTRIBUTION   TO   LOSSES.  405 

and  unadvanced  ;  but  the  advanced  members  "were  not  to  be 
liable  to  make  any  further  contribution  to  the  losses  of  the 
unadvanced,  in  the  absence  of  any  contract  by  the  rules  or 
otherwise  to  that  effect.1 

Sec.  364 — Director  Postponed  to  Stockholders. 

A  director  may  so  conduct  the  affairs  of  the  association 
as  to  render  it  insolvent,  and  then  be  postponed  in  the  right 
to  have  his  stock  satisfied  to  that  of  the  other  stockholders. 
This  is  the  case  where  he  has  been  instrumental  in  wrecking 
the  association.  In  such  an  instance,  in  his  capacity  as  a 
director,  he  will  be  postponed  to  all  the  innocent  stock- 
holders. If  he  participate  in  a  declaration  of  dividends  out 
of  the  capital,  knowing  at  the  time  that  the  association  is 
insolvent,  he  will  be  postponed,  in  winding  up  the  society, 
on  account  of  any  loan  he  may  have  made  it,  until  all  in- 
nocent stockholders  are  fully  paid.  "  The  question  is  not 
whether  he  might  have  enforced  his  demand  against  the 
corporation,"  said  a  Pennsylvania  court  in  a  case  of  this 
kind,  "  if  it  were  solvent,  but  he  here  seeks  to  have  satis- 
faction out  of  a  fund  which  belongs  to  the  stockholders, 
whose  interest  he  has  betrayed.  The  corporation  is  insol- 
vent, and  some  one  must  lose.  Shall  it  be  the  innocent 
stockholders,  or  the  guilty  participant  in  the  fraud  which 
caused  the  insolvency  ?  It  is  not  a  mere  set-off,  or  a  counter- 
claim by  reason  of  simple  liability  oi  the  corporation,  but 
it  is  a  claim  to  come  in  on  the  amount  of  the  corporate 
effects,  constituting  a  fund  to  be  distributed  justly  upon  the 
evidence.  He  assisted  by  fraud  to  reduce  the  association 
to  insolvency,  and  thereby  to  bring  the  wreck  of  its  fortunes 
into  distribution,  and  now  he  seeks  to  put  in  his  hand  and 
withdraw  from  this  fund  the  very  money  he  gave  to  carry 
out  the  fraud.  Every  principle  of  justice  requires  him  to 
be  postponed  until  the  stockholders,  whom  he  defrauded, 
are  satisfied.  Nor  can  we  see  that  the  difference  of  time 
in  making  the  deposits,  which  created  the  stockholders  de- 
positors, changes  the  result."     It  was  claimed  that  an  inves- 

1  See  also  In  re  Doncaster  Build-    T.    270  ;  15   W.    R.    102  ;    31   J.  P. 
ing  Society,  3  Eq.  158 ;  s.  c.  15  L.     210. 


406  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XVII. 

tigation  should  be  ordered  to  determine  what  benefit  the 
members  had  received  from  the  dividends  declared  out  of 
the  capital,  but  the  court  denied  the  investigation,  saying 
that  the  director  had  no  right  to  insist  that  his  illegal  act 
should  be  used  so  as  to  save  him  from  as  little  injury  as 
possible.  The  court  simply  postponed  his  claim  until  all 
others  were  paid.1 

Sec.    365 — Subrogation    of   Shareholder    Having   Ad- 
vanced Share. 

Where  a  shareholder  in  a  homestead  or  building  associa- 
tion paid  in  advance  $1,000  on  his  shares,  which  sum  was 
secured  by  the  deposit  by  the  association  with  a  trust  com- 
pany of  certain  securities,  and  the  association  failed  ;  it  was 
held  that  the  shareholder  was  entitled  to  the  proceeds  of 
the  securities,  as  against  the  receiver  of  the  association.2 

1  Kisterbock's  Appeal,  51  Pa.  St.  other  charges  from  payments  that 

483.  had  been  made  by  a  withdrawing 

A  by-law  providing  that    loans  member  and  the  profits  coming  to 

shall  be  deducted  from  the  amount  him,  empowers  it  to  adopt  a  by-law 

otherwise  due,  is  valid  and  binding,  deducting  the  expenses  of  the  as- 

Hawleyf.  North,  etc.,  Ass'n (Colo).,  sociation.     Beach  v.    Co-operative 

52  Pac.  Rep.  408.  S.  &  L.  Co.  (S.  D.)  74  S.  W.  Rep. 

A  statute  authorizing  an  associa-  889. 

tion  to  accept  by-laws  providing  2  Munhall  v.  Boedecker,  44  111. 

for  the  deduction  of  "all  fines  and  App.  131. 


CHAPTER  XVIII. 

POWER   TO    BORROW    MONEY. 

SEC.  366.  Original  Plan  of  Building  Associations. 

367.  English  Cases  Prior  to  1874. 

368.  No  Rule  of  the  Society  Empowering  Trustees  to  Borrow 

Money. 

369.  Rule  Placing  no  Limit  on  Amount  to  be  Borrowed. 

370.  Subrogation  When  Loan  Illegal. 

371.  Society  Cannot  Exceed  its  Rules  in  Borrowing. 

372.  English  Statutes  of  1874. 

373.  Personal  Liability  of  Directors. 

374.  Power   of    Directors    to  Bind  Individual  Members  of  the 

Society. 

375.  American  Cases. 

376.  Overdrafts — Deposits. 

377.  Rights  of  Borrowers  on  Distribution  of  Assets. 

378.  Lenders  Liable  to  Refund  Society's  Moneys  Received  in  Re- 

duction of  Debt. 

379.  Postponement  of    Depositor's    Right   of  Action — Available 

Balance. 

Sec.  366 — Original  Plan  of  Building  Associations. 

The  original  plan  or  idea  of  a  building  association  was  to 
loan  only  such  funds  as  its  members  paid  in  on  their  stock, 
for  dues,  premiums,  fines  and  interest.  In  recent  years  it 
has  been  found  that  the  amount  thus  raised  was  inadequate 
to  meet  the  demands  of  members  desiring  to  borrow,  or  that 
losses  or  a  failure  of  members  to  meet  their  obligations 
promptly,  rendered  it  desirable  to  borrow  money.  The 
question  arises,  whether  a  societ}^  has  the  authority  to  bor- 
row money,  either  to  meet  a  temporary  deficit  or  as  a 
speculation  ?  This  question  may  be  answered  in  a  general 
way,  that  it  has  such  power. 

Sec.  367 — English  Cases  Previous  to  1874. 

The   English  cases   may  be  divided  into  two  classes, — 

407 


408  BUILDING   AND   LOAN   ASSOCIATIONS.  Cll.  XVIII. 

those  that  precede  the  year  1 874,  and  those  that  follow  that 
year ;  for  in  that  year  building  societies  were  given  power 
to  borrow  money ;  and  where  a  statute  authorizes  a  society 
to  borrow  money  no  question  of  the  power  to  borrow  can 
arise.  The  rules  of  an  English  society,  as  certified  under 
the  Act  6  and  1  Will.  4,  ch.  32,  provided  "  that  its  object  is 
for  raising,  by  the  weekly  contributions  of  the  members,  a 
stock  or  fund,  to  enable  each  of  them  to  erect  or  purchase  a 
dwelling  house,"  etc.,  and  that "  the  trustees  for  the  time  being 
may,  from  time  to  time,  as  occasion  shall  require,  borrow 
and  take  up  at  interest  any  sum  of  money  from  any  banker 
with  whom  the  funds  of  this  society  shall  be  deposited,  or 
from  any  other  person,  to  procure  which  the  trustees  may 
give  their  own  personal  security,  and  they  shall  be  indemni- 
fied out  of  the  first  funds  of  this  society  which  shall  be 
received."  It  was  further  declared  "  that  the  total  sum  of 
money  to  be  borrowed  under  this  rule  shall  not  at  any  one 
time  exceed  two-thirds  of  the  amount  for  the  time  being 
secured  by  mortgage  to  the  society,  including  the  mort- 
gage or  mortgages  for  which  such  advance  or  advances 
may  be  required."  Under  this  rule  the  trustees  of  the  society 
borrowed  over  £66,000  at  five  per  cent,  interest ;  and  a 
member  of  the  society  sought  to  restrain  the  payment  of 
this  interest  on  the  ground  tnat  the  rule  quoted  was  illegal, 
and  such  payment  was  a  misappropriation  of  the  society's 
funds.  The  court  held  that  the  rule  was  valid  ;  at  least  so 
far  as  it  authorized  the  borrowing  of  money  to  a  limited 
extent,  and  in  passing  upon  it  said:  "If  the  rule  had 
authorized  the  trustees  to  raise  an  unlimited  sum  of  money, 
wholly  regardless  of  the  contributions  which  might  be  made 
by  its  members,  that,  no  doubt,  would  be  contrary  to  the 
inf cut  and  scope  of  the  act.  The  act  states  that  money 
shall  be  raised,  first,  by  weekly  contributions  of  the  mem- 
bers ;  second,  by  fines;  and  thirdly,  by  the  payments  of 
those  who  are  desirous  of  acquiring  land.  *  *  *  Then 
comes  the  question,  the  society  having  these  funds,  are  they 
or  are  I  hey  UOt  to  be  allowed  to  manage  them  in  such  a  way 
as  they  may  think'  best  and  most  conducive  to  their  own 
interesl  \     It  we  consider  the  question  of  investing  instead 


§  368.  POWER  TO  BORROW  MONEY.  409 

of  borrowing,  there  is  nothing  in  the  Act  of  Parliament  ex- 
pressly relating. to  investing;  but  it  is  clear  that  they  may 
invest,  because  there  is  a  prohibition  against  investing  in 
savings  banks,  and  that  is  just  one  of  the  things,  I  appre- 
hend, which  are  left  to  them  to  frame  rules  about.  *  *  * 
Then,  if  they  had  power  to  invest,  and  had  invested  their 
money,  it  might  be  injurious  and  inconvenient  for  the 
society  to  dispose  of  these  investments  just  at  the  time  when 
members  required  advances.  Their  investments  might  be 
in  the  funds,  and  the  funds  might  be  so  low  as  to  make  it 
inexpedient  to  sell  out  at  that  time,  and  the  natural  course 
would  be  to  procure  the  money  elsewhere.  For  at  that 
time  they  would  probably  obtain  a  high  rate  of  interest, 
not  being  bound  by  the  usury  laws,  whilst  they  would  not 
pay  more  than  five  per  cent,  for  what  they  might  borrow. 
*  *  *  If  an  advance  were  wanted  when  they  had  not 
money  in  hand,  might  they  not  obtain  the  sums  required  by 
overdrawing  their  account  at  the  bankers'  ?  Would  any- 
body say  that  that  would  be  an  irregular  course,  provided 
always  that  the  borrowing  did  not  exceed  the  proper 
amount  ?  " 1 

See.  368 — No  Rule  oftbe  Society  Empowering  Trustees 
to  Borrow  Money. 

Before,  however,  the  trustees  can  borrow  money  some 
rule  of  the  society  duly  certified  to  the  government  and 
approved  by  the  officer  appointed  for  that  purpose,  must 
empower  them  to  do  so.  Where  no  such  rule  had  been 
adopted  it  was  held  that  the  trustees  had  no  power  to  bor- 
row, and  that  a  loan  made  to  the  society  could  not  be 
recovered.  "  What  we  have  here,"  said  Justice  Gilford,  "  is  a 
limited  benefit  building  society  without  any  power  to  bor- 
row, and  the  rules  and  very  nature  of  that  society  show  that 
it  would  be  contrary  to  its  constitution  to  borrow  money  so 
as  to  bind  the  compan}^,  or  to  make  the  individual  members 
of  the  company,  as  members,  liable  for  borrowing  money  ; 
because  the  whole  constitution  of  the  society  is   that  the 

i  Laing  v.  Reed,  L.  R.  5  Ch.  App.  Rep.  N.  S.  773  ;  18  W.  R.  76  ;  34  J. 
4 ;  s.  C  39  L.  J.  Ch.  1  ;  21  L.  T.  P.  134. 


410  BUILDING  AND   LOAN   ASSOCIATIONS.    Cll.  XVIIL 

members  are  to  make  certain  monthly  payments,  and  in 
consideration  of  these  monthly  payments  and  the  fines  pro- 
vided by  the  rules,  they  are  to  receive  certain  loans.  After 
the  rules  had  been  certified  and  published,  and  the  nature  of 
the  company  had  been  fixed,  a  prospectus  was  issued,  and 
by  that  prospectus  the  directors  chose  to  say  that  they  have 
made  arrangement  to  borrow  sums  to  be  advanced  to  such 
members  as  desire  to  receive  an  advance  before  their  term 
for  it  regularly  arrives,  such  members  of  course  paying 
interest  on  the  sums  lent  until  their  turn  arrives.'  If  we 
look  at  the  nature  of  the  company,  that  can  only  amount  to 
this :  that  the  directors  have  chosen  to  pledge  their  personal 
liability.  *  *  *  lam,  therefore,  of  opinion  that  there  is  no 
legal  or  equitable  debt."  i  Not  only  in  England  must  there 
be  a  rule  authorizing  the  association  to  borrow,  but  it  must 
be  certified,  as  above  stated  ;  and  the  adoption  of  a  rule 
which  is  not  so  certified  will  not  authorize  the  borrowing  of 
money.2     In  both  these  cases  the  loans  were  held  void.3 

Sec,  369 — Rule  Placing  no  Limit  on  Amount  to  be  Bor- 
rowed. 

Not  only,  according  to  the  English  cases,  must  there  be  a 
rule  duly  certified  and  approved,  authorizing  the  trustees  to 
borrow  money,  but  the  rule  must  place  a  limit  on  the  amount 
to  be  borrowed.  If  the  amount  is  unlimited  the  rule  is 
void.4  The  rules  of  a  society  contained  no  express  power 
to  borrow  money,  but  provided  that  "  persons  merely  join- 
ing the  society  to  invest  or  deposit  money,"  should  not  be 

1  In  re  National  Permanent  Ben-  Ch.  92  ;  48  L.  T.  33  ;  31  W.  R.  98 
efit  Building  Society,  L.  K.  5  Ch.  Murray  v.  Scott.  !)  App.  Cas.  519 
A.pp.  309  ;  S.  C.  L8  W.  It.  388  ;  34  J.  s.  C.  53  L.  J.  Ch.  745  ;  51  L.  T.  462 
P.  341  ;  22  L.  T.  Rep.  284.  33  W.  R.  173;  in  Court  below  sub 

2  Coetmor  Benefit  Building  So-  non.  lure  Guardian  Building  So- 
ciety, 51  L.  T.  253.  ciety,23Ch.  Div.  440  :  52  L.  J.  Ch. 

»To    same    general    effect,    see  857  ;  48  L.  T.  134  ;  32  W.  R.  73. 

Cunliffe  ".   Blackburn   &   District  >  /»  re  Liverpool,  etc.,  Building 

Building  Society,  '•»  A.pp.  ( !as.  857  ,  Society,  15  So.  Jr.  177  ;  In  re  Pro- 

s.  o.  "»l  I,.  .1.  Ch.  876;  52  L.  T.225;  fessional,  Commercial,  and  Indus- 

:;:;   W.    I;.    809;   below,    Blackburn  trial  Benefit  Building  Society,  L.  R. 

in  tricl  Building  Society  v.  Cun-  6  Ch.  856;  8.  <'.  25  L.  T.  (N.  S.) 

liffe,  82  i  h.  Div.  61  :  s.  c.  52  L.  .1.  897;  I!)  W.  R.  1153. 


§  369.  POWER   TO   BORROW    MONEY.  411 

entitled  to  vote  at  meetings,  nor  be  called  upon  to  serve 
any  office,  and  that  "  investors  not  in  the  building  branch  " 
might  withdraw  their  deposits  on  giving  a  month's  notice, 
if  no  other  time  was  agreed  upon  when  the  deposits  were 
made,  and  should  be  entitled  to  interest  on  all  moneys  which 
have  been  in  the  hands  of  the  society  more  than  one  month. 
It  was  held  that  the  rules  of  the  society,  in  so  far  as  they 
authorized  borrowing  money  on  deposit,  were  illegal,  be- 
cause no  limit  was  fixed  on  the  amount  which  might  be 
borrowed  ;  and  that  the  depositors  were  not  entitled  to 
have  a  call  made  upon  the  members  for  the  repayment  of 
their  deposits.1  The  rules  of  a  society  gave  the  trustees 
power  to  issue  deposit  or  paid-up  shares,  and  permitted  a 
depositor  to  withdraw  the  whole  or  part  of  his  deposit  "  in 
preference  to  all  other  shares."  The  rules  also  gave  the 
trustees  power  to  borrow  money  (such  money  to  be  a  first 
charge  on  the  funds  and  property  of  the  society),  and  if 
necessary  to  execute  notes  or  other  security  for  the  money 
borrowed.  The  society  getting  into  difficulties,  and  being 
ordered  wound-up,  the  question  arose  concerning  the  order 
in  which  the  assets  should  be  divided  after  the  payment  of 
outside  creditors.  It  was  held  that  those  embraced  in  the 
classes  of  those  who  held  equitable  mortgages  under  the 
rule  deemed  illegal,  and  those  who  had  made  advances  under 
that  rule  without  security,  on  the  faith  of  the  rule,  were 
entitled  to  share  pro  rata  only  in  what  might  be  left  after 
all  others,  including  unadvanced  members,  had  been  paid.2 
But  when  this  case  reached  the  House  of  Lords  it  was 
reversed  in  part,  and  it  was  declared  that  a  rule,  although 
it  did  not  limit  the  amount  to  be  borrowed,  was  valid.3  The 
lenders  were  ordered  to  give  up  their  securities. 

1  7)i  re  Victoria  Permanent  Ben-  3  It  appeared  in  the  House  of 
efit  Building  Investment  and  Free-  Lords  under  the  name  of  Murray 
hold  Land  Society,  L.  R.  9  Eq.  605  ;  v.  Scott,  L.  R.  9  App.  Cas.  519; 
S.  C.  39  L.  J.  Ch.  628  ;  18  W.  R.  s.  c.  53  L.  J.  Ch.  745  ;  51  L.  T.  (N. 
967  ;  L.  T.  (N.  S.)  777  ;  34  J.  P.  S.)  462  ;  33  W.  R.  173.  It  was  de- 
532  ;  6  Mag.  Cas.  474.  clared  that  the  language  in  Laing 

2  In  re  Guardian  Building  So-  v.  Reed,  supra,  on  this  point  was 
ciety,  48  L.  T.  Rep.    (N.  S.)   134;  only  a  dictum. 

L.  R.  23  Ch.  Div.  440  ;  52  L.  J.  Ch. 
857  ;  32  W.  R.  73. 


412  BUILDING   AND   LOAN  ASSOCIATIONS.    Ch.  XVIII. 

Sec.  370 — Subrogation  when  Loan  Illegal. 

A  society,  having  no  rule  authorizing  the  borrowing  of 
money,  went  into  liquidation,  and  at  the  date  of  the  wind- 
ing-up order  it  owed  a  considerable  sum  of  money,  borrowed 
from  bankers,  which  was  afterwards,  chiefly  by  payments 
made  by  borrowing  members  on  account  of  advances,  much 
reduced.  An  action  was  brought  against  the  bankers  to 
compel  them  to  deliver  up  the  deeds  that  had  been  given 
them  to  secure  the  payment  of  the  money  borrowed.  It 
was  held  that  the  borrowing  was  illegal ;  that  it  was  no 
answer  that  the  money  paid  the  bankers  by  the  borrowers 
had  been  applied  to  the  reduction  of  their  claim  by  the  au- 
thority of  the  directors'  order,  a  mistake  of  law  touching 
their  power  to  borrow ;  that  there  was  no  implied  ratifica- 
tion by  the  members  from  their  seeing  and  not  questioning 
the  annual  balance  sheets  showing  the  amount  due  the 
bankers,  and  deposited  at  the  annual  meeting ;  and  that  the 
bankers  had  no  lien  on  the  deeds  either  under  the  agree- 
ment or  by  the  cause  of  dealing  with  the  society.1  By  a 
rule  of  a  benefit  society  it  was  provided  that  when  the  sum 
of  £100  for  every  share  given  out,  together  with  all  costs  and 
expenses  of  the  society,  should  have  been  fully  paid,  the 
society  should  terminate,  and  the  trustees  wTere  to  indorse 
a  receipt  on  the  mortgage  deeds  and  deliver  them  to  the 
mortgagors.  The  advanced  members  of  the  society,  which 
was  established  April  11,  1864,  brought  an  action  against 
the  trustees  to  redeem  their  mortgages,  on  the  ground  that 
their  monthly  instalments  had  all  been  paid,  all  the  unad- 
v;inee<l  members  had  been  paid  off,  thatthere  was  no  valid 
subsisting  debt  <>r  liability,  and  that  the  society  terminated 
on  April  11, 1884.  The  trustees  of  the  society  had  no  power 
to  borrow,  hut  the  defendants,  with  the  assent  of  the  plain- 
tiff and  other  members  of  the  society,  borrowed  money  for 
the  purposes  of  the  society.     The  defendants  claimed  to 

1  Blackburn    Building  Society  r.  and  reversing  L.   R.  29  Ch.    Div. 

Cunliffe,  I,.   R.  '•»    \|-|>.   Cas.   857;  !><)2  ;  s.  c.  54  L.J.  Ch.  1091.    See 

s.c.54  L.J.Ch.  ::;<;;  52  l-  T.  N.  S.  also  Neath,  etc.,  Society  v.  Luce, 

i ;  88  W.  R.  809 ;  affirming  L.  R.  L.  R.  43  Ch.   Div.   L58;  s.  c.  59  L. 

!Ch.   Div.  61 ;  s.  C.  31  W.  R.  98  ;  J.  Ch.  3 ;  61  L.  T.  Ill ;  38  W.   !:. 

52  L.J.  '1..  92;  48  L.  T.   N.  S.  83;  122. 


§  371.  POWER    TO   BORROW   MONEY.  413 

stand  in  the  place  of  the  persons  to  whom  they  had  made 
payments,  for  which  the  society  was  liable  out  of  the  bor- 
rowed money.  The  court  declared,  that  if  any  of  the  offi- 
cers of  the  society  had  made  any  payments  for  which  the 
society  was  liable,  there  not  being  any  moneys  of  the  society 
out  of  which  such  payments  could  be  made,  such  officers 
were  entitled  to  stand  in  the  place  of  the  persons  to  whom 
such  payments  were  made,  and  to  maintain  a  claim  against 
the  society  for  the  amount  thereof.1  So,  where  a  creditor 
of  a  building  society  had  deeds  belonging  to  some  of  the 
members  deposited  with  him  by  the  trustees,  as  a  collateral 
security  for  the  money  lent,  the  court  refused  to  compel 
him  to  return  the  deeds  unless  the  money  for  which  thev 
had  been  given  him  was  repaid  to  him.2  "Where,  however, 
money  was  lent  by  a  company  to  a  person,  who  wras  an  ad- 
vanced member  of  a  building  association,  to  enable  the  asso- 
ciation to  receive  from  the  member  part  only  of  the  monies 
due  it,  and  to  carry  out  an  arrangement  postponing  the  asso- 
ciation's security  for  the  remainder  unpaid,  which  arrange- 
ment the  court  considered  to  come  within  the  mischief 
of  a  rule  of  the  association  forbidding  advancements  on 
second  mortgage — it  was  held  that  the  claims  of  the  asso- 
ciation on  the  property  mortgaged,  for  the  remainder,  would 
not  be  postponed  to  the  company ;  and  that  the  company 
could  not  set  up  an  equity  against  the  association,  for  the 
money  had  been  lent,  not  to  the  society,  but  to  the  member.3 

See.  371 — Society  Cannot  Exceed  its  Rules  in  Borrow- 
ing. 

If  the  rules  of  the  society  authorize  its  directors  to  bor- 
row money  for  a  particular  purpose,  they  cannot  borrow  for 
another  purpose ;  and  if  the  money  be  borrowed  for  a  pur- 

1  Owen  v.  Roberts,  57  L.  T.  81.  3  Portsea  Island  Building  Society 

2  In  re  Durham  County  Perma-  v.  Barclay,  8  Rep.  389  ;  s.  c.  [1894] 
nent  Benefit  Building  Society,  L.  3  Ch.  86 ;  63  L.  J.  Ch.  837  ;  71  L. 
R.  12  Eq.  516 ;  s.  C.  41  L.  J.  Ch.  T.  82  ;  1  Manson,  339  ;  10  T.  L.  R. 
124;  29  L.  T.  N.  S.  83.  See  Neath  526;  affirmed  on  appeal,  12  Rep. 
Building  Society  v.  Luce,  L.  R.  43  324  ;  s.  c.  [1895]  2  Ch.  298  ;  64  L. 
Ch.  Div.  158  ;  S.  C.  59  L.  J.  Ch.  3  ;  J.  Ch.  579  ;  72  L.  T.  744  ;  43  W.  R. 
61  L.  T.  611  ;  38  W.  R.  122.  586 ;  11  T.  L.  R.  424. 


41-1  BUILDING   AND   LOAN   ASSOCIATIONS.    Ch.  XVIII. 

pose  not  authorized  by  the  rules,  the  lender  will  lose  it.1 
Thus,  a  rule  authorizing  the  borrowing  of  money  for  the 
special  purpose  of  making  advances  to  members  who  may 
have  applied  for  them  was  held  not  to  give  authority  to 
borrow  money  not  actually  required  to  meet  applications  at 
the  time  of  the  loan.2 

Sec.  372— English  Statute  of  1874. 

The  Building  Societies  Act  of  1871  settled  the  question 
relative  to  the  power  of  a  society  to  borrow  money,  by 
providing  that  the  directors  or  trustees  should  have  power 
to  borrow  money  and  bind  the  society  for  its  repayment. 
In  permanent  societies  it  is  provided  that  the  "amount 
*  *  *  so  received  and  not  repaid "  shall  at  no  time 
exceed  two-thirds  of  the  amount  for  the  time  being  secured 
to  the  society  by  mortgages  from  its  members.  In  termi- 
nating societies  the  total  amount  received  by  the  society 
may  be  either  a  sum  not  exceeding  that  specified  in  the  case 
of  permanent  societies,  or  a  sum  not  exceeding  twelve 
months'  subscriptions  on  the  shares  for  the  time  being  in 
force.3  The  rules  of  the  society  may  still  further  restrict 
the  amount  to  be  borrowed,  and  they  will  be  binding.4 
Under  this  statute  a  rule  of  a  society  limited  the  amount 
"  borrowed  and  not  repaid  "  to  two-thirds  of  the  amount 
"  secured  to  the  society  by  mortgages  from  its  members.1 ' 
It  was  held  that  the  total  amount  borrowed  and  not  repaid, 
whether  from  members  or  others,  must  be  considered  in  de- 
termining the  power  to  borrow,  but  not  mortgages  from 
those  not  members.5     The  "  amount   for   the   time    being 

1  ///  re  Durham  County  Building  held  void,  because  the  rules  did 

Society,  L.  R.  12  Eq.  51G  ;  s.  c.  25  not  authorize  the  directors  to  do 

L.  T.  Rep.  |  X.  S. )  83  ;    1 1  L.  J.  Ch.  so.     Small  v.  Smith,  L.  R.  10  App. 

124  :  Murray  v. Scott.  L.  R.  9  App.  Cas.  119. 

Ca  .  519;  53   L.  J.   Ch.  745;  51  L.  8  37  &  38  Vict.  ch.  42,  S.  15. 

T.  N.  S.  162  ;  33  W.  R.  I  73.  4  Looker  v.  Wingley,  L.  R.  9  Q. 

-  Moye  v.  Sparrow,  22  L.  T.  Rep.  B.  Div.  397;  s.  c.  46  J.  P.  758. 

151  :  s.  o.  L8  W.  R.  400  ;  5  W.  N.  88.  6  In  re  Wes1  Riding  of  Yorkshire 

Where  a  society  guiiraulcci]  (he  IVnnancnt  Building  Society,  L.  R. 

payment    of  certain  indebtedness  45  Ch.  Div.  463  ;  S.  C.  59  L.  J.  Ch. 

ofa  borrower,  the  transaction  was  823;  68  L.  T.  483;  39  W.  R.  74. 


§  373.  POWER    TO    BORROW    MONEY.  415 

secured "  covers  both  the  amount  of  the  principal  secured 
and  all  loans  due  on  the  members'  securities  at  the  time  of 
the  loan  to  the  society,  whether  for  principal,  interest,  fines, 
or  otherwise ;  and  all  instalments  not  then  accrued  due,  but 
secured  by  the  mortgages  and  outstanding.1  In  Australia 
it  has  been  held  that  a  statute  authorizing  a  society  to  receive 
deposits  or  loans  at  interest,  not  exceeding  a  certain  specified 
limit,  authorizes  the  society  to  go  into  the  market  and  borrow 
money  ;  but  a  rule  of  the  society  authorizing  the  borrowing 
is  necessary.2  The  directors  of  an  incorporated  building 
society,  which  had  no  borrowing  powers,  borrowed  money 
for  the  benefit  of  the  society,  and  gave  to  the  lender  as 
security  the  promissory  note  of  the  directors.  The  society 
was  incorporated  under  the  Building  Societies  Act  of  1874 
(37  and  38  Yict.  c.  42),  and  acquired  borrowing  powers. 
The  appellant,  who  was  the  representative  of  the  lender, 
applied  to  the  society  for  repayment  of  the  loan,  but  ulti- 
mately agreed  to  refrain  from  legal  proceedings  against  the 
society  on  the  directors  giving  him  a  deposit  note.  The 
directors  accordingly  gave  him  a  deposit  note  under  the  seal 
of  the  society,  stating  that  the  money  was  lent  by  the  appel- 
lant on  the  date  of  the  deposit  note,  and  he  thereupon  gave 
to  them  the  promissory  notes  above  mentioned.  It  was  held 
that  the  deposit  note  was  not  binding  on  the  society.3 

Sec.  373 — Personal  Liability  of  Directors. 

If  the  directors  or  trustees  exceed  the  power  conferred  on 
them  by  the  rule  or  statutes  relative  to  borrowing  money, 
they  will  be  personally  liable,  even  if  there  be  no  fraud  on 
their  part.4 

1  Neath  Building  Society  v.  Luce,  and  bind  his  society  unless  autho- 
L.  R.  43  Ch.  Div.128  ;  s.  c.  59  L.  J.  rized  so  to  do  by  the  board  of  di- 
Ch.  3  ;  61  L.  T.  611  ;  38  W.  R.  122.  rectors.     Browning  v.  British  Am- 

2  Colonia  Bank  of  Australia  v.  erican  Friendly  Society,  3  Low. 
Curtain,  L.  R.  4  Vict.  L.  (Austr.)  Can.  Jur.  306. 

38  ;  Colonia  Bank  of  Australia  v.  3  Sheffield,  B.  S.,  In  re  Watson, 

Draper,  L.  R.  4  Vict.  L.  (Austr.)  ex  parte,  21  Q.  B.   Div.   301  ;  s.  C. 

527.  57  L.  J.  Q.  B.  609  ;  59  L.   T.  401  ; 

An  officer  of  a  building  society  36  W.  R.  829  ;  52  J.  P.  742. 

cannot  accept  a  bill  of  exchange  4  Chapleo  v.  Brunswick  Perma- 


416  BUILDING   AND   LOAN   ASSOCIATIONS.    Ch.  XVIII. 

Sec.  374 — Power  of  Directors  to  Bind  Individual  Mem- 
bers of  the  Society. 

The  directors  have  no  power  to  bind  the  members  of  the 
society  as  individuals,  or  to  impose  upon  them  a  personal 
liability,  by  borrowing  mone}^ ;  and  a  rule  purporting  to  so 
bind  the  membership  is  void.1 

Sec.  375 — American  Cases. 

In  Pennsylvania  it  was  said,  by  way  of  a  dictum,  that 
"  It  would  be  a  gross  perversion  of  the  whole  spirit  and  de- 
sign of  such  an  institution  to  borrow  mone}r  from  banks  or 
others  for  the  purpose"  of  loaning  out.2  In  Ohio  it  was 
directly  held  that  a  building  association  had  no  authority  to 
borrow  money  to  loan  ;  although  it  might  to  transact 
its  necessary  business.  If  it  borrow  money  to  loan, 
it  was  a  forfeiture  of  its  franchise.3  In  Maryland  an  as- 
sociation was  incorporated  "  for  the  accumulation  of  a 
fund  by  the  savings  of  the  members  thereof,  sufficient 
to  enable  them  to  purchase  for  themselves  respectively, 
real  leasehold  property,  and  generally  for  the  purpose  of  a 
building  association,  and  subject  in  all  particulars  to  the 
limitations  relating  to  corporations,  which  are  contained  in 
the  general  laws  of  the  state."  A  member  received  a  loan, 
but  instead  of  taking  the  money  received  its  note,  which  he 
discounted.  The  note  was  held  valid,  even  if  not  negotiated 
as  it  had   been  agreed.      "  The    authority    vested   in   this 

nent  Building  Society,  L.   R.  6  Q.  S.  C.  34  W.  R.   148  ;  affirming,  L. 

B.  Div.  696 ;  S.  C.  50  L.  J.  Q.  B.  R.  29  Ch.   Div.  182  ;  s.  c.   54  L.  J. 

Div.    372  ;    44    L.  T.  (N.  S.)    449  ;  Ch.  493  ;  52  L.  J.  N.  S.  406  ;  33  W. 

29  W.  R.  529,  reversing,  L.  R.  5  C.  R.  575. 

P.  Div.  331  ;  S.  c.  49  L.  J.  C.  P.        2  Stiles's  Appeal,  95  Pa.  St.  122  ; 

Div.   796  ;  42  L.  T.  N.  S.  741  ;  29  S.  C.  9  W.  N.  C.  83  ;  37  Leg.   Int. 

W.  R.  153  ;  Richardson  V.  William-  366. 

L.  R.  6Q.  B.  276;  s.  c.  40  L.        3  State  v.  Oberlin  Building  and 

.1.  Q.  B.  145.  Loan  Association,  35  Ohio  St.  258. 

1  In  re  West    London    and   Gen-  The  money  was  really  borrowed  to 

eral   Permanent  Benefit    Building  purchase  its  own  stock,  a  tiling 

Society  [1894)   2  Ch.  852 ;  8.  C.  68  clearly    illegal.      See    Heggie    v. 

I..  .J.  Ch.  506;  70  L.  T.  Rep.  796 ;  Building    and  Loan    Association. 

42  W.  R.  585;  10  T.    L  R.  280;    ///  107  N.  C.  581  ;  s.  C.   12  S.  E.  Rep. 

re  An  on,  I,,   it.  80  ('I..  Div.  484  ;  275. 


§375.  POWER   TO   BORROW   MONEY.  417 

corporation,  by  the  law  of  its  charter,  according  to  the 
nature  of  its  business,  is  unquestionably  sufficient,  to  en- 
able it  to  borrow  money,  and  to  make  loans  to  its  mem- 
bers with  a  view  to  accomplish  the  purpose  of  its  for- 
mation." 1  An  association  was,  in  that  state,  by  statute 
authorized  to  issue  promissory  notes  on  mortgages  only, 
to  be  drawn  to  the  order  of  the  mortgagor,  who 
should  in  all  cases  indorse  the  notes  thus  drawn.  The 
president,  secretary  and  treasurer  and  three  directors  were 
authorized  to  sign  all  notes  issued.  The  association  issued 
its  notes  to  a  person  who  gave  for  it  a  mortgage  to  the  as- 
sociation. It  was  strictly  a  note  in  form,  payable  to  the 
order  of  the  mortgagor,  due  in  sixty  days,  at  a  bank  named, 
and  signed  by  the  officers  of  the  association.  In  one  corner 
of  the  face  of  the  note  was  an  emblem  of  the  seal  of  the  as- 
sociation, printed  at  the  time  the  note  was  printed.  The 
note  was  indorsed  by  the  association  and  by  it  negotiated. 
It  was  held  that  the  note  was  negotiable,  that  the  associa- 
tion had  power  to  take  it  and  bind  itself  by  endorsement ; 
that  the  seal  did  not  destroy  its  negotiability  ;  for  such  was 
the  intent  of  the  parties.  "  The  very  nature  of  the  trans- 
action itself,  the  objects  and  purposes  to  be  subserved  by  the 
issue  of  the  note,  as  well  as  its  form,  plainly  indicate  that 
the  parties  must  have  understood  that  the  note  was  negoti- 
able, and  that  it  would  be  so  accepted  and  dealt  with  by  the 
commercial  community.  The  building  association  issued 
the  note  to  the  appellees,  instead  of  money,  for  which  the 
mortgage  was  given.  It  was  certainly  contemplated  that 
the  appellees  should  negotiate  the  note,  in  order  to  obtain 
the  money  that  the  association  had  contracted  to  loan,  and 
that  was  rendered  impossible,  from  the  form  of  the  note, 
except  by  endorsement.  Nc  bank  or  banker  would  likely 
discount  the  note,  if  not  negotiable,  upon  mere  assignment, 
subject  to  the  equities  existing  between  the  original  parties. 
It  sufficiently  appears  that  the  present  note,  and  others  like 
it,  have  been  dealt  with  by  the  banks,  and  the  commercial 
community  generally,  as  ordinary  negotiable  paper  ;  and  in 

1  Davis  v.  West  Saratoga  Building  Union,  32  Md.  285. 

27 


418  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XVIII. 

their  understanding  of  the  nature  and  qualities   of  these 
instruments  we  think  they  have  not  been  mistaken."1 

An  association  in  Wisconsin  was  neither  forbidden  nor 
expressly  empowered  to  borrow  money.  It  was  a  serial  as- 
sociation, and  when  the  shares  in  the  first  series  matured,  or 
should  have  matured,  the  association  took  up  money  for  the 
purpose  of  paying  off  the  unadvanced  shareholders  in  that 
series,  gave  its  note  for  the  loan,  and  assigned  mortgages 
and  bonds  held  by  it  against  the  borrowers  in  other  series, 
as  collateral  security.  The  money  thus  raised  was  applied 
to  the  purpose  intended.  Part  of  the  debt  was  paid,  and 
then  an  action  was  brought  against  the  lender  of  the  money 
to  recover  possession  of  the  bonds  and  mortgages  thus  as- 
signed. The  inquiry  was  :  (1)  Whether  the  association  had 
the  power,  in  view  of  the  facts,  and  for  any  purpose,  to 
make  the  loan ;  and  (2)  if  it  had  not,  whether  it  could  be, 
heard  to  set  up  its  want  of  power  to  borrow  the  money 
after  having  applied  the  loan  to  the  purposes  of  the  corpora- 
tion. "  To  determine  the  first  question,"  said  the  court,  u  it 
becomes  necessary  to  inquire  what  are  the  objects  and  pur- 
poses of  the  corporation,  and  from  such  objects  and  pur- 
poses to  determine  whether  it  is  consistent,  and  reasonably 
necessary,  under  certain  circumstances,  for  the  corporation 
to  borrow  money  to  accomplish  the  purpose  of  the  organi- 
zation;  and  if  it  be  found  that,  under  some  circumstances, 
the  purpose  of  the  corporation  can  only  be  conveniently  and 
reasonably  carried  out  by  borrowing  money,  then,  under  the 
adjudicated  cases,  in  the  absence  of  any  express  provision 
forbidding  the  corporation  from  borrowing,  the  corporation 
may  do  so.  *  *  *  It  is  a  universally  accepted  principle 
thai  corporations  organized  generally  to  engage  in  a  par- 
ticular business  have,  as  incident  to  such  authority,  the 
power  to  contract  debts  in  the  legitimate  transaction  of 
such  business,  unless  they  are  restrained  by  their  charter  or 
by  the  statute  from  doing  so.  It  is  likewise  an  equally  well 
acknowledged  rule  Unit  the  right  to  contract  debts  carries 
with  it  the  power  to  give  negotiable  notes  or  bills  in  pay- 

i  Jackson  v.  Myers,  48  Md.  452 ;  v.  National  Building  Association, 
Muth  v.  Dolfield,48Md.466;  Jones    94  Pa.  St.  215* 


§  375.  POWER    TO    BORROW    MONEY.  419 

merit  of  or  security  for  such  debts,  unless  the  corporations 
are  in  like  manner  prohibited.  *  *  *  If,  therefore,  it 
can  be  shown  that  the  loan  association,  the  plaintiff  in  this 
action,  in  order  to  properly  carry  on  its  business,  has  the 
power  to  contract  debts  or  borrow  money  as  a  legitimate 
way  to  carry  on  such  business,  then  it  may  do  so,  and 
give  its  notes  or  other  proper  security  for  the  money 
loaned."  "In  conducting  the  business  of  a  corpora- 
tion of  the  said  order,  when  a  considerable  portion 
of  the  stockholders  are  not  borrowing  members,  it  miffht 
not  be  not  only  a  just  but  a  beneficial  way  of  conducting 
the  business  to  loan  the  money  received  in  the  usual  course 
of  business  to  the  members  of  the  corporation  who  are  will- 
ing to  borrow  the  same  and  pay  large  premiums  therefor, 
and  not  to  keep  the  same  on  hand  to  the  detriment  of  all 
the  members,  and  accumulate  it,  in  order  to  be  prepared  to 
pay  off  the  series  of  stockholders  not  being  borrowing  mem- 
bers whose  stock  became  of  its  par  value,  and  when  the 
necessity  for  payment  arrived  make  a  temporary  loan  to 
pay  off  said  members.  It  seems  to  me  that  this  would  not 
be  an  unreasonable  way  of  conducting  the  business  of  the 
corporation,  and  that  it  could,  if  it  saw  fit,  make  a  loan  for 
that  purpose,  there  being  no  statute  or  by-law  of  the  com- 
pany expressly  prohibiting  the  company  from  so  doing. 
We  must  conclude,  therefore,  that  the  corporation  had  the 
power  to  make  a  loan  for  the  purpose  of  paying  off  the 
stockholders  of  the  first  series  when  their  stock  became  of 
its  par  value."  Touching  the  power  of  the  association  to 
assign,  as  security  for  the  loan,  the  bonds  and  mortgages  of 
borrowers  in  junior  series,  the  court  said  :  ';  We  think  the 
power  to  borrow  implies,  in  the  absence  of  any  law  ex- 
pressly restraining  the  board  the  power  to  secure  the  pay- 
ment of  the  loan,  by  an  assignment  of  the  mortgages  and 
bonds  of  the  other  members  held  and  owned  by  the  corpo- 
ration, and  to  make  the  assignment  of  them  for  that  pur- 
pose. In  this  case  the  bonds  and  mortgages  are  made  on 
their  face  assignable  by  the  company.  It  is  said  it  is  unjust 
to  assign  the  bonds  and  mortgages  given  by  members  of  the 
subsequent  series  to  secure  the  payment  of  the  money  due 


420  BUILDING    AND   LOAN   ASSOCIATIONS.  Ch.  XVIII. 

to  the  stockholders  of  the  first  series.  There  could  be  no 
injustice  in  so  doing  if  the  money  was  in  fact  due  to  the 
first  series.  The  payment  could  be  enforced  by  them  in 
equity  from  the  moneys  to  become  due  on  such  bonds  and 
mortgages,  in  the  absence  of  any  other  resources  of  the  com- 
pany, and  we  know  of  no  other  resources  which  the  com- 
pany would  be  likel}T  to  have.  The  pledge  of  these 
mortgages  and  bonds  to  the  bank  can  work  no  injury  to 
the  men  who  gave  them.  Any  payments  made  on  them 
for  the  benefit  of  the  bank  will  inure  to  their  benefit,  the 
same  as  though  it  had  been  paid  to  the  corporation."  The 
court  also  held  that  the  receipt  of  the  money  and  its  appli- 
cation to  a  legitimate  purpose  estopped  the  association  from 
disputing  its  liability  for  the  amount  loaned,  saying  :  "  The 
corporation  has  received  the  money  loaned  and  applied  it  to 
the  legitimate  purpose  of  the  company  in  paying  off  the 
first  series  of  stockholders.  So  far  as  this  payment  was 
justly  due  to  such  stockholders,  all  the  other  stockholders 
are  benefited  by  it,  and  they  cannot  retain  the  benefit  of 
the  application  of  the  money  loaned  by  the  bank,  and 
refuse  to  pay  the  loan.  The  plaintiff  is  estopped  by  the 
receipt  and  application  of  the  money  to  a  legitimate  pur- 
pose of  the  corporation,  from  setting  up  a  want  of  power  in 
the  corporation  to  make  the  loan.  The  corporation  cannot 
reap  the  benefit  of  the  money  loaned  and  then  allege  a  want 
of  power  to  make  it." x 

i  North  Hudson  Mutual  Building  by  it,  see  Murray  v.  Scott,  L.  R.  9 

and  Loan  Association  v.  First  Na-  App.  Cas.  519  ;  53  L.  J.   Ch.  745  ; 

tioiial   Hank,   7!)   Wis.   31  ;  S.  C.  47  51  L.  T.  (N.  S.)  462;  33  W.  R.  173  ; 

N.  W.  Rep.  300  ;  11  L.  R.  A.  845  :  varying  same  case  in  Court  of  Ap- 

:        \iini-.  &  Eng.  Corp.  Cas.  845.  peal  under    the    name    of    In  re 

This  case  also  holds  thai  the  com-  Guardian  Permanent  Building  So- 

pany  would  be  estopped  even  if  the  ciety,  L.  R.  23  Ch.  Div.  440  ;  s.  c. 

money  had  been  misapplied,  if  the  52  L.  J.  Ch.  857;  48  L.  T.  (N.  S.) 

tender  was  in  ignorance  of  the  de-  134;  32  W.  It.  73.    See  also  Quein 

sign  of  the  directors  t<>  misapply  v.  Smith,  108  Pa.  S.  325. 

it,  when  be  made  the  loan.  Upon  the  question  of  estoppel, 

Upon  the  question  of  assignment  and  to  like  effect,  are  CriswelPs 

of  bonds  and  mortgages  held  by  an  Appeal,  mo  Pa.  St.  488  ;  s.c.  12W. 

ociation  as  collateral  t<»  Becure  N.  Cas.  483;  Jones  v.  Building  As- 

the  payment  of  money  borrowed  sociation,  94  Pa.  St.  215;    Loan 


§  376. 


POWER  TO  BORROW  MONEY. 


421 


Sec.  376 — Overdrafts— Deposits. 

The  overdrawing  of  its  bank  account  by  the  association 
is  not  such  a  borrowing  as  will  defeat  a  recovery  by  the 
bank  for  the  amount  of  the  overdraft.1  But  overdrawing 
of  an  account  at  a  bank  is  just  as  much  a  borrowing  when 
done  with  full  knowledge  that  such  is  the  case,  and  with  the 
consent  of  the  bank,  knowing  at  the  time  it  is  an  overdraft, 
as  any  other  transaction  of  lending  or  borrowing  money ; 


Company  v.  Conover,  5  Phila. 
18. 

In  Canada  a  building  society  has 
power  to  borrow  money,  but  it  is 
done  under  a  power  conferred  by 
statute.  Societe  de  construction 
v.  Banque,  1  Q.  B.  (Can.)  Rep.  73. 
Under  a  statute  authorizing  such 
an  association  to  make  loans  on 
real  and  personal  security  to  per- 
sons not  members,  it  may  discount 
notes ;  such  a  transaction  not  being 
banking  within  the  prohibition  of 
its  charter  to  the  effect  that  it  shall 
do  no  banking.  La  Societe  Per- 
manente  District  v.  Rossiter,  4  Leg. 
News.  269.  By  a  statute  a  society 
was  authorized  to  adopt  a  by-law 
for  the  borrowing  of  money  under 
certain  circumstances.  In  a  suit 
on  a  note  it  was  presumed  that  by- 
laws were  adopted  which  author- 
ized the  officers  to  borrow  the 
money.  Snarr  v.  Toronto  Per- 
manent Building  and  Saving  So- 
ciety. 29  U.  C.  Q.  B.  317. 

But  unless  authorized  by  the 
directors  so  to  do,  an  officer  of  a 
society  cannot  accept  a  bill  of  ex- 
change and  bind  the  society  by  the 
acceptance.  Browning  v.  British 
American  Friendly  Society,  3  Low. 
Can.  Jur.  306. 

Where  an  association  by  a  con- 
tract ultra  vires  purchases  lands, 
and  gives  its  notes  and  bond  for 
the  purchase  money,  a  judgment 


will  be  restricted  to  the  land. 
Faulkner's  Appeal,  11  W.  N.  Cas. 
48. 

A  member  of  a  building  associa- 
tion is  charged  with  notice  that  its 
charter  prohibits  the  directors 
alone  from  making  contracts  in 
its  behalf.  Citizens'  Saving,  Build- 
ing and  Loan  Association,  v.  Ruhl, 
55  111.  App.  65. 

The  power  to  incur  indebtedness 
gives  implied  power  to  execute 
negotiable  instruments  for  the 
amount  borrowed.  Grommes  v. 
Sullivan,  81  Fed.  Rep.  45. 

In  Missouri  it  would  seem  that  a 
building  association  cannot  borrow 
money,  although  it  may  issue  cer- 
tificate of  deposit.  Grohmann  v. 
Brown,  68  Mo.  App.  630. 

Such  an  association  has  no  right 
to  accept  a  draft,  and  is  therefore 
not  liable  to  an  innocent  holder 
taking  it  after  acceptance.  Towle 
v.  American,  etc.,  Co.,  78  Fed.  Rep. 
688. 

1  Laing  v.  Reed,  L.  R.  5  Ch.  App. 
4 ;  s.  c.  18  W.  R.  76  ;  39  L.  J.  Ch. 
1  ;  21  L.  T.  (N.  S.)  773  ;  34  J.  P. 
134.  See  also  hi  re  German  Min- 
ing Co.,  4  De  G.  M.  &  G.  19;  In 
re  Cefor  Cilcen  Mining,  L.  R.  7 
Eq.  88 ;  s.  c.  19  L.  T.  593  ;  38  L.  J. 
Ch.  78  ;  and  Waterlow  v.  Sharp,  L. 
R.  8  Eq.  501 ;  s.  C.  20  L.  T.  (N.  S.) 
902. 


422  BUILDING  AND   LOAN  ASSOCIATIONS.  Ch.  XVIII. 

and  especially  is  this  true  if  it  is  agreed  to  pay  interest  on 
the  amount  of  the  overdraft  at  the  time  it  is  made.  Under 
such  circumstances  if  the  act  of  borrowing  is  illegal  the  act 
in  making  the  overdraft  is  invalid.1  If  an  association  be 
not  particularly  authorized  by  statute  to  receive  deposits, 
then  their  receipt  stands  on  the  same  plane  as  the  borrow- 
ing of  money  ;  and  if  borrowing  be  legal  and  binding  on  the 
company,  the  receiving  of  deposits  is  also  legal.  And 
where  an  association  was  authorized  to  receive  deposits 
from  its  stockholders,  and  received  deposits  from  outsiders, 
and  then  became  insolvent,  it  was  held  that  it  was  so 
grossly  unjust  to  permit  the  society  to  retain  the  money  and 
not  refund  it,  that  the  court  would  order  the  amount 
received  repaid  first  and  then  the  stockholders.2  But  where 
a  building  association  received  money  on  deposit  from  out- 
siders it  was  held  that  they  were  bound  by  the  rules  of  the 
society  the  same  as  if  they  were  members  of  it ;  and  that 
stockholders  who  had  paid  up  and  been  discharged  could 
not  be  called  upon  for  contribution  to  pay  such  depositors.3 
Depositors,  however,  are  nothing  more  than  mere  creditors 
of  the  association,  and  consequently  must  be  paid  before  its 
members  ; 4  and  in  the  absence   of   any    special  condition 

1  Lee  as  supporting  this  view,  not  an  act  granting  "banking 
Lookeru  Wingley,  L.  R.  9Q.B.  Div.  powers,"  within  the  meaning  of 
397;  s.  c.  4G  J.  P.  758;  Blackburn  the  Ohio  constitution.  Bates  y. 
Benefit  Building  Society  v.  Cun-  People's  Loan  and  Saving  Associa- 
liffe,  L.  it.  22  Ch.  Div.  61  ;  s.  c.  31  tion,  42  Ohio  St.  653  ;  S.C.  13  Wkly. 
W.  Et.  98;  on  appeal,  9  App.  Cas.  L.  Bull.  396;  Dearborn  v.  North- 
865;  S.  c.  54  L.  J.  Ch.  376  ;  56  L.  T.  west  Savin-  Bank,  42  Ohio  St.  617. 
2 15  :  33  W.  R.  209  :  Brooks  v.  Black-  In  the  first  of  these  last  two  cases 
burn.  etc.  Society,  L.  R.  9  App.  it  was  held  that  an  outsider  who 
Cas.  857.  made  a  deposit  withan  association 

2  Criswell's  Appeal,  100  Pa.  Si.  for  the  purpose  of  securing  a  loan 

s.  c.  12  W.  N.  Cms.  483.    See  is  estopped  from  denying  that  lie 

also  Murray  V.  Scott.  L.  R.  9  App.  was  in  tact  a  depositor,  when  sued 

1         519;  53  L.  J.  Ch.  745;  51    L.  by  the  association  for  the  money 

S  I  162  ;  33  W.  R.  i;:;.  advanced. 

■"■  ///  re  Victoria  Permanenl  Ben-  A  note  given  by  a  society  for  a 

•  ■lit    Building  Society.  L.   B.  '••  Kip  deposit  is  not  negotiable.     Cooley 

605;  s.  c.   is  \V.   b.  967;  89  L.I.  v.  Dominion  Building  Society,  24 

ch.  628;  22  L.  T.  (X.  S.)  777.  L.  Can.  Jur.  111. 

^  statute  authorizing  a  building  4  In  re  Mutual  Aid  Building  So- 

:>    ociation  to   receive  deposits  is  ciety,  30  Ch.  Div.  434;  B.C.  55  L. 


§  878.  POWER   TO   BORROW    MONEY.  423 

depositors  giving  notice  of  withdrawal  acquire  no  priority 
as  between  themselves  in  the  event  of  insolvency  or 
winding-up  -1 

Sec.  377 — Rights   of  Borrower  on  Distribution   of  As- 
sets. 

As  we  have  seen  by  the  preceding  section,  on  distribution 
of  the  assets  of  the  association,  those  who  have  made  loans  to 
it  must  be  paid  first,  or  before  the  stockholders  ;  and  if  stock- 
holders having  made  loans  to  the  association,  they  also,  so 
far  as  their  loans  are  concerned,  stand  upon  the  same  foot- 
ing as  if  they  were  outsiders,  although  they  may  be  liable 
to  contribution,  by  reason  of  their  membership,  to  assets  of 
the  association  in  order  to  pay  those  not  members.2 

See.  378 — Lenders   Liable   to   Refund  Society   Monies 

Received  in  Reduction  of  Debt. 

Where  an  action  was  brought  to  compel  bankers  to  re- 
fund monies  from  time  to  time  paid  them  by  the  society, 
and  applied  towards  discharging  the  balance  alleged  by  the 
bankers  to  be  due  them  from  the  society  upon  their  over- 
drawn account,  the  court  made  an  order  in  favor  of  the 
official  liquidator  ;  but,  on  appeal,  it  was  decided  that,  in 
taking  the  account,  payments  which  had  been  made  out  of 
the  monies  advanced  by  the  bankers  to  withdrawing  mem- 
bers should  be  allowed  in  favor  of  the  bankers ;  and  also 
that  the  lien  which  had  been  given  by  the  judgment  below 
to  the  bankers  on  any  mortgage  securities  taken  by  the 
society  in  advance  out  of  monies  advanced  by  the  bank- 
ers, should  not  be  subject  to  the  mortgage  granted  to 
the  society  in  respect  of  advances  made  by  the  society  out 
of  its  own  proper  funds ;  and  further,  the  lien  of  the 
bankers  was  not  to  be  subject  to  the  costs  of  winding 
up,  for    the  mortgages  given    to  secure  sums  lent  out  of 

J.  Ch.  Ill  ;  53  L.  T.  802 ;  34  W.  R.        2  Criswell's  Appeal,  100  Pa.   St. 

143 ;  Murray  v.  Scott,  9  App.  Cas.  488;  s.  C.  12  W.  X.  Cas.  483  ;  In  re 

519;  53  L.    J.    Ch.  745;    51  L.  T.  Mutual,  etc. ,  Society.  L.  R.  30  Ch. 

462  ;  33  W.  R.  173.  Div.  434  ;  s.  c.  55  L.  J.  Ch.  511  ;  53 

1  In  re  Progressive  Investment  L.  T.  802  ;  34  W.  R.  143. 
and  Building  Society,  54  L.  T.  45. 


424  BUILDING   AND   LOAN    ASSOCIATIONS.  Cll.  XVIII. 

monies  advanced  by  the  bankers    were  to  be    treated   as 
property  which  they  were  entitled  to  claim.1 

Sec.  379— Postponement  of  Depositor's  Right  of  Action 
— Available  Balance. 

The  rules  of  a  society  provided  "  that  if  the  available 
balance  in  hand  shall  be  at  any  time  insufficient  to  pay  all 
the  depositors  wishing  to  withdraw,  they  shall  be  paid  in 
rotation  according  to  priority  of  their  notice."  After 
giving  notice,  a  depositor  brought  an  action  to  recover  pay- 
ment of  his  monies,  and  it  was  held  that  he  had  no  cause 
of  action,  the  society  having  proved  that  there  was  no  bal- 
ance available  either  at  the  time  of  giving  the  notice  or 
bringing  the  action.  "  We  cannot  think,"  said  the  court, 
"  that  it  is  only  intended,  or  that  the  true  meaning  of  the 
condition 2  is  to  regulate  the  course  of  payment  among  de- 
positors, and  thus  to  prevent  any  undue  preference  that 
would  give  it  really  no  effect.  If  all  the  depositors  could 
bring  their  actions  and  recover  their  deposits  at  the  same 
time,  what  would  be  the  advantage  of  the  provision  for  ro- 
tation and  priority  ?  The  construction  contended  for  by 
the  plaintiff  would  afford  no  protection  to  the  defendant 
society,  and  would  leave  it  in  the  power  of  a  certain  num- 
ber of  panic-stricken  depositors  to  wreck  the  society,  which 
would  not  be  for  the  interest  of  the  society  or  the  deposit- 
ors. The  condition  means  that  the  defendant  society  may 
postpone  payment,  and  the  depositors'  rights  to  recover, 
until  there  is  an  available  balance  in  hand  sufficient  to  pay 
depositors  in  rotation  according  to  the  priority  of  their 
notices.  The  plaintiff  brought  his  action  too  soon,  and  at  a 
time  when,  according  to  the  condition  [of  the  above-quoted 
rule],  though  due,  was  not  payable.  AVe  do  not  understand 
'available  balance  in  hand  '  merely  to  mean  money  in  the 
coffers  of  the  defendant  society,  but  money  which,  without 
undue  lessor  undue  delay,  they  could  realize;  as,  for  ex- 
ample,   money    invested    in    consols  or  any  other   security 

i  Blackburn  and  District  Build-  902;  s.  c.  54  L.  J.  Ch.  1091  ;  53  L. 
ing  Society  v.  Cunliffe,  80  Ch.  Div.    T.  741. 

2  Tlic  rule  above  set  out. 


379. 


POWER   TO    BORROW    MONEY. 


425 


capable  of  being  readily  realized.  '  An  available  balance ' 
of  this  kind  the  defendant  society  did  not  possess  at  the 
time  of  the  plaintiff's  notice  of  withdrawal,  nor  at  the  time 
when  the  action  was  brought."  1 


1  Brett  v.  Monarch  Investment 
Building  Society,  9  Rep.  141  ;  s.  c. 
[1894]  1  Q.  B.  367 ;  63  L.  J.  Q.  B. 
237  ;  70  L.  T.  146 ;  42  W.  R.  209  ; 
58  J.  P.  367. 

In  an  English  case  a  question 
was  raised  concerning  the  date 
from  which  the  Statute  of  Limita- 
tions was  deamed  to  run.  By  the 
rules  the  production  of  a  loan  pass- 
book by  a  depositor  was  made  a 
condition  precedent  to  the  liability 
of  the  society  to  repay  the  loan. 
The  depositor  died  on  the  day  his 
notice  withdrawing  the  money  ex- 
pired, without  producing  the  pass- 


book. It  was  held  that  the  right 
of  his  administrator  to  sue  for  the 
deposit  was  not  bound  by  the  Stat- 
ute of  Limitations,  for  no  right  of 
action  had  accrued  during  the  de- 
positor's lifetime,  and  six  years 
had  not  elapsed  since  the  date  of 
the  grant  of  the  letters  of  admin- 
istration, although  more  than  six 
years  had  elapsed  since  the  death 
of  the  depositor.  Atkinson  v. 
Bradford,  3d  Equitable  Building 
Society,  25  Q.  B.  Div.  377  ;  s.  C.  59 
L.  J.  Q.  B.  360 ;  62  L.  T.  857 ;  38 
W.  R.  630. 


CHAPTEE  XIX. 


TAXATION. 

Sec.  380.  Mortgages. 

381.  Tax  on  Stock. 

382.  Payment  into  State  Treasury — Inter-State  Commerce. 

383.  Exemptions. 

384.  Covenant  to  Pay  Taxes. 

Sec.  380— Mortgages. 

For  the  purpose  of  taxcation,  mortgages  given  to  a  build- 
ing association  to  secure  the  payment  of  advances  made  to 
them  must  be  considered  "  as  synonymous  with  property." 
The  property  of  such  association  is  assessable,  like  the  prop- 
erty of  individuals,  at  its  full  value.  Where  a  company 
failed  to  make  a  return  to  the  tax-assessing  offices,  as  re- 
quired by  law,  but  made  a  report  to  the  state,  showing  its 
financial  condition,  wherein  it  appeared  that  its  personal 
estate  amounted  to  over  $120,000  ;  and  the  tax-assessing 
officers  assessed  it  on  the  amount  thus  stated,  it  was  held 
that  this  was  correct ;  and  that  the  association  could  not 
successfully  contend  that  it  was  taxable  only  on  the  amount 
yet  to  be  paid  in  by  all  the  stockholders  to  make  each  share 
worth  its  par  value,  upon  the  theory  that  all  monies 
advanced  become  property  of  the  advanced  stockholder, 
subject  to  his  duty  to  pay  interest  and  instalments,  and 
cease  to  be  assets  of  the  association.1  A  statute  requiring 
building  associations  "to  list  their  real  estate  and  all  per- 
sonal property  "  for  taxation,  covers  mortgages  held  by 
them  if  the  stock  has  not  been  taxed.  To  tax  both  the 
mortffagres  an < I  the  stock'  would  be  double  taxation.2 

1  State  v.   Bornbecker,  41  N.  J.        2 State  v.   Redwood  Falls,  etc., 

L.  519  ;  affirmed,  42   N.  J.  I>.  635  ;     Association,  45  Minn.  154  ;  s.  c.  35 

State  v.  Creveling,  89  N.  J.  L.465;    Amer.  &  Eng.  Corp.  Cas.  244;  10 

affirmed,  40  N.  .).  L.  L92.  L.  R.  A.  752;  47  N.  W.  Rep.  540 

126 


§  381.  TAXATION.  427 

Sec.  381.— Tax  on  Stock. 

Where  the  secretary  of  an  association  returned  to  the 
taxing  officer  $101,400  as  the  amount  of  bonds,  mortgages, 
and  notes  then  held  by  it  as  securities  for  money  loaned  its 
stockholders,  as  well  as  others,  as  provided  for  in  its  con- 
stitution ;  and  the  taxing  officer  declined  to  allow  any 
deductions  to  be  made  from  this  amount ;  this  was  held  cor- 
rect, although  this  sum  was  the  full  amount  of  the  capital, 
stock  and  accumulated  surplus.  "  This  fund,"  said  the  court 
"  which  has  accrued  from  monthty  payments  on  shares,  from 
premiums  and  interest  on  loans,  and  from  fines,  is  the  full 
amount  of  the  capital  stock  and  accumulated  surplus  of  such 
associations  ;  the  former  being  the  aggregate  of  the  monthly 
payments  of  stock,  which,  by  the  fundamental  law  of  the 
association,  are  made  obligatory  on  all  stockholders  alike, 
wrhile  other  payments,  which  are,  in  effect,  optional  with 
those  who  made  them,  represent  the  profits  of  the  scheme, 
and  make  up  the  accumulated  surplus." J  A  statute  of 
Georgia  required  the  officers  of  a  building  association  "  to 
return  to  the  tax  receiver  of  the  county  where  such  associa- 
tions are  located,  at  its  true  market  value,  the  stock  of  such 
associations  owned  by  the  stockholders  thereof,  upon  which, 
as  shown  by  the  books  of  such  associations,  no  advance  has 
been  made,  or  money  borrowed  thereon,  by  the  individual 
stockholders  therein,  to  be  taxed  as  other  moneyed  capital 
in  the  hands  of  private  individuals  is  taxed."  It  also  pro- 
vided that  "  no  tax  shall  be  required  of  real  estate  and 
building  associations  to  be  paid  upon  any  portion  of  its 
capital  which  has  been  loaned  or  advanced  to  a  shareholder 
upon  real  estate,  upon  which  real  estate   tax   is  payable 

(made  so  by  statute).  A  statute  termination.  Pottsville  National 
imposing  a  tax  on  all  corporations  Saving  Fund  Association  v.  Com- 
doing  business  applies  to  a  building  monwealth,  2  Chest.  (Pa.)  189. 
association  that  has  ceased  to  make  A  general  law  taxing  mortgages 
loans  and  to  collect  monthly  dues  does  not  apply  to  building  associa- 
from  members  who  had  not  bor-  tion  mortgages.  Faust  v.  Twenty- 
rowed,  but  is  still  collecting  debts  third,  etc.,  Ass'n,  84  Md.  186  :  s.  c. 
due  it  and  discharging  existing  ob-  35  Atl.  Rep.  890. 
ligations  and  generally  transact-  *  State  v.  Creoeling,  39  N.  J.  L. 
ing  all  business  necessary  to  a  final  463  ;  affirmed,  40  N.  J.  L.  192. 


428  BUILDING   AND    LOAN   ASSOCIATIONS.       Ch.  XIX. 

by  said  shareholder."  Under  this  statute  it  was  held  that 
stock  in  such  an  association,  represented  by  shares  upon 
which  no  advance  or  loan  had  been  made  to  the  owner,  was 
liable  to  taxation  at  its  true  market  value,  and  the  associa- 
tion must  return  this  class  of  stock  and  pay  the  tax  on  it."  1 
In  a  Pennsylvania  case  it  was  said :  "  The  legal  standard 
of  valuation  is  the  actual  cash  value  of  the  capital  stock, 
which  is,  of  course,  made  up  of  the  actual  cash  value  of  all  the 
shares,  without  regard  to  what  has  been  paid  in  on  them."2 

Sec.    382 — Payment  into    State    Treasury — Interstate 
Commerce. 

A  statute  requiring  foreign  building  associations  to  pay  a 
certain  per  cent,  into  the  state  treasury  is  valid,  and  is  not 
an  interference  with  interstate  commerce  nor  a  denial  to 
such  associations  of  equal  protection  of  the  laws,  even  if  the 
tax  is  not  imposed  as  a  condition  precedent  to  the  entrance 
of  the  corporation  into  the  state  to  do  business.3 

Sec.  383 — Exemptions. 

In  several  of  the  states  building  associations  are  exempt 
from  taxation ;  thus  receiving  a  special  favor,  on  the  theory 
that  they  are  institutions  to  aid  the  workingmen  in  securing 
hemes.4  But  under  a  statute  exempting  "  banks  and  saving- 
institutions  "  a  building  association  cannot  claim  exemption 
from  taxation.6  Under  a  clause  of  a  state  constitution 
authorizing  the  legislature  to  exempt  benevolent  institu- 
tions from  taxation,  such  legislature  cannot  exempt  a  build- 

iMcGowanu.  Savannah,  etc.,  As-  3  Southern  Building  &  Loan  As- 

iation,sO(;;i.  515;  s.  c.5So.Rep.  sooiation  v.   Norman,  98  Ky.  29  I  : 

775.    See  also  Charlotte  Building,  s.  c.  32  S.  W.  Rep.  952  ;  31  L.  R.  A. 

etc.,  Association  v.  <  Jommissioners,  -II. 

115  N.  I '.  I  in  ;  8.  C.  BOS.  E.  Rep.  526.  4  In  Michigan  see  Pub.  acts  1889 

a  Commonwealth    v.    Pottsville  No.  124,  p.  144. 

Saving  Fund  Association,  2  Chest.  6Bourignon    Building    Associa- 

189.    See  also  Building  Association  tion  v.  Commonwealth,  98  Pa.  St. 

Banking  Fees,  17  Pa.  C.  C.  62.     En  51  ;  s.  c.  38  Leg.  Int.  324;  10  W. 

West  Virginia  shares  are  assessed  N.Oas.101;  lSPhila.  628.     Contra, 

to  the  members.    Ohio  Valley,  etc.,  Abbott  v.  Muilding  Association,  1 

,,.  v.  Cobell  County,  43  W.  Va.  Del.  (Pa.)  397. 
sis  ;  s.  o.  26  8.  E.  208. 


§  383.  taxation.  429 

ing  association  ;  for  it  is  a  corporation  organized  to  make 
money  for  its  stockholders,  and  is  not  a  benevolent  institu- 
tion.1 A  statute  requiring  a  building  association  to  be  taxed 
on  all  its  stock  upon  which  no  advances  have  been  made  to 
stockholders,  and  providing  that  no  tax  shall  be  levied  upon 
any  portion  of  the  capital  loaned  to  its  stockholders  upon 
taxable  real  estate,  is  valid ;  and  stock  upon  which  no  ad- 
vances have  been  made  is  properly  assessed.2  A  statute 
providing  that  "  the  monthly  instalments  deposited  in  build- 
ing associations,  and  subject  to  withdrawal  on  demand,  or 
on  thirty  or  sixty  days'  notice,  as  provided  in  the  by-laws 
of  such  associations,  are  an  indebtedness  which  mav  be 
deducted"  from  their  taxable  propert}^ ;  such  instalments 
Avhen  loaned  out  are  not  so  subject  to  withdrawal,  and 
hence  no  deduction  can  be  made  on  account  of  them.3  A 
statute  releasing  from  taxation  notes  and  mortgages  given 
by  members  of  a  building  association  to  it  for  advances  on 
stock,  and  remitting  taxes  already  levied  but  not  collected, 
is  valid.4  Under  a  provision  in  a  tax  law  authorizing  a  tax 
levied  upon  the  amount  paid  into  the  association  upon  out- 
standing shares  of  stock,  less  the  amount  loaned  to  share- 
holders upon  mortgage  security,  and  that  neither  the  asso- 
ciation nor  the  shareholders  shall  be  liable  to  other  taxation 
upon  such  shares  of  stock,  paid  up  stock  is  not  exempt  from 
taxation.5  A  statute  exempting  paid-up  shares  from  taxa- 
tion, and  not  any  other  shares,  is  unconstitutional;6  and  so 
is  a  statute,  it  has  been  held,  which  exempts  notes  in  the 
hands  of  the  association  which  have  been  taken  for  loans.7 
In  England  it  has  been  held  that  a  statute  exempting  from 

i  State  v.  McGrath,  95  Mo.  193 ;  L.    R.   A.  752 ;  35  Araer.  &  Eng. 

S.  c.  8  S.  W.  Rep.  425  ;  22  Amer.  &  Corp.  Cas.  244. 

Eng.    Corp.    Cas.    620.      See    also  4  Selma  Building  and  Loan  As- 

Deniston  v.  Terrey,  141  Ind.  677  ;  sociation  v.  Morgan,  57  Ala.  33. 

s.  C.  41  N.  E.  Rep.  143.  *  Denistonv.  Terry,  141  Ind.  677  ; 

2  McGowan  v.  Savannah  Mutual  s.  c.  41  N.  E.  Rep.  142.  Under 
Loan  Association,  80  Ga.515  ;  s.  c.  such  a  statute  the  true  cash  value 
5  S.  E.  Rep.  775.  is  the  amount  taxable. 

3  State  v.  Redwood  Falls  Build-  6  Id. 

ing  and  Loan  Association,  45  Minn.  7  Homestead  Association  v. 
154 ;  S.  C.  47  N.  W.  Rep.   540  ;  10    Keith  (111.),  39  N.  E.  Rep.  1072. 


430 


BUILDING   AND   LOAN    ASSOCIATIONS.       Ch.  XIX. 


stamp  duties,  bonds,  securities,  and  assurances  given  on  ac- 
count of  any  friendly  society,  extends  to  building  societies.1 
Consequently  a  mortgage  taken  by  a  building  societ}7  as 
security  was  held  exempt  from  taxation.  This  rule  has 
also  been  extended  to  a  mortgage  given  by  a  non-member 
to  the  association  for  a  loan.2 

Sec.  384 — Covenant  to  Pay  Taxes. 

A  covenant  inserted  in  a  mortgage  given  to  a  building 
association  for  a  loan,  requiring  the  mortgagor  to  pay  the 
taxes  on  the  land  given  as  security,  is  valid  and  binding 
upon  him  ;  and  if  he  do  not  pay  them,  the  association  may 
claim  the  amount  under  the  mortgage.3  Even  though 
the  taxes  have  been  irregularly  assessed,  the  association 
may  pay  them,  if  it  has  no  notice  of  the  irregularity.4 


i  Walker  v.  Giles,  6  C.  B.  662  ; 
S.  c.  13  L.  T.  Rep.  209  ;  13  Jur.  588  ; 
18  L.  J.  C.  P.  323  ;  60  E.  C.  L.  662 ; 
Barnard  v.  Pils worth,  6  C.  B.  692  ; 
S.  c.  14  L.  T.  Rep.  132 ;  18  L.  J.  C. 
P.  330,  note. 

2  Thorn  v.  Croft,  L.  R.  3  Eq.  193  ; 
S.  C.  36  L.  J.  Ch.  68  ;  31  J.  P.  356  ; 
15  L.  T.  Rep.  (N.  S.)  205;  15  W. 
R.  54. 

In  Indiana  a  general  tax  law- 
makes  all  stock,  except  where  some 
other  provision  is  made  by  law,  tax- 
able in  the  corporate  name.  An- 
other statute  provides  that  building 
associations  shall  he  assessed  on  the 
surplus  of  receipts  over  loans,  and 
declares  thai  neither  they  nor  the 
shareholders  shall  be  liable  to 
-  ta  sal  ion  on  their  shares.  It 
was  held  i  bat  this  was  not  a  limit 
on    the   right  to   further  tax   the 

shareholders,  or  thoseto  whom  the 

company  were  Indebted  ;  and  it 
was  proper  to  tax  a  non-borrowing 
member  for  his  holdings,  which  are 
in  the  rial  are  of  a  credit ,  and  ii  was 


immaterial  whether  or  not  the  stock 
was  fully  paid  up.  Harn  v.  Wood- 
ard  (Ind.),  50  N.  E.  Rep.  33. 

For  a  decision  holding  that  a 
city  has  the  right  to  tax  a  building 
association  under  its  charter, 
when  a  general  state  law  of  ex- 
emption is  in  force,  see  City  Coun- 
cil of  Montgomery  v.  National 
Building  and  Loan  Association,  108 
Ala.  336  ;  s.  c.  18  So.  Rep.  816. 

A  general  statute  allowing  a 
debtor  to  deduct  the  amount  of 
his  general  indebtedness  from 
credits  due  him,  from  whatever 
source,  applies  to  a  borrowing 
stockholder,  who  may  deduct  the 
amount  he  has  borrowed  from  his 
association  from  the  value  of  his 
Stock.  Deniston  r.  Terry,  141  Ind. 
Cdr  :  s.  c.  41  N.  E.  Rep.  143. 

3  Huntington  Building  .Associa- 
tion v.  Melsheimer,  14  W.  N.  Cas. 
344. 

4  Bates  v.  People's  Saving  and 
Loan  Association,  42  Ohio  St.  655 ; 
14  Wkly.  L.  Bull.  396. 


CHAPTER  XX. 

DISSOLUTION — RECEIVER. 

Sec.  385.  Insolvency  as  a  Ground  for  the  Appointment  of  a  Receiver. 

386.  "Who  may  Demand  a  Receiver  for  an   Insolvent  Building 

Association. 

387.  Right  of  Member  to  Ask  for  Receiver  when  Shares  Reach 

Par  Value. 

388.  Mortgages  not  Assets  for  the  Purpose  of  Determining  the 

Solvency  of  the  Association. 

389.  Effect  of  Society  Reaching  Limit  of  its  Corporate  Existence. 

390.  Dissolution  by  Agreement. 

391.  When  Abandonment   of  Corporate   Existence  may  be   In- 

ferred. 

392.  Forfeiture  of  Franchise. 

393.  Suit  to  Wind  Up. 

394.  Liability  of  Member  for  Payment  of  Dues  and  the  Like  After 

Association  Suspends  Operations. 

395.  Apportioning  Profits  in  Serial  Association — Estoppel. 

396.  Distribution  of  Assets. 

397.  Effect  upon  Mortgages  or  Loans. 

Sec.    385 — Insolvency   as   a   Ground   for  the  Appoint- 
ment of  a  Receiver. 

Inasmuch  as  insolvency  does  not  dissolve  an  ordinary 
corporation,1  much  less  does  it  dissolve  an  ordinary  build- 
ing association.2  Owing  to  their  peculiar  organization, 
such  institutions  seldom  have  few  creditors  outside  of  their 
membership,  and  they  very  frequently  have  none.  "  The 
insolvency  of  such  an  institution  is  sui  generis.  There  can 
be,  strictly  speaking,  no  insolvency,  for  the  only  creditors 
are  the  stockholders  by  virtue  of  their  stock.  The  so-called 
insolvency  is  such  a  condition  of  the  affairs  of  the  associa- 

1  Michles  v.  Richmond  Bank,  11     Building  and  Loan  Association,  3 
Paige,  118.  W.  N.  Cas.  11. 

2  Gormerly    v.    Port    Richmond 

431 


432 


BUILDING   AND   LOAN   ASSOCIATIONS.         Cll.  XX. 


tion  as  reduces  the  available  and  collectible  funds  below  the 
level  of  the  amount  of  stock  already  paid  in.  The  associa- 
tion is  said  to  be  insolvent  when  it  cannot  pay  back  to  the 
stockholders  the  amount  of  their  actual  contribution,  dollar 
for  dollar."  J 

"While  a  building  association  has  the  power  to  make  a 
general  assignment,2  yet  it  would  seem  that  a  better  method 
of  procedure  is  to  apply  for  a  receiver  in  case  of  insolvency, 
and  the  court  may  even  order  a  reassignment  to  the  associa- 
tion for  that  purpose.3 


1  Towle  v.  American  Building, 
Loan  and  Investment  Society,  61 
Fed.  Eep.  446 ;  People  v.  National 
Home  Building  and  Loan  Associa- 
tion, 7  Chicago  Law  Jr.  193.  See 
In  re  National  Savings,  Loan  and 
Building  Association,  9  W.  N.  Cas. 
79  ;  S.  c.  37  Leg.  Int.  299  ;  Chap- 
man v.  Young,  65  111.  App.  131. 
Commonwealth  v.  Pennsylvania 
B.  &  L.  Ass'n,  20  Pa.  C.  C.  589. 

2  Christian's  Appeal,  102  Pa.  St. 
184  ;  s.  0.  40  Leg.  Int.  261  ;  30  Pitts. 
L.  Jr.  435;  13  W.  N.  Cas.  181; 
Connolly  v.  Association,  6  W.  N. 
Cas.  176. 

:)  Tn  the  case  of  In  re  National 
Saving  and  Loan  and  Building  As- 
sociation, supra,  the  court  made 
the  following  order:  "Let  the 
general  creditors,  if  any,  be  paid, 
and  let  the  Auditor  so  report  if  he 
can.  Upon  petition  in  the  usual 
form,  ami  under  t  he  act  of  Assem- 
bly, tin-  general  creditors  being 
paid,  we  w  ill  order  a  reconveyance 
ami  assig  ament  of  t  he  enl  ire  prop- 
erty in  t  he  hands  of  the  assignee 
to  i  hi  a  i  nor.  A  l>ill  <>('  equity 
may  i hen  lie  prepared  at  the  suit 
of  those  intere  ted  in  a  final  sel  I  le- 
nient, in  w  hich  if  it  shall  appear 
t  h.ii  i  be  corporal  ion  is  insoh  enl , 
t hat  its  a  •  t  may  be  Lost ,  and 
t hat   by  t he  appoint cnenl  of  a  re- 


ceiver the  rights  of  all  may  be 
protected.  If  the  case  is  a  proper 
one  upon  the  bill  and  answers,  and 
proofs,  we  will  at  once  act  and 
direct  the  receiver,  by  a  cautious 
and  prudent  policy,  to  wind  up 
the  affairs  of  the  concern,  and 
then,  upon  hearing  and  proof,  so 
marshal  and  distribute  the  assets 
by  final  decree  as  to  do  justice  to 
all." 

Where  a  statute  provided  that 
when  the  assets  of  an  association 
were  insufficient  to  justify  the 
continuance  of  its  business,  it 
should  be  allowed  sixty  days 
within  which  to  make  its  assets 
sufficient,  and,  in  default  thereof, 
be  dissolved  ;  it  was  held  that  wip- 
ing out  the  deficiency  between  its 
assets  and  liabilities  by  charging 
it  off  pro  rata  against  theamounts 
paid  in  by  its  members  on  their 
stock  was  a  sufficient  compliance 
with  the  statute.  Continental, 
etc.,  So.  v.  People,  107  111.  195  ;  S.  C. 
47  N.  E.  Rep.  381.  But  see  People 
v.  Empire,  etc.,  Co.,  13  N.  Y.  Misc. 
Rep.  221 ;  s.  c.  34  N.  Y.  Supp.  235. 

The  fact  that  at  the  date  of  a 
not  ice  of  withdrawal  by  a  member, 
the  liabilities  of  the  association  to 
its  shareholders  were  in  excess  of 
the  value  of  its  assets,  constitutes 
an  insolvency.  Chapman  v.  Young, 


386. 


DISSOLUTION — RECEIVER. 


433 


Sec.  380 — Who   may   Demand   a   Receiver   for   an    In- 
solvent Building  Association. 

It  is  pretty  well  settled  that  only  a  shareholder  in  a 
building  association  may  ask  to  have  a  receiver  appointed 
for  it  when  insolvent,  and  he  must  ask  for  the  appointment 
in  his  character  as  a  shareholder,  and  not  in  the  character 
of  a  general  creditor  of  the  association.1  Where,  however, 
a  person  deposited  money  with  an  association  with  a  view 
of  becoming  a  member,  but  before  becoming  such  member 
gave  the  proper  notice  of  withdrawal,  it  was  held  that  he 
might  file  a  petition  to  wind  up  the  association,  the  associa- 
tion's rules  giving  it  no  authority  to  borrow  money.2 


65  111.  App.  131.  See  also  Contin- 
ental, etc.,  So.  v.  People,  167  111. 
195  ;  S.  C.  47  N.  E.  Eep.  381. 

In  a  New  York  case  it  was  held 
that  the  directors  cannot  charge 
off  a  deposit  against  the  stock  of 
members  so  as  to  render  the  asso- 
ciation solvent,  where  the  deposit 
was  created  by  expenditures  made 
in  violation  of  the  articles  of  the  as- 
sociation. People  v.  Empire,  etc., 
Co.,  44  N.  Y.  Supp.  308;  S.  c.  15 
App.  Div.  69. 

On  an  application  for  a  receiver 
on  the  ground  of  insolvency,  it  ap- 
peared that  the  alleged  indebted- 
ness consisted  of  $5000  "  bills  pay- 
able," none  of  which  were  held  by 
the  plaintiffs,  and  subscriptions  of 
"  free  shareholders,"  to  the  amount 
of  $74,000,  of  which  plaintiffs  repre- 
sented $545  ;  that  plaintiff  had  not 
given  notice  in  writing  of  their 
withdrawals,  and  hence  were  not 
creditors  ;  that  a  large  majority  of 
the  free  shareholders  desired  the 
business  continued ;  and  that  the 
available  assets  were  $50,950.  It 
was  held  that  a  receiver  ought  not 
be  appointed.  Steinberger  v.  In- 
dependent L.  &  S.  Ass'n,  84  Md. 
625  :  s.  C.  36  Atl.  Rep.  439. 
28 


1  Gormerly  v.  Port  Richmond 
Building  and  Loan  Association,  3 
W.  N.  Cas.  11. 

2  In  re  Queen's  Benefit  Building 
Society,  L.  R.  6  Ch.  Div.  815  ;  19 
W.  R.  597, 762  ;  40  L.  J.  Ch.  381  ;  24 
L.  T.  (N.  S.)  346.  See  In  re  Planet 
Benefit  Building  and  Investment 
Society,  L.  R.  14  Eq.  441  ;  s.  C.  27 
L.  T.  (N.  S.)  638;  20  W.  R.  935; 
41  L.  J.  Ch.  738.  But  see  the  con- 
trary in  In  re  National  Permanent 
Benefit  Building  Society.  5  Ch.  309 ; 
s.  c.  18  W.  R.  388 ;  22  L.  T.  284  ; 
34  J.  P.  341. 

The  Illinois  statute  of  1893  (p.  83) 
giving  the  auditor  of  public  ac- 
counts supervisory  power  over  loan 
associations,  providing  that  when- 
ever it  shall  appear  that  the  assets 
of  such  an  association  are  insuffi- 
cient to  warrant  the  continuance 
of  business,  and  the  association, 
after  notice,  fails  to  make  the  assets 
sufficient,  he  shall  report  the  facts 
to  the  attorney-general,  who  shall 
apply,  on  the  state's  relation,  for  a 
dissolution  of  the  association,  does 
not  authorize  that  officer  to  insti- 
tute the  suit  after  suit  brought  by 
a  stockholder  to  wind  up  the  con- 
cern as  insolvent,  but  before  that  is 


434  BUILDING   AND   LOAN   ASSOCIATIONS.         Ch.  XX. 

Sec.  387 — Right  of  Member  to  ask  for  Receiver  when 
the  Shares  Reach  Par  Yalue. 

When  the  shares  of  a  building  association  reach  their  par 
value  the  association,  in  case  it  is  a  terminating  one,  reaches 
the  limit  of  time  for  which  it  was  organized.  If  it  is  a  serial 
association,  then  the  stock  of  the  series  to  which  such  shares 
belong  has  terminated,  and  all  belonging  to  it  are  entitled 
to  receive  their  money,  except  such  as  have  anticipated  that 
payment  by  borrowing  or  securing  an  advancement.  It  is 
sometimes  difficult  to  determine  whether  that  point  of  time 
has  arrived,  for  it  rests  in  proof,  and  usually  the  officers  of 
the  association  have  the  best  opportunities  of  knowing  that 
fact.  If  they  choose  to  conceal  it,  and  for  some  purpose  of 
their  own  carry  the  association  along,  it  may  be  difficult  to 
establish  the  fact.  Bat  whenever  the  fact  is  established 
such  a  shareholder  may  insist  upon  the  appointment  of  a 
receiver  to  wind  up  the  association.1  If  the  effect  of  a 
member  becoming  a  borrower,  according  to  the  contract 
and  by-laws,  is  to  sever  his  relationship  with  the  association 
and  turn  him  into  a  debtor,  owing  the  association  a  fixed 

accomplished  an  assessment  is  made        Tins  right  has  been  recognized, 

which  renders  the  association  sol-  although  not  decided,  in  the  fol- 

vent  to  the  approval  of  such  audi-  lowing  cases  :  North  Hudson  Mu- 

tor.       Broadwell    v.     Inter-Ocean  tual  Building  and   Loan  Associa- 

Homestead   &   Loan    Association,  tion  v.    First   National   Bank.    79 

161  111.  327  ;  S.  C.  43  N.  E.  Rep.  1067.  Wis.  31  ;  S.  c.  47  N.  W.  Rep.  300  ; 

The  Missouri  statute  of  1895  pro-  10  L.  R.  S.  845  ;  Lister  v.  Log  Cabin 

viding  that  proceedings  by  the  su-  Building  Association,  38  Md.  L15; 

pervisor  of  building  associations  for  Bowkerv.  Mill  River  Loan  Fund 

the  winding  up  shall  he  conducted  Association,  7  Allen,  100;  Charles 

by  tin-  attorney-general  for  the  su-  Tyrell  Loan  and  Building  Associa- 

pervisor  is  not  mandatory  ;  so  thai  tion  v.  Haley,  13!)  Pa.  St.  477  ;  s.  c. 

when,  for  any  reason,  the  attorney-  20  Atl.   Rep.   1063;    O'Rourke  v. 

eral  refuses  or  fails  to  conduct  Wesl      Pennsylvania    Loan     and 

the  suit  at  the  relation  of  the  su-  Building  Association,  98  Pa.   St. 

pervisor,  it  may  be  conducted   by  308;  Casonv.  Seldner,  77  Va.  293  ; 

other  counsel.     Slate   v.   Flitcraft  s.  C.  (',  Amer.  &  Fug.  Corp.  Cas. 

(Mo.),  36  S.    \V.    Rep.  675.      Sec  630;  Edelyn  v.  Pascoe,  22  Gratt. 

Illinois  B.  &  L.  Ajbs'd  v.  People,  I  73  826.     In  a  suit  to  wind  up  an  asso- 

III.  638;  s.  o.  50  N.  E.  Rep.  1007.  ciation,  all  shareholders, including 

1  Amer.  v.  Union   Building  and  those  illegally  released,  should  be 

Loan     Association,    50    N.    J.    Eq.  made    parties.     Cason  v.   Seldner, 

170  ;  s.  o.  24  Atl.  Rep.  052.  mpra. 


§  388.  DISSOLUTION — RECEIVER.  435 

sum  of  money,  even  though  payable  in  weekly  or  other 
instalments,  he  is  not  entitled  to  maintain  a  bill  to  wind  up 
the  association  ;  for  after  he  has  made  his  payments  he  no 
longer  has  an  interest  in  the  association,  and  has  not  even 
the  footing  of  an  ordinary  creditor.1 

Sec.  388— Mortgages  not    Assets   for    the  Purpose  of 
Determining'  the  Solvency  of  the  Association. 

For  the  purpose  of  determining  whether  or  not  an  asso- 
ciation is  solvent  or  insolvent,  and  whether  or  not  it  has 
reached  that  period  of  time  when  it  should  be  wound  up, 
the  mortgages  given  by  members  for  loans  cannot  be  con- 
sidered, for  they  are  not  assets.2  Where  it  was  claimed 
that  the  mortgages  should  be  considered  as  assets  the  court 
denied  the  claim,  saying:  "The  fallacy  consists  in  treating 
these  mortgage  debts  as  appropriate  assets,  to  be  calculated 
and  applied,  with  the  sum  from  the  net  revenues,  to  the  sat- 
isfaction of  the  claims  of  the  unpaid  shareholders.  They 
cannot  be  used  for  that  purpose.  The  association  has  no 
authority  to  collect  and  apply  the  indebtedness  under  the 
mortgage  to  the  liquidation  of  the  claims  of  the  unpaid 
members.  Whilst  they  exist,  and  are  of  binding  efficacy, 
they  are  only  a  source  of  revenue,  and  as  such  constitute  an 
efficient  part  of  the  available  assets  of  the  association.  The 
profits,  which  enable  the  company  to  pay  the  shareholders, 
also  operate  to  discharge  the  mortgages.  When  the  former 
are  paid  the  latter  are  released  ;  but  the  payment  of  the 
one,  and  the  release  of  the  other,  depend  upon  the  sufficiency 
of  the  general  revenues  and  assets."3  The  items  of  assets 
to  consider,  therefore,  in  determining  whether  or  not  an  as- 
sociation is  solvent  are  (a)  the  gains  by  premiums ;  (b)  interest 
received  ;  (c)  all  payments  made  by  borrowers  on  account  of 
the  principal  of  their  advancements,  and  not  reloaned  ;  (d) 

1  Bovvker  v.  Mill  River  Loan  Building  Association,  114  Ind.  226  ; 
Fund  Association,  7  Allen,  100.  s.  C.  16  N.  E.  Rep.  486;  l:j  West 
See  Overby  v.  Fayette  Building  Rep.  816  ;  22  Amer.  &  Eng.  Corp. 
and  Loan  Association,  81  N.  C.  56  ;  Cas.  612  ;  Lister  v.  Log  Cabin 
Whiter'.  Mechanics' Building  Fund  Building  Association.  38  Md.  115. 
Association,  22  Gratt.  233.  3  Lister  v.  Log  Cabin    Building 

2  Barton  v.  Enterprise  Loan  and  Association,  38  Md.  115. 


436  BUILDING   AND   LOAN   ASSOCIATIONS.       Cll.  XX 

and  all  stock  payments  made  by  non-borrowers  which  have 
not  been  devoted  to  the  advancement  of  other  members.1 

Sec.  389 — Effect  of  Society  Reaching  Limit  of  its  Cor- 
porate Existence. 

When  a  building  society  has  reached  the  limit  of  its 
existence  as  fixed  by  the  charter  or  articles  of  association,  or 
by  the  maturity  of  its  shares  as  in  the  case  of  a  terminating 
association,  it  ceases  to  exist  any  longer,  except  for  the  pur- 
pose of  winding-up  its  affairs.2  It  can  no  longer  maintain 
a  suit.3  A  judgment  rendered  against  it  after,  but  in  a  suit 
brought  before,  that  period  of  time,  is  void,  unless  some 
statute  expressly  authorizes  it.4 

Sec.  390— Dissolution  by  Agreement. 

The  stockholders  of  a  building  association  may  abandon 
the  original  scheme  of  the  association  by  agreement  and 
adopt  a  new  one,5  or  wind  it  up.6  The  dissolution  may  be 
effected  by  acquiescence  of  all  the  stockholders  in  the  action 
of  some  of  their  number  voting  to  dissolve  the  association.7 
But  all  must  consent  to  the  dissolution  or  winding-up ;  and 
a  dissenting  minority,  however  small,  may  maintain  a  suit 

1  Real  estate  on  land  may  be  es-  4  Id.     See   Building  Association 

timated  at  the  value  paid  for  it  at  v.   Beyer,  17  Phila.  314;  s.  c.   41 

the  sheriff's  sale,  or  the  true  value  Leg.    Int.    280,   holding  that    the 

may  be  shown.     Burns  v.   Metro-  officers,  after  the  expiration  of  the 

politan    Building    Association,    2  charter,  may  execute   a  warrant 

Mackey,  7.  of  attorney  to  cany  on  suits,  un- 

-  Eagerman    v.    Ohio    Building  der  a  general  statute  authorizing 

and  Savings  Association,  25  Ohio  such  associations  to  maintain  ac- 

si .  L86  :  Laurel  Run  Building  As-  tions  after  their  dissolution. 

Bociation  v.  Sperring,  100  Pa.  St.  5  City  Loan,  etc.,  Association  v. 

334.  Goodrich,  48  Ga.  445. 

3  Cooper  v.  Oriental  Savings  and  G  White   Haven   Loan    Building 

Loan  Association,  100  Pa.  St.  402  ;  Association  v.  Kelley,   1   Kulp.  9 ; 

Vim    ivit    r.   Borne   Building  and  s.  c.   Luz.   Leg.   Reg.   9.     Under 

Loan  Associal  ion,  *7  <  la.  :'.7<) ;  s.  o.  a  statute  Mechanics',  etc.,  Ass'n  v. 

IB  B.  B.  Rep.  ■"■;  1  :  s.  o.  79  Ga.  189;  People,  72111.  App.  160. 

I  S.  E.  Rep.  501  ;   19  Ann  r.  &  Eng.  7  People  v.  Lowe,  117  N.  Y.  175  ; 

Corp.  Cas.  66;  Borne  Building  and  s.  c.  22  N.  S.  Rep.  1016  ;  31  Amer. 

I. .,.iu  Association  r.  Van   Pelt,  94  &  Eng.  Corp.  Cas.  239;  47  Hun, 

Ga,  615  ;  s.  o.  SI  S.  E.  Rep.  606.  577. 


§  390.  DISSOLUTION — RECEIVER.  437 

for  an  injunction  to  prevent  the  dissolution.1  Thus,  where 
it  was  provided  in  the  articles  of  association  that  it  should 
continue  in  operation  eight  years,  unless  it  should  sooner 
have  sufficient  funds  to  pay  its  debts  and  redeem  its  stock, 
a  resolution  dissolving  the  association  before  the  time  lim- 
ited, without  the  consent  of  all  the  shareholders,  and  with 
unredeemed  stock  outstanding,  was  held  void  and  without 
effect.2  If  a  member  claims  the  benefit  to  be  derived  by  a 
dissolution  of  the  association  without  his  consent,  he  cannot 
object  to  the  dissolution  thereafter.3  Whatever  arrange- 
ment, however,  the  members  of  the  association  may  enter 
into  for  a  winding-up  of  the  association  will  be  upheld. 
Thus,  an  agreement  made  by  all  the  parties  interested  that 
the  affairs  of  the  company  should  be  wound  up,  and  that 
the  owners  of  the  unredeemed  shares  should  receive  the 
sums  they  had  advanced,  with  interest,  and  that  the  owners 
of  the  unredeemed  shares  who  had  given  mortgages  for  the 
price  of  redemption  should  be  discharged  upon  paying  the 
amount  of  their  mortgages,  with  interest,  was  held  valid 
and  enforced.4 


1  Pfaff  v.  Building  Association,  Canadienne-Francaise,  6  Montreal, 
6  W.  N.  Cas.  349.  Q.  B.  464. 

2  Barton  v.  Enterprise  Loan  and  If  the  members  agree  to  wind 
Building  Association,  114  Ind.  226  ;  up  the  association  before  it  reaches 
s.  c.  16  N.  E.  Rep.  486;  13  West  its  period  of  limitation,  repudiating 
Rep.  816  ;  22  Amer.  &  Eng.  Corp.  the  original  scheme,  and  charging 
Cas.  612.  each  other  with  the  amount  re- 

3  Central  Building  Association  ceived  with  interest,  and  allowing 
v.  Witzell,  13  Phila.  54  ;  S.  C.  36  him  interest  on  the  amount  paid 
Leg.  Int.  174.  in,  the  rate  of  interest  must  be  the 

4  Hoboken  Building  Association  legal  rate  and  cannot  exceed  that 
v.  Martin,  2  Beas.  (N.  J.)  Eq.  427.  rate,  although  if  the  original 
See  Himman  v.  Ryan,  3  Ohio  C.  C.  scheme  had  been  followed,  a 
529.  greater  rate  of  interest  or  profit 

After  the  adoption  of  a  resolu-  would  have  been  realized  than  the 

tion   to  dissolve  the    association,  general  interest  law  allows.     City 

under  a  statute  providing  for  such  Loan,   etc.,  Association    v.  Good- 

a  dissolution,  and  the  proper  offi-  rich,  48  Ga.  445. 

cers  have  entered  upon  their  duties,  See  People  v.   Lowe,  117  N.  Y. 

the  association  is  dead  and  cannot  175 ;  S.  C.  22  N.  E.  Rep.  1016. 
be  revived.     Larivee  v.  La  Societe 


438  BUILDING   AND   LOAN   ASSOCIATIONS.       Cll.  XX. 

Sec  391 — When  Abandonment  of  Corporate  Existence 
May  be  Inferred. 

It  cannot  be  said  that  mere  non-user  is  a  surrender  of 
corporate  rights  or  powers ;  but  a  failure  to  exercise  its 
powers  for  a  long  period  may  be  evidence  sufficient  from 
which  to  infer  that  at  some  time  there  was  an  abandonment, 
either  expressly  or  tacitly.  This  is  peculiarly  true  of  build- 
ing associations.  A  case  in  point  is  where  one  member 
united  in  himself  all  the  bonds,  mortgages,  and  assets  of  the 
association,  and  all  unredeemed  shares.  The  effect  was  that 
not  enough  members  were  left  to  make  a  quorum ;  and  con- 
sequently no  officers  could  be  elected.  The  court  came  to 
the  conclusion  that  the  assignment  to  this  member,  who  was 
the  security,  of  all  these  bonds,  mortgages,  and  shares 
"  amounted  to  a  complete  suspension,  at  least,  if  not  to  a 
final  dissolution  of  the  corporation  by  the  unanimous  con- 
sent of  all  members." J 

A  like  holding  was  held  where  an  association  paid  off  all 
its  stockholders,  assigned  all  its  unpaid  loans,  and  ceased  to 
transact  any  business.2 

Sec.  392 — Forfeiture  of  Franchise. 

A  corporation  may  so  abuse  its  corporate  powers  as  to 
justify  the  courts,  in  a  proceeding  brought  for  that  purpose, 
to  declare  that  it  has  forfeited  its  franchise.  Courts  are, 
however,  very  loathe  to  enter  a  decree  of  forfeiture,  except 
in  a  clear  case.  Thus,  if  a  building  association  should  take 
its  funds  and  use  them  in  a  general  banking  business,  no 
doubt  the  courts  would  feel  called  upon  to  declare  that  it 
had  forfeited  its  franchise,  although  the  occasional  discount- 
ing of  a  bill  of  exchange  or  promissory  note  would  not  have 
that  effect.8  A  materia]  defect  in  the  proceedings  for  its 
incorporation  may  be  sufficient  to  justify  the  state  in  asking 

1  <'<><>k  v.  Cent,  105  Mass.  246.  8  Manufactures  and   Mechanics' 

-  Y;ni  I'll!  c.  Home  liuildiu^and  Saving  and   Loan  Co.  v.  Conover, 

Loan    \  isociation,  s?  G-a.  :i70  ;  s.  c.  5  Phila.  18  ;  State  v.  Oberlin  Build- 

13  S.  E.  Rep.  574;  Borne  Building  ing  and  Loan  Association,  35  Ohio 

and  Loan  Association  v.  Van  Pelt,  St.  258. 

'at  Oa.  615;  s.  c.  21  S.  E.  Rep.  606. 


§  393.  DISSOLUTION — ItECEIVER.  480 

for  a  decree  of  forfeiture.1  The  adoption  of  an  invalid  by- 
law, however,  is  not  sufficient  to  work  a  forfeiture  of  its 
franchise,  unless  the  by-law  is  so  radical  as  to  evince  a  deter- 
mination on  the  part  of  the  association  to  radically  change 
and  pervert  the  original  object  of  the  incorporation.2  But, 
in  all  these  instances,  no  private  person,  unless  some  statute 
authorizes  it,  can  ask  for  a  forfeiture  of  the  association's 
franchise.  Only  the  state,  through  its  duly  constituted  offi- 
cers, can  do  that.3 

Sec.  393— Suit  to  Wiiid  Up. 

Whenever  a  building  association  is  insolvent,  and  he  can- 
not otherwise  realize  his  claim,  a  stockholder  may  petition 
a  court  of  equity  to  wind  it  up.4  And  a  court  of  equity  has 
jurisdiction,  at  the  suit  of  the  shareholder  of  unredeemed 
shares,  to  call  the  unredeemed  shareholders  to  an  account, 
enforce  payment  of  what  they  respectively  owe,  distribute 
the  fund  among  the  unredeemed  shareholders,  and  wind  up 
the  institution.5  In  such  an  instance  all  the  members  must 
be  made  parties.  "  In  this  case,  the  sum  fixed  by  the  arti- 
cles is  $200  on  each  of  the  unredeemed  shares,  after  paying 
the  liabilities  of  the  company.  No  other  provision  is  made 
for  the  dissolution  of  the  association.  Until  it  ceases  to 
exist  the  obligation  of  the  appellant  to  pay  the  stipulated 
monthly  dues  and  interest   continues.     In  like  manner  a 

1  Beeket  v.  Uniontown  Building  another  or  in  favor  of  a  shareholder 
Association,  88  Pa.  St.  211 ;  Work-  as  against  the  association.  People 
ingmen's  Building  Association  v.  v.  National  Home  Building  and 
Coleman,  89  Pa.  St.  428.  See  Mar-  Loan  Association,  7  Chicago  Law 
tin  v.  Nashville  Building  Associa-  Jur.  193. 

tion,  2  Coldw.  418  ;  Gordon  v.  Win-  i  In  re  Premier  Permanent  Build- 

chester  Building  and  Accumulat-  ing  Association,  11  Australia  L.  T. 

ing  Association,  12  Bush.  110.  139  ;  In    re    Premier    Permanent 

2  Beeket  v.  Uniontown  Building  Building,  etc.,  Association,  L.  R. 
Association,  supra ;  Rhoads  v.  16  Vict.  (Australian)  20  ;  Com- 
Hoernerstown  Building  Associa-  monwealth  v.  Pennsylvania  B.  & 
tion,  82  Pa.  St.  180  ;  State  v.  Ober-  L.  Ass'n,  20  Pa.  C.  C.  89 ;  Siborg 
lin  Building  and  Loan  Association,  v.  Security,  etc.,  Ass'n  (Minn.),  75 
supra.  N.  W.  Rep.  1116. 

3  The  state  cannot  interfere  in  5  Edelon  v.  Pascoe,  22  Gratt- 
behalf  of  one  shareholder  as  against  826. 


440  BUILDING   AND   LOAN   ASSOCIATIONS.         CI).  XX. 

reciprocal  obligation  rests  upon  every  other  stockholder  to 
pay  as  required  by  the  articles  of  association.  All  of  the 
stockholders,  therefore,  should  have  been  brought  before 
the  court,  and  their  respective  liabilities  to  the  association 
enforced,  including  those  illegally  released,  if  any  such 
were  found.  Provision  should  also  have  been  made  for  the 
collection  of  their  monthly  payments  as  they  become  due,  and 
for  the  enforcement  of  all  liabilities  and  the  collection  of  all 
debts  and  assets  of  the  association,  and  the  fund  preserved 
until  sufficient  to  pay  all  of  the  debts,  if  any,  and  $200  on 
each  of  the  redeemed  shares,  unless  the  company  is  sooner 
dissolved  by  a  vote  of  the  stockholders."  1  No  one,  how- 
ever, except  a  stockholder  or  creditor  can  ask  that  the  asso- 
ciation be  wound  up.  Thus,  where  the  plaintiff  owned  only 
four  shares,  which  stood  in  the  name  of  another,  which  he 
purchased  after  the  society  had  gone  into  liquidation  and 
after  it  was  in  fact  wound  up,  it  was  held  that  he  had  no 
interest  to  bring  the  action.2 

Sec.  394 — Liability  of  Member  for  Payment  of  Dues  and 
the  Like  after  Association  Suspends  Operations. 

Aside  from  the  question  of  contributions  when  an  associa- 
tion suspends  operations  by  reason  of  its  insolvency,  a  bor- 
rowing member  of  such  association  is  released  from  any 
further  liability  to  carry  out  the  covenants  of  his  mortgage, 
and  is  entitled  to  have  his  mortgage  released  on  paying  the 
sura  justly  due3  IFe  is  no  longer  liable  for  the  payment  of 
dues.4     So  where  the  by-laws  of  an  association  required  dues 

i  Cason  v.  Seldner,  77  Va.  093.  Ind.  544  ;  s.  C.  23  N.  E.  Rep.  689; 

2  Belanger   v.   Gauthier,  5  Leg.  Miller  v.  Second  Jefferson  Building 

News.    171;  In   re    National    Per-  Association,  50  Pa.  St.  32 ;  Hinman 

maneni  Benefit   Building  Society,  v.  Ryan,  3  Ohio  ( '.  C.  529.    A  pro- 

5  Ch.  309;  8.  C.   18  W.  R.  388 ;  22  posal  on  the  part  of  the  association 

L.  T.  284;  34  J.  P.  341.  to  go  into  liquidation  according  to 

8  Hampstead    Building   Aasocia-  a  certain  plan  will  not  justify  a 

tion  v.  King.  58  Mil.  079.  member  in  ceasing  to  pay  dues,  al- 

1  Blakeley    v.  El    Paso   Building  though  it  be  stated  that  the  asso- 

and   Loan    Association    (Tex.  Civ.  ciation  will  come  to  bankruptcy  if 

Ap|).i    26    S.    \V.    Rep.    292.    See  it  go  on  the  old  plan.    PioneerSav- 

Lime    City    Building  Saving  and  ing  and  Loan  Co.  v.  Oxford  (Tex. 

Loan     Vasociation    v.    Black,    186  Civ.  App.),  85  S.  W.  Rep.  1078. 


§  394.  DISSOLUTION — RECEIVER.  441 

and  instalments  to  be  paid  weekly,  and  provided  further 
that  "  all  loans  shall  become  due  in  six  years  from  the  date 
of  this  corporation,  or  on  the  stock  of  the  association  becom- 
ing of  par  value,  in  either  of  which  cases  the  note  given  by 
the  borrower,  and  the  stock  upon  which  the  loan  was  made, 
shall  be  set  off  against  each  other,"  it  was  held  that  a  bor- 
rower who  paid  the  required  dues  and  instalments  for  a 
period  of  six  years,  thereby  extinguished  his  obligations  to 
the  association,  and  was  not  liable  to  make  any  further  pay- 
ments.1 Likewise,  where,  by  agreement  of  all  the  sharehold- 
ers, the  money  advanced  to  members  is  to  be  theirs  absolutely, 
if  they  pay  all  dues  and  interest  and  agree  to  take  the 
amounts  so  advanced  in  full  for  their  stock,  the  conditions 
being  fulfilled,  mortgages  executed  by  them  are  not  enforce- 
able, and  do  not  constitute  assets  of  the  association  ;  and  if 
there  be  no  assets  for  distribution,  a  receiver  will  not  be 
appointed.2  The  appointment  of  a  receiver  for  a  building 
association  terminates  the  liability  of  the  stockholders  for 
monthly  dues,3  but  interest  upon  their  mortgages  continues.4 

1  Lime  City  Building,  Saving  they  ought  to  be  allowed  not  only 
and  Loan  Association  v.  Wagner,  for  the  sums  paid  by  them  as 
122  Ind.  78;  s.  c.  23  N.  E.  Rep.  weekly  dues,  but  also  for  what 
689.  But  see  Buist  v.  Fitzsimons,  they  paid  as  interest  ;  while  they 
44  S.  C.  130  ;  S.  C.  21  S.  E.  Rep.  610.  are  to  be  charged  interest  at  the 

2  Barton  v.  Enterprise  Loan  and  rate  of  six  per  cent,  per  annum  on 
Building  Association,  114  Ind.  226  :  the  sums  advanced  by  the  associa- 
s.  c.  16  N.  E.  Rep.  486  ;  13  West  tion,  and  so  from  time  to  time  on 
Rep.  816  ;  22  Amer.  and  Eng.  Corp.  the  balance  of  such  sums,  after  de- 
Cas.  612.  ducting    therefrom    the     moneys 

3  Buist  v.  Bryan,  44  S.  C.  121  ;  paid  by  them  for  weekly  dues  and 
S.  C.  21  S.  E.  Rep.  537  ;  Brown  v.  interest.  On  payment  of  the  bal- 
Archer,  62  Mo.  App.  277  ;  s.  c.  1  ance  due  upon  their  mortgages, 
App.  Mo.  Rep.  465  ;  Pattison  v.  Al-  thus  ascertained,  they  will  be  en- 
bany,  etc.,  Association,  63  Ga.  373.  titled  to  have  the  same  released." 

4  Hinman  v.  Ryan,  3  Ohio  C.  C.  Windsor  v.  Bandel,  40  Md.  172. 
52!)  ;  State  Saving  and  Loan  Asso-  It  has  been  held  that  the  appoint- 
ciation  v.  Carroll,  15  Pa.  C.  C.  522  ;  ment  of  a  receiver  causes  debts  due 
s.  c.  4  Pa.  Dist.  Rep.  6.  it  to  mature,  yet  the  receiver  can- 

"  The   orignal   contract   having  not  enforce  a  mortgage  given  to 

been   broken    up,   the  liability  of  secure  them  under  the  power  of 

the  appellants  on  their  mortgage  sale  contained  in  such  mortgage, 

should  be  ascertained  in  the  ordi-  the   association  alone   having  the 

nary  way.     In  stating  the  account  power  to  do  that.     Straus  v.  Caro- 


442  BUILDING   AND    LOAN   ASSOCIATIONS.  Ch.  XX. 

Sec.  395. — Apportioning  Profits  in  Serial  Association — 
Estoppel. 

The  proper  method  of  apportioning  the  profits  of  a  build- 
ing association  having  more  than  one  series  of  stock  is  to 
divide  them  equally  among  the  shares  in  proportion  to  the 
amount  paid  on  each  share ;  and  to  ascertain  the  value  of 
any  particular  share  at  a  given  time  there  must  be  added  to 
the  amount  paid  on  the  share  a  proportion  of  the  profits 
thus  ascertained.  The  fact  that  a  shareholder  has  acqui- 
esced for  a  number  of  years  in  a  different  method  adopted 
by  the  association,  by  which  the  profits  were  divided  equally 
among  all  the  shares  without  regard  to  the  amount  paid  in, 
will  not  estop  him  from  requiring  that  the  method  of  ascer- 
taining the  value  of  his  share  be  changed  to  that  indicated 
above  as  the  proper  method.1  But  upon  the  question  of 
estoppel  the  rule  laid  down  in  this  case  has  not  always  been 
followed.  Thus,  where  an  amended  section  of  the  by-laws 
of  an  association  gave  to  borrowing  members  the  right  to 
dividends  on  the  total  amount  of  dues  paid  by  them  prior 
to  the  declaration  of  such  dividends,  as  well  as  to  the  rebate 
of  interest  therein  provided  for;  yet  where  under  the  con- 
stitution, by-laws  and  regulations  adopted  prior  to  such 
amendatory  section,  it  was  the  plan,  in  addition  to  such 
rebate  of  interest,  to  allow  dividends  to  borrowing 
members  only  on  dues  paid  by  them  during  the  fiscal  year, 
for  which  the  dividends  to  non-borrowing  members  on  all 
dues  paid  by  them  prior  to  declaring  such  dividend;  and  if 
at  the  time  the  person  became  a  borrowing  member  he  was 
ful  1  v  advised  of  the  manner  in  which  dividends  were  de- 
clared, and  with  full  knowledge  thereof  continuously  for 
eight  years  continued  to  receive  dividends  so  declared,  and 
without  complaint  allowed  such  association  to  deal  with  all 
its  members  on  the  same. plan,  and  to  pay  or  credit  to  non- 
borrowing  members,  many  of  whom  ceased  to  bo  mem- 
bers, such   dividends,  such   person  was  held  estopped  from 

Una  Interstate  Building  and  Loan        l  Charles  Tyrell  Loan  and  P.uild- 

\    jociation,  117  N.  C.808;  s.  c.  '-':(  ing  Assoeiation  v.  Haley,  1G.'3  Pa. 

S.  I-;.  Rep.  450  ;  affirmed,  lis  N.  < '.  Si.  301  :   s.  c.  35  W.  N.  Cas.  269; 

j.  <-.  84  s.  I,.  Rep.  I!''..  80  Atl.  Rep.  L54. 


§  396.  DISSOLUTION — RECEIVES.  443 

claiming  that  such  method  was  contrary  to  the  statute  in 
force,  and  that  he  was  entitled  to  dividends  on  all  dues  paid  by 
him,  which  would  require  a  recasting  of  all  the  accounts  of 
all  the  members  during  such  time,  and  which  would  result 
in  great  loss  to  the  association.1 

Where  mistakes  of  fact  are  made  in  the  compilation  and 
apportionment  of  the  profits  among  the  several  series  of 
stock  of  a  building  association,  and  a  settlement  into  which 
such  errors  have  entered  is  made  between  the  association 
and  stockholders  of  one  of  the  series,  whereby  their  stock 
is  extinguished,  the  fact  that  the  members  of  such  series  had 
ceased  to  be  stockholders  at  the  time  of  the  filing  of  their 
bill  is  no  reason  why  they  may  not  invoke  a  court  of  equity 
to  correct  the  errors.  The  ordinary  stockholder  is  not  held 
to  the  strict  and  rigorous  rule  as  to  knowledge  of  the  affairs 
of  a  corporation  that  applies  to  the  officers,  and  therefore  is 
not  precluded  from  asking  for  equitable  relief  from  such 
errors,  because  the  quarterly  and  annual  reports  of  the  offi- 
cers were  read,  audited  and  approved  at  the  stockholders' 
meeting.  But  the  directors  and  officers  being  directly  re- 
sponsible for  the  management  of  the  affairs  of  such  associa- 
tion, and  such  mistakes  having  arisen  from  their  own  negli- 
gence, they  are  estopped,  and  cannot  have  the  aid  of  a  court 
of  equity  to  correct  a  settlement  based  upon  them.2  Where 
officers  of  an  association  proceeded  to  wind  up  an  associa- 
tion, pursuant  to  a  resolution  of  the  majority,  and  after 
having  paid  a  part  it  was  found  that  the  remaining  stock- 
holders, who  had  not  consented  to  the  arrangement,  would 
not  receive  as  much  as  those  already  paid,  it  was  held  that 
the  officers,  who  had  acted  in  good  faith,  were  not  liable  to 
the  unpaid  stockholders.  In  such  a  case  the  unpaid  stock- 
holders can  sue  those  paid  off  for  an  equalization  of  the 
payments.3 

Sec.  396 — Distribution  of  Assets. 

Elsewhere 4  has  been  discussed  the  effects  of  insolvency 

1  Buehlman  v.  Atlantic,  etc.,  As-  3  Goodrich  v.  City  Loan,  etc., 
sociation,  6  Ohio  C.  C.  285.  Association,  54  Ga.  98. 

2  Mutual  B.  &  L.  A.'s  Appeal,  33  *  Sees.  348-365. 
Pitts.  L.  Jr.  324(1886). 


444  BUILDING   AND   LOAN   ASSOCIATIONS.  Ch.  XX. 

upon  the  membership  of  an  association,  and  the  liability  of 
the  members  to  contribute  to  the  losses  of  the  association  in 
order  to  equalize  in  value  its  shares,  whether  held  by  bor- 
rowing or  non-borrowing  members,  or  even  by  those  who  had 
withdrawn  from  the  association.  It  is  not  necessary  in  this 
connection  to  again  discuss  that  condition  of  an  association  ; 
but  turn  to  a  discussion  of  the  rights  of  members  to  a  dis- 
tribution of  the  assets  of  the  association  when  it  lias  reached 
the  termination  of  its  corporate  existence,  in  whatever  v 
that  may  be  brought  about.  To  begin  with,  it  is  plain  that 
all  outside  creditors  must  first  be  paid,1  as  well  as  the 
expenses  of  maintaining  the  association.  So,  too,  must  all 
depositors  with  the  association,  when  that  relationship  does 
not  require  them  to  become  members  of  the  association.2  A 
member  may  also  be  a  general  creditor  of  and  likewise  a 
depositor  with  the  association,  and  be  entitled  to  have  his 
claims  in  these  capacities  satisfied,  just  as  if  he  bore  no 
other  relationship  to  the  association.3  So  a  member  hold- 
ing prepaid  stock  under  a  by-law  securing  the  repayment  of 
the  amount  in  excess  of  dues  actually  accrued  is  entitled  to 
he  paid  that  excess  before  any  of  the  general  members 
paid.4  A  like  rule  prevails  where  a  member  holds  pre- 
ferred stock.5  In  some  cases  it  is  held  that  a  member 
whose  stock  lias  been  redeemed  is  not  entitled  to  share  in 
the  profits  of  the  business  accruing  thereafter,  for  hece:: 

be  a  member,  and  has  no  further  interest  in  the  associa- 
tion.6    But  these  casesare  not  in  harmony  with  the  greater 

1  Kisterbock's  Appeal,  50  Pa.  St.     ton,  140  N.  Y.  54!)  ;  s.  C.  35  N.  E. 

///  re   Mutual,  etc.,  Society,  Rep.  979.     See  In  re  Reliance  Per- 
il. R.  30  Ch.  Div.  434.  manent  Benefit  Building  Society, 

2  Christian's  Appeal,  102  Pa.  St.  01  L.  J.  Ch.  453;  66  L.  T.  (N.  S. ) 
184;  s.  c.   13    W.   N.   Cas.    181;  30  823;  81  L.  R.  525. 

Pitl  3.  I..  -Jr.  135  ;  40  Leg.  Int.  2G1.  8  Overby  v.  Fayette  Buildingand 

8  Christian's  Appeal,  supra.  Loan    Association,   M    N.   C.   56; 

Bennighausen  v.  Tisher,  50  Mil.  Whiter.  Mechanic's  Building  Fund 

5    ;.  Association,  22  Gratt.  233  ;  Edelyn 

1  Munhall   v.  Boedecker,  44  111.  v.  Pascoe,  22  Gratt.  826. 

Ajip.   131.  The    assets    must     lie     converted 

6  Murray  v.  Scott,  '■>   A.pp.  Cas.     into  cash  and  then  distributed,  un- 

519;  B.C.    5:»  L.  .J.    715;   83    W.    h'.      less  the  members  universally  agree 
:,l   L.  T.    162.      People   V.  Pres-     otherwise.        Mercer     v.      AmMer 


396. 


DISSOLUTION — RECEIVER. 


445 


number  of  authorities  ;  for  it  is  pretty  generally  held  that 
both  advanced  and  unadvanced  members,  no  question  of  in- 
solvency intervening,  share  alike  in  the  profits  or  assets  of 
the  association  remaining  when  it  is  wound  up.1 

If  a  member  has,  however,  given  notice  and  withdrawn 
from  the  association  according  to  its  by-laws,  he  has  sev- 
ered his  membership  with  the  association,  and  is  not  entitled 
to  a  share  of  its  assets  on  its  dissolution.2  Earnings  on 
stock  made  subsequent  to  the  death  of  the  holder  are  to  be 
treated  as  income  and  paid  to  the  life-tenant.3 

An  association  cannot  divide  or  distribute  its  funds 
among  its  members  in  advance  of  the  distribution  at  the 
winding  up  of  the  corporation  ;  and  if  it  do  it  may  work  a 
forfeiture  of  its  charter.4 

If,  however,  a  right  of  priority  in  payment  has  been  ac- 
quired by  a  withdrawing  member,  it  cannot  be  taken  away 
by  a  dissolution  of  the  society,  even  under  the  statutory  dis- 


Building  and  Loan  Association,  10 
Pa.  C.  C.  51  ;  s.  C.  48  Leg.  Int.  277  ; 
Plymouth  Building  Association  v. 
Mangan,  2  Kulp.  210. 

1  Seibel  v.  Victoria  Building  As- 
sociation, 43  Ohio  St.  371  ;  S.  C.  10 
Amer.  &  Eng.  Corp.  Cas.  460 ;  re- 
versing, 13  Wkly.  L.  Bull.  265; 
Mercer  v.  Ambler  Building  and 
Loan  Association,  10  Pa.  C.  C.  51  ; 
Lister  v.  Log  Cabin  Building  As- 
sociation, 38  Md.  115  ;  State  Saving 
and  Loan  Association  v.  Carroll,  15 
Pa.  C.  C.  522. 

The  dividing  of  profits  among  the 
shareholders  is  said  to  give  the 
workings  of  the  corporation  a  re- 
semblance to  that  of  a  savings 
bank.  Atwood  v.  Dumas,  149 
Mass.  167  ;  s.  C.  21  N.  E.  Rep. 
236. 

On  maturity  of  a  series  of  stock 
of  a  building  association,  bor- 
rowers and  non-borrowers  stand 
on  an  equal  footing ;  non-bor- 
rowers cannot  be  required  to  take 


less  in  cash  for  their  stock  than 
the  borrowers  received  credit  on 
their  mortgages.  Mercer  v.  Am- 
bler Building  and  Loan  Associ- 
ation, supra. 

2  Security  Loan  Association  v. 
Lake,  69  Ala.  456  ;  s.  c.  1  Amer.  & 
Eng.  Corp.  Cas.  418. 

3  Elton's  Estate,  1  Pa.  Dist.  Rep. 
458  ;  s.  c.  30  W.  N.  Cas.  275 ;  49 
Leg.  Int.  268. 

4  State  v.  Oberlin  Building  and 
Loan  Association,  35  Ohio  St.  258. 

Borrowing  stockholders,  in  or- 
der to  wind  up  an  association  be- 
fore its  time,  cannot  compel  non- 
borrowing  members  to  accept  a 
sum  per  share  less  than  the  amount 
fixed  by  the  charter.  Pfaff  v. 
Kensington  Building  Association, 
6  W.  N.  Cas.  349. 

If  an  association  has  made  an 
assignment,  a  borrowing  member 
on  paying  off  his  loan  is  entitled 
to  have  his  stock,  assigned  as  col- 
lateral security,  reassigned,  in  or- 


44.6 


BUILDING   AND   LOAN   ASSOCIATIONS.        Cll.  XX. 


solution  provided  for  by  the  English  Building  Society's  Act. 
Thus,  where  an  instrument  of  dissolution  was  executed  by 
the  members  of  a  society  operating  under  that  act,  contain- 


der  that  iie  may  share  in  the  dis- 
tribution of  any  assets  that  may 
be  left.  State  Saving  and  Loan 
Association  v.  Carroll,  15  Pa.  C.  C. 
.v.-:. 

In  an  incorporated  building  and 
loan  society  the  shares  of  stock 
were  for  §1,000  each,  and  the  only 
actual  capital  consisted  of  a  stated 
weekly  subscription  on  each  share. 
As  fast  as  a  sufficient  amount  was 
contributed,  any  member  could 
borrow  §1,000  on  each  share  held 
by  him,  on  which  he  was  to  pay 
no  interest,  and  payment  of  which 
was  to  be  secured  by  mortgage  on 
realty,  a  certain  percentage  to  be 
paid  annually  in  monthly  instal- 
ments, and  no  provision  was  made 
for  canceling  the  mortgages  with- 
out payment.  Held,  that  on  dis- 
solution of  the  society,  by  acquies- 
cence of  all  the  members,  before 
the  contributions  reached  $1,000 
per  share  of  stock,  its  assets  should 
be  distributed  equally  among  its 
members,  according  to  their  re- 
aped ive  uumber  of  shares,  and  bor- 
rowing members  were  not  entitled 
to  have  their  mortgages  canceled 
until  payment  of  the  balances  due 
thereon  after  deducting  their  re- 
spective shares  of  the  assets,  nor 
were  creditor  members  entitled  to 

si  .000  on    each    of   their   shares   of 

Btock.  People  v.  Lowe,  i  it  X.  Y. 
175;  22  X.  E.  L016. 

To  facilitate  t  he  liquidal  ion  of  a 
unit  1 1 : 1 1  building  society  a  resolu- 
tion was  passed  at  a  meeting  of 
the  borrowing  members  to  dis- 
charge those  who  iii  three  months 
Id  pay  eighty  percent,  of  I  heir 
indebtedness,   the    surplus,    after 


paying  non-borrowing  members  in 
full,  to  be  divided  among  the  bor- 
rowing members.  It  was  held 
that  those  non-borrowing  members 
who  did  not  discharge  the  society 
were  not  bound  by  this  arrange- 
ment, and  were  entitled  to  claim 
the  surplus,  to  the  exclusion  of  the 
borrowing  members  who  had  all 
discharged  the  society.  Harvey 
v.  O'Shaughnessey,  6  Leg.  News. 
369  ;  5  Leg.  News.  429. 

A  shareholder  who  has  approved 
of  an  arraignment  with  a  creditor 
of  the  society  whereby  the  credi- 
tor is  granted  delay,  on  condition 
that  the  society  should  not  sell  its 
real  estate,  waives  thereby  his 
right  to  bring  the  real  estate  of  the 
society  to  sale  in  satisfaction  of 
his  claim  as  a  shareholder.  Cham- 
poux  v.  Lapierie,  31  Leg.  News. 
302. 

The  insolvency  of  an  association 
dissolves  the  original  contract  be- 
tween the  shareholders  and  there- 
after it  is  wound  up  on  an  equitable 
basis.  On  the  principle  of  rescis- 
sion, each  member  should  receive 
what  he  has  paid,  and  pay  back 
what  he  had  received.  Knutson 
v.  Northwestern,  etc.,  Ass'n,  07 
Minn.  201  ;  s.  c.  69  N.  W.  Rep. 
889;  Chapman  v.  Young,  65  111. 
A  pp.  i:'.l  ;  Twin  ( 'it  Les,  etc..  Ass'n 
r.  Lepore,  17  Pa.  C.  C.  426;  Chois- 
ser  v.  Young,  69  111.  App.  352; 
Rochester  Savings  Hank  v.  Whit- 
mo,,..  49  N.  Y.  Supp.  862;  Moran 
v.  Gray  (N.  J.  Eq.),  38  Atl. 
Rep.  608  ;  Meares  v.  Davis  (N. 
C),  28  S.  E.  Rep.  188;  Weir 
v.  Granite  State,  etc.,  Ass'n  (N. 
J.     Eq.).     88      Atl.     Rep.     643; 


396. 


DISSOLUTION — RECEIVER. 


447 


ing  a  clause  that  "  members  who  shall  have  given  notice  of 
withdrawal  shall  have  no  priority  over  members  who  have 
not  given  such  notices;  "  the  court  adjudged  that  the  right 


Richter  v.  Main  St.,  etc.,  Co.,  6 
Ohio  Dec.  95  ;  s.  c.  4  Ohio  N.  P. 
97  ;  Thompson  v.  North  Carolina 
B.  &  L.  Ass'n,  120  N.  C.  420  ;  S.  C. 
27  S.  E.  Rep.  118  ;  Rogers  v.  Raines 
(Ky.)  38  S.  W.  Rep.  48:3  ;  Pioneer 
Savings  &  L.  Ass'n  v.  Pancoast 
(Tex.  Civ.  A  pp.);  s.  C.  43  S.  W.  Rep. 
280  ;  Curtiss  v.  Granite  State,  etc., 
Ass'n,  69  Conn.  6 ;  S.  C.  36  Atl. 
Rep.  1023  ;  Hohenshell  v.  Home 
Savings  &  L.  Ass'n,  140  Mo.  560; 
S.  c.  41  S.  W.  Rep.  948.  Reming- 
ton v.  King,  11  Abb.  Pr.  278  ;  Peo- 
ple v.  Empire,  etc.,  Co.,  17  N.  Y. 
Misc.  Rep.  221  ;  s.  c.  N.  Y.  Supp. 
235  ;  Sullivan  v.  Stucky,  86  Fed. 
Rep.  491  ;  Carpenter  v.  Richardson 
(Tenn.),  46  S.  W.  Rep.  452. 

All  the  cases  cited  above  hold 
that  he  must  be  charged  with  sim- 
ple interest,  in  an  instance  of  in- 
solvency, on  what  he  actually  re- 
ceived;  but  there  is  some  differ- 
ence among  them  when  the  ques- 
tion arises  with  what  he  is  to  be 
credited.  Thus  some  of  the  cases 
hold  that  he  is  to  be  credited  with 
premiums,  dues,  payments  made 
and  interest  thereon.  Rochester 
Savings  Bank  v.  Whitmore,  49  N. 
Y.  Supp.  862. 

In  some  of  the  cases,  however, 
it  is  held  that  he  cannot  be  credited 
with  dues  paid  on  his  stock  in  de- 
termining the  amount  he  owes  on 
his  loan  or  mortgage  ;  for  they  be- 
long to  his  stock,  and  all  stock  is 
to  be  put  on  a  dead  level.  Post 
v.  Building  &  L.  Ass'n,  97  Tenn. 
408  ;  S.  c.  37  S.  W.  Rep.  216  ;  34  L. 
R.  A.  201.  This  is  especially  true 
where   the   dues   were    unauthor- 


izedly  paid  in  advance.  Id.  See  also 
Twin  Cities,  etc.,  Ass'n  r.  Lepore, 
17  Pa.  C.  C.  426;  Rogers  v.  1 
(Ky.),  38  S.  W.  Rep.  483  ;  Curtis  v. 
Granite  State,  etc.  Ass'n.  69  Conn. 
6 ;  s.  c.  36  Atl.  Rep.  1023.  See 
Weir  v.  Granite  State,  etc.,  Ass'n 
(N.  J.  Eq.),  38  Atl.  Rep.  643. 

The  general  rule  is  not  changed 
by  the  fact  that  the  mortgages 
given  for  the  loan  provide  that  the 
premium  shall  belong  to  the  asso- 
ciation. Curtis  v.  Granite  State, 
etc.,  Ass'n,  69  Conn.  6  ;  s.  c.  36  Atl. 
Rep.  1023. 

In  one  case  it  was  said  that  if 
the  value  of  the  stock  equal  the 
amount  of  the  loan,  the  parties 
are  remitted  to  the  position  of  or- 
dinary lenders  and  borrowers.  He 
is  charged  with  all  he  received 
with  interest,  and  credited  with 
all  he  paid,  with  interest.  Moran 
v.  Gray  (N.  J.  Eq.),  38  Atl.  Rep. 
668.  See  contra  Choisser  v.  Young, 
69  111.  App.  252. 

Fines  are  included  in  the  amount 
the  borrower  is  entitled  to  credit. 
Thompson  v.  North  Carolina  Ass'n, 
120  N.  C.  420  ;  s.  C.  27  S.  E.  Rep.  118. 

The  following  cases  are  at  cross 
purposes  with  each  other.  Meares 
v.  Davis  (N.  C),  28  S.  E.  Rep.  188  ; 
Pioneer  Savings  &  I..  Ass'n  v.  Pan- 
coast  (Tex.  Civ.  App.),  43  S.  W. 
Rep.  280  ;  Knutson  r.  North  West- 
ern L.  &  B.  Ass'n.  67  Minn.  201: 
s.  C.  69  N.  W.  Rep.  889. 

Premiums  falling  due  after  the 
appointment  of  a  receiver  or  as- 
signee cannot  be  collected.  Curtis 
v.  Granite  State,  etc.,  Ass'n,  96 
Conn.  6  ;  S.  c.  36  Atl.  Rep.  1023. 


448 


BUILDING   AND   LOAN   ASSOCIATIONS.       Ch.  XX. 


of  a  member   who   had   previously   given   notice  of  with- 
drawal could  not  be  affected  thereby.1 

Sec.  397 — Effect  Upon  Mortgages  or  Loans. 

The  order  or  agreement  for  winding  up  or  dissolving  a 
building  association  cannot  accelerate  the  date  when  the 
mortgages  or  loans  mature  ;  and  the  contract  of  the  mort- 
gagor or  borrower  cannot  thereby  be  changed  without  his 
consent.3 


If  a  series  has  been  improperly 
declared  due,  those  holding  in  the 
series  hold  their  positions  un- 
changed, the  same  as  if  no  such 
declaration  had  been  made.  Post 
v.  Building  &  L.  Ass'n,  97  Tenn. 
408 ;  s.  C  37  S.  W.  Rep.  216 ;  34 
L.  E.  A.  201. 

1  Botten  v.  City  and  Suburban 
Building  Society,  13  Rep.  591  ;  s.  c. 
[1895],  22  Ch.  441;  64  L.J.  Ch. 
609  ;  72  L.  T.  722  :  44  W.  R.  12  ; 
following  Kemp  v.  Wright  (on  ap- 
peal)  7  Rep.  631  ;  s.  C.  [1895]  1  Ch. 
121 ;  64  L.  J.  Ch.  59  ;  71  L.  T.  650  ; 
43  W.  R.  21  3 :  59  J.  P.  133  ;  and  de- 
clining to  follow  Kemp  v.  Wright, 
[1894]  2  Ch.  472;  s.  c.  71  L.  T. 
650  ;  17  W.  R.  213  ;  58  J.  P.  588  ;  1 
Manson,  308. 

"■  1  Kemp  v.  Wright,  7  Pop.  631  : 
S.  C.  [1895]  1  Ch.  121 ;  64  L.  J.  Ch. 
59  ;  71  L.  T.  650  ;  43  W.  R.  213  ;  95 


J.  P.  133.  See  London  Provident 
Building  Society  v.  Morgan,  5  Rep. 
510  ;  s.  C.  [1893]  2  Q.  B.  266  ;  62  L. 
J.  Q.  B.  544;  69  L.  L.  595  ;  42  W. 
R.  157 ;  57  J.  P.  696 ;  Scottish 
Property  Investment  Building  So- 
ciety v.  Boyd,  4  Rettie,  127  ;  and 
Tosh  v.  North  British  Building  So- 
ciety, 11  App.  Cas.  489  ;  35  W.  R. 
413;  14  Rettie  (H.  L.)  6. 

In  North  Carolina  it  is  held  that 
on  the  appointment  of  a  receiver 
because  of  the  insolvency  of  the 
association,  the  mortgage  of  a  bor- 
rowing member  matures  at  once. 
Strauss  v.  Carolina  Interstate 
Building  &Loan  Association,  UN. 
C.  308 ;  S.  C.  23  S.  E.  Rep.  450  ;  in 
Connecticut,  Curtis  v.  Grant,  etc., 
Ass'n.  69  Conn.  6  ;  S.  C.  1023;  and 
in  New  Jersey  Wier  v.  Granite 
State,  etc.,  Ass'n  (N.  J.  Eq.),  38 
Atl.  Rep.  643. 


CHAPTER  XXL 

MISCELLANEOUS. 

Sec.  398.  Introduction. 

399.  General  Powers. 

400.  Power  to  Hold  Real  Estate — Leasing. 

401.  Power  to  Build  Houses. 

402.  Mechanics'  Lien. 

403.  Seal. 

404.  Suits. 

405.  Expense  Fund — Withdrawals. 

406.  Unincorporated  Associations. 

407.  Miscellaneous. 

408.  Assignment  for  Benefit  of  Creditors. 

409.  Bankruptcy  Loan  of  1898. 

410.  War  Revenue  Law — Stamps. 

411.  To  what  Companies  Revenue  Law  Applies. 

412.  What  Investments  Exempt  from  War  Tax. 

Sec.  398 — Introduction. 

It  has  been  found  difficult  to  classify  or  to  arrange  in  any 
other  connection,  certain  decisions  relating  to  building 
associations ;  so  much  so  that  it  has  been  deemed  best  by 
the  authors  to  bring  them  together  in  this  connection  with- 
out any  attempt  to  group  them  in  a  systematic  order,  re- 
lying upon  the  index  to  point  out  the  subjects  herein  dis- 
cussed. All  who  have  attempted  to  systematically  classify 
and  arrange  all  the  decisions  on  the  subject  of  building 
associations  have  evidently  met  with  a  similar  embarrass- 
ment. 

Sec.  399 — General  Powers. 

Speaking  of  the  powers  of  a  building  society,  an  Austra- 
lian court  has  used  the  following  language :  "  These  societies 
are  corporations  incorporated  by  virtue  of  the  statute,  and 

beyond  the  statute  they  cannot  venture.   That  which  is  not 

449 


450  BUILDING   AND   LOAN   ASSOCIATIONS.      Ch.  XXL 

permitted  is  prohibited."1  Speaking  upon  the  same  subject 
an  American  court  has  said:  "Corporations  possess  all 
those  powers  which  are  expressly  conferred  upon  them  by 
the  acts  of  incorporation,  and  all  those  incidental  powers 
which  are  reasonably  necessary  for  the  purpose  of  carrying 
into  effect  the  powers  expressly  granted  and  reasonably 
necessary  for  the  purpose  of  attaining  the  objects  of  their 
creation."2  A  careful  examination  of  the  language  used  in 
these  two  quotations  will  show  that  the  two  courts  had  one 
and  the  same  view  of  the  powers  of  a  building  association 
or  society.  The  Kansas  court  applied  to  it  the  law  apply- 
ing to  corporations  generally,  while  the  Australian  court 
drew  from  the  decisions  applying  to  general  corporations  a 
rule  applicable  to  building  societies.  All  building  associa- 
tions or  societies  have  ample  powers  to  carry  out  the  object 
of  their  incorporation  ;  but  they  have  no  power  to  carry  out 
any  other  scheme  than  that  necessary  to  the  attainment  of 
that  object.  Bearing  this  in  mind,  but  little  confusion  can 
arise  when  it  is  desired  to  ascertain  the  powers  of  these 
associations. 

Sec.  400— Power  to  Hold  Real  Estate— Leasing. 

Unless  authorized  by  a  statute,  a  building  society  has  no 
power  to  deal  in  real  estate,  either  for  itself  or  for  the 
benefit  of  its  members.3  If  it  attempt  to  purchase  land  it 
acquires  no  title,  and  its  contract  for  the  purchase  price  is 
void,  even  when  evidenced  by  notes  and  assigned  to  third 
parties.4  And  under  a  power  to  borrow  money,  the  society 
cannot  bind   itself   for  money  borrowed  to  purchase   real 

1  In  re  Metropolitan  Permanent  J.  P.  421  ;  Inre  Kent  Benefit  Build- 
Building  and  Improvement  So-  ing  Society,  1  Dr.  &  Sm.  417  ;  S.  C. 
ciety,  L.  R.  7  Vict.  Eq.  (Australia)  4  L.  T.  Rep.  (N.  S.)  010  ;  30  L.  J. 
HO;  citing  Asl.ury  R.  W.  Co.  v.  Ch.  785;  7  Jur.  (N.  S.)  1045;  25  J. 
Richie,  7  E.  &  I.  App.  653;  and  P.  805  ;  9  W.  R.  686.  See  Regina 
Atloi  iky  (Hiicral  v.  (J  real,  Kastern  v.  D'EyncOurt,  4  B.  &  S.  820;  9  L. 
I.'.v.  Co.  5  A|.|>.  (as.  481.  T.  712;  33  L.  J.  M.  C.  89;  10  Jur. 

*Massey    v.   Citizens    Building,  N.  S.  513 ;  116  E.  C:  L.  820. 
etc  .  Association,  22  Kan.  624.  '  Id.  ;    Miller's  Estate,  2  Pears. 

9 Grimes  v.   Harrison,  26  Beav.  (Pa.)   21S;    Rhoads   •?>.   Hoerners- 

485;  s.  c.  5. Jur.  (N.  8.)  528 ;  88  L.  town  Building  Association,  82  Pa. 

T.    Rep.    II.;  28  L.  J.  <  !h.  828  ;  28  St.  180  ;  Faulkner's  Appeal,  11  W« 


§  400.  MISCELLANEOUS.  451 

estate,  and  the  person  loaning  it  cannot  follow  the  money 
into  the  land.1  If  the  officers  of  the  association  in  any  way 
have  personally  bound  themselves  for  the  purchase,  they 
cannot  recover  of  the  association  any  amount  they  may 
have  been  compelled  to  pay  by  reason  of  having  entered 
into  such  covenant.2  Where  an  association,  without  power 
to  do  so,  purchased  real  estate,  the  vendor  retaining  a  Lien 
thereon  for  the  purchase  money,  and  the  association  then 
sold  the  land,  receiving  from  the  vendee  the  fall  purchase 
price,  it  was  held  that  the  land  in  such  vendee's  hands  was 
liable  to  the  first  vendor  for  the  amount  due  him.3  In 
Australia,  under  a  statute  empowering  a  building  society 
"  to  buy  and  sell  and  mortgage  freehold  or  leasehold 
estate,"  it  may  lease  its  own  freehold  estate.  "  These  words 
do  not  expressly  give  the  power  to  lease.  But  they  give 
the  power  to  buy  property.  And  I  do  not  see  anything  to 
prevent  their  buying  property  which  at  the  time  of  the  pur- 
chase was  leased  to  some  one  and  so  becoming  that  person's 
landlord.  Further,  the  society  may  absolutely  dispose  of 
the  property  so  purchased.  And  it  would  seem  strange  if  a 
society  whose  business  is  of  the  character  of  the  societies 
under  this  act  could  sell  their  property  out  and  out,  but 
could  not  dispose  of  their  interest  for  a  periodical  return. 
In  my  opinion  the  legislature  intended  to  allow  these  socie- 
ties to  be  owners,  with  the  ordinary  powers  incident  to 
ownership,  and  the  power  of  leasing  among  them.  *  *  * 
I  am  therefore  of  opinion  that  when  the  legislature  said  that 
these  societies  could  buy,  sell  and  mortgage,  they  also 
meant  that  the  societies  should  have  the  smaller  right  of  an 
owner,  that  of  leasing."4 

N.  Cas.  48.     In  this  last  case  the  ciety,  supra. 

judgment  was  confined  to  the  land.  3  Peto    v.   Hammond,   30  Beav. 

1  7/i  re  Durham  County  Perman-  495  ;  s.  c.  8  Jur.  (N.  S.)  550  ;  31  L. 

ent  Investment  Land  and  Building  J.  Ch.  354. 

Society,  L.  R.  12  Eq.  516  ;  s.c.  25  L.  *  In  re  Premier  Permanent  Build- 

T.  Rep.  (N.S.)  83;41L.  J.  Ch.  124.  ing  Society,   2  Austr.    L.  T.  113. 

But  as  to  investment  of  surplus  See  Fitzpatrick  v.  Woring,  11  Ch. 

funds,    See   Mullock    v.    Jenkins,  D.  Ir.  35. 

14  Beav.  628  ;   s.   c.  21  L.  J.  Ch.  In  re  Premier  Permanent  Build- 

65.  ing  Society,  L.  R.   16  Vict.    (Aus- 

*  In  re  Kent  Benefit  Building  So-  tralia)  643. 


452  BUILDING   AND   LOAN   ASSOCIATIONS.      Ch.  XXI. 

Sec.  401 — Power  to  Build   Houses. 

A  charter  of  a  building  association  authorizing  it  to  aid 
its  members  in  acquiring  and  improving  land,  empowers  it 
to  make  contracts  for  the  erection  of  homesteads.1  Where 
the  object  of  the  society  was  "  to  offer  to  its  members  a 
sure  and  advantageous  means  of  investing  their  savings,  to 
aid  them  in  acquiring  cottages  on  certain  lots  of  land  of  one 
hundred  feet  frontage,  situate  "  in  a  certain  named  district ; 
a  purchase  of  land  in  that  district,  the  construction  of 
twenty-four  cottages  on  the  land  at  a  cost  of  $1,250  apiece, 
and  a  division  of  them  by  lot  among  the  membership  was 
held  a  valid  transaction,  and  the  purchase  of  the  real  estate 
valid.2  But  a  statute  authorizing*  a  society  to  buy  and 
sell  and  mortgage  freehold  and  leasehold  estate,  does  not 
authorize  it  to  adopt  a  rule  to  "  acquire  "  freehold  or  lease- 
hold estate,  and,  when  deemed  expedient,  erect  buildings 
upon  it.3 

Sec.  402— Mechanic's  Lien. 

A  building  society  organized  for  the  purpose  of  loaning 
money  to  its  stockholders  and  on  real  estate  security  is  not 
entitled  to  a  mechanic's  lien  on  the  homestead  of  a  stock- 
holder for  money  loaned  him,  which  he  has  used  in  the 
construction  of  a  building  on  his  land.4 

In  Canada  a  general  statute  pro-  sell  real  estate,  see  Tyler  v.  Anglo- 

hibiting  all  corporations  purchas-  American,  etc.,   Ass'n,  52  N.    Y. 

ing  land  without  permission  of  the  Supp.   77.      Power  under   statute 

Crown  was  held   to  apply  to  build-  to  buy.     McComb.  v.  Belknap,  30 

ing  societies.     Cooper  v.  Mclndoe,  30  Abb.  N.  C.  119;  S.  c.  24  N.  Y. 

2  Montreal  Supr.  388  ;  s.  c.  10  Leg.  Supp.  935. 

News.  35  ;  affirmed,  32  Lower.  Can.  ]  Heady   r.   Bexar  Building  and 

Jur.  210.  Loan  Association  (Tex.  Civ.  App.), 

An     association     may    advance  20  S.  W.  Hep.  4 OS. 

money   to    pay  off  a  prior  mort-  2  La    Compagnie    de    Villas    v. 

gage.     Sheffield,    etc.,   Society  v.  Hughes,  11  Can.  Sup.  Ct.  537  ;  S.  C. 

Aizlewood,  14  Ch.  Div.  412.  1  Low.  Can.  Jur.  264 ;  affirming,  3 

Thai  a  building  association  can-  Dorion,  175;  s.  c.  4  Leg.  News.  361. 

nol  purchase  land  on  credit,  to  be  8  In  re  Metropolitan  Permanent 

divided  among  its  membership,  see  Building  and  Investment  Society, 

Vo     v.    Cedar    Grove    Land   and  L.  E.  Vict.  Eq.  (Austr.)86. 

Building   Association,   '■)   VVkly.  L.  4   International      Building     and 

Bull.  194.  Afl  to  employing  agent  to  Loan    Association    v.     Fortassain 


§  404.  MISCELLANEOUS.  453 

Sec.  403— Seal. 

It  is  not  necessary  that  the  seal  of  a  building  association 
should  be  affixed  to  an  instrument  authorizing-  its  agent  to 
sell  under  a  power  of  sale  contained  in  a  mortgage.  The 
entry  in  the  books  of  the  association  is  sufficient  for  that 
purpose.1  A  mortgage  was  made,  pursuant  to  a  statute,  to 
the  president  and  treasurer  of  a  society,  their  successors  and 
assigns,  in  trust  for  the  society.  The  society  having  exer- 
cised the  power  of  sale,  the  succeeding  president  and  treas- 
urer conveyed  the  land  to  a  purchaser  by  deed  under  a  seal 
not  the  society's  seal ;  and  this  was  held  to  give  the  pur- 
chaser a  good  title  in  fee  simple,  the  officers  for  the  time 
being  having  full  powder  to  convey  in  fee  without  using  the 
society's  seal.2  Notwithstanding  these  decisions  of  the 
Canadian  Court  of  Chancery,  it  has  been  held  by  the 
Queen's  Bench  of  that  country  that  the  appointment  of  a 
secretary  is  not  valid  unless  under  seal,  so  far  as  it  was 
executory.3 

Sec.  404— Suits. 

In  discussing  the  powers  of  the  president  and  attorney 
or  solicitor  of  a  building  association,  references  were  made 
to  the  authority  of  these  officers  to  represent  their  associa- 
tion in  the  courts,  and  what  was  there  said  need  not  be 
repeated  here.  It  may  be  stated  as  a  general  rule  of  almost 
universal  recognition  that  the  right  of  a  building  association 
to  sue  as  a  corporation  is  admitted,  unless  such  right  is 
challenged  by  a  special  plea.4  Averring  that  the  plaintiff 
is  duly  incorporated  according  to  a  certain  recited  statute 
is  a  sufficient  allegation  of  incorporation.5  If  the  associa- 
tion be  not  properly  named  in  the  complaint  it  may  be 
amended  by  inserting  the  proper  name.6     A  president  and 

(Tex.  Civ.    App.),  23  S.  W.  Rep.  Loan  and  Savings  Society,  39  U.  C. 

496.  Q.  B.  221. 

1  Osborne  v.   Farmers  and   Me-        4West  Winsted,  etc.,  Association 
chanics'  Building  Society,  5  Grant,  v.  Ford,  27  Conn.  282. 

Ch.  326.  5  Chillicotte  Savings  Association 

2  In  re  Inglehart,  29  Grant.  Ch.     v.  Ruegger,  60  Mo.  218. 

418.  6  Hoboken  Building  Association 

3  Hughes  v.  Canada  Permanent    v.  Martin,  2  Beas.  (N.  J.)  Eq.  427. 


454  BUILDING   AND   LOAN   ASSOCIATIONS.    Ch.  XXI. 

treasurer  may  sue  in  their  own  proper  names  under  a  statute 
vesting  in  them. "  for  the  time  being,  for  the  use  of  the  society, 
without  any  assignment  or  conveyance  whatever  being 
necessary  on  account  of  any  change  of  president  or  treasurer 
by  death  or  removal,  and  for  all  purposes  of  actions  in  law 
or  equity,  concerning  the  same,  be  deemed  to  be,  and  shall 
in  all  such  proceedings,  when  necessary,  be  stated  to  be  the 
property  of  the  president  and  treasurer  for  the  time  being, 
in  the  proper  names  of  such  president  and  treasurer,  with- 
out further  description."  1  But  in  such  an  instance  the  suit 
may  be  in  the  name  of  the  corporation.2  When  the  presi- 
dent and  treasurer  are  authorized  to  sue  for  the  society  in 
their  own  names,  the  suit  must  be  brought  in  the  names  of 
the  president  and  treasurer,  who  at  the  time  of  bringing  the 
suit  are  holding  such  offices.3  The  officers  of  an  association, 
after  the  expiration  of  its  charter,  may  execute  a  power  of 
attorney  to  carry  on  a  suit  already  begun.4  Where  a  com- 
mittee of  a  corporation  are  authorized,  by  a  resolution  of 
the  board  of  directors,  to  make  collections  due  the  associa- 
tion, they  may  institute  proceedings  to  collect  them,  in  the 
name  of  the  corporation,  against  an  individual,  without  an 
order  specifying  the  mode  of  collecting  that  particular 
indebtedness,  or  without  any  more  particular  authority 
with  reference  thereto.5 

Sec.  405 — Expense  Fund — Withdrawals. 

A    building  association  may  maintain  an  expense  fund  ; 
but  on  withdrawal  a  member  is  not  entitled  to  credit  for 

1  Barwick  v.  Clement,  7  U.  C.  Q.  5  St.  Louis  Domicile,  etc.,  Asso- 

B.  51'.).  ciation  v.  Augustine,  2  Mo.  App. 

-  Partners  and  Mechanics' Build-  123. 

ing  Society  v.  Langstaff,  9  TJ.  C.  Q.  Where  payment  of  assessments 

B.  183  :  Canada  Permanent  Build-  in  a  building  association  are  made 

ing  Society  v.  Bank,  10  Grant.  Ch.  conditions  in  a  promissory  note,  in 

203;    Essex     Building    Society    v.  a   suit   thereon  it  is  not  required 

I  ;.<!nari,  19  U.  C.  Q.  B.  W.».  thai    the   proceedings  in   making 

;;  Morgan  v.  Boyer,  !t  U.  C.  Q.  B.  the  assessment  should  be  set  out 

318;    Esses     Building    Society   /■.  with    particularity    in    the    com- 

Beeman,  L9U.C.Q.  B.  609.  plaint.      Borohus    v.    Huntington 

1  Harmony  Building  Association  Building,  Loan  and  Savings  Asso- 

v   Berger,  ll  Leg.  Int.  880;  8.  o.  17  ciation,  97  End.  ISO. 
.  814. 


§  406.  MISCELLANEOUS.  455 

the  amount  that  was  set  apart  for  the  expense  fund  by  the 
by-laws.1 

See.  406— Unincorporated  Associations. 

The  first  building  associations  were  unincorporated,  for 
the  very  good  reason  that  no  law  authorized  their  incorpo- 
ration ;  and  the  early  decisions  in  England  and  a  few  in  this 
country  apply  to  such  associations.  In  an  instance  of  incor- 
porated associations  the  stockholders  bear  to  each  other 
the  relationship  of  partners.  "  The  organization  is  in  fact 
and  in  law  a  partnership  with  corporate  rights,  in  which 
every  stockholder  is  a  member. "  2  In  the  case  of  unincorpo- 
rated associations  this  is  also  true,  both  as  to  the  member- 
ship and  also  as  to  the  outside  world.  The  courts  will 
enforce  the  contracts  the  members  have  entered  into  as 
between  themselves,  unless  they  violate  some  settled  rule  of 
public  policy.3  An  unincorporated  association  cannot  claim 
any  rights  under  a  general  statute  for  the  incorporation  of 
building  associations.4  A  contract  made  with  an  unincor- 
porated association  is  not  affected  by  a  subsecpient  incorpo- 
ration of  the  society.5  Usually  an  unincorporated  association 
takes  a  mortgage  to  secure  a  loan  made  by  it  in  the  nam 
of  a  trustee;  and  it  may  so  take  a  contract  for  the  pay- 
ment of  subscriptions.6  With  respect  to  the  payment  of 
dues  on  stock  and  their  application  to  the  stockholders' 
debt,  the  same  rule  applies  to  unincorporated  as  applies  to 
incorporated  associations.7  If  a  by-law  is  in  contravention 
with  its  constitution  or  articles  of  association,  it  is  void.8 
If  the  trustees  of  the  association  assign  a  mortgage  payable 
to  them,  it  will  be  presumed  that  the  association  is  bound 

1  Middle  States  Loan,  etc.,  Co.  v.  Jarrett  v.  Cope,  68  Pa.  St.  67; 
Hagerstown.  etc.,  Co.,  82  Md.  507  ;  Link  v.  Germantown  Building  As- 
S.  C.  33  Atl.  Rep.  886.  sociation,  89  Pa.  St.  15. 

2  In  re  National  Savings  Loan         sId. 

and  Building  Association,  9  W.  N.        fi  Merrill  v.   Mclntire,  13   Gray, 
Cas.  79.  157;  Baxter  v.  Mclntire,  13  Gray, 

3  American   Homestead   Co.   v.     168. 

Linigan,        La.         ;  s.  c.  15  So.  7  Link  v.  Germantown  Building 

Rep.  369.  Association,  89  Pa.  St.  15. 

4  Melville  v.  American  Benefit  8  Powell  v.  Abbott  9  W.  N.  Cas. 
Building  Association,  33  Barb.  103  ;  231. 


456  BUILDING  AND   LOAN   ASSOCIATIONS.     Ch.  XXI. 

thereby  until  the  contrary  be  shown.1  If  the  society  incor- 
porate, still  the  trustees  may  enforce  a  mortgage  given  them 
before  the  incorporation.2 

Sec.  407— Miscellaneous. 

A  receiver  ought  to  pay  out  no  money  except  for  neces- 
sary expenses,  until  ordered  and  directed  by  the  court.3  The 
trustee  foreclosing  a  mortgage  after  the  appointment  of  a 
receiver  ought  to  pay  over  all  the  proceeds  to  such  receiver.* 

Where  the  shares  of  defaulting  shareholders  have  been 
improperly  forfeited  such  shareholders  must  act  promptly ; 
and  cannot,  after  the  proceeds  have  been  distributed  for 
years,  set  up  the  illegality.5  A  statutory  right  to  'withdraw 
cannot  be  waived  by  accepting  a  certificate  of  stock  con- 
taining words  of  waiver  of  the  right.6  An  agent  may  sign 
the  instrument  of  dissolution  under  the  English  act.7  Where 
a  statute  requires  the  association  to  deposit  its  mortgages 
with  the  auditor  of  state,  "  in  trust  for  all  its  members  and 
creditors,"  it  cannot  withdraw  them  except  for  the  purpose 
of  foreclosure  or  when  paid  off.  It  cannot  sell  them.8 
They  will  be  controlled   by  the  court  on  final  distribution.9 

Sec.  408 — Assignment  for  Benefit  of  Creditors. 

Whether  or  not  a  building  and  loan  association  can  make 

1  Manahan  v.  Varnum,  11  Gray,  Ass'n.,  20  Pa.  C.  C.  589.  Thorn  p- 
405.  son  v.  North  Carolina,  etc.,  Ass'n, 

2  Memntf.McIntire.awpra.  See  120  N.  C.  420;  s.  c.  27  S.  E.  Rep. 
Stein    v.    Indianapolis     Building,  118. 

Loan.  Fund  and  Savings  Associa-  4  Id. 

tion,  18  Ind.  237.  5  Barton  v.  Pioneer  S.  &  L.  Co., 

8  Upon  a  withdrawal  by  a  mem-  Minn.         ;  s.  c.  71  N.  W.  Rep. 

ber,   he   cannot  be   charged   with  906. 

Inxses  occasioned  by  the  negligence  8  Latimer    v.    Equitable    Loan, 

of  the  officers  of  tin-  association;  etc.,  Co.,  81  Fed.  Rep.  776. 

I)  unison   v.  Alpena,  etc.,    Ass'n.  7  Dennison  v.  Jeffs,  65  L.  J.  Ch. 

(Mich.),  75  N.  Rep.  300.     Unpaid  185;  S.  c.   [1896]  1  Ch.  611 ;  74  L. 

dues    are     not    assets    when    the  T.  270  ;  44  W.  R.  476 

amounts    have    been    snttVivd    l"  "Trowbridge    V.    Hamilton,    53 

reach  Large  amounts,  and  the  as-  Pa.  C.  C. 

lociation  Unotofalocal  cliaracter,  9  Irwin  r.   Granite   State,  etc., 

except  for  their  actual  value.  Com-  Ass'n,  38  Atl.  Rep.  680. 
monwealth  v.  Pennsylvania,  etc., 


§  408.  MISCELLANEOUS.  457 

an  assignment  for  the  benefit  of  its  creditors  is  not  defi- 
nitely settled  by  a  judicial  decision,  to  our  knowledge. 
Every  day,  however,  these  assignments  are  made,  and  pass 
unquestioned.  Under  the  peculiar  circumstances  of  the 
case,  such  an  assignment  in  Kentucky  was  held  void  by  the 
federal  court  for  that  district.  The  directors  had,  of  their 
own  motion,  made  an  assignment  of  the  assets  of  the  asso- 
ciation for  the  benefit  of  its  creditors.  The  validity  of  this 
assignment  was  directly  drawn  in  question.  At  the  time  of 
the  assignment  only  six  per  cent,  of  the  shareholders  had 
given  notice  of  withdrawal,  and  there  were  ample  funds  in 
the  treasury  to  pay  both  them  and  all  the  general  creditors. 
Only  one  per  cent,  of  this  liability  was  to  outside  creditors. 
The  money  on  hand  and  the  real  estate  owned  and  mort- 
gages held  by  the  association  amounted  to  over  three  hun- 
dred thousand  dollars.  The  association  was  not  insolvent ; 
and  "  no  trust  had  therefore  arisen  in  favor  of  creditors," 
said  the  court.  The  court  held  the  assignment  void.  "  I  am 
of  opinion  that  under  such  circumstances  the  directors  had 
no  power,  either  under  the  general  assignment  statute  of 
Kentucky  or  at  common  law,  to  make  and  execute  the  deed 
of  assignment.  The  act  was  ultra,  vires  the  officers  and 
directors  of  the  association.  Still  it  was  an  act  which  might 
have  been  ratified  by  the  shareholders  as  a  mode  of  liquida- 
tion within  the  general  power  of  the  corporation.  But 
there  was  no  ratification,  actual  or  implied.  Upon  the  con- 
trary, the  shareholders,  in  general  meeting  assembled,  at  the 
call  of  the  directors,  have  rejected  and  repudiated  the 
assignment  and  demanded  that  it  be  retracted."  1 

1  Powers  v.  Blue  Grass  B.  &  L.  insolvent,  the  board  of  directors  of 

Ass'n,  86  Fed.  Rep.  705.  their  own  motion  may  make  the 

It  has  been  held  that  an  ordi-  assignment  without  authority  or 

nary  corporation  can  make  an  as-  consent  of  the  stockholders.     Le- 

signment,  even  at  common  law.  high  Iron  Co.'s  Estate,  12  Pa.  Co. 

Vanderpoel  v.  Gorman,  140  N.  Y.  Ct.  Rep.  257.     See  also  Stevens  v. 

563;  Catlin  v.  Eagle  Bank,  6  Conn.  Hill,  29  Me.   133;  Trip  v.  North- 

233  ;  Shockley  v.   Fisher,   75  Mo.  western  Nat.  Bank,  41  Minn.  400  ; 

493  ;    DeRuyter     v.      St.     Peter's  Sargent  v.  Webster,  13  Mass.  497  ; 

Church,  3  N.  Y.  238  ;  affirming,  3  s.  C.  46  Am.  Dec.  743  ;  Dana  v.  U. 

Barb.  Ch.  124  ;  Haxtun  v.  Bishop,  S.  Bank,  5  W.  &  S.  223  ;  Ardesco 

3  Wend.  13.    If  the  corporation  be  Oil  Co.  v.  N.  A.  Oil,  etc.,  Co.,  66 


458  BUILDING  AND   LOAN   ASSOCIATIONS.     Cll.  XXI. 

Sec.  409— Bankruptcy  Law  of  1898. 

The  bankrupt  law  of  1898  does  not  apply  to  a  building 
and  loan  association.  Corporations  under  that  act  can- 
not become  voluntary  bankrupts  ;  and  it  is  only  corporations 
"engaged  principally  in  manufacturing,  trading,  printing, 
publishing,  or  mercantile  pursuits"  that  may  be  adjudged 
an  involuntary  bankrupt.1  A  building  and  loan  association 
does  not  belong  to  any  of  these  classes. 

Sec.  410 — Wa-rRevenue  Law — Stamps. 

The  Act  of  Congress  of  June  13,  1898,  commonly  known 
as  the  "  war-revenue  law,"  applies  to  certain  building  and 
loan  associations.  A  part  of  this  act,  which  directly  affects 
them,  is  as  follows,  viz  :  "  All  bonds,  debentures,  or  certifi- 
cates of  indebtedness  issued  by  the  officers  of  the  United 
States  government,  or  by  the  officers  of  any  state,  county, 
town,  municipal  corporation,  or  other  corporation  exercis- 
ing the  taxing  power,  shall  be  and  hereby  are  exempt  from 
the  stamp  taxes  required  by  this  act.  Provided,  That  it  is 
the  intent  hereby  to  exempt  from  the  stamp  taxes  imposed 
by  this  act  such  state,  county,  town,  or  other  municipal 
corporations  in  the  exercise  only  of  functions  strictly  belong- 
ing to  them  in  their  governmental,  taxing,  or  municipal 
capacity.  Provided  further,  That  stock  and  bonds  issued  by 
cooperative  building  and  loan  associations  whose  capital 
stock  does  not  exceed  ten  thousand  dollars,  and  building 
and  loan  associations  or  companies  that  make  loans  only  to 
their  shareholders,  shall  be  exempt  from  the  tax  herein 
provided." 

Pa.  St.  375  ;  Merrick  v.   Bank,   8  to  execute  the  deed  of  assignment. 

Gill.  (Md.)  59  ;  De  Camp  v.  Ahvard,  Huse  v.  Arnes,  104  Mo.  91 ;  Hutch  - 

52  End.  468;  Wright  v.  Lee,  2S.D.  inson  v.  Green,  91  Mo.  374;  Potts 

596.  v.  Wallace,  146  U.  S.  689. 

The  assignment  must  be  by  the  The  deed  of  assignment  should 

board  of  directors,  Norton  v.  State  be  under  the  corporate  seal,  espe- 

Bank,  102  Ala.  120  ;  Chase  v.  Tut-  oially  if  land  be  assigned.    Shrop- 

tle,  55   Conn.  455;  Buell  v.  Buck-  shire    v.    Behrens,   77    Tex.    275; 

ingham,   16  [a.  384;  8.  0.85  Am.  Vanish     v.     Pioneer     Fuel     Co. 

Dee.  516  ;  Richardson  v.  Rogers, 45  (Minn.),  66  N.  W.  Rep.  198. 

Mich.  591  ;  bul  lli.-l.oanl  may  an-  J  Sec.  4  of  Act  July  1,  1898. 
thorizean  officer  of  tin;  corporal  ion 


§  413.  MISCELLANEOUS.  459 

Sec.  411 — To  What  Companies  the  Revenue  Measure 
Applies. 

The  kind  of  building  and  loan  associations  to  which  that 
part  of  this  revenue  measure  quoted  applies  is  such  as  have 
been  defined  and  discussed  in  this  treatise.  The  word 
"cooperative"  clearly  points  out  this  fact.  The  stock  and 
bonds  of  two  kinds  of  such  associations  are  exempt  from  its 
operations,  viz : 

First.  Associations  where  their  capital  stock  does  not 
exceed  ten  thousand  dollars.  This  means  associations  whose 
authorized  capital  stock  does  not  exceed  ten  thousand  dol- 
lars, whether  they  have  issued  it  or  not.  If  the  authorized 
capital  exceeds  that  amount,  whether  it  has  been  issued  or 
not,  then  the  law  applies  to  them.  No  distinction  is  drawn 
under  this  head  between  foreign  and  domestic  associations. 

Second.  All  "  building  and  loan  associations  or  companies 
that  make  loans  only  to  their  shareholders  "  are  also  exempt 
under  the  provisions  of  the  clause  quoted  in  the  previous 
section.  If  the  association  is  of  the  kind  referred  to  in  the 
clause  just  quoted,  then  the  amount  of  the  capital  is  imma- 
terial. But,  if  its  authorized  capital  is  less  than  ten 
thousand  dollars,  it  is  still  not  subject  to  the  provisions  of 
the  law,  even  though  it  loan  to  persons  not  shareholders. 

Sec.  412 — What  Instruments  Exempt   from  the   War 
Tax. 

It  is  only  stock  and  bonds  issued  by  the  two  kinds  of 
building  and  loan  associations  above  specified  that  are 
exempt  from  this  tax.  In  all  other  respects  these  associa- 
tions and  their  transactions  are  treated  as  other  institutions 
and  so  their  transactions.  Notes,  checks,  drafts,  given  or 
drawn  by  them,  are  liable  to  the  tax;  and  notes  or  mort- 
gages must  be  treated  in  the  same  way  as  if  they  were 
given  to  private  individuals.  So  all  sales  and  transfers  of 
stocks  and  bonds  of  these  associations  made  by  private  indi- 
viduals are  liable  to  the  same  tax  as  a  transfer  of  any  other 
kind  of  stock  or  bonds. 

Sec.  413— Power  to  Purchase  Real  Estate. 

The   special   charters  of    building   associations,   or   the 


460  BUILDING   AND   LOAN   ASSOCIATIONS.      Ch.  XXI. 

statutes  providing  for  the  organization  of  such  corporations, 
ma}'  be  amply  broad  to  authorize  them  to  purchase  real 
estate  and  sell  it  to  their  members  upon  terms  similar  to  the 
loans  they  make.  It  is  sometimes  desirable  to  do  this. 
Often  by  purchasing  a  tract  of  land,  dividing  it  into  lots, 
and  erecting  buildings  thereon  for  its  members,  it  is  better 
for  the  membership  than  to  allow  each  individual  member 
to  perform  those  acts  for  himself.  But  it  is  not  clear  that 
this  can  be  done  without  a  statute  especially  authorizing  it. 
Thus  a  rule  of  an  English  society  provided  that  "all  money 
not  loaned  to  members  shall  be  invested  by  the  trustees,  in 
such  manner  and  upon  such  legal  security  as  the  board  of 
directors  shall  deem  necessary."  Under  this  rule  it  was  held 
that  the  society  could  not  invest  its  money  on  hand  not 
needed  for  the  purpose  of  loans  in  the  purchase  of  lands  for 
sale  to  its  members  ;  and  especially  that  it  could  not  make 
such  purchase  upon  credit.1  The  impression  to  be  derived 
from  this  decision  seems  to  be  that  the  money  on  hand  and 
not  needed  for  other  proper  purposes  might  be  so  invested, 
not  as  a  permanent  business,  but  as  a  temporary  expedient 
for  the  investment  of  such  surplus.2  In  the  first  case  cited 
in  this  section,  Romilly,  M.  K.,  said :  "  It  is  impossible  to 
say,  upon  the  rules  of  the  society,  that  this  was  a  bona  fide 
investment  of  the  surplus  funds  of  the  society.  It  was 
nothing  else  than  laying  out  the  money  of  the  society  in  the 
purchase  of  an  estate,  which  the  directors  might  think  fit  to, 
to  divide  again  if  they  pleased.  That  may  be  the  function 
of  a  freehold  land  society,  but  it  is  not  the  function  of  a 
building  society."  3  It  must  be  remembered,  however,  that 
in  England  arc  institutions  called  freehold  societies,  which 

i  Grimes   v.   Barrison,  26   Beav.  686.    The  fact  that  it  does  pur- 

435  ;  s.  c.  f>  Jur.  N.  Y.  528  ;  28  L.  J.  chase  real  estate  does  not  dissolve 

( 'li.  823  ;  33  L.  T.  115.  it.     Hughes  v.  Layton,  33  L.  J.  M. 

-  Mullock  v.  Jenkins,  14  Beav.  C.  89  ;  s.  C.  10  Jur.  N.  Y.  513  ;  S.C. 

628;  s.  c.  '-'I  I>.  •'•  Ch.  <i'-'">.  sub  nom.  Regina  v.  D'Eyncourt,  9 

18  L.  J.  Ch.  at  p.  827.     Asimi-  L.  T.  712;  28  J.  P.  116;  4  Best  & 

lar  view  was  taken  in  Tn  re  Kent  S.  820;  12  W.  R.  408;  sub  nom. 

Benefll    Building  Society,  I    Dr.  &  Hughes  v.  D'Eyncourt,   3    N.   R. 

Sm.  117  :   1  I..  T.  610;  80  L.  J.  Ch.  420. 
.   Jur.  X.  Y.   1045;  9  W.  R. 


§  413.  MISCELLANEOUS.  4G1 

have  authority  to  buy  and  sell  real  estate  much  in  the  same 
manner  as  building  societies  make  loans ;  and  this  fact 
evidently  had  its  influence  with  the  courts. 

But  in  America  practically  the  same  results  have  been 
reached  by  the  courts  where  no  statute  authorized  the 
purchase  of  real  estate.  It  has  been  so  decided  in 
Pennsylvania;1  in  Canada;2  and  in  Ohio.3  But  the  rule 
against  societies  purchasing  and  holding  real  estate  does  not 
prevent  their  buying  in  lands  sold  on  a  decree  of  foreclosure 
or  on  an  execution  issued  on  a  judgment  they  have  obtained 
in  order  to  enforce  the  collection  of  a  loan  they  have  made. 
Nor  does  it  prevent  their  taking  possession  of  real  estate 
mortgaged  to  them  after  default  made  ;  nor  in  operating 
mills  and  machinery  thereon  in  order  to  realize  their  claim 
or  prevent  loss.4  In  Texas  the  statute  authorized  these 
associations  to  aid  and  assist  members  in  acquiring,  holding, 
or  improving  real  estate,  and  it  was  held  that  this  authorized 
them  to  make  contracts  for  erecting  homesteads  for 
members.5 

'Miller's  Estate,  2  Pears.  (Pa.)  in  building  or  repairing  houses,  or 

348;  Faulkner's  Appeal,  11  W.  N.  other  purposes." 

Cas.  48;  Rhoades  v.  Hoenerstown  i  Sheffield,  etc.,  Society  v.  Aizlc- 

Building  Ass'n,  82  Pa.  St.  180.  wood,  44  Ch.  Div.  412  ;  s.  c.  59  L. 

2  Cooper  v.  Mclndoe,  2  Montreal  J.  Ch.  34 ;  62  L.  T.  678  ;  6  T.  L.  R. 
Supr.  Ct.  38  ;  S.  C.  10  Leg.  News.  25 ;  Wynne  v.  Moore,  1  Australian 
35.  Jur.  Rep.  156. 

3  Vos  v.  Cedar  Grove,  etc.,  Ass'n,  5  Heading  v.  Bexar,  etc.,  Ass'n, 
9  Wkly.  L.  Bull,  194.  In  this  case  (Tex.  Civ.  App.).  26  S.  W.  Rep. 
the  association  was  organized  "  For  468.  See  also  Cahall  v.  Citizens 
the  purpose  of  raising  moneys  to  Mutual  Building  Ass'n,  61  Ala.  232. 
be  loaned  among  the  members  and  As  to  the  former  New  York  rule, 
depositors  of  such  corporation,  for  see  McComb  v.  Belknap,  30  Abb. 
using  in  buying  lots  or  houses,  or  N.  C.  119  ;  s.  C.  24  N.  Y.  Supp.  935. 


APPENDICES. 


APPENDIX  I. 


The  following  pages,  comprising  Appendix  I,  are  taken 
from  "  A  Practical  Treatise  on  Building  Societies  and 
Average  Investment  Trusts''''  (7  ed.,  1891),  by  Arthur 
Scratchley,  M.  A.,  the  author  of  a  number  of  practical  works 
on  English  moneyed  companies.  We  believe  that,  coming 
from  so  high  an  authority,  and  one  with  such  broad  experience 
in  Building  Societies'  or  Associations'  affairs  and'  their  work- 
ings, the  following  pages  will  be  found  of  practical  value  to 
all  engaged  in  the  conduct  of  Building  Associations. 


PART    I. 


ON  BENEFIT  BUILDING  SOCIETIES. 

The  subject  of  this  work  has  presented  difficulties  of  a 
complicated  character,  from  the  various  phases  under  which 
the  peculiar  defects  of  individual  societies  appeal1.  The 
task  has,  however,  been  lightened  by  the  reflection  that,  al- 
though it  cannot  be  expected  that  this  effort  to  place  them 
upon  a  more  rational  and  secure  footing  will  meet  with  the 
success  of  wholly  obviating  errors  for  the  future,  yet  a  most 
important  end  will  at  once  be  obtained  if  the  attention  of  the 
patrons,  trustees,  directors,  and  other  officers  of  many  of 
these  institutions  be  awakened  to  the  sense  of  the  grave 
moral  responsibility  incurred  by  them  in  allowing  their 
names  to  be  connected  with  schemes,  which,  while  profess- 
ing to  benefit,  do  but  cause  injury  to  those  for  whose  good 
they  were  designed — to  individuals  not  of  equal  information 
and  position  with  themselves,  but  a  class  remarkable  for  the 
simple  faith  with  which  they  believe  in  any  statement  that 
is  sanctioned  by  the  countenance  of  their  superiors. 

[Extract  from  preface  to  first  edition.] 


CHAPTER  I. 

Article  1. — Among  the  remarkable  features  of  the  pre- 
sent age,  benefit  building  societies  occupy  a  leading  position. 
Their  increase  during  the  last  thirty  years,  not  only  in  the 
metropolis,  but  in  every  part  of  the  kingdom,  has  been 
steadily  progressive,  so  that  it  has  become  a  matter  of  im- 
portance to  many,  and  of  interest  to  all,  correctly  to  under- 
stand their  object  and  the  true  principles  on  which  they 
ought  to  be  founded.  This  information  is  the  more  desira- 
ble, as  the  amount  subscribed  to  these  associations  is  already 
so  large  that  they  may  be  said  to  have  engaged  in  their 
operations  a  considerable  portion  of  the  investing  capital  of 
the  industrious  classes.  But,  although  they  have  received 
this  extensive  support,  it  is  painful  to  find  that  many  socie- 
ties are  guided  by  principles  which  cannot,  either  in  theory 
or  practice,  justify  the  hope  of  realizing  the  advantageous 
results  held  out  as  an  inducement  to  parties  to  become 
members. 

That  the  principles  of  building  societies  should  be 
erroneous,  and  yet  their  popularity  should  be  widely  ex- 
tended, may  be  ascribed  to  two  causes.  As  yet  but  few 
persons  of  sound  mathematical  knowledge  or  experience  in 
calculations  have  turned  their  attention  to  the  subject,  and 
the  societies  hitherto  formed  have  been  deprived  of  that 
basis  of  science  and  just  reasoning  which  alone  can  insure 
the  prosperity  of  this  or  any  similar  kind  of  speculation. 
On  the  other  hand,  the  members  of  these  associations  have, 
in  general,  been  led  to  expect  from  them  an  unreasonable 
degree  of  benefit — a  false  impression,  which  has  been  shared 
even  by  persons  of  the  more  educated  orders. 

Art.  2. — A  benefit  building  society,  when  properly  con- 
stituted, is  a  species  of  joint  stock  association,  the  members 
of  which  subscribe  periodically,  and  in  proportion  to  the 
number  of  shares  they  hold,  different  sums  into  one  common 
fund,  which  thus  becomes  large  enough  to  be  advantageously 
employed  by  being  lent  out  at  interest  to  such  of  the  mem- 
bers as  desire  advances ;  and  the  interest,  as  soon  as  it  is 
received,  making  fresh  capital,  is  lent  out  again  and  again, 
so  as  to  be  continually  reproductive.  Large  sums  may  be 
raised  in  this  manner ;  for  example,  if  1000  shares  were 
subscribed  for  at  10s.  per  month  per  share,  the  amount  in 

4G9 


470  APPENDIX  I.  Ch.  I. 

one  year  would  be  £6,000,  which,  month  by  month,  as 
received,  might  be  advanced  to  any  members  who  wish  to 
become  borrowers.  The  payments  of  borrowers  are  so 
calculated  as  to  enable  them  to  repay,  by  equal  monthly 
or  less  frequent  instalments,  within  a  specified  period,  the 
principal  of  the  sum  borrowed  and  whatever  interest  may  be 
due  upon  it  throughout  the  duration  of  the  loan.  The  other 
members,  who  have  not  borrowed,  and  who  are  generally 
called  investors,  receive,  at  the  end  of  a  given  num- 
ber of  years,  a  large  sum,  which  is  equivalent  to  the  amount 
of  their  subscriptions  with  compound  interest  accumulated 
upon  them. 

The  idea  of  a  society  upon  this  principle,  correctly  formed 
and  afterwards  properly  managed,  is  of  the  most  admirable 
kind.  For,  on  the  one  hand,  it  holds  out  inducements  to 
industrious  individuals  to  put  by  periodically  portions  of  their 
income,  which  are  invested  for  them  by  the  society,  and,  at 
the  end  of  a  certain  time,  are  repaid  to  them  in  the  shape  of 
a  large  accumulation,  without  their  having  themselves  the 
trouble  of  seeking  a  suitable  investment ;  while,  on  the  other 
hand,  the  money  subscribed,  being  advanced  to  some  of  the 
members,  enables  them  to  purchase  houses,  or  similar  prop- 
erty, and  to  repay  the  loan  by  small  periodical  instalments, 
extended  over  a  number  of  years. 

The  gentle  compulsion  to  investing  members  of  the  fines, 
which  enforce  punctuality  of  contribution,  is  not  without  its 
value  as  tending  to  form  habits  of  economy  and  regularity. 

A,:T.  3. — As  regards  the  purchasing  of  house  property, 
building  societies  are  peculiarly  beneficial.  A  large  portion 
of  a  man's  income  is  usually  absorbed  by  the  payment  of 
rent,  especially  among  the  lower  classes,  who  pay  for  their 
tenancy  much  more  heavily  than  the  rich,  considering  the 
relative  value  of  the  houses  which  they  occupy.  It  has 
been  justly  said,  that  every  one  knows  something  of  the 
ultimate  cost  of  hiring  furniture  for  his  house  or  lodgings; 
he  knows  that  it  is  much  more  advantageous  to  the  hirer  of 
furniture  to  buy  the  articles  outright  than  to  pay  continu- 
ally for  their  use;  and,  therefore,  most  prudent  people  in 
1  Ik'- middle  and  humble  walks  of  life  make  it  a  rule  to  pur- 
chase their  own  furniture  and  other  articles  of  domestic 
comfort  and  convenience,  because  the  price  paid  for  long 
hiring  is  at  Least  equal  to  the  original  value  of  the  article 
hired.  5Te1  there  are  many  thousands  of  persons  in  the 
metropolis   alone,    who,    while    they  deem    it  an    unwise 

bravagance  Dot  to  purchase  their  articles  of  household 
furniture,  arc  quite  content  to  hire  their  homes. 

Akt.    J.— It  is,  however,  only  by  means  of  these  societies 


Art.  5.  ON   BENEFIT   BUILDING    SOCIETIES.  471 

that  a  person,  not  possessed  of  capital,  who  merely  receives 
his  income  periodically,  can  become  possessor  of  a  house. 
This  he  is  enabled  to  do  from  the  practical  fact  that  the 
annual  repayments,  required  by  a  society  upon  a  loan,  do 
not  much  exceed  the  rent  of  a  house,  which  could  be  pur- 
chased with  the  sum  borrowed  "  after  a  short  period  of 
saving  as  an  investing  member  ;"  so  that  a  man  living  ten 
or  fourteen  years  in  a  house,  instead  of  paying  his  rent  to 
his  landlord,  and  thus  losing  so  much  money  for  ever,  pays 
it  with  a  small  addition  to  a  building  society  for  a  limited 
number  of  years,  and  in  consideration  of  this  arrangement, 
the  society  advances  him  at  once  the  money  requisite  for  the 
purchase  of  the  property,  which  thus  in  the  stipulated  time, 
whan  the  loan  has  been  repaid  with  interest,  becomes 
entirely  his  own,  the  money  advanced  being  in  the  mean- 
time secured  by  a  suitable  mortgage. 

Art.  5. — Such  is  the  simple  outline  of  the  plan  pursued 
in  the  practice  of  benefit  building  societies,  and  if  efficient 
in  'ins  be  provided  for  securing  correctness  in  their  prin- 
ciples of  calculation  and  a  fair  and  honorable  way  of  carry- 
ing out  their  object,  these  institutions  must  undoubtedly  be 
considered  as  an  excellent  application  of  the  system  of 
mutual  association.  A  private  individual  usually  finds  it 
impracticable  to  obtain  an  advantageous  accumulating 
interest  for  the  smaller  sums  which  he  can  spare  for  his 
necessities.  He  has  no  means  of  procuring  satisfactory 
information  respecting  the  adequacy  of  any  security  con- 
templated for  his  investment,  nor  is  he  in  the  way  of  hear- 
ing of  remunerative  opportunities,  which  present  them- 
selves from  time  to  time. 

An  association,  however,  of  provident  persons  can  com- 
mand all  that  is  wanting  to  the  single  member ;  and, 
although  the  trifling  contribution  of  each  by  itself  would  be 
too  small  to  be  capable  of  reproductive  investment,  yet 
when  united  with  others  in  a  large  sum,  it  becomes  a  pro- 
portionate participator  and  has  its  representative  in  the 
aggregate  profits  of  the  general  body.  Moreover,  when 
there  exists  a  variety  of  amount  of  talent  and  capital,  their 
union  for  the  purposes  of  carrying  out  the  same  design 
facilitates  and  renders  possible  its  accomplishment.  The 
efforts  of  a  body  of  men  in  pursuit  of  a  good  object  are 
generally  successful,  whether  they  endeavor  to  attain  for 
themselves  definite  and  tangible  results  by  the  operation  of 
great  commercial  enterprises,  or  whether  they  combine 
with  the  provident  desire  to  avert,  as  far  as  possible,  the 
pecuniary  loss  to  which  the  death  of  any  individual  among 
their  number  would  expose  the  members  of  the  family.    As 


472  APPENDIX  I.  Ch.  I. 

an  application  of  the  former  species  of  association,  though 
in  a  limited  degree  and  among  humble  classes,  benefit  build- 
ing societies  have  proved  a  remarkable  illustration  of  the 
great  advantages  conferred  by  the  working  of  this  prin- 
ciple, but  they  are  yet  so  obscured  by  defects  and  errors  as 
to  require  the  application  of  many  improvements,  both  in 
their  system  and  practice,  to  prevent  them  from  sinking 
into  disrepute. 

Art.  6. — The  first  benefit  building  society  which  can  be 
traced  was  founded  in  1815  under  the  auspices  of  the  Earl 
of  Selkirk.  It  was  a  village  club  at  Kirkcudbright  in  Scot- 
land. Other  institutions  of  a  similar  kind  were  afterwards 
established  in  the  same  kingdom  under  the  title  of 
"  Menages,"  and  the  system  was  soon  adopted  in  England, 
by  societies  formed  in  the  neighborhood  of  Manchester  and 
Liverpool  and  other  parts  of  the  JNTorth.  After  the  year 
1830  they  increased  so  rapidly,  that  on  the  11th  of  July, 
1836,  a  "special  act  (6  and  7  William  IV.,  cap.  32)  was 
passed  for  their  encouragement  and  protection,  in  the  pro- 
visions of  which  were  embodied  "  certain  clauses  applicable 
to  their  conduct,  which  were  included  in  the  statutes  relat- 
ing to  Friendly  Societies  passed  in  the  reigns  of  George  IV. 
and  William  IV.  As  a  proof  of  their  numbers  it  may  be 
stated  that  up  to  the  present  time,  there  have  been  regis- 
tered in  the  United  Kingdom  considerably  over  7,000 
societies,  and  that  they  are  increasing  every  year.  Of  these 
societies  there  is  evidence  to  show  that  above  3,000  are  yet 
in  existence,  the  total  income  of  which  is  calculated  at  not 
less  than  £9,500,000  a  year.  In  fact,  there  are  several 
whose  annual  income  exceeds  £100,000.* 

Art.  7. — The  act  of  Parliament  just  mentioned  bears  the 
designation  of  "  An  Act  for  the  regulation  of  Benefit  Build- 
ing  Societies,"  and  was  passed  for  the  express  purpose  of 
encouraging  the  formation  of  such  institutions,  by  granting 
them   various  privileges,    among   which   is   the    power   of 

*  [The  annual  receipts  from  con-  has   103,000  inhabitants,   possesses 

tributions   of   the   Leeds  Building  60   Building    Societies,    of    13,401 

Society  amount  to  £151,292.    The  members,  with  a  realized  capital 

number  of  the   members  is  7047.  of  £1,768,025,  having  trebled  their 

Theamount  advanced  to  borrow-  capital  since  1859.    The  Birkbeck 

ing     members     £826,112     (Seven-  Building    Society    (London),    re- 

teenth  pear,  L865).      Tl>c  Temper-  ceived   in  deposits,  during    1865. 

ance Building  Society,  London,  has  £492,789,     and     in     subscriptions 

I    !,!  more  than  £500,000.     Thecon-  'j:;i),<i7r>,  and  lent  out    upon   ntort- 

tribution  received  by  the  Queen's  gage  676,750.    The  income  of  the 

Building     Society,    Birmingham,  Standard  Building  Society,  Edin- 

during  the  fourth  yearof  its  exist-  burg,  for  its  eighthyear,  amounted 

ence  (1865),  amounted  to  £68.890.  to  £127,889]. 

The  DOrOUgfa  Of  Sunderland  w  IikIi 


Alt.  9.  ON   BENEFIT   BUILDING   SOCIETIES.  .   473 

charging  a  higher  rate  of  interest  than  was  formerly 
allowed  ;  while,  to  protect  their  subsequent  operations,  it 
enacted  that  each  society  should  be  governed  by  certain 
rules,  to  be  approved  of,  and  so  certified,  by  a  barrister  ap- 
pointed by  Government.  It  seems  to  have  been  overlooked 
by  the  legislature  that  societies  of  this  kind  would  be 
exposed  to  more  serious  danger  than  ever,  when  thus  en- 
couraged by  a  special  act,  if  the  rates  of  subscription  were 
left  unguided  by  any  advice  or  check  furnished  by  com- 
petent authority.  By  far  the  greater  number  of  the  earlier 
building  societies  were  founded  on  incorrect  principles  of 
payment,  and  evinced  on  the  part  of  their  originators  much 
ignorance,  even  of  the  simplest  operation  of  compound 
interest.  In  some  instances  the  statements  put  forth  were 
very  extravagant,  and  it  would  not  be  easy  to  account  for 
the  confidence  with  which  they  were  received  except  on  the 
ground  that  a  species  of  fascination  for  this  kind  of  invest- 
ment seemed  to  possess  the  minds  of  the  industrious  classes ; 
and  even  persons  of  superior  position,  who  would  be  ex- 
pected to  have  more  information,  united  in  giving  their 
sanction  to  the  error,  for  it  has  been  found  that  no  benefit 
building  society  has  ever  been  started,  however  ridiculous 
its  pretensions,  which  has  not  speedily  succeeded  in  drawing 
together  a  number  of  shareholders. 

Art.  8. — The  tone  of  moderation  assumed  in  many  of  the 
prospectuses  (proceeding,  in  some  cases,  from  an  honest  con- 
viction on  the  part  of  their  authors)  was  but  too  well  fitted 
to  gain  the  confidence  of  single-minded  persons.  It  was  not 
unusual  to  find  some  impossible  project  represented  as  "  no 
speculation — no  scheme,  by  which  uncertain  results  are  to 
be  obtained,  but  a  sober,  well-tried  and  successful  mode  of 
associating  together  a  number  of  persons  for  the  bene- 
fit of  the  whole,"  and  then,  although  it  was  deemed 
unnecessary  to  give  the  ground  upon  which  their  promises 
were  founded,  they  sheltered  themselves  beneath  the  mantle 
of  legislative  sanction,  and  adduced  the  Act  of  Parliament 
as  being  "  of  itself  sufficient  evidence  of  the  favorable 
opinion  entertained  by  government  of  their  society. "  It 
cannot  be  wondered  at  that  statements,  advanced  in  such 
language  as  this,  and  supported  by  so  high  an  authority, 
too  frequently  gained  the  confidence  of  the  public. 

Art.  9. — Nor  is  it  thus  only  that  the  legitimate  object  of 
building  societies  has  been  perverted.  In  order  to  render 
the  scheme  popular  and  attractive,  its  projectors  in  many 
cases  did  not  content  themselves  with  promising  to  the 
poor  but  industrious  man  the  privilege  of  becoming  the 
possessor  of  a  house  by  easy  means ;  but  unhappily  infused 


474  APPENDIX   I.  Ch.  I. 

into  him  an  eager  desire  to  obtain  a  disproportionate 
amount  of  gain  in  his  purchase.  Hence  it  comes  to  pass, 
that,  instead  of  his  feeling  a  lively  satisfaction  at  being  able 
to  get  possession  of  his  house  by  the  payment  to  a  society 
of  very  little  more  than  the  amount  of  his  rent  during  a 
r  tasonable  number  of  years,  he  has  been  taught  to  believe 
that  this  important  advantage  can  be  obtained  by  means 
and  within  a  period  of  time  which  common  sense  ought  to 
have  suggested  as  impossible. 

Whilst  this  attraction  was  held  out  to  the  borrowers  a 
similar  sacrifice  of  principle  was  made  to  the  investors,  or 
non-borrowers,  who  were  promised  large  accumulations  at 
the  end  of  a  limited  number  of  years,  in  return  for  dispro- 
portionately small  monthly  subscriptions.  The  same  pros- 
pectus frequently  contained  these  incompatible  statements, 
and  vet  the  subscribers  believed  with  implicit  and  blind  faith 
in  the  virtues  of  a  scheme,  into  the  practicability  of  which  day 
bv  day  they  did  not  trouble  themselves  to  inquire.  They  lost 
sight  of  the  fact  that,  in  saving  a  little  money  they  were 
but  providing  against  misfortunes  and  the  exigencies  of 
life,  that  facilities  for  the  investment  of  their  savings  are 
only  valuable  in  so  far  as  they  increase  their  means  for  that 
purpose,  and  that  not  for  one  moment  should  they  labor 
under  the  delusion  that,  by  joining  this  or  that  association, 
their  fortunes  can  be  made  without  trouble.  Such  hopes 
cannot  receive  too  strong  a  check,  as  they  give  rise  to  ideas 
which  I'll  the  working  classes  beyond  their  sphere,  and 
incapacitate  them  for  the  exertion  necessary  to  maintain 
them  in  it,  and  thus  cannot  fail  to  induce  misery  and 
disappointment  in  the  end. 

Aim-.  10. — la  addition  to  the  discouraging  effect  produced 
bv  tlic  errors  introduced  into  so  many  societies  there  ;ire 
other  obstacles  to  their  complete  success  that  arise  from  the 
imp  srfection  of  the  act  of  Parliament  r<  Lating  to  them.  In 
the  presence,  however,  of  these  objections  or  difficulties,  it 
may  confidently  be  i  I  that   the  introduction  into  this 

intry  of  the  system  of  buildiug  societies  bias  been  accom- 
panied byv  -cy  happy  results  in  promoting  habits  of  economy 
and  prudence  among  the  poorer  classes. 

Much  good  has  been  obtained  by  their  enabling  so  Large  a 
>er  of  persons  to  become  possessors  of  houses  and  land, 
which,  on  the  conclusion  of  their  payments,  they  occupy 
I'rcc  of  rent,  and  can  transmit  as  a  little  property  to  their 
families.  This  pecuniary  interest  serves  at  once  to  bind 
ii  to  the  soil,  and  to  promote  a  feeling  of  love  and  ven- 
er  it  ion  lor  the  national  institutions  of  their  country. 

The  fact  that  building;  societies  have  suffered  little,  if  at 


Art.  12.  ON    BENEFIT    BUILDING    SOCIETIES.  475 

all,  from  the  several  severe  financial  and  commercial  panics 
which  have  been  experienced  since  their  introduction,  speaks 
highly  for  the  general  soundness  of  the  principle  on  which 
they  are  based,  and  for  the  character  of  the  members  they 
attract. 

Art.  11. — Yet  it  is  remarkable  that  this  excellent  principle 
has  been  completely  overlooked  by  a  class  of  persons  in 
more  easy  circumstances,  to  whose  case  it  would  admit  of 
more  ready  and  certain  application.  There  are  a  vast  num- 
ber of  professional  men  and  others  engaged  in  commercial 
pursuits,  with  ample  means,  who  continue  for  years  to  pay 
away  large  sums  in  rent,  without  reflecting,  that  by  uniting 
together  in  the  formation  of  a  superior  kind  of  benefit 
building  society  they  would  be  able  to  realize  additional 
property  for  their  families  with  but  little  extra  outlaw 
Such  a  society  would  also  offer  another  channel  for  tempor- 
ary investment  to  many  non-commercial  persons  of  the 
higher  classes,  who  would  be  willing,  as  investors,  to  lay  out 
from  time  to  time  comparatively  small  sums  of  money  at 
advantageous  interest. 

Art.  12. — Hitherto  the  money  accumulated  by  these  asso- 
ciations has  been  devoted  mainly  to  the  purpose  of  enabling 
members  to  become  purchasers  of  houses  and  land,  or  simi- 
lar property,  yet,  as  far  as  the  principal  is  concerned,  there 
is  no  reason  why  it  should  not  be  applied  to  other  objects 
provided  the  investment  obtained  be  equally  safe.  Illustra- 
tions of  this  kind  will  be  found  in  Part  II.,  and  in  our  larger 
treatise,  where  Ave  suggest  a  plan  for  a  building  society,  the 
shares  of  which,  by  the  adoption  of  a  combination  of  Life 
and  even  Fidelity  Assurance,  could  be  made  payable  at  the 
end  of  a  definite  number  of  years,  or  sooner  in  case  of 
death  ;  while,  at  the  same  time,  they  might  serve  as  security 
for  the  fidelity  of  the  possessor,  when  holding  a  situation 
of  trust. 

Other  useful  applications  of  benefit  building  societies  may 
be  enumerated  as  follows: — 

First. — Provisions  for  old  age  may  be  secured,  payable  at 
tiie  end  of  any  number  of  years,  by  a  person  joining  the 
society  as  an  investor. 

Second. — Houses  can  be  purchased,  instead  of  being  hired, 
by  an  inconsiderable  increase  of  annual  outlay. 

Third. — -Heads  of  large  commercial  establishments  and 
ministers  of  parishes  may,  by  affording  encouragement, 
advice  and  protection  in  the  formation  of  such  societies 
secure  more  benefit  for  their  dependents  and  the  humble 
members  of  their  charge  than  can  be  obtained  by  any  effort, 
however  extensive,  of  private  charity. 


476  APPENDIX   I.  Cll.  I. 

Fourth. — Leaseholders,  such  as  farmers  and  others,  desir- 
ous of  providing  for  the  fine  on  renewal  on  their  leases  (if 
for  terms  certain)  can  do  so  by  joining  a  society  as  investors 
and  subscribers  for  such  number  of  shares  (to  be  received  in 
full  at  the  required  time)  as  will  meet  the  amount  desired. 
This  obviously  would  be  to  many  an  easy  mode  of  provid- 
ing for  what  is  now  often  felt  to  be  a  difficult  and  onerous 
charge. 

Fifth. — The  premiums  or  fees  for  placing  boys  as  appren- 
tices or  articled  clerks  to  solicitors,  engineers,  etc.,  can  be 
obtained  in  a  similar  way. 

Sixth. — -Marriage  and  family  endowments  of  all  kinds 
can  be  secured. 

Seventh. — Benevolent  institutions  and  religious  societies 
can  borrow  funds  for  the  erection  of  churches,  alms  houses, 
schools,  chapels,  etc.,  or  for  the  immediate  paying-off  of 
debts,  and  the  amount  borrowed  can  subsequently  be  repaid 
by  charitable  contributions  periodically  collected. 


CHAPTER  II. 

ON  THE  NATURE  OF  THE  OPERATIONS  OF  COMPOUND  INTEREST. 

Article  13. — Previously  to  describing  the  theoretical  con- 
struction of  a  building  benefit  society,  or  any  other  similar 
association,  a  few  remarks  will  be  necessary  respecting  the 
principles  of  compound  interest,  on  which  the  rates  of 
subscription  are  supposed  to  be  based,  so  that  the  general 
reader  may  be  enabled  to  judge  of  the  manner  in  which  the 
advantages  to  be  derived  from  these  institutions  are  attain- 
able, and  to  appreciate  the  influence  which  the  practical 
contingencies  examined  in  the  successful  sections  may  be 
expected  to  have  in  the  result  produced  by  a  mere  theoreti- 
cal investigation  of  the  subject. 

It  would  be  irrelevant  to  the  object  of  this  work  to 
enter  into  the  doctrines  of  interest  further  than  is  neces- 
sary to  elucidate  and  explain  the  nature  of  benefit  building 
and  other  investment  societies;  we  shall  therefore  confine 
ourselves  to  a  few  general  outlines  and  illustrations.  The 
reader  who  is  desirous  of  more  extended  information  is 
referred  to  treatises  specially  devoted  to  the  science  and  to 
the  mathematical  appendix  at  the  end  of  this  volume,  where 
he  will  find  the  subject  treated  analytically. 

Art.  11. — It  is  the  custom  in  all  civilized  countries  that 
one  person  borrowing  a  sum  of  money  from  another  should 
pay  him  periodically  for  its  use  a  certain  consideration, 
under  the  name  of  Interest.  This  consideration  varies  in 
amount  according  to  the  nature  of  the  security  given  for 
the  loan,  the  state  of  public  monetary  affairs,  and  occasion- 
ally other  circumstances.  In  order  to  simplify  commercial 
transactions  and  establish  a  standard  of  measurement  for 
them,  annual  rates  of  interest  have  been  formed  varying 
from  £1  upward  for  every  £100  borrowed.  This  interest, 
although  specified  nominally  as  an  annual  rate,  is  payable 
at  such  regular  periods  as  are  agreed  upon,  either  by  annual 
or  half-yearly,  or  more  frequent  instalments,  each  periodical 
payment  being,  however,  always  proportional  to  the  annual 
rate. 

The  rate  of  interest  that  a  lender  may  legally  demand  or 
receive  for  the  use  of  his  money  was  formerly  limited  in 
England   to   five  per   cent,   per'  annum,  although  special 

477 


478  APPENDIX   I.  Cll.  Ii 

exceptions  were  made  for  the  investments  of  building 
societies  and  similar  institutions.  It  does  not  seem  clear 
for  what  reason  the  rate  of  five  per  cent,  was  selected  as 
the  limit  allowed  ;  and  the  growing  opinion  that  the  exist- 
ence of  such  a  limit  was  the  occasion  of  more  injury  to 
commercial  affairs  amidst  the  fluctuations  of  public  confi- 
dence than  it  had  produced  good  by  the  restraint  imposed 
upon  usurious  practices  gave  rise  in  1853  to  the  repeal  of 
all  laws  against  usury. 

SIMPLE    AND    COMPOUND    INTEREST. 

Art.  15. — In  treating  of  the  advantage  derived  by  invest- 
ing money,  it  is  important  to  distinguish  between  simple 
and  compound  interest. 

If  the  sums  received  by  the  lender  from  time  to  time  on 
account  of  interest  are  placed  by  him  in  similar  investments 
as  so  much  new  capital,  it  is  obvious  that  he  not  only  realizes 
interest  on  the  sum  originally  lent,  but  also  on  its  interest, 
thus  increasing  materially  the  advantages  produced  by  his 
money,  for  which  he  is  consequently  said  to  be  receiving 
compound  interest. 

The  same  would  be  the  result,  if  the  borrower,  instead  of 
actually  paying  the  interest  when  it  became  due,  were 
allowed  to  increase  his  debt  thereby,  with  the  understand- 
ing that  the  whole  should  be  paid  off  in  one  sum  at  the 
end  of  the  time  for  which  the  loan  was  made,  the  borrower 
undertaking  to  place  his  creditor  in  the  same  pecuniary 
position  as  he  would  have  been  in  had  the  instalments  of 
interest  been  actually  paid  periodically  and  themselves  re- 
invested. 

If,  however,  instead  of  supposing  the  interest,  which 
should  have  been  paid  from  time  to  time  to  be  reproductive, 
the  borrower  were  only  bound  to  pay  the  sum  of  the  peri- 
odic instalments  on  the  original  amount  lent,  without  any- 
thing additional  for  their  non-payment  at  the  epoch  when 
they  became  due,  then  he  is  said  to  be  paying  only  simple  in- 
terest; for  example  : 

Suppose  £100  were  borrowed  for  four  years  at  the  annual 
rate  of  5  per  cent,  simple  interest,  which  is  to  be  paid  at 
the  end  oi  the  fourth  year  with  the  loan,  then  the  amount 
payable  at  that  time  would  be £100  and  four  times  £5,  or 
all  together  6120. 

Aim.  1<>. — The  way  compound  interest  accumulates  will  be 
seen  by  tin-  following  example:  Supposed  lends  B  £1,000 
lor  fourteen  years  at  5  per  cent,  interest,  payable  annually 
at  the  end  of  each  year.     At  the  end  of  the  first  year    A. 


Alt.  19.  ON   BENEFIT    BUILDING   SOCIETIES.  479 

receives  from  B  £'50  for  interest,  which  he  reinvests  by  a 
further  loan  to  B  or  to  some  other  party.  The  amount  al- 
together thus  lent  is  then  £1,050.  At  the  end  of  the  second 
year  A  receives  £52  LOs.  as  interest  at  5  per  cent.,  which  he 
again  lends  out  immediately,  making  his  total  investment 
£1,102  10s.  At  the  end  of  the  third  year  the  interest  re- 
ceived upon  this  loan  of  £1,102  10s.  is  £55  2s.  6d.,  which, 
being  also  lent  out,  causes  the  total  sum  reinvested  to  be 
£1,157  12s.  6d.3  on  which,  at  the  end  of  the  fourth  year,  A 
again  receives  interest,  and  so  on,  until  the  end  of  the 
period,  the  advantage  derived  from  these  repetitions  of  in- 
vestment increasing  every  year. 

In  this  example  we  have  seen  that  the  lender  in  three 
years  clears  £157  12s.  6d.  in  the  shape  of  interest  of  the 
£1,000  originally  lent,  which  is  £7  12s.  6d.  more  than  he 
would  have  obtained  by  simple  interest.  In  the  same  way 
i  f  we  refer  to  table  No.  4,  which  is  formed  on  the  above 
eonsiderations,  it  is  found  that  at  the  end  of  fourteen  vears 
the  £1,000  would  amount  to  £1,979  18s.,  of  which  £979  18. 
arises  from  compound  interest,  being  £279  18s.  more  than  a 
simple  interest. 

Art.  1 7. — As  in  the  practice  of  the  societies  which  forms  the 
subject  of  this  work,  interest  is  always  supposed  to  be  com- 
pound and  not  simple,  we  will  confine  ourselves  to  remarks 
on  the  various  results  appertaining  to  the  realization  of  the 
former,  promising  that  whenever  the  rate  of  interest  is  men- 
tioned, it  always  signifies  the  yearly  rate,  whether  it  be 
actually  paid  once  a  year  or  in  portions  at  more  frequent 
intervals. 

Art.  18. — Respecting  tables  of  interest  and  thepreceding 
example,  it  should  be  observed  that  the  calculations  are  only 
true,  supposing  the  money,  which  is  received  yearly  or  other- 
wise, as  interest,  to  be  immediately  transferred  to  some  in- 
vestment producing  the  same  rate  of  interest,  and  in  as 
frequent  instalments  as  the  original  investment  did.  The 
loss  of  a  day  falsifies  the  calculations,  and  neglect  of  this 
most  important  consideration  is  the  cause  of  the  frequent 
discrepancies  which  are  seen  between  valuations  made  on 
theory  and  those  consistent  with  the  circumstances  of 
actual  practice. 

Art.  19. — In  commercial  transactions,  interest  is  more 
frequently  due  half  yearly  than  yearly,  and  sometimes 
quarterly  or  monthly,  which  materially  increases  the  amount 
to  which  a  sum  of  money  will  accumulate  in  a  given  time, 
since  the  instalments  of  interest  are  then  susceptible  of  more 
frequent  investment  themselves,  as  so  much  new  capital 
bearing  interest.     One  instance  will    prove  this :    Suppose 


480  APPENDIX  I.  Ch.  II. 

£1,000  were  lent  out  for  one  year  at  5  per  cent,  rate  of  in- 
terest, payable  half-yearly.  At  the  end  of  six  months  the 
lender  receives  half  a  }rear's  interest,  or  £25.  This,  if  in- 
vested immediately,  will  itself  produce  in  six  months  12s.  6d. 
interest,  or  the  lender  will,  at  the  end  of  the  year,  by  his 
investment  of  £1,000,  have  made  £50  12s.  6d.,  instead  of  the 
£50,  which  he  would  have  received  had  the  interest  been 
payable  yearly. 

The  greater  advantage  derived  by  the  receipt  of  interest 
in  equal  instalments,  more  frequently  than  once  a  year,  is 
shown  in  Table  5,  where  is  given  the  actual  interest  realized 
at  the  end  of  the  year,  corresponding  to  various  nominal 
rates,  according  as  it  is  paid  half-yearly,  quarterly  or 
monthly,  or  even  by  shorter  intervals  of  time.  When  in- 
terest is  supposed  due  at  the  end  of  every  moment  of  time, 
it  is  said  to  be  momentaneous,  and  this  hypothesis,  to  which 
other  rates  can  be  reduced,  gives  rise  to  several  curious  in- 
vestigations which  are  discussed  at  length  in  the  Appendix. 
See,  also,  the  Tables  6  and  7. 

Art.  20.  In  case  where  the  amount  of  a  sum  is  to  be  de- 
termined for  a  period  of  years  beyond  the  limit  of  the 
tables  which  are  used,  results  given  in  them  may  yet  serve 
the  purpose. 

Example:  Suppose  the  amount  of  £100  in  thirty  years  at 
5  per  cent,  compound  yearly  interest  is  desired.  Ascertain 
the  amount  in  twenty-five  years  by  Table  7,  and  then  by 
rule  of  three  determine  what  the  sum  produced  at  the 
end  of  twenty-five  years  will  accumulate  to  in  five  years 
more ;  or,  what  is  the  same  thing,  the  amount  of  £1  in  thirty 
years  is  equal  to  the  product  of  the  respective  amounts  in 
twenty-five  and  five  years.  The  multiplication  is  very  easy 
when  decimals  are  used. 

Thus  in  twenty-five  years,  at  5  per  cent.,  £100  would 
amount  to  £338  12s.  8d.  Again,  in  five  years,  £100  would 
amount  to  £127  12s.  6d.,  therefore  in  five  years  £338  12s.  8d. 
will  amount  to  £132  3s.  10d.,  or  the  amount  of  £100  in 
thirty  years  is  £432  3s.  10d.,  which  is  shown  to  be  correct 
by  Table  4. 

The  general  theorem  is:  The  amount  of  £1  in  any  given 
number  of  years  is  equal  to  the  product  of  the  respective 
amounts  of  1:1  in  any  two  or  more  periods  of  years,  into 
which  the  given  number  can  be  separated. 

Aim.  21.  [fa  person  be  entitled  to  a  certain  amount  at 
a  given  time,  and  wish  in  its  stead  to  take  its  equivalent 
value  at  present,  the  sum  which  he  ought  to  receive  is 
termed  the  present  value  of  the  amount  in  question,  and 
the  difference  between  the  two  is  called  discount.     The  dis- 


Art.  22.  ON   BENEFIT   BUILDING   SOCIETIES.  481 

count  will  be  less  or  greater  according  as  the  sum  due  is 
discounted  at  simple  or  compound  interest.  In  ordinary 
mercantile  transactions  to  avoid  the  necessity  for  tables, 
it  is  unusual  to  charge  a  discount  equal  to  the  simple  in- 
terest on  the  whole  debt  for  the  time  that  exists  between 
the  present  and  the  day  on  which  it  is  due.  Thus  if  the 
amount  be  £100,  and  there  remain  two  years  before  it  is 
due,  the  discount  at  5  percent,  rate  of  interest  will  be .£10 — 
for  eighteen  months  it  will  be  £7  10s.,  and  similarly  for 
other  periods.  This  is  sufficiently  accurate  for  the  practical 
purposes  of  commercial  affairs,  and  in  fact  is  the  only  way 
in  which  the  necessity  for  separate  calculations  on  every 
occasion  can  be  obviated ;  but  for  debts  extending  over  a 
large  number  of  years,  such  a  method  of  computing  the 
discount  would  give  a  result  which  would  be  much  too 
large.  When  money  is  correctly  discounted  at  a  certain 
rate  of  compound  interest,  the  present  value  is  such  a  sum 
as  will,  if  invested  at  once  at  the  same  rate,  accumulate  at 
the  end  of  the  given  time  to  the  amount  due. 

Discount,  therefore,  being  the  inverse  of  interest,  we 
have  this  fact,  corresponding  to  the  one  mentioned  in 
Article  19,  that :  The  present  value  of  a  sum  due  at  the  end 
of  a  given  time  is  less  in  proportion  to  the  greater  fre- 
quency of  the  period  at  which  the  interest  is  supposed  to 
be  due. 

Example :  The  present  value  of  £1,000,  due  in  five  years 
and  discounted  at  the  rate  of  4  per  cent,  compound  yearly 
interest,  is  £821  18s.  6d.  But  if  the  interest  be  calculated 
as  due  half-yearly,  it  is  £820  7s.,  and  similarly  it  is  less  if 
calculated  as  due  quarterly  or  monthly.  Tables  which  give 
the  amounts  to  which  a  present  sum  will  accumulate  will 
serve  inversely  to  give,  by  rule  of  three,  the  present  value 
of  a  sum  due  at  the  end  of  a  specified  number  of  years. 

For  if  £100  amount  at  three  per  cent,  yearly  interest  to 
£115  18s.  5d.  in  five  years  (see  Table  4),  then  £100  is  the 
present  value  of  £115  18s.  5d.,  due  five  years  hence.  There- 
fore, by  rule  of  three,  £86  5s.  4d.  is  the  present  value  of  £100 
due  five  years  hence. 

Art.  22. — The  important  theorem  in  Article  20  holds 
also  for  present  values. 

Art.  23. — A  table  of  present  values  is  worth  attention. 
(See  Sec.  2,  Appendix).  If  two  rates  of  interest  be  followed 
down  the  table,  and  the  difference  of  the  present  values  of 
£100  at  those  rates  of  interest  be  measured,  it  will  be  seen 
that  there  is  a  period  at  which  the  difference  attains  a  maxi- 
mum. In  other  words,  if  one  person,  A,  obtain  a  present 
loan  or  advance   from   another  person,  B,    in  return   for 


482  APPENDIX   I.  Ch.  II. 

which  he  is  to  pay  him  a  sum,  S,  in  a  certain  number  of 
years ;  and  A,  out  of  the  money  he  has  received,  lends  a 
smaller  sum  (though  deducting  a  higher  rate  of  interest)  to 
a  third  party,  C,  from  whom  in  repayment  he  is  also  to  re- 
ceive a  sum,  S,  which  will  enable  A  to  pay  his  debt  to  B ; 
then  the  immediate  profit  derived  by  A  will  be  greatest,  if 
he  select  the  proper  term  of  years  for  his  transaction. 

ON    ANNUITIES    OB    PERIODIC    PAYMENTS. 

Article  24. — Having  explained  the  operations  by  which  a 
single  sum  changes  its  value,  under  the  influence  of  interest 
in  the  course  of  time,  we  will  proceed  to  show  what  is  the 
result  when  several  sums  are  taken  together  into  considera- 
tion. 

Annuity  is  a  term  applied  to  the  periodic  payment  of 
money  at  fixed  intervals.  It  is  said  to  be  yearly,  half- 
yearly,  quarterly,  or  monthly  annuity,  according  as  the 
periodic  payments  are  made  once  a  year  or  in  two  half- 
yearly,  four  quarterly,  or  twelve  monthly  equal  portions. 
Annuities  are  also  termed  certain,  if  payable  for  a  definite 
number  of  years  ;  but  contingent,  if  their  duration  depend 
upon  adventitious  circumstances,  such  as  the  existence  of 
one  or  more  lives,  in  which  case  they  are  called  life  annui- 
ties. We  will  confine  our  attentions  to  the  first  kind,  in 
which  there  are  only  two  fundamental  questions  requiring 
special  examination,  from  which  every  problem  relating  to 
annuities  can  be  deduced,  premising  that,  unless  the  con- 
trary  is  stated,  the  annuities  are  supposed  payable  at  the 
end  of  each  vein- : 

First. — What  sum  an  annuity  would  amount  to  at  the  end 
of  its  duration,  if  each  periodic  payment  were  to  be  invested 
and  to  produce  compound  interest. 

Second. — What  present  sum  paid  down  is  equivalent  to  an 
annuity  payable  for  a  given  number  of  years. 

These  values  will  vary  with  the  rate  of  interest  supposed 
in  the  calculations,  and  also  with  the  frequency  of  the  inter- 
vals, at  which  the  periodic,  payments  of  the  annuity,  or 
instalments  of  interest  thereon,  are  supposed  due.  It  is 
obvious,  however,  that,  first:  The  amount  of  an  annuity,  at 
the  end  of  the  time  during  which  it  is  to  continue,  is  the 
sum  of  the  accumulations  of  each  periodic  payment,  im- 
proved at  compound  interest,  from  the  date  at  which  each 
was  paid,  or  due,  up  to  the  time  of  the  expiration  of  the 
annuity.  And  secondly:  The  present  value  of  an  annuity 
is  equal  to  the  sum  of  the  present  values  of  each  of  the 
periodic,  payments  discounted  at  compound  interest,  each 


Art.  26.  ON   BENEFIT    BUILDING    SOCIETIES.  483 

payment  being  separately  discounted  for  the  respective  dis- 
tance of  time  being  between  the  present  and  the  date  of 
which  it  is  due. 

Art.  25. — Since  an  annuity  is  strictly  equivalent  to  its 
present  value,  the  party  purchasing  and  the  other  selling 
being,  as  far  as  the  mathematical  considerations  go,  in 
equal  positions,  it  follows  that  the  amount  of  an  annuity  is 
exactly  equal  to  the  amount  to  which  the  present  value  of 
the  annuity  would  accumulate,  if  itself  were  invested  and 
improved  at  the  same  interest,  until  the  end  of  the  given 
number  of  years. 

Hence,  when  accurately  calculated  at  the  rate  of  interest 
agreed  upon,  the  amount  and  the  present  value  of  the 
annuity  are  each  exactly  equivalent  to  the  annuity  itself, 
and  are  thus  equally  applicable  to  the  affairs  of  life,  the  one 
being  frequently  exchanged  for  the  other.  Thus,  a  debtor 
may  clear  off  a  given  sum  now  due  by  paying  to  his  credi- 
tor either  an  equivalent  annuity  for  a  certain  number  of 
years,  or  its  amount  at  the  end  of  that  time  ;  and  a  land- 
holder, whose  estate  is  charged  with  an  annuity,  can  com- 
pound for  it  by  giving  a  present  sum  in  cash.  As  an 
example:  Referring  to  tables  10  and  11,  we  see  that  at  7 
per  cent,  rate  of  yearly  interest,  the  present  value  of  £8  8s.  Od. 
paid  at  the  end  of  each  year  for  ten  years,  is  nearly  £59, 
and  also  that  the  amount  of  £8  8s.  Od.  a  year  at  the  end  of 
ten  years  is  £116  Is.  2d.  ;  moreover,  Table  4  shows  that  the 
single  sum  £59,  improved  at  7  per  cent,  compound  interest  for 
ten  years,  gives  the  same  amount,  providing  that  the  three 
are  equivalent  to  each  other ;  or  in  other  words,  supposing 
two  men  each  to  undertake  to  pay  £8  8s.  Od.  at  the  end  of 
each  year  to  a  society  for  ten  years,  and  that  one  desired  to 
receive  in  return  the  present  value  of  his  ten  years'  pay- 
ments, while  the  other  determined  to  wait  for  his  share  until 
the  end  of  the  time,  they  would  both  be  fairly  treated,  in 
respect  of  their  subscriptions  to  the  society,  if  the  one  re- 
ceived £59  at  once,  and  the  other  £116  Is.  2d.  at  the  termina- 
tion of  the  annual  payments. 

The  same  reasoning  applies  to  annuities  of  larger  or 
smaller  amounts  for  different  periods  of  duration,  and  a 
society  receiving,  as  in  the  above  example,  annuities  from 
its  members  and  pa}Ting  to  some  their  present  value  and  to 
others  their  ultimate  amount,  is  on  the  general  principle  of 
a  benefit  building  society. 

Art.  26. — The  whole  theory  of  annuities  cannot  be  ex- 
plained without  some  analytical  investigations,  such  as  will 
be  found  in  the  Appendix.  For  practice,  Tables  10,  11  and 
12  may  be  used,  in  which  are  given,  for  various  rates  of 


484  APPENDIX  I.  Ch.  II. 

interest,  the  amount  and  present  value  of  an  annuity  of 
£100,  payable  at  the  end  of  each  year,  and  the  annuity 
which  £100  will  purchase.  These  tables,  however,  will 
serve  for  annuities  of  other  amounts,  and  they  may  be 
adopted  when  the  annuity  is  paid  at  the  beginning  instead 
of  the  end  of  each  year. 

Art.  27. — If  the  annuity  be  supposed  payable  half-yearly 
or  quarterly,  or  monthly,  as  in  building  societies,  some 
modification  is  necessary  in  the  tables,  the  nature  of  which 
is  explained  in  the  Appendix.  But  it  is  clear  that :  A 
smaller  annuity  ought  to  be  paid  during  a  specified  number 
of  years,  in  consideration  of  a  given  present  sum,  debt  or 
purchase-money,  in  proportion  to  the  greater  frequency  of 
the  periods,  at  which  the  equal  portions  of  the  annuity  are 
to  be  paid.  Similarly :  The  accumulated  amount  of  an 
annuity  at  the  end  of  a  given  time,  increases  with  the 
frequency  of  the  Intervals  at  which  the  instalments  are 
paid. 

Art.  28. — It  will  be  observed  that :  For  a  given  annuity, 
the  amount  at  the  end  of  a  given  number  of  years  will  in- 
crease with  the  rate  of  interest  at  which  the  money  is  sup- 
posed invested.  And  inversely  :  The  larger  the  accumula- 
tion is  promised  in  return  for  the  subscription  of  an  annuity 
for  a  stated  time,  the  higher  will  the  rate  of  interest  be 
at  which  it  must  be  invested.  Hence,  the  first  point  to  be 
t  bought  of,  when  an  accumulation  is  promised  for  an  annuity 
paid, is:  Can  the  necessary  rate  of  interest  be  obtained? 
Can  every  instalment  of  the  annuity  be  immediately  and 
continually  invested  throughout  the  whole  time,  at  the  rate 
required '. 

Thus,  for  example,  £6  a  year  will  amount  to  £82  18s. 
nearly,  in  ten  years,  at  7  per  cent,  rate  of  interest.  But,  in 
order  that  £0  a  year  may  amount  to  £120,  the  rate  of  inter- 
est required  is  11'  percent.  (See  Appendix.)  Again,  that 
£6  a  year  will  amount  to  £140,  or  £3  a  year  to  £70  in  the 
Mime  time,  the  rate  of  interest  required  is  nearly  18  per 
cent. 

Akt.  29. — The  number  of  years  during  which  a  given  an- 
nuity is  to  be  paid  in  return  for  a  given  present  sum,  debt, 
or  purchase-money,  increases  with  the  rate  of  interest  sup- 
posed to  be  paid.  Inversely:  The  advantage  obtained  by  a 
borrower,  who  pays  a  certain  annuity  in  return  for  a  loan, 
diminishes  as  trie  number  of  years  increases.  Example:  If 
a  borrower  pay  68s  8.  Od.  a  year  during  ten  years  for  a  loan 
of  659,  he  is  paying  at  the  rate  of  7  per  cent,  compound 
yearly  interest,  but  if  the  time  be  increased  to  thirteen 
years,  the  rate  of  interest  will  be  about  10£  per  cent. 


Alt.  32.  ON    BENEFIT    BUILDING    SOCIETIES.  485 

Art.  30. — On  comparing  Table  4  with  Table  10,  it  will  be 
seen  that  the  difference  of  two  successive  values  of  the  annvify- 
table  (^amounts  is  equal  to  the  sum  given  in  the  table  of  sin- 
gle amounts  for  the  lesser  number  of  years.     Example  : 

The  amount  of  an  annuity  of  £100,  in  eleven  years,  at  5  per 
cent =£1,420.67 

The  amount  of  an  annuity  of  £100,  in  ten  years,  at  5  per 
cent =  £1 ,257.78 

Difference £162.89 

which  is  the  amount  of  a  single  £100  at  5  per  cent,  by  Table 
4.  So  that  Table  4  might  in  fact  be  calculated  from  Table 
10,  if  that  were  given. 

The  converse  holds  for  present  values.  (See  Tables  9 
and  11.) 

Art.  31. — If  annuity  payments  be  deferred  for  a  few  years, 
the  present  value  and  the  amount  of  such  an  annuity  can  be 
easily  deduced  from  the  tables  for  immediate  annuities. 
For  instance,  the  present  value  of  a  deferred  annuity  of  i'l 
for  ten  years,  at  5  per  cent,  (the  first  payment  to  begin  at 
the  end  of  five  years),  is  equal  to  the  present  value  of  the 
immediate  annuhYy,  viz :  £7.7217  for  ten  years  divided  by 
the  amount  of  £1  for  four  years,  or  by  £1.2155.  The 
answer  is  £6.3527. 

<>\'    THE    DOUBLING    OF   MONEY. 

Art.  32. — "When  a  sum  of  money  increases  to  double  its 
value  by  the  accumulation  of  compound  interest,  the  an- 
alytical investigations  assume  a  peculiar  form,  from  Avhich 
we  have  deduced  the  following  theorems  as  bearing  on  the 
system  of  many  Benefit  Building  Societies :     (See  Appendix.) 

1. — For  all  rates  of  interest  not  exceeding  10  per  cent.  the 
number  of  years  in  which  a  single  sum  will  become  double 
in  amount  by  the  accumulation  of  com/pound  'ml'  r<  st  may  be 
foundby  dividing  70  by  the  rate  of  interest  per  cent.,  and 
taking  that  whole  number  which  is  nearest  to  the  quotient 
obtained. 

The  accuracy  of  this  theorem  may  be  judged  of  by  Table 
8,  but  the  property  is  valuable  as  furnishing  a  simple  rule 
and  one  easily  remembered.     Thus : 

If  the  rate  of  interest  be  2  per  cent.,  then  the 

number  of  years  will  be  ^°-  nearly  =  35    years 

If  the  rate  of  interest  be  21  per  cent.,  then  the 

number  of  years  will  be tt9-?  nearly  =  28    years 

If  the  rate  of  interest  be  3  per  cent. ,  then  the 

number  of  years  will  be -^  nearly  =  23£  years 


486  APPENDIX  I.  Ch.  II. 

If  the  rate  of  interest  be  3£  per  cent.,  then  the 

number  of  years  will  be -g^?  nearly  =  20    years 

If  the  rate  of  interest  be  4  per  cent.,  then  the 

number  of  years  will  be ^  nearly  =  17$  years 

If  the  rate  of  interest  be  4|  per  cent.,  then  the 

number  of  years  will  be ^tt^s  nearly  =  15|  years 

If  the  rate  of  interest  be  5  per  cent.,  then  the 

number  of  years  will  be ^°-  nearly  =  14    years 

If  the  rate  of  interest  be  6  per  cent.,  then  the 

number  of  years  will  be 76°-  nearly  =  11 J  years 

If  the  rate  of  interest  be  7  per  cent.,  then  the 

number  of  years  will  be  ^  nearly  =  10    years 

If  the  rate  of  interest  be  8  per  cent.,  then  the 

number  of  years  will  be ™  nearly  =    8|-  years 

(or  9  nearly.) 
If  the  rate  of  interest  be  9  per  cent.,  then  the 

number  of  years  will  be -™  nearly  =    7 f  years 

(or  8  nearly.) 
If  the  rate  of  interest  be  10  per  cent.,  then  the 

number  of  years  will  be f {}  nearly  =    7    years 

which  agree  with  the  whole  numbers  given  by  the  table. 
When  the  rate  of  interest  is  higher  than  10  per  cent.,  a 
larger  dividend  than  70  must  be  taken. 

2.— The  amount  of  an  annuity  of  £1,  in  the  exact  time  in 
which  a  single  sum  would  double,  is  equal  to  £100  divided 
by  the  rate  of  interest  per  cent. 

Thus,  at  5  percent.,  money  will  double  in  fourteen  years 
and  a  fraction,  and  £1  a  year  for  the  same  time  will  amount 
to  £100  divided  by  5,  or  £20,  which  agrees  with  Table  10. 

Art.  33. — From  Theorems  1  and  2  we  have: 

3. — Tf  a  sum  of  money  be  borrowed  for  such  a  time  that,  if 
unpaid,  it  wouldbecome  doubled  by  the  accumulation  of  com- 
pound interest,  then  the  debtor  can  liquidate  his  debt  with 
interest  in  that  time,  by  an  inutility  equal  to  twice  one  years 
interest  on  the  sum  Inn-rowed.  If  the  time  be  a  certain  num- 
ber of  years  and  days,  the  last  payment  of  the  debtor  will  be 
a  fractional  portion  of  the  year's  annuity  proportionate  to 
the  fractional  number  of  days. 

Thus,  if  £60  be  borrowed  for  fourteen  years,  seventy-six 
days  (which  is  the  exact  time  in  which  money  will  double  at 
yearly  5  percent.),  then  the  debt  can  be  repaid,  including 
principal  and  interest,  by  an  annuity  for  that  time  after  the 
rate  of   £6  a  year,  since  £3  is  the  interest  on  £60  at  5  per 

cent. 

in,  if  £60  be  borrowed  for  ten  years, ninety  days  (the 
exacl  lime  of  doubling  al  7  per  cent.),  then  a  yearly  annuity 
of  68  8s.  for  thai  time  will  repaj  principal  and  interest, 
II  Is.  being  one  year's  interest  on  660  at  7  percent.  If  the 
above  annuities  were  paid  in  monthly  instalments  of  LOs.  and 
J  Is.  the  debts  would  be  repaid  in  very  nearly  fourteen  years 
and  ten  years  respectively. 


Alt.  35.  ON   BENEFIT   BUILDING   SOCIETIES.  487 

4. — The  interest,  at  which  money  will  double  in  a  given 
number  of  years,  is  nearly  equal  to  70  divided  by  the  number 
of  years. 

5. — If  two  equal  sums  be  invested  for  the  same  time, 
the  one  at  simple,  the  other  at  compound,  interest,  the 
former  will  increase  70  per  cent,  in  the  time  in  which  the 
latter  will  double;  or  whatever  be  the  rate,  the  advantage 
in  the  time  of  doubling  will  be  30  per  <>ent.  in  favor  of  com- 
pound interest. 

Art.  34. — The  result  obtained  by  means  of  the  above 
theorems  become  more  accurate  when  the  instalments  of 
annuity  are  due  more  often  than  once  a  year,  and  in  the 
case  of  monthly  payments,  they  are  found  to  differ  but  very- 
little  from  the  real  values.  The  exact  degree  of  approxi- 
mation afforded  by  these  theorems  we  have  examined  in  the 
Appendix,  together  with  the  general  extension,  of  which  they 
admit,  to  the  case  of  money  increasing  to  several  times  its 
original  value.     One  is  most  important : — 

If  a  sum  of  money  be  borrowed  for  such  a  time,  that  (if 
unpaid  it  would  amount  to  y-fold  its  original  value)  then 
the  annuity  which  would  pay  it  off,  principal  and  interest  in 
that  time,  is  equal  toy  divided  hyf  less  one,  times  one 
year's  interest  on  the  debt.     Or : — 

The  amount  of  an  annuity  of  £1  {accumulated  at  com- 
pound interest,  1  per  cent.,  during  the  whole  time  in  which 
the  single  sum  £1  would  accumulate  to  £f)  is  equal  to  £100 

(/-I).  '      , 

Art.  35. — -The  Appendix  also  contains  other   theorems, 

which  have  been  deduced,  relating  to  various  interesting 
points  in  the  working  of  Compound  Interest.  The  results 
in  some  instances,  however,  are  obtained  only  bv  the  aid  of 
analysis  of  a  somewhat  high  order.  At  the  end  of  the 
practical  Section  4,  will  be  found  the  Formula  for  calcu- 
lating tables  for  the  allowance  of  interest,  in  case  a  society 
undertake  to  receive  occasional  deposits,  with  power  to  the 
depositor  of  withdrawing  the  whole  or  part  of  the  sum, 
under  certain  conditions. 


CHAPTEK  III. 

on  benefit  building  societies  as  originally  constituted. 

Section  1. 

The  Theoretical  Principles  of  a  Terminating  Society. 

["  A  minute  inquiry  into  the  various  systems  of  these  associ- 
ations has  confirmed  an  opinion,  suggested  by  previous  experi- 
ences, that,  among  other  defects,  one  stands  prominent  as  the 
fatal  obstacle  in  the  way  of  their  success,  arising  from  almost 
universal  conditions,  by  which  the  existence  of  a  Benefit 
Building  Society  is  limited  to  a  specified,  number  of  years." 
— See  Preface  to  First  Edition  of  Treatise  on  Building- 
Societies.] 

Article.  36. — Benefit  building  societies  are  generally 
founded  with  the  same  object,  but  carried  out  with  various 
modifications.  They  are  now  divided  into  two  distinct 
classes  :  the  one  terminating,  the  other  permanent.  A  ter- 
minating society  is  one  which  it  is  intended  to  close  at  the 
end  of  a  certain  period,  when  all  the  shares  of  the  members 
have  realized  their  full  amount.  In  a  permanent  society  it 
is  merely  the  membership  of  a  shareholder  that  terminates 
at  the  end  of  a  fixed  number  of  years  (when  he  receives 
the  full  value  of  his  shares) — the  society  itself  continuing. 
Whichever  system  be  adopted  the  object  of  a  building 
society  is  still  the  same,  namely,  as  we  have  stated  in 
Chapter  I.,  to  enable  individuals  to  associate  together  and 
unite  their  subscripl  ions  from  time  to  time  in  one  common 
fund,  some  for  the  simple  purpose  of  placing  a  portion  of 
their  incomes  in  an  advantageous  investment,  others  with 
the  view  of  borrowing  money,  by  which  they  may  purchase 
houses  or  other  similar  property. 

But,  in  order  that  one  man  may  borrow,  there  must  be 
others  who  lead.  To  induce  a  person  of  limited  means  to 
lay  by  periodically  a  portion  of  his  income  merely  as  an 
investing  member,  some  strong  incentive  must  be  held  out, 
and  the  only  one  that  has  been  found  successful  is  to  offer 
him  a  high  r;ite  of  interest  for  the  use  of  his  money.  The 
legislature,  being  aware  of  the  force  of  this  consideration, 
and  of  the  importance  of  removing  any  obstacle  at  that 
time  existing,  passed  the  Benefit  Building  Society  Act  of 
488 


Art.  38.  ON   BENEFIT   BUILDING   SOCIETIES.  489 

1830,  in  which  the  following  clause  was  specially  introduced  : 

"  And  be  it  enacted,  That  it  shall  and  may  be  lawful  to 
and  for  any  such  society  to  have  and  receive  from  any 
member  or  members  thereof  any  sum  or  sums  of  money, 
by  way  of  bonus  on  any  share  or  shares,  for  the  privilege  of 
receiving  the  same  in  advance  prior  to  the  same  being 
realized,  and  also  any  interest  for  the  share  or  shares  so  re- 
ceived, or  any  part  thereof,  without  being  subject  or  liable 
on  account  thereof,  to  any  of  the  forfeitures  or  penalties 
enforced  by  any  act  or  acts  of  Parliament  relating  to 
usury."  So  that,  in  other  words,  the  society  might  charge 
its  borrowing  members,  under  the  name  of  bonus,  any  rate 
of  interest  upon  a  loan  which  it  might  deem  advisable  ;  and 
though  this  clause  is  rendered  unnecessary  by  the  repeal  of 
the  Acts  relating  to  usury,  it  strives  to  show  the  intention 
of  the  legislature. 

Art.  37 — In  this  chapter  we  shall  examine  the  character 
and  deficiencies  of  terminating  societies,  and  in  the  next 
enter  upon  the  question  of  the  merits  of  their  successors  on 
our  principle  of  permanence. 

The  majority  of  the  terminating  building  societies  an- 
nounce, at  the  time  of  their  formation,  that  their  shares  are 
a  fixed  sum,  usually  £120,  to  be  realized  at  the  expiration 
of  a  given  number  of  years,  by  which  time,  it  is  expected, 
the  association  will  terminate  with  that  result.  The  number 
of  years  is  generally  10  or  11,  although  some  societies  exist 
whose  expected  duration  is  11  or  13  years,  and  some  in 
which  the  amount  of  the  shares  is  £50  or  £100.  The  sub- 
scriptions of  the  members  are  a  few  shillings  a  month  per 
share,  varying  with  the  number  of  years  calculated  as  the 
probable  duration  of  the  society,  but  not  allowed  by  the 
statute  to  exceed  20  shillings  per  share,  and  the  investing  or 
non-borrowing  members  are  promised  the  amount  of  their 
shares  at  its  close.  The  subscriptions  are  received  at 
monthly  meetings  and,  with  as  little  delay  as  practicable, 
are  lent  to  those  members  wTho  wish  to  become  borrowers, 
and  to  obtain  a  loan  in  the  shape  of  a  present  advance  on 
each  share  they  hold  or  take  up,  in  lieu  of  the  amount  which 
they  wrould  otherwise  receive  at  the  end.  The  sum  advanced 
per  share  of  course  depends  upon  the  number  of  years  that 
remain  between  the  time  of  borrowing  and  the  date  at 
which  the  society  is  expected  to  terminate. 

Art.  38. — To  explain  this,  we  will  take  an  example  ;  but 
it  must  be  first  remarked  that  in  the  most  of  the  associa- 
tions at  present  existing  in  the  United  Kingdom,  which 
have  any  principle  of  reasoning  for  their  guide,  one  of  two 
rates  of  interest  has  generally  been  adopted  as  the  basis  of 


490  APPENDIX  I.  Ch.  III. 

their  calculations ;  their  expected  duration  being  conse- 
quently different.  These  rates  are  5  or  7  per  cent,  per 
annum ;  but  the  interest,  though  taken  at  a  nominal  annual 
rate,  is  supposed  to  be  realized  at  the  end  of  each  month, 
instead  of  at  the  end  of  each  year.  In  practice  many  diffi- 
culties, to  which  attention  is  drawn  further  on,  oppose  the 
ictual  realization  of  interest  monthly  ;  yet,  for  the  purpose 
;>f  an  example,  the  question  may  be  treated  theoretically,  as 
if  no  such  impediments  were  in  existence. 

Let  the  case  be  that  of  a  14  years'  terminating  society, 
formed  on  a  basis  of  5  per  cent,  rate  of  interest,  and  con- 
sisting of  shares  of  £120  each,  on  which  every  member  pays 
10s.  at  the  beginning  of  each  month,  during  11  years.  This 
sum  is  assumed,  because  such  a  monthly  annuity  would,  at 
5  per  cent,  rate  of  interest  supposed,  realized  monthly  and 
continuously  invested  and  reinvested,  accumulate  to  £120 at 
the  end  of  nearly  14  years;  hence  £120  is  the  amount  that 
a  non-borrowing  member  would  be  entitled  to  receive  at  the 
close  of  the  society.  On  the  other  hand,  it  is  known  that 
£60  cash,  invested  at  5  per  cent,  rate  of  compound  monthly 
interest,  will  accumulate  to  £120  in  nearly  14  years.  If, 
then,  a  member  should  wish  to  discount  one  share  and  take 
its  present  value  at  the  beginning  of  the  society,  he  would 
be  entitled  to  receive  £60,  in  consideration  of  his  subsequent 
monthly  payment  of  10s.,  or  £6  a  year  for  14  years.  Sim- 
ilarly, should  he  desire  to  borrow  £300,  or  5  times  60,  he 
would  have  to  make  payments  on  5  shares,  amounting  to 
£.")(»  a  year.  As  the  society  progresses  in  its  existence,  the 
number  of  remaining  months  over  which  a  borrower's  pay- 
ments can  extend,  diminishes ;  so  that  the  amount  of 
advance  per  share,  which  a  member  would  be  entitled  to 
receive,  if  he  wished  to  borrow  at  a  later  period  of  the 
society  than  the  beginning,  would  depend  upon  the  date  of 
his  Hist  becoming  a  subscriber.  If  hehad  entered  only  just 
before  receiving  a  loan,  the  amount  of  advance  per  share 
would  merely  be  discounted  present  value  of  his  future  pay- 
ments; but  if  he  had  been  a  subscriber  for  some  months 
previously,  then,  in  addition  to  the  allowance  for  Ids  future 
subscriptions,  he  would  also  be  entitled  to  a  sum  arising 
from  his  past  payments. 

Thus, for  example:  In  the  14  years' society  in  question, 
a  member,  whose  subscriptions  are  los.  a  month,  or  £6  a 
year,  for  each  £120  share,  if  he  wished  to  borrow  in  the 
first  month  of  the  7th  year,  and  had  been  a  subscriber  from 
the  beginning,  would  receive  £42  Is.  Id.  on  account  of  his 
past  payments  during  6  years,  and  £38  L9s.  8d.  in  considera- 
tion of  ais  future  subscripl  ions,  making  altogether  £81  0s.  9d. 


Art.  40.  ON   BENEFIT   BUILDING   SOCIETIES. 

We  quote  one  of  the  societies  on  this  plan,  but  this  can  be 
easily  proved  correct  by  means  of  a  monthly  compound 
interest  table.  But,  if  the  borrower  had  only  just  become 
a  member  at  the  beginning  of  the  seventh  year,  and  did 
not  pay  up  any  arrears  or  back  subscriptions,  he  would 
merely  be  entitled  to  £38  19s.  8d.  as  an  advance  in  con- 
sideration of  the  payment  of  £6  a  year,  to  be  made  by  him 
during  the  remaining  8  years ;  and,  under  such  circum- 
stances, it  is  seen  by  rule  of  three  that  to  obtain  a  loan  of 
£81  0s.  9d.,  he  would  have  to  pay  £12  9s.  6d.  a  year  during 
the  8  years.  So  that,  in  fact,  the  nearer  a  member,  at  the 
time  of  his  first  joining,  or  taking  up  the  required  number 
of  new  shares,  and  then  borrowing,  is  to  the  epoch  at  which 
the  society  is  expected  to  close,  the  larger  will  be  his  pay- 
ments in  return  for  a  given  loan.  As  a  second  instance,  it 
would  be  found  that,  although  a  member,  who  borrowed 
£300  at  the  commencement,  would  merely  pay  £30  for  14 
years,  yet,  if  he  took  up  the  shares  at  the  beginning  of  the 
9th  year  and  obtained  the  same  loan,  without  paying  up  any 
arrear-subscriptions,  he  would  then  have  to  pay  £59  18s.  for 
the  remaining  6  years.  Such  a  high  rate  of  repayment 
becomes  very  inconvenient  to  members  of  limited  means, 
who  wish  to  borrow  money  for  the  purchase  of  house  prop- 
erty, not  at  the  beginning,  but  when  they  have  for  some 
time  been  members ;  and  the  difficulty  increases  more  and 
more  with  the  progress  of  the  institution. 

Art.  39.— The  proceeding  is  an  example  at  5  per  cent- 
Societies  formed  upon  the  7  per  cent,  rate  of  interest  are 
expected  to  last  only  10  years,  and  on  this  supposition  there 
exist  a  great  many.  The  amount  of  the  shares  to  be  real- 
ized, at  the  end  of  such  a  period,  is  usually,  as  before,  £120, 
for  which  the  members  pay  lis.  a  month  for  10  years.  This 
rate  of  payment  is  adopted  because  such  a  monthly  annuity 
would  amount  to  £120  at  the  end  of  nearly  ten  years,  sup- 
posing each  monthly  payment  immediately  as  it  is  received 
invested  at  7  per  cent,  compound  interest,  calculated  also  as 
realized  monthly. 

Again,  since  £60,  if  similarly  invested  at  7  per  cent., 
would,  with  its  accumulations  from  compound  interest, 
amount  to  £120  at  the  end  of  nearly  10  years,  it  is  obvious 
that  a  member  effecting  a  loan  upon  a  share  at  the  begin- 
ning, and  receiving  £60  as  its  present  value,  would  be  in  an 
equitable  position  with  regard  to  a  non- borrowing  member, 
who  waited  for  the  full  value  of  his  share  or  £120,  at  the 
termination  of  the  society. 

Art.  10. — Other  associations  exist  founded  on  other  rates 
of  interest,  as  6  or  8  per  cent.,  and  of  different  expected 


492  APPENDIX  I.  Ch.  III. 

periods  of  duration.  The  principle  of  calculation,  however, 
is  the  same,  and  the  same  remarks  apply  to  all,  whatever  be 
the  rate  adopted.  The  intention  of  each  is  to  give  to 
the  investors  the  amount  of  their  shares  in  full,  at  the  close 
of  the  number  of  years  representing  the  probable  duration 
of  the  society,  and  throughout  its  existence  to  invest  the 
funds,  from  time  to  time  as  collected,  in  the  shape  of  dis- 
counted advances  to  any  of  the  members  who  wish  to  bor- 
row, the  amount  of  advance  per  share  being  supposed 
proportionate:  First,  to  the  number  of  years  or  months 
that  the  borrower  has  already  been  a  subscriber  ;  and,  sec- 
ondly, to  the  unexpired  time  which  remains  bettvem  the 
epoch  at  which  he  obtains  the  loan,  and  the  expected  date  of 
the  termination  of  the  association. 

Art.  41. — Such  is  the  system  of  the  superior  classes  of 
terminating  benefit  building  societies,  but  it  must  not  be 
supposed  that  all  or  even  the  greater  number  were  estab- 
lished on  such  accurate  principles  of  calculation.  This,  un- 
fortunately, was  not  the  case.  By  far  the  majority  were 
based  on  rates  of  subscription  fundamentally  unsound,  and, 
in  their  subsequent  dealings,  both  with  the  investors  and  bor- 
rowers, proceeded  on  assumptions  which  cannot  be  justified 
by  theoretical  or  practical  reasoning.  Of  this  the  next  sec- 
tion will  contain  a  few  instances,  which  prevailed  in  several 
hundreds  of  the  societies  established  at  an  early  period,  and 
are  selected  not  as  being  by  any  means  the  most  extrava- 
gant of  the  number,  but  simply  from  the  extent  to  which 
they  were  adopted. 

The   defects '    in   most   cases   are  so   numerous  and   va- 

]}  In  the  state  of  Massachusetts,  membered    by    some    only    as    a 

building    societies    have    been   in  scheme    by    which    sharpers    ab- 

operalion   some   years   under   the  sorbed  the  money  of  the   simple, 

title  of  Loan  Fund  Associations,  and  by  others  as  an  unsuccessful 

but  as  most  of  them  are  founded  on  if  not  an  unfortunate  experiment." 

the  terminating   principles,  their  The     commissioners,    however, 

career   lias   not   been   prosperous,  proceed  to  remark,  That  in  spite 

The    insurance  commissioners   of  of   the  inherent  defects  of  these 

tlic  state,  who  are  charged   with  associations,   and    the    abuses    in 

supervision  of  these  institutions,  practice,  they  have    had  a  lar^e 

made    the   following   remarks,   in  degree    of   usefulness,    and    have 

t  heir  report  of  1862  :  demonstrated,  perhaps  even  better 

"There    seems    at    present    no  than  if  they  had  been  better  con- 

probability  that    the   number   of  structed,  the  value  of  the  principle 

•  organizations  will  increase,  of  repaying  loans  by  small  monthly 

Most    of    these    now    existing   uil1  'iiintiilinciitx.     It  lias  I n  inipossi- 

close  bytheirown  limitation,  ble  for  us  to  ascertain  with  exact- 

and    perhaps  Hie    rest,  will    also  ness  but  we  have  no  doubt  that  by 

cease   from    the   fact    thai    their  means  of  them  not  less  than  one 

structure  is  not  stable  enough  to  thousand  families  in  Massachusetts 

l.iud   lie-    pressure  Of   tin-   e   times.      now    enjoy    homes    of    their    own, 

in  a   few  years  they  may  bi    re      v.  in.  would   otherwise  have  been 


Art.  42.  ON   BENEFIT   BUILDING   SOCIETIES.  493 

ried,  and  in  each  individual  society  so  interwoven  one 
with  another,  that  it  will  be  necessary,  for  the  better  sepa- 
ration of  ideas,  and  in  order  to  enable  the  reader  to  fully 
understand  the  details  into  which  we  are  about  to  enter, 
that  we  should  endeavor  to  introduce  some  classification 
among  them.  The  chief  heads  under  which  they  may  be 
resumed  are  as  follows : 

First. — Inaccuracy  in  theory  ;  such  as  erroneous  rates  of 
subscription,  etc. 

Second. — Practical  causes,  which  nullify  the  results  ob- 
tained from  accurate  theory  :  such  as  loss  of  interest,  the 
expenses  of  management,  etc. 

Third. — The  pecuniary  loss  inseparable  from  the  condition 
of  termination. 

Fourth. — The  great  inconvenience  caused  to  individual 
members  by  the  terminating  system  ;  such  as  the  difficulty  of 
withdrawing  at  the  time  when  a  member  may  desire  it,  or  of 
effecting  the  redemption  of  a  mortgage  on  equitable  terms, 
etc. 

Fifth. — Losses  through  mismanagement :  viz.,  From  inat- 
tention to  the  sufficiency  or  soundness  of  security  accepted 
for  investment;  or,  from  the  consequences  of  inaccuracy 
in  balance  sheets,  etc.,  etc. 

Some  of  these  defects  will  be  explained  by  themselves  in 
the  next  section  ;  others,  to  avoid  the  necessity  for  sub- 
sequent repetition,  will  be  considered  by  way  of  contrast  in 
the  chapters,  which  treat  of  the  advantages  of  the  permanent 
principle  and  the  practical  working  of  building  societies. 

Section  2. 

Societies  on  Erroneous  Principles. 

Art.  42. — First  instances  /—Societies  have  been  established, 
proposing  to  last  10  years  only,  and  sometimes  for  a  less 
period,  the  shares  of  which  are  £120,  and  the  payments  of 
the  investors  10s.  a  month  :  that  is  to  say,  for  a  subscription 
of  £6  a  year  during  10  years,  or  a  total  payment  of  £60,  a 
member  is  promised  £120  at  the  end  of  that  time. 

Now,  in  order  that  the  payment  of  £6  a  year  may  accu- 

rolling  about  as  tenants  from  one  £670,000,  and  having  lost  only 
landlord  or  boarding-house  to  an-  £3,000  upon  realization.  Thelarg- 
other,  or  have  left  the  state  in  dis-  est  amount  lent  to  one  member  in 
gust  to  find  a  home  in  the  wilder-  any  society  is  £2,350  ;  and  some 
ness.  Though  the  machinery  lias  have  never  lent  more  than  £200. 
not  worked  smoothly,  it  has  turned  The  aggregate  existing  capital  of 
out  an  article  of  inestimable  value,  the  several  societies  is  £100,000, 
Twenty-eight  of  these  societies  and  the  annual  expenses  of  man- 
are  still  in  existence,  having  lent  agement,  £3.000. J 


494  APPENDIX  I.  Ch.  III. 

ululate  with  compound  interest  to  £120,  in  the  course  of  10 
years  a  rate  equivalent  to  14^  per  cent,  yearly  interest 
must  be  realized ;  and  unless  the  subscriptions  are  continu- 
ally invested  and  reinvested  at  this  rate,  the  promised  re- 
sults are  impossible.  Of  this  the  reader  may  satisfy  himself 
by  referring  to  the  mathematical  Appendix. 

The  borrower's  repayments,  however,  do  not  bring  into  the 
society  a  higher  rate  of  interest  than  7  or  8  per  cent.,  and  in 
some  cases  much  less ;  for  the  same  prospectuses  state  that 
if  a  member  desire  an  advance  in  the  first  year,  he  will  re- 
ceive £60  on  each  share  (sometimes  only  £55)  in  return 
for  which  he  will  have  to  pay  14s.  a  month,  or  £8  8s.  Od.  a 
year,  for  the  10  years,  the  extra  4s.  being  usually  charged 
under  the  name  of  redemption  fee.  A  reference  to  a  com- 
pound monthly  interest  table,  will  show  that  the  actual  in- 
terest produced  by  these  repayments,  which  include  principal 
and  interest,  is  between  7  and  8  per  cent,  per  annum.  The 
advances,  also,  made  in  the  second  and  subsequent  years  of 
the  existence  of  the  association,  are  in  the  same  proportion; 
— consequently,  the  subscriptions  of  the  members  are  in- 
correctly calculated  to  the  large  amount  of  nearly  7  percent, 
annual  rate  of  interest,  even  although  the  borrowers  pay  so 
high  a  rate  as  8  per  cent.  Hence  it  follows,  that  the  promised 
results  cannot  be  realized. 

The  above  assumes  that  the  monthly  receipts  are  also  rein- 
vested monthly.  Such  in  reality  is  not  the  case.  Indeed, 
even  if  a  society  of  this  kind  were  to  experience  no  pecuniary 
loss  from  any  of  the  causes  which  will  be  examined  further 
on,  yet  the  result  would  practically  be  only  as  follows: — 
1  >y  table  0,  a  yearly  annuity  of  £6  invested  continuously  at 
7  per  cent,  will  accumulate  to  £82  18s.  Od.  in  ten  years 
leaving  a  deficit  of  £37  2s.  Od.  per  unadvanced  share,  or 
nearly  one-third  of  the  promised  amount,  at  the  epoch  of 
the  expected  termination  of  the  society. 

Again,1  even  supposing  the  borrowers  should  unwitting 

1  Unjustifiably  high  rates  of  in-  shall  pay  interest  at  5  per  cent. 
tcrest  were  prevalent  among  many  per  annum,  on  the  amount  bor- 
of  the  earlier  societies,  from  a  mis-  rowed,  by  equal  monthly  pay- 
taken  interpretation  of  the  Rules,  meats,  such  interest  to  commence 
and  much  injustice  is  still  occa-  from  the  time  the  money  is  ad- 
sionally  committed    by  (lie    same  vanced  or  if  the  security  for  the 

means.      For  example,  in    s ;is-  same  be  not  completed  previously, 

sociations,  the  borrowers  pay  in-  then  from  the  third  month  from 

terest  at   I   or  5  per  cent,  on  the  the  time  of  purchase,  and  to  be 

most  advanced,  pursuant  to  clauses  subject  to  the  same  fines  as  for 

similar  to  the  following  :    vi/..,  subscriptions   in   arrear."     The  ob- 

vious equitable    interpretation   of 
"  Payment  op  Enterest.  the  proceeding  is,  that  the  inter- 

'•  l.  Thai  any  member  having  est-subscription  shall  be  after  the 
received  bis  or  her  share  or  shares,    rate  of  5  per  cent,  on  the  whole 


Art.  43.  ON   BENEFIT   BUILDING    SOCIETIES.  495 

consent  to  pay  10  per  cent,  interest  for  their  loans,  there 
would  yet  be  a  deficiency  of  £24  7s.  6d.  since  the  amount 
of  £6  a  year  in  10  years  at  10  per  cent,  is  only  £95  12s.  6d. 

This  remarkable  instance  of  inaccuracy  of  rates  is  the 
more  worthy  of  notice,  as  it  prevailed  with  various  other 
less  important  errors  in  a  great  number  of  benefit  build- 
ing societies,  and  thus  involved  the  pecuniary  welfare  of 
many  shareholders.1  There  can  be  no  doubt,  however, 
that  it  arose  entirely  from  ignorance,  for  the  same  prospec- 
tuses usually  declared  that  the  annual  rate  of  interest, 
charged  from  the  borrowers,  did  not  exceed  4  per  cent.  This 
last  statement  was  possibly  suggested  by  some  misconception 
founded  on  the  circumstance  of  the  borrowers  paying  4s.  a 
month  per  share  more  than  the  investors. 

Art.  43. — The  second  instance  is  of  a  more  complicated  char- 
acter, and  was  introduced  with  considerable  pretension  by 
its  advocates,  as  an  improved  plan  of  a  benefit  building 
society. 

The  scheme  professed  to  guarantee  that  the  society  shall 
positively  not  last  more  than  10  years ;  that  non-borrow- 
ing members,  by  paying  5s.  a  month,  or  £3  a  year,  for  10 
years  would  be  entitled  to  and  receive  £70  at  the  end  of 
that  time,  which  is  £40  more  than  the  total  amount  of  the 
10  years'  subscriptions  ;  also,  that  the  borrower  shall  re- 
ceive as  an  advance  on  each  share,  if  there  be  no  competitors 

sum  borrowed,  diminishing,  if  the Building    and    Invest- 

debt  diminish,  in  just  proportion.  MENT  SOCIETY  may  now  (the  sec- 

For  example  let  the  debt  be  £100  ;  ond  year  having  terminated)   re- 

the    borrower's    payments   would  ceive  the  whole  amount  of  their 

comprise   the    ordinary   subserip-  subscriptions   with   18-J-   per    cent, 

tion,  and  £5  a  year  or  8s.  4d.    a  per  annum  interest  thereon.     By 

month  for  interest.     As,  however,  order  of  the  Board. 

the  principal  of  his  debt  is  gradu-        (Signed) Secretary. 

ally  liquidated  in  the  period  of  the  j         tant  to  Persons  desir<ms  0f 

society  s  duration,  it  would  not  be  {>nrcliasing  House  Property. 

fair  to  require  him  to  keep  on  pay-  J                     -co 

ing  £5  a  year  for  interest  to  the  £1,000  will  be  offered  for  sale  at 

end  ;  inasmuch  as  in  so  doing  he    the  second  meeting  of  the 

is  practically  paying  sums  in  in-  Building    and    Investment    So- 

terest    which    increase    tbe    rate  ciety,  on  Thursday  Evening,  the 

from  5  per  cent,  up  to  50  per  cent.  9th    of    May    next,    at    half-past 

Yet  this  has  been  perpetrated  in    7    o'clock, Interest    payable 

many  societies.  by  the  borrowers  from  1  to  5  per 

1The    following    advertisement,  cent.     The  whole   amount   of  the 

extracted  from  a  weekly  periodi-  purchase-money  and  law  charges 

cal,  will    serve  as  a  specimen  of  advanced  by  the  society.     No  ar- 

popular  credulity  : —  rears  to  pay — Fixed  to  close  in  ten 

,                                    ,     ,r            ,  years    certain.      Subscription,   5s. 

Immense    success  of    Mr.  s  ^er  share  ner  month 

BuiMing  and  Investment  Societies  Fxomt£          i  numberof  shares 

£70 /or -every  £30  Subscribed  m  k           thJ>flrst  meeting,  this  so- 

a  Fixed  Term  of  7 en  I  ears.  ciety  wiU  be  cloged  after  the  third 

Notice. — The  members  of    the     meeting. 


496  APPENDIX  I.  Ch.  III. 

with  him  for  the  same  loan,  the  total  of  the  10  years  subscrip- 
tion or  £30,  in  return  for  which  he  was  to  pay  5s.  a  month, 
or  £3  a  year,  for  10  years  :  or,  in  other  words,  that  a  member 
could  borrow  £30  and  repay  the  whole,  including  principal 
"and  interest"  by  ten  payments  of  £3  extended  over  10  years. 

If,  however,  there  are  several  applicants  for  advances, 
theu  the  prospectus  states — 

That  the  funds  of  the  society  shall  be  put  up  to  open 
competition  and  the  same  shall  be  awarded  to  those 
members  who  shall  offer  the  highest  premium  of  interest 
for  the  use  thereof. 

By  this  plan  the  great  evils,  loss  and  uncertainty,  attend- 
ant upon  the  rotation  and  balloting  systems,  are  avoided. 

That  the  premiums  or  interest  shall  be  the  only  sum  pay- 
able by  the  borrowers  for  the  use  of  the  money  that  shall 
be  advanced  to  them. 

That  the  premiums  bid  shall  not  be  deducted  from  the  sum 
to  be  advanced,  but  may  be  paid  by  equal  monthly  instal- 
ments, spread  over  the  remainder  of  the  ten  years.  This 
will  be  a  very  great  accommodation  to  the  borrowers,  and 
is,  in  the  opinion  of  the  directors,  a  great  improvement  upon 
the  old  systems,  under  which  the  premiums  are  deducted 
from  the  money  to  be  advanced. 

In  order  that  the  members  may  be  guided  as  to  the  pre- 
miums they  may  safely  bid  for  advances  of  money,  the  fol- 
lowing Table  is  given,  showing  the  amount  of  interest  to 
which  the  premiums  for  £3  to  £15  per  share  will  be  equal 
for  the  ten  years,  namely  : — 

PREMIUMS.    IF    GIVEN    DURING    THE    FIRST     TEAR. 

Interest  per  cent, 
per  annum. 

£    s.     d. 
0    0    Premium  for  an  advance  of  £30,  spread  over 


£ 

s. 

(1 

3 

0 

0 

4 

10 

0 

6 

0 

0 

7 

11) 

0 

9 

(1 

0 

in 

10 

0 

12 

0 

0 

13 

10 

0 

15 

0 

0 

.  1  0 

0 

..   1  10 

0 

..2  0 

0 

.  .  2  10 

0 

..3  0 

0 

. .  3  10 

0 

..4  0 

0 

..  4  10 

0 

. .  5  0 

0 

u  While  such  great  benefits  are  secured  to  the  borrowers,  it 
will  be  Been  that  those  m<  mhers  mho  allow  their  subscriptions 
to  remain  as  investments,  will  receive,  at  the  expiration  of 
the  A  n  yt  ars  a  rial  a,  a  y<  ry  large  profit,  amounting,  it  is  cal- 
culated  {from  //<<  facilities  and  encouragement  afforded  to 
borrowers,  and  the  certainty  of  the  society  being  always  able 


Alt.  43.  ON   BENEFIT   BUILDING   SOCIETIES.  497 

to  lend  out  its  funds  at  a  moderate  rate  of  interest),  to  nearly 
£40  per  share,  or  £70  for  each  £30  subscribed  in  the  course 
of  the  10  years  :  Thus  showing,  that  persons  wishing  to  in- 
vest their  small  savings,  <t ad  jxii'i  ni*  desirous  of  securing  >< 
future  provision  for  themselves  or  their  families,  will  be  able 
to  do  so  in  this  society  with  a  vast  deal  more  advantage  and 
solid  benefit,  than  they  can  by  investing  their  money  in 
Life  Assurances,  or  depositing  the  same  in  savings  banks, 
which  do  not  in  any  case  allow  more  than  3  per  cent,  per 
annum  interest,  or  not  above  one-tenth  of  the  estimated 
interest  or  profit  to  be  gained  by  investing  money  in  this 
society." 

"  This  plan  clearly  proves  that,  although  the  investors 
(that  is  to  say  those  members,  who  do  not  borrow  money 
of  the  society)  will  probably  more  than  double  the  capital 
they  may  invest  in  this  society  in  the  10  years ;  the  bor- 
rowers will  gain  considerably  more  in  the  same  time." 

We  have  quoted  so  much  of  this  prospectus,  because  the 
s}^stem  is  one  that  contains  a  variety  of  complicated  errors 
common,  unfortunately,  to  a  considerable  number  of  soci- 
eties. 

It  has  been  said  that  the  inventors  were  promised  £70,  in 
return  for  the  10  annual  payments  of  £3.  This  could  not 
be  effected  unless  the  subscriptions  invested  after  the  rate 
of  18  per  cent,  yearly  interest,  continuously  realized  during 
the  10  years,  by  the  constant  investment  and  reinvestments 
of  the  society  funds,  in  loans  to  borrowers. 

Now  the  members  who  borrow  pay  more  or  less,  accord- 
ing as  there  is  competition  or  not  for  advances. 

If  there  be  no  competition,  a  borrower  gives  no  premium, 
and  consequently  in  obtaining  a  loan  of  £30  per  share,  has 
only  to  pay  £3  a  year  for  10  years,  or,  in  other  words,  he 
has  the  loan  without  paying  any  interest  for  it. 

If  there  be  competition,  the  highest  premium  he  can  pay 
on  each  £30  share  is  £15,  spread  over  10  years :  he  there- 
fore obtains  an  advance  of  £30,  for  which  he  has  to  pay 
annually  £3  subscription,  and  £1  10s.  Od.  instalment  of 
his  premium  during  10  years,  which  is  equivalent  to  paying 
nearly  8  per  cent,  rate  of  interest  for  the  loan.  [See  the 
Tables  at  the  end.] 

So  that  in  the  most  favorable  case  the  society  would  ex- 
perience annually  a  deficiency  of  10  per  cent,  rate  of  inter- 
est. If  the  premium  or  discount  which  a  borrower  allows 
be  less  than  £15,  the  repayments  made  by  him  are  smaller, 
and  consequently  the  rate  of  interest  obtained  on  the  aver- 
age is  less  than  8  per  cent.  Hence,  while  on  the  one  hand, 
this  "  Improved'''' plan  undertook  to  guarantee  to  the  investors 
32 


498  APPENDIX   I.  Cll.  III. 

a  profit  arising  from  the  accumulations  of  their  subscriptions 
at  IS  per  cent,  compottnd  interest  /  yet,  on  the  other,  it  lent 
oui  the  money  at  rates  which  never  could  exceed  8  'per  cent, 
and  in  most  cases  would  be  considerably  less. 

We  pass  over  the  other  incorrect  estimates  advanced  by 
the  prospectus,  respecting  the  rates  of  interest,  which  are 
said  to  correspond  to  the  various  amounts  of  premium  men- 
tioned, as  enough  has  been  stated  to  prove  the  utter  unsound- 
ness of  the  plan. 

Art.  44. — Ballot  Appropriation  Societies. — In  this  class 
of  society  the  subscriptions  of  investing  members  are  fixed 
at  a  trifling  sum,  such  as  one  shilling  a  week,  and  no  interest 
whatever  is  promised  to  them ;  the  attraction  being  the 
promise  of  a  loan  of  large  amount — £250  or  £300 — to  be 
balloted  to  the  member,  on  which,  it  is  pretended,  he  has  to 
pay  no  interest.  The  rules  provide,  however  (cl.  25),  that 
in  addition  to  a  repayment  of  one-tenth  per  annum  of  the 
loan  for  10  years,  the  amount  of  the  investing  shares  shall 
subsequently  be  paid  up  by  each  borrowing  member,  and 
that  the  objects  of  the  society  shall  not  be  treated  as  realized 
till  each  member  has  had  an  advance,  which  entails  on  all 
members  the  legal  necessity  of  continuing  their  subscrip- 
tions till  all  are  served  with  loans.  The  encouragement  to 
overlook  this  consideration  on  joining  the  society  is  a 
promise  that "  when  the  whole  purpose  of  the  society  has 
been  completed,"  all  the  subscriptions  received  shall  be  re- 
turned to  the  members.  Any  person  desiring  a  loan  from 
such  a  society,  and  not  successful  in  getting  one  soon  bal- 
lotted  to  him,  has  to  '  purchase  the  right  to  an  advance  from 
some  more  fortunate  member,  who  may  not  wish  himself 
to  use  it. 

The  price  given  for  the  right  is  measured  by  the  neces- 
sities of  the  one  party  and  the  cupidity  of  the  other  ;  but 
it  has  the  same  effect  on  the  member  who  borrows  as  if 
more  interest  were  charged  on  the  loan  by  the  society, 
and  the  society  as  a  body  loses  the  profit  obtained  by  the 
members  who,  through  chance  only,  may  have  secured  the 
right  to  an  "  Appropriation,"  as  such  loans  are  termed.  A 
system  involving  such  a  complication  of  errors  and  absurd- 
ities would  have;  earlier  broken  down,  but  for  the  profit  ob- 
tained on  the  shares  of  those  members  who  withdraw  dis- 
appointed. 

'The  Following  advertisement  Money  ready  to  be  advanced  on 
shows  thai  I  In-  Bate  <>!'  Loans  is  car-  freehold,  leasehold,  or  for  building 
ried  on  systematically  by  these  so-     purposes.     Repayable   £7   10s.  per 

oieties  : —  Appropriation.—  €:ioo    quarter.    Also  a  .€250. 

for  ten  years,  without  interest,  in  Secretary, 

a Building  Society,  for  Sale.  13, Street. 


Art.  46.  ON   BENEFIT   BUILDING   SOCIETIES.  409 

Art.  45. — Many  other  societies  have  been  started,  con- 
ducted upon  various  schemes  which  are  equally  fallacious, 
and  announcements  in  the  public  prints  such  as  the  follow- 
ing, were  not  unusual : — 

"  From  the  peculiar  advantages  offered  by  this  society, 
the  investing  members  will  reap  above  20  per  cent,  interest 
for  the  use  of  their  subscriptions,"  etc.,  etc. 

And  further  on  the  same  advertisements  assert — 

"  That  the  borrowers  will  scarcely  pay  at  the  rate  of  2 
per  cent,  interest  for  the  loans." 

Again — 

"  It  is  calculated  that  those  members  who  allow  their  sub- 
scriptions to  accumulate  at  compound  interest  till  the  close 
of  this  society,  will  receive  about  25 per  cent,  annual  interest 
for  the  same,  etc.,  etc.,  and  from  SO  to  100  per  cent,  profit 
will  be  obtained  by  those  members  who  purchase  property 
with  the  money  advanced  to  them  by  the  society." 

Such  statements  require  no  comment. 

Art.  46. — It  is  not  necessary  to  extend,  our  inquiry  into 
the  defects  of  other  societies,  as,  since  our  earlier  publi- 
cations, increasing  knowledge  on  this  subject  has  to  a  con- 
siderable extent  prevented  their  formation.  Our  object  in 
this  place  is  rather  to  point  out  the  general  practical  objec- 
tions to  the  system  of  terminating  societies  altogether,  than 
to  rectify  misconceptions  which  arise  from  ignorance. 

It  is,  however,  worthy  of  notice  that  the  tendency  of 
new  societies  was  to  diminish  the  rate  of  contribution  paid 
by  the  members,  without  making  any  corresponding  reduc- 
tion in  the  amount  of  each  share  promised  at  the  termination. 

Formerly  a  more  secure  principle  was  adopted,  and  the 
monthly  subscriptions  required  on  each  share  were  much 
larger. 

For  instance,  in  most  of  the  old  Liverpool  and  Man- 
chester societies,  the  shares  were  fixed  at  £150,  and  the 
monthly  payments  at  20s.  per  share.  Hence,  many  suc- 
ceeded in  terminating  successfully.  The  modern  associa- 
tions, however,  diminished  the  monthly  subscriptions  one- 
half,  and  yet  took  only  £30  of  the  amount  of  the  share  to 
be  realized.  In  general  the  statements,  they  put  forth  did 
not  depend  upon  principles  deduced  from  sound  knowledge 
or  careful  reasoning,  but  were  rather  the  offspring  of  crude 
guesses  thrown  out  at  random. 

The  originators  of  the  multitudinous  variety  of  "  new 
and  improved  plans,"  promising  such  large  benefits  simul- 
taneously to  each  of  the  two  classes  of  members  who 
alone  constitute  these  societies,  might,  with  as  much  proba- 
bility of  success,  devise  a  game  of  cards,    at  which  all  who 


500  APPENDIX  I.  Ch.  III. 

played  should  rise  up  winners.  They  did  not  reflect  that, 
although  a  fair  and  reasonable  benefit  may  be  secured  to 
the  investor  by  lending  on  equitable  terms  to  the  borrower, 
yet  any  extra  profit  beyond  this,  which  is  promised  to  the 
one,  can  only  be  obtained  at  the  expense  of  the  other. 

Section  3. 

The  leading  Practical  Objections  to  Benefit  Building  Socie- 
ties as  Originally  Constituted. 

Art.  47. — Among  the  objections  which  apply  to  the 
majority  of  the  earlier  societies,  there  is  one  which  is  pecu- 
liar to  those  founded  on  the  terminating  principle  : — 

In  consequence  of  its  being  intended  to  close  the  society  in 
a  given  number  of  years,  or  as  soon  after  as  practicable,  the 
opportunity  for  investment  soon  ceases,  as  the  members  a/re  un- 
willing to  borrow  in  the  later  years  of  its  existence,  when  the 
period  over  which  a  loan  can  extend  has  become  small,  and 
the  corresponding  rates  of  repayment  much  increased. 

It  is  found  by  experience,  and  it  is  indeed  a  fact  which 
common  sense  would  suggest,  that  it  is  almost  impossible  to 
find  members  who  will  care  to  borrow,  when  the  first  five 
or  six  years  of  any  society's  expected  duration  have  elapsed. 
The  monthly  repayments  upon  a  loan,  which  is  to  be  only 
for  a  short  period,  becomes  too  large  to  suit  the  means  of 
the  industrious  classes,  who  are  usually  the  shareholders  of 
a  benefit  building  society  ;  and  this  difficulty  increases  to 
an  insurmountable  degree  in  the  last  years  of  the  proposed 
term  of  its  existence.  For  although  a  man  who  borrowed 
£300  for  14  years  in  order  to  purchase  a  house  might  con- 
trive with  comparative  ease  to  pay  £30  a  year  in  addition 
to  the  taxes  and  ground  rent,  yet  he  would  probably  be 
unable  to  pay  £59  18s.  Od.  a  year  it'  the  loan  were  merely 
for  6  years,  or  £85  12s.  6d.  a  year  if  it  were  only  for  4 
years,  and  so  forth. 

Art.  48.  Some  societies  attempt  to  obviate  the  difficulty 
by  a  plan  which,  in  some  measure,  would  be  successful  in 
preventing  this  loss  of  interest,  were  it  not  that  it  entails 
another  equally  important  objection  relative  to  the  expenses 
of  the  association.  The  plan  alluded  to  consists  in  dividing 
"by  lot  any  balance  of  money  existing  at  a  meeting,  where 
there  are  no  borrowers,  among  those  members  who  have  not 
yet  received  advances  on  their  shares,  so  as  to  compel  them 
at  once  to  withdraw  from  the  society,  as  far  as  such  shares 
are  concerned  ;  the  amount  paid,  on  this  forced  withdrawal 
of  each  share,  being  regulated  by  its  value  at  the  time  of 
withdrawal,  according  to  the  rules. 


Art.  49.  ON    BENEFIT    BUILDING    SOCIETIES.  501 

Such  a  measure,  though  necessary,  adds  to  the  general 
difficulties  in  the  principle  of  termination,  since  it  tends, 
montli  by  month,  in  a  rate  rapidly  increasing,  to  diminish 
the  number  of  the  members  or  the  association ;  for  in  each 
successive  month  of  the  last  years  of  its  expected  existence 
the  number  of  members  who  desire  to  borrow  becomes 
less,  and,  in  the  absence  of  applicants  for  advances,  the 
number  of  investors,  or  non-borrowers,  who  must  be  paid 
off,  increases.  Thus  the  society,  which  might  otherwise 
have  succeeded,  rapidly  sinks  in  importance,  and  the  expenses 
and  any  deficiency  of  funds,  which  may  afterwards  be  dis- 
covered, instead  of  being  spread  over  a  large  body,  have  to 
be  borne  by  the  few  who  are  unlucky  enough  to  remain  to 
the  end. 

Art.  49. — The  following  objections  for  consideration,  al- 
though common  to  many  societies,  whether  terminating  or 
permanent,  are  nevertheless  increased  and  aggravated  when 
the  institution  is  of  a  transitory  character. 

First. —  The  interest  is  usually  calcrdated  as  likely  to  he 
realised  monthly,  whereas  such  is  practically  not  the  case.  It 
is  not  possible  but  that,  from  the  very  beginning  of  any 
society's  existence,  some  portion  of  its  funds  will  at  various 
periods  remain  unemployed  for  a  time.  Sometimes  this 
takes  place  because  the  balance  in  hand  is  not  large  enough 
to  meet  the  purpose  of  any  borrower,  particularly  in  the  first 
year  or  two,  when  the  subscribers  are  too  few  in  number  to 
raise  quickly  enough  an  adequate  sum.  Sometimes,  on  the 
contrary,  when  the  amount  required  by  the  borrowers, 
whose  names  are  entered,  has  been  advanced,  there  remains 
a  sum  which  is  not  applied  for. 

Now  it  has  been  stated  that  the  interest  is  generally  cal- 
culated as  produced  monthly,  which  would  require  that  there 
should  never  be  even  a  day  lost  in  investing  the  whole  of  the 
subscriptions  collected  at  each  meeting;  and  since  this  is 
practically  impossible,  it  may  be  laid  down  as  an  axiom, 
that  no  society  can  be  secure  whose  rates  of  subscription  are 
formed  upon  such  a  principle.  It  is  not  remembered  that 
although  it  is  desirable  to  receive  the  subscriptions  monthly, 
yet  it  is  not  safe  to  act  upon  the  hypothesis  of  their  being 
immediately  reinvested,  or  of  monthly  interest  being  actually 
obtained,  as  such  a  mode  of  calculation  reduces  the  rate  of 
repayment,  which  it  is  necessary  to  charge  to  a  borrower 
for  a  given  loan. 

It  is  one  thing  to  receive  the  repayments  monthly,  and 
another  to  assume,  in  the  calculations,  that  they  may  be  fre- 
quently reproductive  of  interest.  In  other  words,  the  safety 
of  any  society  depends  upon  the  managers  always  having 


502  APPENDIX  I.  Cll,  III. 

sufficient  time,  before  the  arrival  of  each  of  the  calculated 
periods  for  reinvestment,  upon  which  the  tables  are  based 
to  complete  the  necessary  details  for  preventing  loss  of  in- 
terest, by  investing  all  moneys  which  are  not  required  for 
the  immediate  purposes  of  management.  This  can  only  be 
secured  satisfactorily  by  making  the  epochs  of  monetary 
repayment  in  each  year  more  frequent  than  the  periods  at 
which  allowance  for  interest  is  credited  to  the  borrower  in 
the  fundamental  calculations. 

Hence  it  would  be  safer,  at  all  events,  if  the  interest  were 
supposed  paid  quarterly ;  but,  in  order  to  remove  any  pos- 
sible contingency  from  this  source,  we  consider  that,  in  all 
calculations  which  form  the  basis  of  the  subscriptions,  the 
interest  should  be  assumed  as  only  realized  annually  and  at 
the  end  of  each  year.  The  difference  between  this  assump- 
tion and  the  actual  result  would  be  in  favor  of  the  society, 
and  useful  for  contingencies. 

Akt.  50. — Secondly. —  The  loss  from  the  expenses  of  man- 
agement. Whether  the  amount  of  monthly  subscriptions 
from  the  members  of  a  benefit  building  society  be  theoreti- 
cally sufficient  or  not,  yet  the  promised  results  cannot  be 
realized,  in  consequence  of  the  annual  loss  caused  by  the  ex- 
penses, which  are  not  adequately  provided  for. 

In  Section  1  we  have  seen  that,  in  most  societies  founded 
upon  principles  theoretically  accurate,  the  present  value  of 
each  share  at  the  time  of  an  advance,  or  its  amount  at  the 
end  of  the  specified  number  of  years,  are  respectively  equiv- 
alent to  the  accumulation  arising  from  the  receipt  and  im- 
mediate reinvestment  of  the  monthly  subscriptions  thereon. 
It  follows  that  the  money  so  received  cannot  be  appro- 
priated to  other  purposes  without  loss;  hence  the  expenses 
of  starting  and  giving  publicity  to  a  building  society,  and 
those  also  of  its  subsequent  management,  to  however  small 
a  compass  they  are  reduced,  must  be  defrayed  out  of  some 
other  source  of  revenue  than  the  share  subscriptions.  If  the 
initial  and  subsequent  annua]  expenses  could  be  accurately 
estimated  beforehand,  (here  would  be  no  difficulty  in  ascer- 
taining  what  payment  per  share  ought  to  be  contributed  by 
each  member  to  meet  the  necessary  outlay.  In  the  majority 
of  cases,  however,  the  probable  amount  of  the  expenses  is 
neither  known  nor  provided  for,  although  they  are  fre- 
quently asserted  t<>  be  covered  by  the  entrance  fees,  fines  for 
non-payment  of  subscriptions  when  due  and  a,  few  other 
trifling  sources  of  profit,  which  the  society  may  be  expected 
to  receive.  T<>  a  certain  extent,  this  is  correct,  but  in  no 
case  are  these  receipts  sufficienl  to  defray  more  than  a  very 
small  proportion  of  the  expenses.     In  the  first  place  it  must 


Art.  51.  ON   BENEFIT    BUILDING   SOCIETIES.  503 

be  remembered  that  a  fine  is  not  wholly  profit.  A  fine  is 
inflicted  at  so  much  a  month  per  share,  for  neglect  of  regu- 
larity in  paying  the  monthly  subscription  when  due,  and, 
therefore,  is  partly  requisite  to  supply  the  loss  of  interest, 
which  the  society  would  otherwise  experience.  And,  even 
assuming  that  the  preliminary  expenses  could  be  covered  by 
the  money  received  from  entrance  fees,  which  an  inspection 
of  the  various  balance  sheets  shows  to  be  very  seldom  the 
case,  yet  the  annual  charges  of  management,  consisting  of 
office-rent,  salaries,  etc.,  must  be  provided  for. 

To  show  how  such  an  annual  outlay  would  affect  the 
ultimate  status  of  a  terminating  association,  take  for  an 
example  a  14-years  building  society,  whose  shares  are  £720, 
produced  by  a  monthly  subscription  of  10s.  or  £6  a  year,  and 
the  annual  expenses  of  which  we  will  suppose  to  amount  to 
£72  a  year.  Now  £72  is  12  times  £6,  or  equal  to  the  amount 
of  subscriptions  received  yearly  on  12  shares,  and,  therefore, 
by -the  fundamental  statements  of  the  society,  is  calculated  as 
equivalent  to  12  times  £120,  or  £1,440;  consequently  the  an- 
nual charges  must  produce  a  deficiency  of  £1,440  in  the 
society's  fund  at  the  epoch  of  its  originally  expected  ter- 
mination. This  instance  will  apply  in  principle  to  all  soci- 
eties, whether  of  10,  12,  or  14  years'  duration,  unless,  inde- 
pendently of  the  monthly  share  subscriptions,  they  have 
adequately  provided  for  the  annual  expenditure.  On  exam- 
ination many  of  the  annual  balance  sheets  show,  moreover, 
that  the  expenses  of  the  year  added  together  frequently 
average  from  £120  to  £150,  which,  on  the  same  principle  of 
calculation  as  that  made  use  of  above,  must  create,  from  this 
source  alone,  a  deficiency  in  the  society's  funds,  at  the  end, 
of  from  £2,400  to  £3,000. 

Art.  51. — Thirdly. —  There  is  no  provision  made  in  the  theo- 
retical calculations  for  losses,  which  may  be  experienced 
through  bad  investments,  etc.  In  all  mercantile  transactions  of 
this  kind  losses  must  occasionally  happen ;  and  whether  they 
arise  from  wilful  neglect  or  carelessness,  or  other  causes,  such 
as  deterioration  in  the  value  of  property,  they  combine  to  pro- 
duce an  effect  for  which  no  provision  is  made  in  determining 
the  subscriptions  to  be  paid  by  members.  Although  at  the 
commencement  of  a  benefit  building  society,it  would  of  course 
be  impossible  to  foresee  the  individual  events,  or  even  the 
nature  of  the  events,  which  are  likely  to  be  productive  of  loss, 
yet  it  is  a  matter  of  experience  that  losses  will  occur,  entailing 
a  deficiency  in  the  society's  funds  at  the  time  of  its  promised 
termination,  which,  with  the  combination  of  the  other  de- 
fects already  mentioned,  will,  in  the  case  of  a  terminating 
society,  tend  to  cause  a  prolongation  of  its  existence  beyond 


504  APPENDIX   I.  Cb.  III. 

the  originally  intended  or  stated  period.  By  such  means 
the  duration  of  the  subscriptions  of  both  investors  and  bor- 
rowers is  unavoidably  extended,  and  they  suffer,  in  con- 
sequence, a  decided  loss. 

As  these  societies  are  constituted,  the  duration  of  a 
society  and  the  consequent  continuance  of  the  borrower's  re- 
payment depend  not  on  any  number  of  years  specified  in 
the  prospectus,  but  upon  the  actual  completion  of  the  full 
amount  of  the  unadvanced  shares ;  so  that  a  society  may 
not  close  at  the  end  of  the  expected  term  of  its  existence, 
unless  the  fund  collected  at  the  last  monthly  meeting  shall 
be  sufficient  to  give  to  each  of  the  non-borrowing  members 
a  division  per  share  equal  to  its  originally  stated  amount. 
If  there  be  a  deficienc}r,  from  whatever  cause  it  may  proceed, 
then  must  all  the  members,  borrowers  as  well  as  non-borrow- 
ers, continue  their  subscriptions  for  such  additional  number 
of  months  as  may  be  necessary,  unless  they  should  all  unan- 
imously agree  to  dissolve  the  society  and  put  up  with  the  loss 
sustained. 

Art.  52.— It  appears,  therefore,  that  in  these  closely- woven 
societies,  there  will  not  be,  at  the  end  of  the  originally  spec- 
ified time,  sufficient  funds  to  give  to  each  investor  the  full 
amount  of  his  shares,  unless  : — Throughout  the  whole  previous 
duration  of  the  association,  there  has  been  no  loss  sustained, 
either  through  bad  investments  or  other  causes,  or  from  ex- 
traneous expenses  {not  covered! >>j  sufficient  extra  contributions 
from  each  member  over  and  above  the  receipts  from  fines, 
fees,  etc.),  and  also  unless  no  month  has  passed  in  which 
any  part  of  the  subscriptions  has  remained  unproductive, 
so  that,  in  other  words,  no  loss  of  interest  has  at  any  time 
occur i'  d. 

Art.  53. — Should  there  arise  a  deficiency  from  any  one  of 
these  causes,  and  the  duration  of  the  society  be  prolonged,  it 
will  be  well  to  consider  the  effect  which  such  a  result  has  upon 
the  relative  interest  of  the  investors  and  borrowers  respec- 
tively. An  extension  of  its  existence  for  three  or  four  years, 
in  reality,  causes  the  borrowers  to  pay  much  more  for  the 
Loans  1  hey  have  obtained  than  they  imagined  would  be  the  case 
when  i  hey  entered  into  their  engagements  toward  thesociety. 
The  interest  which  they  actually  pay,  instead  of  being 
perhaps  only  5  or  7  per  cent.,  becomes  thereby  increased 
to  more  than  10  per  cent.  An  investor,  also,  not  only  does 
//^/receive  the  promised  amount  at  the  expected  time,  re- 
specting which  he  may  likely  have  made  pecuniary  arrange- 
ments, but  lie  is  also  compelled  to  continue  his  own  sub- 
scriptions; by  which  means  the  benefit  that  he  derives  from 
ins  shares  is  \cvy  materially  diminished. 


Alt.  55.  ON   BENEFIT   BUILDING    SOCIETIES.  505 

As,  however,  the  investors  have  still  the  option  of  with- 
drawing- from  the  society,  if  they  are  willing  to  accept  snch 
amount  of  dividend  per  share  as  the  funds  admit  of,  and 
thus  mutually  agree  to  dissolve  the  association,  it  will  often 
be  a  question  worthy  of  their  serious  consideration  whether 
it  will  not  be  better  to  endeavor  to  make  an  arrangement 
with  the  existing  borrowing  members,  that  the  latter  should 
at  once  contribute  something  towards  the  deficiency,  to  be 
determined  by  calculation,  and  then  that  all  the  members, 
both  investors  and  borrowers,  should  agree  to  dissolve  tlie 
society.  Experience  has  shown  that  this  plan  will  really 
be  the  most  advantageous  to  the  two  classes  of  members, 
inasmuch  as  the  investors  will  be  prepared,  in  general,  to 
put  up  with  some  loss,  or,  in  other  words,  to  release  the 
borrowers  upon  liberal  terms,  in  order  to  receive  at  once 
some  money  for  their  shares,  however  much  the  amount  may 
fall  short  of  what  they  expected. 

Art.  54. — We  have  said  that  the  borrowers  have  not  to 
make  good  the  whole  deficiency  in  the  society's  funds,  but 
only  their  proportionate  amounts,  considered  relatively  to 
the  otherwise  necessary  continuation  of  subscriptions  from 
both  parties.  Hence,  it  will  be  advisable,  in  order  to  avoid 
an  unintentional  act  of  injustice  to  either,  that  the  members 
should  see  that  the  proper  quota  to  be  contributed  is  deter- 
mined by  accurate  calculation. 

Art.  55. — In  perusing  these  remarks  respecting  the  ma- 
jority of  the  terminating  societies,  and  in  comparing  the  lib- 
eral promises  contained  in  their  prospectuses  with  the 
periodic  reports  of  the  position  of  their  affairs,  we  believe 
the  impartial  reader  can  arrive  but  at  one  conclusion.1 

He  will  become  satisfied  : — That  not  one  in  twenty,  or 
even  in  a  greater  number,  can  possibly  realize  for  its 
members,  whether  investors  or  borrowers,  the  advantageous 
results  originally  promised  ;  and  that,  at  the  various  epochs 
of  their  expected  termination,  there  will  be  found  such  a  de- 
ficiency 'of  money  as  must  deprive  the  possessors  of  unad- 
vanced  shares  of  a  considerable  portion  of  the  accumulation 

1  Readers  should  beware  how  that  in  the  north  of  England  a  so- 
they  rely  too  hastily  upon  state-  ciety  terminated  lately  with  the 
nients  which  they  may  hear,  of  promised  results,  through  the 
individual  societies  having  ter-  members  paying  for  the  last  few 
minated  successfully.  They  will  years  double  the  original  subscrip- 
find,  upon  investigation,  like  the  tions  upon  their  shares.  The  pub- 
author,  that  some  questionable  lie  were  then  informed  of  the  fact 
expedient  has  been  adopted,  to-  that  the  shares  had  been  realized, 
wards  the  last  years  of  its  intended  The  shareholders  alone  could  have 
existence,  by  which  an  apparently  stated  what  they  had  paid  for 
prosperous  end  lias  been  obtained,  the  same. 
For  example,  it  may  be  mentioned 


506  APPENDIX  I.  Ch.  III. 

which  they  had  been  led  to  expect ;  that  in  many  cases  so 
far  from  receiving  £120  per  share,  they  will  obtain  less  than 
£75,  and  that,  if  not  disposed  to  accept  whatever  sum  may 
be  offered  to  them,  they  will  be  forced  to  continue  their  sub- 
scriptions for  several  years  beyond  the  specified  time  ;  that 
these  unfortunate  results  have  arisen  in  great  measure  from 
a  lack  of  proper  knowledge  and  experience  in  the  originators 
of  these  institutions, — a  circumstance  that  does  not  always 
escape  the  notice  of  the  industrious  classes,  and  tends 
largely  to  diminish  their  faith  in  the  real  advantages  of 
prudent  and  economical  habits  ;  lastly,  that  legislative 
measures  are  necessary  for  the  due  regulation  both  of  the 
legal  establishment  of  a  benefit  building  society,  and  also 
of  the  system  of  its  financial  operations ;  and  that  some 
supervision  should  be  exercised  by  truly  competent  persons, 
not  only  at  the  commencement  of  the  society's  existence, 
but  subsequently,  from  time  to  time,  throughout  its  prog- 
ress. 


CHAPTER  IV. 

ON    PERMANENT    BENEFIT    BUILDING    SOCIETIES. 

Article  56. — Having  reviewed  some  of  the  leading  objec- 
tions to  the  plan  of  terminating  societies,  which  propose  to 
close  at  the  expiration  of  a  fixed  number  of  years,  or  as  soon 
after  as  the  stated  amount  of  the  unadvanced  shares  is  real- 
ized, we  will  now  proceed  to  examine  in  detail  the  various 
superior  features  of  oxw  permanent  system. 

To  enable  an  institution  of  this  kind  to  conduct  its  opera- 
tions successfully,  as  regards  the  profit  which  is  expected 
by  the  investing  members,  at  the  same  time  that  the  bor- 
rowers are  freed  from  unjust  responsibilities,  it  is  proper, 
not  only  that  the  rates  of  subscription  and  repayment  should 
depend  upon  a  sound  basis  of  mathematical  reasoning,  but 
also  that  the  general  system  of  the  society's  practical  opera- 
tions should  be,  as  much  as  possible,  clear  from  those  de- 
fects which  either  prevent  the  realization  of  the  expected 
interest  within  the  calculated  time,  or  produce  injury  and 
personal  inconvenience  to  the  members.  It  is  essential 
that  due  provision  should  be  made  for  the  current  expenses 
and  liabilities,  and  that  they  should  no  longer  be  left  de- 
pendent upon  the  uncertain  receipts  from  fines  or  fees. 
The  relative  position  of  the  two  classes  of  members  should 
also  be  more  equitably  considered,  so  that  the  profits  of  the 
one  may  not  be  increased  by  taking  an  unfair  advantage  of 
the  others ;  and  the  period  of  the  duration  of  a  mortgage 
should  be  rendered  definite,  in  order  that  the  claim  of  the 
society  upon  a  borrower  may  at  all  times  be  subject  to  equit- 
able adjustment,  in  case  of  his  being  subsequently  desirous 
of  redeeming  his  property,  since  it  is  evident  that  any  un- 
certainty, respecting  the  duration  and  amount  of  a  debt- 
tends  materially  to  depreciate  the  saleable  value  of  the  se- 
curity held  for  it. 

As,  moreover,  it  is  not  easy  to  form  an  opinion  of  the 
possible  fluctuations  in  the  value  of  money,  when  it  is  in- 
volved in  transactions  extending  over  a  lengthened  number 
of  years,  attention  must  be  given  to  a  suitable  reserve  be- 
ing annually  made  upon  the  society's  profits  to  form  a  pro- 
tective fund  against  future  contingencies.  Experience  daily 
shows   that    benefit   building  societies,  from  the    peculiar 

507 


508  APPENDIX  I.  Ch.  IV. 

nature  of  their  transactions,  are  exposed  to  losses  which 
cannot  always  be  averted  by  the  most  careful  or  intelligent 
management.  By  subjecting,  however,  the  chance  of  their 
advent  to  the  laws  of  "  Average,"  and  by  providing  a  re- 
source whence  any  deficiency  may  be  at  once  made  good, 
these  institutions  can  be  rendered,  on  the  whole,  as  secure 
and  as  advantageous  mediums  for  investment  as  any  other 
in  the  kingdom. 

Art.  57. — The  permanent  plan  which,  we  devised  in  1846 
appears  to  meet  these  requirements,  as  it  is  entirely  free  from 
most  of  the  objections  peculiar  to  terminating  societies: — 

First. — The  difficulty  of  finding  borrowers,  at  any  time 
in  the  course  of  the  existence  of  a  society,  is  removed. 

Second. — New  members  may  enter  in  any  month  without 
paying  up  any  arrears  or  increase  of  entrance  fee.  Hence, 
the  scope  of  the  society's  action  is  extended,  and  the  power, 
resulting  from  mutual  association,  of  doing  good,  is  greatly 
augmented  as  the  number  of  shareholders  increases  year 
b}T  year,  and  even  month  by  month,  instead  of  diminishing. 

Third. — The  initial  and  annual  expenses  can  be  more 
equitably  divided,  and  spread  over  a  larger  number  of 
members. 

Fourth. — A  member  may,  under  reasonable  restrictions, 
withdraw  his  subscriptions,  or  effect  the  redemption  of  a 
mortgage,  without  the  delay  or  expense  that  he  would  ex- 
perience in  a  terminating  society. 

Fifth. — The  duration  of  members'  subscriptions  can  be 
fixed  with  greater  certainty. 

Art.  58. — The  system  of  a  permanent  building  society, 
which  is  most  simple  in  its  operations,  may  be  explained  as 
follows: — -The  members  are  separated,  as  before,  into  two 
classes,  investors  and  borrowers. 

The  investors  pay  a  certain  monthly  subscription  during 
2kjfoced  number  of  years,  calculated  as  sufficient  for  the  re- 
ali/ai  ion  of  (heir  snares,  at  the  end  of  which  time  the  amount 
due  is  paid  to  them,  and  they  secede  from  the  association,  as 
far  as  such  shares  are  concerned.  The  investors  represent 
i  he  proprietors  of  a  company.  New  members  can  enter  at 
any  time,  and  commence  their  subscriptions  without  paying 
up  any  arrears  or  any  increase  on  the  original  entrance  fee, 
whereas,  in  terminating  societies,  the  fee  on  entering  is  in- 
creased, without  sufficient  reason,  year  by  year,  until,  from 
being  originally  only  2s.  6d.,  il  is,  in  some  cases,  raised  to  six 
pounds  per  share.  The  duration  of  a  membership  is  counted 
from  the  month  of  a  member's  first  entrance.  This  causes 
every  month  ;i  fresh  secies  of  members  to  be  added  to  the 
society,  or  new  shares  tobei  ssued,  so  t  hat,  taking  an  example, 


Art.  58.  ON    BENEFIT   BUILDING    SOCIETIES.  509 

if  the  term  of  membership  were  10  j^earsor  120  months,  and 
5"  new  shares  on  the  average  were  taken  up  every  month, 
there  would,  at  the  end  of  the  first  10  years,  be  6000  shares 
subscribed,  supposing  always  that,  if  any  were  withdrawn, 
the  average  would  be  kept  up  by  an  increase  in  the  new- 
comers. At  the  end  of  the  first  120  months,  or  10  years, 
50  would  be  paid  out,  but  as  new  members  would  come  in, 
the  number  of  subscribers  would  be  undiminished  ;  and 
month  by  month  afterwards,  as  successive  periods  of  120 
months  were  completed,  old  members  would  go  out  and  new 
ones  come  in. 

The  borrowers  receive,  at  the  time  of  obtaining  an  ad- 
vance, the  full  amount  of  their  shares,  without  any  deduc- 
tion beyond  a  trifling  commission,  which  is  withheld  as  a 
contribution  toward  the  expenses  and  losses ;  the  loan  is 
secured  by  a  mortgage  on  the  property  purchased,  and  in 
return  they  pay,  during  an  optional  fixed  number  of  years 
previously  agreed  upon,  a  suitable  monthly  subscription,  by 
which  the  debt  is  liquidated  with  interest.  The  members 
who  become  borrowers,  at  once  cease  to  he  investors  in  re- 
spect of  the  shares  on  which  they  obtain  advances,  and  do 
not  participate  in  any  of  the  subsequent  liabilities  or  ex- 
penses of  the  society,  nor,  consequently,  in  its  profits,  which 
in  fact  they  anticipate  by  obtaining  their  loans  at  a  moder- 
ate and  definite  rate.  The  general  liabilities  are  provided 
for  by  taking,  as  the  basis  of  the  calculations,  a  higher  rate 
of  interest  for  the  repayments  than  is  actually  guaranteed 
to  the  investors  for  the  realization  of  their  shares  ;  that  is 
to  say,  if  the  amount  of  each  share  held  by  an  investor, 
which  is  promised  to  him  at  the  end  of  a  fixed  term  of  years, 
be  equivalent  to  the  accumulation  of  his  subscriptions  at 
4£  or  5  per  cent,  compound  interest,  the  borrowers  would 
nevertheless  be  charged  about  6|  or  7  per  cent.  This  dif- 
ference of  2  per  cent,  in  the  rate  of  interest  obtained  is  tem- 
porarily withheld  from  the  investors,  in  order  to  form  a 
management  and  contingent  fund,  for  the  purpose  of  meet- 
ing the  expenses,  and  contingencies  of  loss  on  the  mort- 
gages. The  customary  commission,  which  is  deducted  from 
the  loan,  is  proportionate  to  the  number  of  years  of  its  dura- 
tion, and  varies  in  amount  with  the  local  circumstances  of 
the  place  in  which  the  society  is  conducted.  It  is  regulated 
by  a  table,  where  the  advances  are  made  by  rotation  or  the 
ballot ;  but  in  the  case  of  the  bidding  system,  it  is  replaced 
by  the  premium  bid  per  share. 

A  borrower  must  have  been  previously  an  investor,  but 
immediately  after  he  borrows,  he  passes  over  from  one  class 
to  the  other,  receiving  then  whatever  amount  is  due  to  him 


510  APPENDIX  I.  Ch.  IY. 

on  his  investing  shares,  as  arising  from  his  past  subscrip- 
tions, with  interest  thereon  from  the  date  of  his  first  joining 
up  to  the  time  of  his  obtaining  the  advance.  The  repay- 
ments of  the  borrowers  are  for  a  fixed  term  of  years  what- 
ever be  the  subsequent  condition  of  the  society,  as  it  is  not 
reasonable  that,  when  they  have  once  given  good  and  suffi- 
cient security  for  a  loan,  they  should  be  expected  to  share 
in  the  responsibilities  of  future  investments. 

This  is  one  great  improvement  upon  the  old  system, 
where  the  period  of  the  subscriptions  depends  upon  the  suc- 
cess or  non-success  of  the  association,  or  upon  the  contin- 
gency of  any  loss  being  sustained  by  it  from  other  property 
mortgaged  to  other  members ;  so  that  in  many  cases  the  re- 
payments are  extended  over  several  years  more  than  was 
expected  by  a  borrower  when  he  first  effected  his  loan. 

Art.  59. — As  regards  those  members  who  remain  in- 
vestors, the  system  of  periodically '  dividing  a  bonus  from 
the  profits  is  adopted,  which  has  been  found  so  productive 
of  safety  and  success  to  mutual  life  assurance  companies. 
Instead  of  forestalling  the  society's  profits  by  reducing  the 
monthly  subscriptions  of  the  investor  to  such  a  degree  as 
barely  to  leave  them  sufficient,  even  theoretically,  to  produce 
by  accumulation  the  amount  of  the  shares,  the  safer  plan 
already  alluded  to  is  adopted  of  keeping  the  subscriptions 
sufficiently  high  to  be  theoretically  and  practically  adequate 
to  the  purpose.  Any  surplus  profits  which  arise,  beyond 
the  promised  amount  of  the  unadvanced  shares,  are  periodi- 
cally and  proportionately  divided  among  the  investors  in  the 
shape  of  a  profit-bonus  to  be  paid  to  them,  with  the  other 
sums  due  on  the  completion  of  the  subscriptions  upon  each 
share.  The  bonus  system  thus  possesses  very  great  advan- 
tages, inasmuch  as  it  preserves  to  the  society  the  possession 
of  a  reserve  fund,  over  which  it  has  power,  and  whence  any 
unexpected  losses  may  be  met. 

Art.  GO. — The  borrowers,  of  course,  are  not  entitled  to 

1  Valuations  for  the  purpose  of  years  of  its  existence,  declared 
declaring  a  bonus  should  not  be  profit  amounting  to  £17,885.  In 
made  at  less  intervals  than  three  the  tenth  year,  although  £1,922  of 
Or  five  years.  An  annual  valua-  this  profit  which  was  supposed  to 
fcioil  is  perplexing  and  unfair,  in-  have  been  realized  fell  in,  by  for- 
asmuch as  the  amount.  <>f  new  feiture  of  bonus  on  withdrawal, 
profits  annually  made  by  the  build-  yet  the  aggregate  balance  in  favor 
ing  society  varies  very  largely,  of  the  society  was  only  £47,  show- 
being  affected  by  the  number  of  ing  a  loss  in  that  year  of  £1,875. 
new  mortgages  granted,  the  pro-  If  annual  valuations  are  made,  a 
portion  of  withdrawals  and  re-  very  large  proportion  of  the  ap- 
demptions,  and  many  other  cir-  parent  balance  ought  to  be  set 
CUmstances.  aside  for  an  equalization  fund, 
\  ca  e  is  before  us  of  a  building  before  any  prolit  is  actually  de' 
.society    which,    in   the    first    nine  clared. 


Art.  62.  ON   BENEFIT   BUILDING    SOCIETIES.  511 

participate  in  this  surplus-bonus,  as  they  have  secured  the 
equivalent  by  the  manner  in  which  they  obtained  their 
advances.  This  point  appears,  since  the  publication  of  the 
first  edition  of  our  treatise,  to  have  been  misunderstood, 
and  several  well-disposed  persons  have  exclaimed  against 
an  apparent  disadvantage  offered  to  borrowers  by  the  new 
system.  They  should,  however,  have  reflected  that  the 
borrower  is,  in  all  cases,  practically  equally  well  off,  since  by 
the  very  mode  in  which  he  obtains  his  loan,  he  secures  at 
once  the  enjoyment  of  an  immediate  profit,  which  is  still 
only  prospective  to  the  investor.  The  money  in  hand  is  of 
at  least  as  much  advantage  to  the  borrower  as  the  deferred 
realization  of  his  share  can  be  to  the  subscriber,  who  has  to 
wait  to  the  end  of  his  membership.  So  strange  a  notion, 
however,  appears  to  prevail  in  some  places,  that  a  plan  of 
so-called  "  mutuality,"  by  which  borrowers  should  antici- 
pate with  investors  in  the  profits  and  losses  of  the  society, 
is  preferable,  that,  on  the  ground  of  expediency,  we  have 
in  some  cases  recommended  the  adoption  of  a  "mutual" 
plan. 

Art.  61. — In  a  permanent  institution  of  this  kind  there  is 
little  difficulty  in  obtaining  borrowers,  for  the  great  objec- 
tion disappears  which  is  made  against  terminating  societies, 
viz.,  that  after  a  few  years  of  their  existence,  the  duration 
of  a  mortgage  is  too  limited,  and  the  loan  repayments  too 
heavy  to  suit  the  means  of  the  class  who  are  usually  mem- 
bers. If  the  society  be  permanent,  a  member  can  at  any 
time  become  a  borrower,  and  yet  have  his  advance  for 
whatever  period  is  most  suited  to  his  means,  the  amount  of 
monthly  payments  required  being  less  as  the  duration  of  the 
debt  is  extended. 

Akt.  62. — Again,  since  new  members  may  come  in  at  any 
time  without  paying  up  any  arrears,  the  society  will,  if 
properly  managed,  continually  receive  a  fresh  accession  of 
strength  from  new  subscribers,  and  thus  generally  possess, 
at  each  meeting,  funds  sufficiently  large  to  be  capable  of 
being  invested  without  delay ;  whereas,  it  has  been  stated 
before  as  one  of  the  difficulties  in  the  old  societies,  that 
their  being  comparatively  confined  in  their  action,  the  funds 
collected  at  a  subscription  meeting  are  frequently  insuffi- 
cient to  meet  the  wants  of  any  borrowing  member,  and  are 
consequently  left  idle  and  unproductive  of  interest  for  per- 
haps some  months,  until  by  subsequent  addition  they  amount 
to  the  sum  required. 

The  permanent  principle,  therefore,  possesses  several  ele- 
ments which  tend  materially  to  confirm  the  calculations 
founded  on  the  probability  of  a  continuous  realization  of 
interest. 


512  APPENDIX  I.  Ch.  IV. 

Akt.  63. — It  is,  however,  necessary  and  proper  that  a 
liio-her  rate  of  interest  be  charged,  in  determining  the  ad- 
vance repayments,  than  the  investors  would  be  content  to 
receive  in  return  for  their  subscriptions,  in  order  that  some 
margin  may  thus  be  provided  for  the  various  contingencies 
to  which  these  societies  are  exposed.  These  contingencies 
arise  not  from  the  investors,  but  from  the  borrowers.  It 
is  through  the  loans  that  losses  are  likely  to  be  produced, 
and  the  borrowers  should  therefore  pay  sufficient  interest 
to  protect  the  investors  from  such  casualties.  As  we  have 
said  before,  the  security  offered  to  benefit  building  socie- 
ties is  one  of  much  tendency  to  be  of  an  unsound  nature, 
and  out  of  a  large  number  of  such  investments  a  few  bad 
cases  will  always  arise  entailing  loss.  By  charging,  how- 
ever, a  sufficiently  high  rate  of  interest  from  the  borrowers, 
the  annual  receipts  from  that  source  may  be  made  large 
enough  not  only  to  meet  the  engagements  in  respect  of 
interest  on  their  subscriptions,  which  the  society  has  con- 
tracted towards  the  investors,  but  also  to  cover  any  loss 
arising  from  bad  security  or  other  causes.1 

In  societies  formed  for  the  purpose  of  purchasing  or  deal- 
ing with  property,  which  does  not  consist  of  land,  in  or 
around  London,  or  other  large  towns,  a  very  fair  plan  is  to 
take  7  per  cent,  rate  of  interest  as  the  basis  of  the  loan 
repayments,  since  that  rate  is  sufficiently  low  to  enable  a 
member  to  purchase  a  house  on  comparatively  moderate 
terms,  and,  in  consequence  of  the  greater  opportunities  for 
other  investments,  at  apparently  as  high  rates  of  interest, 
possessed  by  London  residents,  which  they  might  consider 
more  secure  than  house  mortgages,  it  would  be  nearly  im- 
possible to  find  lenders  or  investors,  ii"  a  lower  rate  were 
charged,  as  (supposing  that  the  expenses  and  losses  which 
might  arise  absorb  2  per  cent,  off  the  rate  of  interest  ob- 
tained)  they  would  not  clear  more  than  5  per  cent,  for  their 
money. 

1  We    have,    since    writing  the  funds,  say,  at  6  per  cent,  per  an- 

above,  mel  witha  similar  view  of  mini    duly   :u  or    4    per   cent. — 

the  principal  involved,  in  the  well-  more  or  less — can  ho  considered  as 

known   Catechisme    de  I'Economi  the  payment  from  the  borrower  by 

Politique,  by  the  Late  distinguished  way  of  rent  lor  the  hiring  (if  the 

.1.  B.  Say, ai  page  181  of  the  fourth  money.     The    remainder   2h    or   2 

edition.      The    substance    of    his  percent. — more  or  less — istocover 

view  is  as  follows:    Capital  is  ren-  the  extra,  risk  existing  in  the  in- 

dered  available,  by  industrial  en-  vestment,  or  is  the   premium  of 

terprises,   to   produce  an    income  assurance  at  which   the   lender — 

under  the  name  of  interest.    The  act  ing  ;is  his  own  Assurer — can  in- 

interesl    or   income   from  such   a  cur  the  chance  of  loss,  to  which  he 

source  Bhould   be  separated    into  is  exposed    through   making    his 

two  parts.     When  a  sum  of  money  advance  upon  ;i  security,  that  is 

i    lenl   ai  ;i  much  higher  rate  of  not  of  the  first  class, 
interest  than  thai    of  the   public 


Alt.  66.  ON   BENEFIT   BUILDING    SOCIETIES.  513 

Akt.  64. — Again,  the  expenses,  both  initial  and  annual, 
can  be  more  equitably  divided  over  present  and  future  share- 
holders. First,  as  regards  the  initial  expenses,  instead  of 
their  being  defrayed  by  the  first  series  of  members,  they 
can  be  charged  as  a  debt  against  them  as  well  as  present  sub- 
scribers and  be  paid  off  by  certain  fixed  temporary  deduc- 
tions from  the  surplus  profits  of  the  society.  The  annual 
expenses  will  in  a  similar  manner  be  borne  b}7  a  much 
greater  number  of  members  than  in  the  case  in  associations 
formed  on  the  terminating  principle,  with  this  one  peculiar 
additional  advantage,  that  year  by  year  as  the  society  pro- 
gresses, until  the  close  of  the  first  period  of  the  duration  of 
the  investors'  shares,  the  number  of  contributors  will  in- 
crease instead  of  diminishing.  {See  Appendix  for  further 
remarks  on  the  rate  of  contribution,  which  it  is  equitable  to 
require  from  the  members.) 

Art.  65. — In  permanent  societies,  any  borrower  who  de- 
sires it  can,  under  certain  practical  restrictions,  be  permitted 
to  redeem  his  mortgage  on  much  more  equitable  terms  than 
under  the  old  system. 

In  a  society  of  limited  duration,  if  a  borrower,  or  his 
family,  in  case  of  death  before  the  mortgage  is  cleared  off, 
make  application  to  pay  off  the  remainder  of  the  debt,  a 
much  larger  sum  is  exacted  than  would  be  required  on  a 
mere  theoretical  view  of  the  question,  in  consequence  of  the 
society  no  longer  possessing  opportunities  of  investment 
for  any  sum  which  may  be  returned  on  its  hands,  as  the 
other  members  are  unwilling  to  borrow,  when  the  loan  can 
only  be  obtained  for  a  few  years.  So  that  a  borrower  who 
wishes  to  clear  off  his  mortgage  before  the  close  of  the  asso- 
ciation, has  to  pay  not  only  the  net  value  of  the  remainder 
of  his  debt,  but  also  some  compensation  for  the  loss  of  interest 
which  will  be  experienced  in  those  years  during  which  the 
money  thus  returned  will  remain  idle  and  unproductive  in 
the  hands  of  the  society.  Hence,  instances  constantly  occur 
of  amounts  being  required  in  redemption  of  a  mortgage, 
which  would  be  considered  unfair  and  exorbitant  were  it 
not  for  the  peculiar  circumstances  of  the  case. 

In  a  permanent  association,  on  the  contrary,  as  opportu- 
nities for  investment  abound,  the  directors  would  be  ready  to 
offer  fair  and  reasonable  terms  for  redemption,  in  order 
to  increase  their  power  of  encouraging  the  entry  of  new 
members  by  the  prospect  of  an  early  advance. 

Art.  66. — On  the  other  hand,  the  withdrawal  of  shares  by 
the  investing  members  is  greatly  facilitated. 

In  terminating  societies,  persons  who  desire  to  discon- 
tinue their  membership,  cannot  do  so  without  much  diffi- 
33 


514  APPENDIX  I.  Ch.  IV. 

culty  and  delay,  because  the  money  they  have  subscribed  is 
engaged  in  the  society's  investments  ;  and  as  few.  if  any, 
new  members  join  after  two  or  three  years,  the  funds  received 
from  time  to  time  can  only  with  considerable  restriction  be 
paid  out  on  withdrawing  shares.  Hence  it  has  been  cus- 
tomary to  inflict  fines,  varying  from  5s.  to  £10  per  share 
on  parties  withdrawing.1  This  deduction  is  severely  felt  by 
the  poor  man  who,  when  endeavoring  to  save  a  few  pounds, 
does  not  know  at  what  time  he  may  require  them ;  and 
who  from  unforeseen  circumstances  may  desire  to  withdraw 
some  portion  of  his  subscriptions,  as  the  only  means  of 
freeing  himself  from,  perhaps,  temporary  difficulties.  Yet, 
if  withdrawals  were  permitted  without  restrictions,  a  ter- 
minating society  could  never  lend  out  the  whole  of  the 
sums  invested,  as  it  might  be  called  upon  at  any  time  to 
return  an  inconvenient  portion  of  them.  Consequently,  in 
all  the  old  benefit  building  societies,  the  rules  attempt  to 
provide  against  this  difficulty  by  making  it  not  easy  to 
withdraw  shares.  Moreover,  the  societies  themselves  are 
injured  by  applications  for  withdrawal,  which  they  cannot 
satisfy,  as  a  feeling  of  distrust  is  excited  which  materially 
affects  their  subsequent  operations.  This  inconvenience 
does  not  exist  in  the  permanent  plan,  because  new  members 
continually  enter,  and  there  is  always  a  floating  balance 
sufficient  to  meet  any  applications  for  withdrawal  within 
reasonable  limits. 

Art.  67. — The  permanent  system,  described  in  the  fore- 
going pages,  will  best  be  understood  by  a  few  examples 
from  the  rules  of  a  society,  founded  upon  that  principle, 
which  has  met  with  great  success  :— 

"The  shares  of  investing  members  are2  £100  each,  for 
which  the  subscription  is 

13s.  0d.  a  month  for  10  years  or  120  months, 
or    [10s.  0d.  "  12  150 

8s.  0d.  "  14  168        "J 

"  They  may,  however,  take  half  shares  of  £50,  or  quarter 
shares  of  £25  each,  if  they  prefer  it.  Investing  members 
can  withdraw  from  the  society,  without  fine,  at  any  time 
after  the  first  year,  when  the  amount  of  their  subscriptions 
will  be  returned,  with  interest,  varying,  according  to  the 
length  of  time  the  mem  tier  has  subscribed,  from  1  per  cent, 
up  to  6  per  cent,  according  to  the  following  table  for  whole 

1  The  rules  should  provide  that  2  In    some  cases  €50,  and  even 

;i  member   who  has  given  notice  £25,  would,  perhaps,  be  the  prefer* 

to  withdraw  shall  not  participate  able  amount  of  eaoh  share,  as  the 

in  any  loss  occurring  subsequent  to  smaller  the  sum  subscribed,  the 

the  date  of  his  notice.  less  amount  of  withdrawals. 


Art.  67.  ON   BENEFIT   BUILDING    SOCIETIES.  515 

shares,  and  so  in  proportion  for  half  and  quarter  shares, 
viz., 

f  At  the  end  of  the  first  year £ 

"  2  years    

3     " 

Hi  "  4    " 

"  5     " 


At  the  last  or  10th  year £100. 

(With  Profits  in  addition  to  the  £100.") 

"  Investors  may,  if  they  desire  it,  cease  their  future  pay- 
ments and  leave  their  past  subscriptions,  as  a  deposit  pro- 
ducing compound  interest,  to  be  received  back  in  one  accu- 
mulated sum  at  the  end  of  the  originally  selected  term  of 
their  membership." 1 

"  A  guarantee  fund  is  also  formed,  by  the  issue  of  stock,  in 
shares  of  £  each,  which  may  be  put  up  at  once,  or  by  four  quar- 
terly instalments  of  five  shillings.  On  these  shares  interest 
is  paid  half  yearly,  at  a  guaranteed  rate  of per  cent." 

"  Persons  intending  to  borrow  must,  in  order  to  qualify, 
previously  become  members  ;  and,  at  the  time  of  borrowing, 
they  will  be  repaid  the  sum  due  for  the  past  subscriptions 
on  their  shares  with  interest,  and  then  receive,  as  a  loan, 
the  full  amount  as  any  number  of  shares  they  may  require, 
without  any  deduction,  beyond  a  small  commission,  which 
will  be  carried  to  the  credit  of  a  management  and  contin- 
gent fund,  to  defray  expenses,  etc.  Loans,  to  the  extent  of 
£ ,  will  be  made  to  members  on  security  of  real  or  lease- 
hold estate,  house  or  land,  in  any  part  of  England,  for  5,  7, 
10,  12  or  14  years,  as  they  prefer." 

"  Example.2  A  member  borrowing  £100  on  mortgage  is 
only  required  to  make  the  following  repayments,  including 
principle  and  interest,  viz., 

If  for 


5 

years- 

-£2    0 

8 

monthly 

or 

£6    5 

0 

quarterly 

7 

" 

1  11 

0 

" 

4  15 

4 

cc 

10 

" 

1     3 

9 

cc 

3  13 

1 

(C 

12 

tt 

1     1 

0 

(< 

3    4 

6 

« 

14 

ii 

0  19 

1 

fit 

2  18 

9 

it 

The  repayments  of  the  borrowers  are  calculated  at  6  or  7 
per  cent,  rate  of  interest,  whether  the  loan  be  taken  for  5, 
7,  10,  12,  or  14  years,  and  although  actually  paid  monthly 

1  The  table  being  calculated  by  of  annuities  secured  upon  prop- 
the  formula  in  section  4  of  the  erty.  It  will  be  different  from  the 
appendix.  ordinary  deed  of  the  terminating 

2  The  mortgage  deed    must  be  building  society. 
for  a  term  certain,  as  in  the  case 


516  APPENDIX  I.  Ch.  IV. 

or  quarterly,  they  are  regarded  in  the  calculation  as  made 
yearly  and  at  the  end  of  each  year.  This  creates  but  a 
slight  augmentation  in  the  amount  of  the  periodic  repay- 
ments and  yet  tends  materially  to  increase  the  safety  of  the 
basis  on  which  a  society  is  founded. 

"  The  amount  of  commission  deducted  is  what  a  careful 
examination  of  the  expenses  and  losses  of  other  similar  in- 
stitutions has  shown  to  be  necessary  and  sufficient.  (See  the 
Hides  in  oar  Treatise  on  Copyhold  Enfranchisements  and 
Freehold  Land  Societies). 

"  The  surplus  profits  of  the  society  (over  and  above  the 
promised  amount  of  the  unadvanced  shares)  will  be  ascer- 
tained periodically  by  an  actuary,  and  be  apportioned,  two- 
thirds  to  the  credit  of  the  investors,  to  be  paid  to  them  as  a 
bonus  at  the  termination  of  their  10  years  membership ; 
the  other  third  to  be  carried  to  the  credit  of  a  permanent 
guarantee  fund,  formed  to  meet  any  loss  which  may  arise. 
This  proportion  in  the  division  of  surplus  profits  will,  how- 
ever, be  varied  as  may  be  considered  advisable,  after  the 
expiration  of  the  first  nine  years  of  the  society's  existence. 

"  There  will  be  no  loss  from  bidding.  Should  there  be 
more  applicants  for  advances  than  can  be  supplied  at  one 
time,  priority  will  be  settled  by  ballot  (or  rotation).  The 
receipts  arising  from  the  entrance  fees,  fines,  etc.,  will  all  be 
carried  to  the  credit  of  the  management  and  contingent 
fund,  out  of  which  the  different  expenses  will  be  defrayed. 

"  As  an  example  of  the  working  of  this  society  : — Suppose 
a  person  desirous  to  purchase  a  house  for  £300,  which  would 
return  a  net  rental  of  £30  per  annum,  and  that  he  has  been  an 
investing  member  one  year  before  he  applies  for  the  advance. 
He  must  hold  three  shares  to  borrow  £300;  and  in  this 
example  suppose  that  he  has  paid  one  year's  subscriptions  on 
each  of  the  three  shares.  By  the  table  of  withdrawals  he  is 
entitled  to  three  times  £7  16s.  0d.,  or  £23  8s.  0d.,  in  return 
for  his  past,  subscriptions.  This  sum  he  receives  at  once,  if 
he  desire  it,  with  the  £300,  and,  ceasing  to  be  an  investor, 
he  borrows  the  £300  on  the  terms  of  the  table  of  repay- 
ments for  loans,  for  which  only  he  gives  security.  If  he 
effect  this  loan  for  10  years,  his  repayments,  including 
principal  and  interest,  will  be  £3  lis.  3d.  a  month,  or 
annmllv £47  15     0 

Multiplied  by  10  years      ....  10 

Making  the  total  re-payments          .  .  £427  10    0 

Deducl  L0  years' rent  paid  or  received  .  £300    0    0 

Leaving  the  cost,  as  far  as  the  benefit  . 

Building  Society  is  concerned          .  .    £127  10    0 


Alt.  68.  ON    BENEFIT   BUILDING   SOCIETIES.  517 

"  For  which  sum  the  member  has  thus  secured  to  his 
family  a  house,  free  of  rent,  for  the  remainder  of  its  lease. 
The  above  example  is  for  10  years.  The  purchase,  however, 
may  be  effected  by  smaller  annual  payments,  if  the  loan  be 
taken  out  for  12  or  14  years. 

"  The  deduction  for  commission,  and  the  law  expenses, 
must  be  provided  for  from  the  £23  8s.  or  other  private  source. 
They  of  course  add  to  the  expenses  of  the  purchase,  but  it 
should  be  remembered  that  the  payments  of  the  borrowers  can 
in  no  way  be  increased  or  extended  beyond  the  specified 
period  for  which  the  loan  is  taken,  as  is  the  case  in  the  old 
societies. 

"  Taking  an  example  from  one  of  them  whose  shares  are 
£120,  upon  which,  in  the  first  year,  a  borrower  would  re- 
ceive only  about  £55  in  cash,  and  occasionally  much  less,  he 
would  be  required  to  pay  lid.  per  month  per  share,  or  £8 
8s.  Od.  per  annum,  until  the  close  of  the  society,  which  is 
more  likely  to  extend  to  11,  or  even  16  years,  than  to  ter- 
minate in  10  years,  but,  confining  the  question  to  10  years, 
in  order  to  obtain  a  loan  of  £300,  he  would  have  to  pay  a 
subscription  upon  five  and  a  half  shares,  amounting  to  £46 
4s.  Od.  a  year  ;  whereas  in  this  society  it  would  cost  only 
£42  15s.  Od." 

Art.  68. — In  the  permanent  plan  just  described,  the 
periods  of  the  investors'  subscriptions  may  be  10,  12,  or  14 
years,  or  even  longer  or  shorter  without  affecting  the  prin- 
ciple. Either  would  answer  equally  well,  and  the  result 
would  be  the  same  to  an  investor  whatever  term  were 
adopted,  if  the  basis  of  the  subscriptions  were  upon  the  same 
rate  of  interest.  We  recommend,  however,  that  to  avoid 
complication,  in  no  society  should  the  investors  have  more 
than  one  or  two  periods  for  the  realization  of  theunadvanced 
shares,  and  their  monthly  subscriptions  should  not  be  less 
than  what  would  be  required  to  produce  them  by  accumu- 
lation in  the  stated  time,  at  4  or  5i  per  cent,  compound 
yearly  interest.  Although  it  is  not  possible,  a  priori  to  esti- 
mate the  amount  of  surplus  profit,  which  will  remain  at  the 
end  of  each  period,  when  the  expenses  and  any  losses  that 
may  occur  have  been  provided  for,  yet  it  is  reasonable  to  ex- 
pect that  if  the  society  be  carefully  managed,  each  investor 
will  receive  a  bonus  in  addition  to  the  originally  promised 
amount  of  his  share.  What  that  bonus  will  be  must  depend 
on  the  success  of  the  association ;  and  every  member  will, 
therefore,  find  it  to  his  advantage  to  add  his  individual  efforts 
in  promoting  its  prosperity.  The  management  and  con- 
tingent fund  will  be  amply  adequate  for  its  purpose,  since  it 
will  include  not  only  the  entrance  fees,  fines  and  commission 


518  APPENDIX  I.  Ch.  IV. 

deducted  from  the  loans  at  the  time  of  an  advance,  but, 
moreover,  a  fluctuating  reserve  on  each  £100  share,  arising 
from  the  circumstance  that  the  annual  subscriptions  paid 
by  an  investing  member,  viz.,  13s.  a  month  or  £7  16s.  Od.  a 
year,  are  invested  at  7  per  cent,  compound  interest,  and  in 
the  case  of  its  being  realized  monthly,  the  reserve  in  10  years 
would  be  as  high  as  £11  per  share.  (See  Section  IV.  Ap- 
pendix.) 

Art.  66. — An  improvement  might  be  effected  in  the  pecu- 
niary position  of  the  borrowers,  by  which  greater  facilities 
would  be  afforded  to  them  to  realize  benefit  from  advances. 
For  the  first  year  after  his  purchase,  a  borrower  is,  in  most 
cases,  scarcely  able  to  complete  the  necessary  arrangements 
connected  with  the  furnishing  his  house,  etc.,  and  he  experi- 
ences some  difficulty  in  providing  for  the  increased  pay- 
ments, which  begin  at  the  end  of  the  month  from  the  time 
of  his  obtaining  a  loan.  The  original  object  of  benefit 
building  societies,  viz.,  to  enable  the  industrious  poor  to  be- 
come possessors  of  their  own  homes,  would  be  accomplished, 
with  greater  certainty  and  less  inconvenience  to  the  parties 
concerned,  if  the  monthly  repayments  upon  advances  did 
not  begin  for  a  year  after  the  same  had  been  granted.  The 
borrower  would  thus  have  time  to  look  about  him  and  to 
settle  comfortably  in  his  purchase ;  and  the  society  would 
merely  have  the  repayments  deferred  for  one  year,  or  for 
whatever  other  time  might  be  agreed  upon.  In  the  Appendix 
the  formula  is  given  for  the  rate  of  contribution  suitable  for 
a  loan  so  granted. 


CHAPTER  Y. 

THE  PRACTICAL  MANAGEMENT  OF  A  BENEFIT  BUILDING-  SOCIETY. 

Article  70. — After  recommending  the  adoption  of  the  per- 
manent instead  of  the  terminating  principle,  in  the  formation 
of  all  benefit  building  societies,  and  the  conversion  into  per- 
manent societies  of  those  terminating  ones  which  yet  remain, 
it  may  not  be  out  of  place  to  add  a  few  remarks  relative  to 
their  subsequent  practical  management. 

At  the  commencement,  great  care  ought  to  be  exercised 
in  the  judicious  selection  of  suitable  persons  as  officers. 

The  most  important  of  these  are  undoubtedly  the  solicitor 
and  surveyor,  from  their  influence,  for  good  or  evil,  on  the 
operations  of  the  society  ;  for  it  is  upon  their  testimony 
respecting  the  soundness  and  adequacy  of  the  security  offered 
for  an  investment,  that  its  safety  and  prosperity  entirely 
depend. 

When  a  member  is  desirous  of  purchasing  a  house,  or  other 
similar  property,  he  makes  application  to  the  directors,  who 
instruct  the  surveyor  to  examine  and  report  on  the  nature, 
position,  and  value  of  the  proposed  purchase.  If  these  be 
satisfactory,  they  then  direct  the  solicitor  to  examine  into  the 
right  of  sale  or  title  which  the  member  possesses.  Should  this 
also  prove  unexceptionable,  the  money  is  advanced  for  the 
purchase,  its  repayment  being  secured  by  a  mortgage 
on  the  property  for  an  agreed  term  of  years.  Let  us  now 
examine  the  position  of  the  benefit  building  society  with 
respect  to  this  investment. 

If,  at  some  subsequent  time,  before  the  mortgage  is  cleared 
off,  the  borrower  were  to  discontinue  his  payments,  the 
society  would  be  under  the  necessity  of  seizing  the  property 
and  reselling  it,  in  order  to  recover  the  remaining  amount 
yet  due  to  it.  Thence  would  arise  various  chances  of  loss. 
It  may  happen  that  the  locality  in  which  the  property  is 
situated  may  have  diminished  in  public  estimation,  as  is 
frequently  the  case  with  many  parts  of  London  and  other 
large  towns ;  or  the  necessary  repairs  to  which  any  new 
purchaser  would  be  exposed,  if  they  have  been  neglected 
by  the  late  occupier,  might  be  found  too  heavy.  Perhaps 
by  a  wilful  mis-statement  or  an  error  in  judgment  on  the 
part  of  the  surveyor,  the  house  may  have  been  estimated  at 

519 


520  appendix  i.  Ch.  V. 

more  than  its  real  value  ;  or,  lastly,  some  defect  in  the 
original  title  may  be  discovered.  In  any  one  of  these  cases 
an  attempt  to  resell  the  property  would  occasion  loss. 

Art.  71. — Now  these  contingencies  may  in  a  great  measure 
be  averted  by  the  selection  of  an  efficient  committee,  and  of 
careful  and  respectable  officers.  An  excellent  arrangement 
exists  in  a  society  at  Carlisle,  by  which  those  duties  which 
are  usually  performed  (or  neglected)  by  the  committee,  are 
distributed  among  a  series  Of  separate  officials.  The  com- 
mittee consists  of  six,  and  undertakes  the  general  manage- 
ment. Four  money-stewards  are  appointed  to  attend  the 
receipt  of  the  money,  and  to  be  responsible  for  its  being 
duly  accounted  for.  Four  inspectors,  also  to  examine  the 
securities  prepared  for  advances.  No  member  is  liable  to 
serve  two  of  these  offices  at  once. 

The  usual  system,  however,  is  to  confide  the  whole  manage- 
ment and  supervision  of  the  society's  affairs  to  one  commit- 
tee, who  are  assisted  by  a  solicitor,  a  surveyor,  a  manager, 
auditors,  arbitrators  and  trustees.  We  proceed  to  make 
a  few  remarks  on  the  duties  appertaining  to  these  several 
offices : — 

First.  As  regards  the  solicitor,  who  examines  the  title  of 
the  property.  This  branch  of  law  business,  which  is  techni- 
cally called  "  conveyancing,"  is  one  of  great  intricacy  and 
difficulty,  and  requires  peculiar  skill  and  experience  in  the 
person  who  undertakes  it.  The  title-deed  to  property  often 
much  involved,  or  present  flaws  and  deficiencies  which  can 
only  be  detected  by  searching  and  patient  inquiry.  On  the 
other  hand  the  prosperity  of  a  building  society,  the  security 
of  its  members  during  the  continuance  of  a.  mortgage,  and 
the  subsequent  undisturbed  enjoyment  b}^  the  borrowers  of 
the  property  purchased,  depend  solely  and  entirely  upon  the 
validity  of  these  titles,  and  the  correct  appreciation  of  the 
property  they  represent. 

For  these  reasons,  the  selection  of  a  competent  solicitor 
is  one  of  the  most  important  duties  which  belong  to  the 
directors  of  the  society. 

The  person  chosen  should  possess  both  experience  and 
taienJ  ;  be  should  be  ;i  man  of  integrity  and  firm  principle, 
incapable  alike  of  being  influenced  by  motives  of  interest  or 
feelings  of  private  friendship;  and,  besides  these  indispen- 
sable qualifications,  he  should,  if  possible,  in  common  with 
the  other  officers  of  the  society,  be  possessed  of  a  good  con- 

lierf  ion. 

A  i.t.  72. — -To  secure  the  services  of  ;i  person  thus  qualified, 
an  adequate  and  Liberal  remuneration  must  be  offered,  in- 
stead of  the  insufficient  Ices  which  are  sometimes  tendered  by 


Art.  75.  ON   BENEFIT   BUILDING    SOCIETIES.  521 

building  societies  to  their  solicitors.  The  recompense  should 
be  proportionate  not  only  to  the  actual  value  of  the  work- 
done,  but  also  to  the  heavy  responsibility  attached  to  the 
office  which  they  hold ;  for,  should  the  society  sustain  any 
loss  through  the  inaptitude  or  carelessness  of  its  solicitor,  he 
is  legally  liable  to  make  good  the  deficiency.  Examples  of 
this  will  be  found  in  our  chapter  of  law  cases,  under  the  title 
Solicitor. 

Art.  73. — Besides  the  necessity  of  offering  an  ample  re- 
muneration to  the  solicitor  of  a  building  society,  it  is  also 
essential  that  the  amount  of  his  fees,  whatever  it  be,  should 
be  fixed  beforehand,  at  the  time  of  his  election  to  the  office. 

Art.  74. — 2d.  The  Surveyor  of  the  society  stands  next  in 
importance  to  the  solicitor,  his  duties  being  attended  with 
great  difficulty,  and  considerable  experience  and  judgment 
being  requisite  to  enable  him  to  form  anything  approaching 
to  an  accurate  estimate  of  the  pecuniary  value  of  property. 
This  value  may  depend  upon  several  varying  conditions. 
The  tenure  by  which  the  property  is  held  may  be  freehold, 
copyhold  or  leasehold  ;  in  the  latter  case  the  number  of 
years  yet  unexpired  in  the  lease  must  be  taken  into  consid- 
eration. The  neighborhood  in  which  the  property  is  situ- 
ated may  be  likely  to  rise  or  fall  in  public  opinion.  Any 
estimate,  calculated  on  the  amount  of  rent  actually  paid,  is 
little  to  be  trusted,  as  attempts  are  not  unfrequently  made 
to  mislead  the  surveyor  by  letting  the  property  at  a  nomi- 
nal rent  much  larger  than  is  actually  paid  for  it. 

The  surveyor,  therefore,  must  not  only  be  able  to  esti- 
mate the  materials  and  cost  of  erection,  but  he  must  be 
well  acquainted  with  the  locality  in  which  he  is  employed, 
and  he  must  have  sufficient  experience  to  enable  him  to 
detect  the  artifices  by  which  the  vendors  of  property  en- 
deavor to  exaggerate  its  value. 

The  false  estimates,  which  are  sometimes  productive  of 
so  much  loss  to  building  societies,  are  not  always  the  fruits 
of  incapacity  or  inexperience.  Cases  have  occurred  of  com- 
pacts between  the  surveyor  and  the  vendor  or  the  purchaser 
of  property,  or  even  some  officer  of  the  society,  to  share  be- 
tween themselves  the  profits  of  an  unfair  valuation.    . 

To  guard  against  the  possibility  of  such  fraudulent  prac- 
tices as  these,  a  man  of  high  moral  integrity  should  be 
chosen ;  and  he  should,  as  well  as  the  solicitor,  be  liberally 
remunerated  for  his  services. 

Art.  75. — Several  expedients  have  been  adopted,  with  the 
view  of  obtaining  a  check  on  the  estimates  of  the  surveyors 
of  benefit  building  societies.  It  has  been  recommended  that 
they  should  be  paid  out  of  the  ordinary  funds  of  the  society, 


522  appendix  i.  Ch.  V. 

instead  of  by  the  borrowing  members  individually,  so  as  to 
destroy  any  reciprocity  of  action  or  feeling  between  them 
and  the  mortgagors  of  property.  Some  societies  appoint  a 
survey  committee  to  act  as  a  check  between  the  surveyor 
and  purchaser,  and  a  regulation  has  been  proposed  to  pre- 
vent any  subsequent  transfer  of  property  from  a  member  to 
the  surveyor,  or  to  any  individual  of  the  survey  committee. 
All  these  may  be  useful  as  auxiliary  measures,  but  the 
necessity  for  them  will  be  much  diminished  by  a  previous 
examination  into  the  character  of  the  person  employed. 

Art.  76. — 3d.  The  Manager. — We  have  placed  the  solicitor 
and  the  surveyor  of  a  society  first  in  importance  on  the  list  of 
its  officers,  because  we  believe  that,  provided  they  are  unex- 
ceptionable, and  the  manager  be  an  honest,  intelligent,  and 
active  man,  little  more  is  wanting  to  carry  on  with  advan- 
tage an  institution  formed  on  a  correct  basis  as  regards 
its  rates  of  subscription.  It  is,  however,  essential  that 
any  person  proposed  as  a  manager  should  be  thoroughly  ac- 
quainted with  the  fundamental  principles  of  compound 
interest,  and  the  practice  of  tables  relating  thereto.  Much 
mischief  and  inequitable  dealing  has  occurred  in  several  of 
the  existing  societies,  from  the  ignorance  of  their  managers 
on  that  subject ;  and  it  would  be  well  if  some  regulation 
were  enforced  requiring  that  every  person  who  intends  to 
become  the  manager  of  an  association  in  which  the  savings 
of  the  poor  are  engaged,  should  first  obtain  from  competent 
persons  a  certificate  of  his  qualifications  for  the  office. 
Since  not  a  little  depends  on  the  zeal  and  attention  with 
which  the  manager  performs  his  duties,  it  is  but  reasonable 
that  he  should  be  paid  as  his  exertions  demand.  Experi- 
ence has  long  shown  that  it  is  a  sorry  and  false  economy 
not  to  give  an  adequate  remuneration  to  men  who  superin- 
tend the  affairs  of  important  institutions. 

Art.  77. — One  duty  of  the  manager  must  specially  be 
mentioned.  Be  should  make  himself  perfectly  master  of 
the  rides  of  the  society,  and  the  bearing  of  each  clause  upon 
the  various  matters  of  business,  which  he  will  have  to  sub- 
mit, from  time  to  time,  to  the  board  of  directors  at  their 
periodic  meetings.  It  cannot  be  expected  that  the  trustees 
or  directors  should  be  as  cognizant  as  their  deputy  of  the 
practical  effect  of  regulations,  which  they  meet-  only  at 
intervals  to  carry  out;  the  responsibility  therefore  rests, 
very  properly,  on  the  manager,  and  that  he  should  be 
awa  re  of  t  he  dul  ies  of  office,  ol  herwise  his  society  may  fall 
intol  hose  posit  ions  of  difficulty  and  even  Litigation,  from  the 
evil  effects  of  w  Inch  many  insl  it  ut  ions  have  greatly  suffered. 
Aim.  7".     1th.  The  Auditors  of  the  society  occupy  also 


Art.  80.  ON   BENEFIT   BUILDING    SOCIETIES.  523 

very  responsible  situations.  The  members  entirely  rely 
upon  their  careful  examination,  from  time  to  time,  of  the 
accounts  and  balance  sheets.  Not  only  is  it  their  duly  to 
see  that  correct  vouchers  are  produced  corresponding  to 
the  items  of  expenses  and  receipts,  but  they  should  examine 
strictly  into  the  formation  of  the  annual  or  more  frequent 
balance  sheet;,  purporting  to  show  the  pecuniary  position  of 
the  society  at  the  time  of  audit.  Upon  the  faith  of  the 
statements  contained  in  these  balance  sheets,  it  is  customary 
for  the  directors  of  the  institution  to  found  their  report  of 
its  progress.  By  erroneously  placing  sums  to  the  credit  of 
profit,  which  are  not  such  in  reality,  subsequent  loss  has 
been  created.  [See  the  following  chapter.]  For  this  reason 
it  is  of  urgent  necessity  that  the  auditors  should  be  careful 
and  experienced  persons,  well  versed  in  the  practice  of  book- 
keeping and  the  calculation  of  interest.  In  Part  2  of  the 
present  work  relating  to  Local  Enterprise  Encouragement 
Associations,  we  discuss  at  length  the  whole  system  of  audit 
in  public  companies,  and  recommend  a  more  efficient  inspec- 
tion as  necessary  for  the  prevention  of  fraud,  and  for  apply- 
ing a  speedy  remedy  to  defects  of  management.  The  syst<  m 
we  there  advocate  is  equally  applicable  to  benefit  building 
societies,  and  its  adoption  would  be  found  of  great  advantage. 

Art.  79. — 5th.  The  Arbitrators.  As  to  these  officers, 
see  our  legal  chapter  under  the  heading  Arbitration. 

Art.  80. — The  Trustees  of  the  society,  though  last  on 
our  list,  in  reality  are  the  most  prominent,  if  not  the  most 
active  of  its  officers.  ^\Ve  may  judge  of  this  from  the  fact 
of  their  names  being  so  frequently  paraded  as  evidence  to 
the  public  of  the  general  respectability  of  the  association, 
and  from  the  popular  impression  that  they  are  numbered 
amongst  its  responsible  officials.  The  high  and  recognized 
standing  of  many  trustees  leads  us  to  wonder  at  the  read- 
iness with  which  they  accord  their  names  to  uncertain 
themes,  and  their  being  so  unmindful  of  the  injury  likely 
to  be  caused  by  their  imprudence  to  the  public  at  large.1 
To  correct  this  evil,  a  knowledge  of  the  usual  duties  of  their 
position,  we  are  confident,  is  alone  necessary.  A  slight 
degree  of  watchfulness,  exercised  in  a  properly  constituted 
association,  will  protect  them  from  sharing  in  the  reprehen- 
sion that  otherwise  would  be  justly  due  to  them.  As 
trustees  of  the  society  they  should  insist  upon  a  strict  ad- 
herence to  the  rules  established  for  its  government  and 
also 2  upon  security  being  given  by  those  officers,  who  act  as 
recipients  of  the  members'  money. 

1  See  Art.  42,  page  23.  are  told  in  this  work,  which  may 

2  Benefit  building  societies,  we    be  considered  the  grammar  of  the 


524  appendix  i.  Ch.  V. 

Art.  81. — Turning  from  the  officers  of  the  society  to  the  de- 
tails of  its  practical  working,  we  shall  next  examine  several 
points  respecting  which  there  is  considerable  difference  of 
opinion  ;  even  among  persons  who  are  most  experienced  in 
building  society  transactions. 

With  reference  to  the  mode  of  granting  advances  to 
members,  when  there  are  applications  for  loans  exceeding 
the  amount  of  money  which  can  be  lent,  three  plans  exist  : 
viz.,  either  by  bidding,  rotation  (that  is,  seniority  on  the 
list  of  applicants),  or  by  ballot.  The  two  first  appear  to 
present  more  objections  than  the  third,  although  it  is  ex- 
tremely difficult  to  decide  what  system  can  be  adojited  as 
likely  to  be  entirely  free  from  inconvenience. 

Art.  82. — The  plan  of  determining  by  bidding  who  is  to 
have  the  preference  for  an  advance,  consists  of  putting  the 
sum  proposed  to  be  lent,  up  to  auction  among  the  members, 
and  in  finally  allotting  it  to  that  person  who  offers  the 
highest  discount  for  it.  This  may  be  explained  by  an  ex- 
ample :  In  a  10  years'  society,  suppose  there  is  a  sum  ready 
to  be  advanced.  The  chairman  puts  up,  say,  one  share  of 
£120,  and  inquires  what  discount  will  be  allowed  for  it.  The 
members  present  hand  in  written  biddings  to  him,  and  he 
declares  the  highest  discount  offered ;  upon  which  the  bid- 
ding is  commenced  a  second  time,  and  the  result  is  again 
declared  ;  and,  finally,  a  third  trial  is  made,  and  the  advance 
is  allotted  to  the  member  who  has  offered  the  largest  dis- 
count. 

By  this  plan  members  who  had  no  intention  to  borrow, 
have  had  the  power  of  raising  the  discount  offered,  by  bid- 
ding during  the  first  and  second  trials  and  abstaining  the 
third  time;  the  profits  derived  by  the  non-borrowers  in- 
creasing with  the  magnitude  of  the  discount  obtained.  An 
attempt  has  Ween  made  to  remove  this  objection  by  causing 
the  bidding  to  be  made  by  word  of  mouth,  as  at  a  public 
auction,  and  by  only  allowing  one  trial.  The  system  of 
bidding,  however,  may  still  cause  borrowing  members  to 
obtain  advances  on  most  inequitable  terms,  unless  a  limit 
be  phucd  to  the  price,  which  they  can  offer.     Cases  contin- 

■iii.  are    mainly    intended  for  carry  on  their  duration  beyond  the 

the    benefit    of   persons    of    very  period   specified.     There  must  be 

moderate    means;   and  yet  their  security   for  the  intermissions  of 

<  i  h  transactions  are  nol  upon  the  those   who  are   in  any  way  con- 

footing  of  the  public  respectabil-  cerned  in  handling  the  money  of 

it  y,  which  gives  security,  as  for  in-  the  company,  or  the  wist  lom  which 

Stance  in  a  hank.      This  is  the  first     t  he  plan  may  he  conceived  will  be 

point  to  be  considered;  for  even  no  guarantee  against  ruinous  loss. 
ih"  wild  miscalculations  pointed  Chambers's  Edinburgh  Journal — 
oul  in  M.nie  terminating  societies  Extract  from  Review  of  our  Treat- 
will  merely  involve  partial  Loi  3,  or  ise  on  Building  Societies. 


Al't.  86.  ON   BENEFIT   BUILDING    SOCIETIES.  525 

ually  occur,  where  discounts,  for  £120  shares,  are  given  as 
high  us  £70  and  even  £80  in  the  first  year.  By  this  means 
the  borrower  receives  only  £50,  or  even  £40,  at  the  begin- 
ning, in  lieu  of  £120,  the  full  amount  of  the  share  at  the  end 
of  the  society. 

And  as  be  has  to  pay  14s.  a  month,  for  10  years,  or  £8 
8s.  0d.  a  year,  his  advance  costs  him  considerably  over  L0 
per  cent,  rate  of  interest. 

Art.  83. — It  is  necessary,  however,  to  caution  the  societies 
which  adopt  the  bidding  system,  or  indeed  any  system  by 
which  a  large  discount  or  commission  or  premium  is  de- 
ducted from  an  advance  at  the  time  it  is  made,  against  rep- 
resenting the  amount  so  deducted  as  immediately  realized 
profit.  The  only  light  in  which  it  can  be  properly  viewed, 
is  as  a  fund  for  increasing  the  interest  to  be  received  by  the 
society  on  the  loan,  and  so  providing  an  extra  protective 
margin  on  the  future  repayments  against  loss  on  the  security. 
For  example,  if  a  loan  nominally  of  £100  be  granted  at  five 
per  cent,  for  10  years,  and  a  discount  of  £4  14s.  Od.  de- 
ducted, the  rate  of  interest  realized  by  the  society  on  the 
actual  money  advanced  is  6  per  cent.  Again,  if  the  rate 
of  interest  nominally  charged  be  1  per  cent,  and  the  dis- 
count £8  12s,  Od.  the  interest  actually  realized  is  9  per 
cent. 

Art.  84. — Between  the  rotation  or  seniority  systems  and 
balloting  it  is  difficult  to  make  a  choice.  By  the  first  a 
member  puts  his  name  down  on  the  list  of  applicants,  and 
waits  his  turn  for  an  advance.  If  the  societ}^  has  been  some 
months  in  existence  when  he  joins  or  wishes  to  borrow,  he 
may  have  to  wait  a  considerable  time  before  he  obtains  the 
loan  he  desires. 

Art.  85. — By  the  balloting  plan,  the  names  of  all  the  ap- 
plicants are  placed  together  in  a  ballot  box,  and  one  is 
drawn  out  by  lot,  to  whom  preference  is  given.  To  this 
last  arrangement  the  modern  societies  seem  to  incline, 
because,  without  the  enormous  losses  consequent  on  the 
bidding  system,  and  the  delay  certain  to  attend  that  by 
rotation,  each  of  the  borrowing  members  individually  has  a 
chance  of  being  fortunate  enough  to  obtain  the  first  right 
to  an  advance. 

As  the  names  are  drawn  out  of  the  ballot-box  a  list  is 
formed  in  the  order  of  which  the  loans  are  to  be  granted. 
If  there  be  not  money  enough  to  suit  all  the  applicants  at 
once,  those  members  whose  names  remain  on  the  list  have 
preference  at  the  next  advance  before  any  subsequent  ballot, 
provided  they  have  been  six  months  in  the  society. 

Art.  86. — It  has  been  imagined  that  the  system  of  ballot- 


526  appendix  i.  Ch.  V. 

ingis  not  legal,  inasmuch  as  it  might  be  considered  a  species 
of  lottery.  Such  an  impression  is  entirely  without  founda- 
tion, since  the  ballot  is  merely  introduced  in  a  permanent 
building  society  for  the  simple  purpose  of  collecting  for  an 
individual  preference  the  names  of  the  members,  who  desire 
to  become  borrowers  and  receive  advances,  for  which  each 
and  all  have  to  pay  after  the  same  rate  of  subscription  and 
interest ;  no  favor  in  respect  of  repayments  being  obtained 
by  any.  The  ordinary  lotteries  were  very  properly  prohib- 
ited from  very  different  motives,  because  they  encouraged  a 
system  of  gambling,  by  which  one  man  was  made  rich,  while 
his  less  fortunate  rivals  became  impoverished.  Is  o  analogy 
exists  between  the  two  cases.  If  the  bidding  or  rotation 
plan  be  preferred,  there  would  be  found  no  difficulty  in  ap- 
plying either  to  a  permanent  building  society,  but  a  clause 
should  be  introduced  to  obviate  too  great  improvidence  on 
the  part  of  competing  borrowers  in  the  former  case,  or  the 
disheartening  delay  of  the  latter  s}Tstem. 

Akt.  87. — With  respect  to  the  important  question,  how 
the  surplus  bonus  to  investing  members  should  be  ascer- 
tained and  divided,  errors  of  a  grave  character  are  frequently 
committed  by  societies.  It  appears  to  be  thought  by  many 
that  when  a  valuation  has  been  made  of  the  future  repay- 
ments remaining  to  receive  from  the  borrowing  members, 
the  whole  of  the  surplus  shown  may  be  taken  to  be  realized 
profit,  and  alloted  to  the  investing  shares  accordingly.  If 
any  portion  is  reserved  to  a  guarantee  fund,  that  portion  is 
frequently  fixed  at  a  very  small  amount,  such  as  £100  or 
£200.  The  necessity  of  ample  and  liberal  reserves,  is  one 
which  practical  advisers  find  the  greatest  difficulty  in  en- 
forcing on  the  managing  bodies  of  building  societies. 
Every  estimate  of  the  present  value  of  the  mortgages  as- 
sumes necessarily  that  the  repayments  will  be  punctually 
kept  up,  and  until  that  has  been  proved  to  be  the  case  by 
the  complete  discharge  of  the  securities  without  loss  of  the 
society,  the  surplus  profit  on  the  transaction  is  not,  in  point 
of  fact,  realized.  If  the  whole  of  the  calculated  surplus, 
therefore,  be  divided,  and  the  members,  who  were  in  the 
society  when  the  mortgages  were  granted,  complete  their 
shares  and  receive  their  bonus,  then  should  loss  subse- 
quent ly  arise  on  those  mortgages  it  would  have  to  be  borne 
by  the  members  entering  utter  they  were  granted,  attracted 
probably  by  this  fallacious  estimate  of  profit.  The  amount 
of  reserve  to  be  deducted,  before  an  actual  division  of  prof- 
it, must  be  determined  in  each  case  by  the  circumstances 
of  the  society,  ;ind  the  Length  of  time  the  several  mort- 
gages have  still  to  run,  but  to  divide  profits  without  mak- 


Art.  90.  ON   BENEFIT   BUILDING   SOCIETIES.  527 

ing  an  ample  reserve  for  contingencies  of  loss,  is  a  highly 
dangerous  proceeding. 

Art.  88. — In  the  general  conduct  of  the  society  it  ought 
to  be  borne  in  mind  that,  at  its  commencement,  a  liberal 
yet  careful  outlay  is  requisite,  to  give  due  publicity  to  its 
principles  in  the  districts  over  which  its  operations  are  pro- 
posed to  extend.  The  preliminary  expenses  may  perhaps  be 
large  in  amount,  but  where  they  have  been  judiciously  in- 
curred, they  are  sure  to  be  amply  repaid  by  the  future  ex- 
tent and  importance  of  the  institution.  In  order  to  effect 
legitimately  and  advantageously  the  main  object  of  benefit 
building  societies,  care  should  be  taken  that  the  personal  in- 
terests of  no  individual  member  are  sacrificed  by  the  adop- 
tion of  any  unjust  regulations  which  may  have  been  intro- 
duced for  the  special  advantage  of  another.  As  the  chief 
aim  is  to  provide  a  home  for  those  who  otherwise  might 
not  be  in  circumstances  to  obtain  it,  the  amount  of  avail- 
able funds  during  each  year  should  be  so  apportioned  as 
to  supply  the  greatest  possible  number  with  advances. 
Where  a  member  has  pecuniary  means  of  his  own,  he  ought 
readily  to  apply  it  towards  part  of  his  purchase,  so  that  his 
less  fortunate  neighbor  may  participate  to  the  fullest  extent 
in  the  assistance  which  the  society  can  afford  him. 

Again,  there  is  in  general  less  spirit  of  speculation  on  the 
part  of  a  borrower,  who  intends  to  occupy  the  house  himself 
which  he  desires  to  buy,  and  it  is  found  by  experience  that 
more  substantial  property  is  offered  for  security  in  such 
cases. 

Art.  89. — It  is  desirable  that  no  meeting  of  the  society 
should  ever  be  held  at  any  tavern  or  public-house.  The 
members  may  save  much  money  by  the  adoption  of  this  rule. 
They  may  do  more :  they  may  deliver  themselves  from  the 
temptation  to  form  bad  habits  of  intemperance  and  useless 
expenditure  which,  to  view  them  in  no  worse  light,  well 
nigh  counterbalance  all  the  advantages  to  be  derived  from 
these  institutions. 

Art.  90. — The  Rules  should  be  framed  by  persons  well 
versed  in  the  principles  and  practice  of  benefit  building 
societies,  so  that  the  advantages  of  both  sound  and  new 
features  may  be  secured.  All  such  provisions  as  experi- 
ence has  proved  to  be  productive  of  loss  or  inconvenience, 
must  be  excluded.  The  set  of  rules  in  our  Treatise  on  Copy- 
holds are  applicable  to  the  proposed  permanent  plan,  which 
we  have  prepared,  of  a  building-society,  and  may  be  adapted 
to  the  circumstances  of  particular  localities.  *  They  have 
been  carefully  modified,  since  the  publication  of  our  first 
draft  set  in  1847,  by  the  results  of  uninterrupted  experience, 


528  APPENDIX  I.  Ch.  V. 

and  by  valuable  suggestion  communicated  by  the  certify- 
ing barrister  for  England,  Mr.  John  Tidd  Pratt  ;  and  we  re- 
commend them  as  providing  a  sound  basis  for  any  society, 
although  we  are  far  from  believing  that  they  should  be 
adopted,  without  modification,  as  lifted  to  every  part  of  the 
country. 

Airr.  91. — The  promoters  of  new  societies  should  carefully 
abstain  from  engrafting  corrections  upon  the  draft  rules  in 
question  which  their  inexperience  may  prevent  them  from 
perceiving  might  have  the  effect  of  utterly  destroying  the 
connected  link  of  principles  by  which  the  various  clauses 
hinge  upon  each  other.  That  this  caution  is  not  unnecess- 
ary, we  may  mention,  by  way  of  anecdote,  that  one  of  the 
most  flourishing  societies  at  present  in  Middlesex  had  to  go 
through  the  expensive  operation  of  a  revision  and  fresh  reg- 
istration of  its  clauses,  after  a  great  number  of  copies  of 
its  prospectuses  and  rules  had  been  printed  ready  for  circu- 
lation. This  arose  from  the  promoters  having  adopted  the 
general  characteristics  of  our  first  draft  set  of  rules,  upon 
which  they  had  made  such  fanciful  alterations  that  the  sys- 
tem in  their  hands  became  a  chapter  of  inconsistency  ;  and 
they  were  put  to  expense  in  retracing  their  steps,  which  in 
great  measure  might  have  been  obviated  by  a  more  legit- 
imate proceeding  at  first. 

Aim.  92. — Particular  care  should  be  taken  in  the  rules  to 
ddine  accurately  the  method  of  distributing  bonuses  out  of 
surplus  profits  among  the  members. 

In  many  societies  the  rules  relating  to  profits  are  drawn 
so  carelessly  as  to  give  rise  to  much  dissension  and  dispute 
between  the  members  as  to  the  interpretation  to  be  placed 
upon  their  provisions.  It  is  the  more  important  that  care 
should  he  taken  on  this  point  in  the  first  instances ;  that 
there  is  difficulty  in  afterwards  altering  a  rule  relating  to 
profits  where  vested  interests  exist. 

Aim.  93. — The  directors  should  be  cautious  not  to  offer 
too  much  discount  on  shares  paid  in  advance.  It  may  be 
safe  fco  hold  out  a  promise  of  accumulations  from  interest, 
by  the  end  of  ;i  term  of  years,  at  even  5  per  cent,  or  more; 
hut  it.  does  not-  follow  that  it  would  be  equally  so  to  allow 
5  or  4&  per  cent,  discount  on  money  tendered  in  advance. 
The  distinction  is  obvious :  In  the  one  case,  the  undertaking 
is  simply  to  give  the  result  of  the  interest  after  it  has  been 
realized;  in  the  other,  the  equivalent  is  parted  with  at  once 
;iik1  a  grave  responsibility  unnecessarily  incurred  of  so  in- 
vesting the  money  received  ;is  to  recover  the  discounter 
forestalled  interest)  paid  in  advance. 


CHAPTEE  VI. 

THE   BALANCE    SHEETS    OF    BENEFIT   BUILDING    SOCIETIES. 

Articlk  94. — We  have  mentioned  before,  that  it  is  cus- 
tomary for  all  building  societies  to  produce,  once  a  year  at 
least,  a  balance  sheet  relative  to  the  state  of  their  pecuniary 
affairs,  which  is  certified  by  the  auditors  as  correct,  and 
generally  concludes  with  an  estimate  of  the  improvement  in 
the  value  of  the  shares,  attained  by  the  operation  of  the 
preceding  year.  It  is  evidently  of  the  greatest  importance 
that  such  statements  should  be  accurate,  for,  if  a  fictitious 
amount  of  profits  be  declared,  the  directors,  not  being  aware 
of  the  error,  are  induced  to  make  a  corresponding  augmen- 
tation in  the  entrance  fee,  to  be  required  from  any  one  Avho 
may  subsequently  desire  to  join  the  society,  and  to  partici- 
pate in  the  supposed  profits  ;  the  effect  of  which  would  be 
to  deter  persons  from  entering,  and  the  scope  of  the  asso- 
ciation would  be  curtailed.  The  existing  members  also 
would  conceive  a  false  impression  respecting  the  pecuniary 
value  of  their  shares ;  and,  if  any  of  them  should  desire  to 
withdraw  from  the  society  before  its  termination,  they 
would  expect,  and  the  directors  might  be  led  to  pay  to 
them,  a  premium  equivalent  to  the  profit  declared,  which  if 
it  be  overrated  must  be  prejudicial  to  the  interests  of  the 
general  body  of  shareholders.  Considerable  sums  are  in 
this  manner  frequently  paid  away  in  the  early  stages  of  the 
society  under  the  name  of  bonus,  which  create  an  irrepara- 
ble deficiency  in  the  accumulated  funds  at  the  epoch  of  their 
intended  termination.  In  a  variety  of  cases,  which  have 
come  before  our  notice,  this  mischievous  circumstance  has 
occurred,  and  has  been  found  to  have  produced  a  most  un- 
favorable effect  on  their  financial  position.1  Moreover, 
many  members  who  might  be  disposed  to  seek  for  advances 
imagine  that,  if  so  large  a  profit  can  be  made  so  soon,  they 
surely  would  have  to  pay  too  high  a  rate  of  interest  for  the 
loan  desired.  They  become  consequently  dissatisfied  and  do 
not  borrow.     Nor  is  the  pernicious  effect  of  these  erroneous 

1  The  case  is  similar  in  its  effect  itors,  but  who  by  giving  20s.  to 

to  that  of  a  bankrupt  tradesman,  some  of  them  at  first,  leaves  but 

whose  assets  would  enable  him  to  10s.  in  the  pound  to  those  who  are 

pay  15s.  in  the  pound  to  his  cred-  paid  afterwards. 

34  529 


530  APPENDIX   I.  Ch.  VI. 

estimates  confined  to  the  members  of  the  society  in  which  they 
occur.  The  false  experience  and  superficial  success  thus 
created  are  quoted  by  the  promoters  of  new  associations 
formed  on  the  same  scheme,  and  serve  both  as  an  excuse  for 
copying  it,  with  all  the  errors  it  contains,  without  fur- 
ther inquiry  into  its  safety  or  practicability,  and  as  a 
means  of  attracting  members  eager  to  participate  in  similar 
advantages. 

Art.  95. — Such  are  the  evil  consequences  attending  an 
inaccurate  statement  of  the  position  of  a  society  at  the  end 
of  any  year ;  and  yet,  in  many  instances,  the  balance  sheets 
contain  mistakes  equally  important  with  those  which  are 
found  in  the  rules  and  rates  of  subscription. 

The  main  source  of  error  consists  in  the  practice  of  in- 
serting the  whole  nominal  amount  of  a  share,  for  instance 
£120,  as  having  been  lent  in  cash  to  a  borrowing  member, 
when  probably  he  has  only  received  £55  or  £60.  This  is 
obviously  incorrect,  since  it  matters  not  what  is  the  nominal 
value  of  the  share,  but  merely  what  present  sum  in  money 
has  actually  been  advanced  upon  it,  in  lieu  of  the  full 
amou  nt,  which  the  shareholder  would  otherwise  be  entitled 
to  claim  at  the  close  of  the  society,  and  for  which  advance 
he  has  to  pay  a  monthly  annuity  for  a  certain  number  of 
years. 

Art.  96. — In  general,  the  only  profit  which  can  be  appa- 
rent in  the  annual  statements,  is  that  resulting  from  the  in- 
terest already  obtained  through  investing  the  subscriptions 
in  loans;  and,  as  such,  is  merely  what  was  assumed  as  prob- 
able in  the  fundamental  calculations.  By  the  accumulations 
of  interest  year  by  year  the  expected  amount  of  the  shares 
can  alone  be  realized,  and  the  yearly  profit  thus  produced  is 
not  a  matter  of  congratulation  as  if  it  were  unexpected,  but 
simply  the  means  by  which  the  suppositions  forming  the 
basis  of  the  society  are  rendered  true.  Hence,  if  profit  at 
the  end  of  any  year  be  shown,  it  cannot  be  carried  to  the 
credit  of  any  but  the  investing  or  non-borrowing  members, 
who  are  making  their  monthly  payments  in  the  hope  of 
receiving,  at  the  end  of  a  certain  number  of  years,  the 
promised  accumulation  of  their  subscriptions,  and  compound 
interest  thereon,  which,  together,  are  represented  by  the 
share  they  hold.  The  borrowers,  having  cancelled  their 
shares  by  the  loans  obtained,  are  not  interested  in  or  enti- 
tled to  any  portion  of  the  profit  or  interest  realized. 

Aim.  97.  The  question,  however,  may  be  said  to  present 
some  difficulty  of  convict  ion,  as  it,  is  frequently  objected  by 
borrowers  that  as,  in  ;i  terminating  society,  they  are 
exposed   to  participate  in  any  losses  which  may  affect  its 


Art.  99.  ON   BENEFIT   BUILDING    SOCIETIES.  531 

duration,  it  would  be  but  fair  that  they  should  also  share  in 
the  pecuniary  prosperity  of  the  association.  To  this,  which 
is  but  another  proof  of  the  evil  of  high-flown  balance  sheets, 
it  can  be  only  answered  that,  as  they  have  received  their 
shares  in  advance,  and  frequently  on  very  favorable  terms, 
they  should  not  afterwards  claim  a  part  of  the  profits,  by 
which  alone  non-borrowers  can  expect  to  receive  an  advan- 
tage from  the  society  equivalent  to  that  already  secured  by 
the  borrowers.  Moreover,  practically,  the  borrowers  are 
greatly  benefited  in  the  end  by  a  non-participation  in  the 
annual  profits;  inasmuch  as  the  more  rapidly  the  unad- 
vanced  shares  improve  in  value  or  towards  completion,  the 
sooner  will  the  society  arrive  at  its  termination,  and  the 
sooner  they  will  be  entitled  to  cease  their  payments,  and 
to  have  their  deeds  returned  to  them  indorsed  with  the  usual 
receipt. 

Art.  98. — The  plan,  hitherto  adopted,  of  making  a  balance 
sheet  serve  to  give  an  estimate  of  the  profit  annually  re- 
alized on  the  shares,  is  productive  of  the  greatest  confusion. 
The  terms  Dr.  and  Cr.  tend  to  mislead,  if  the  figures  under 
their  head  are  considered  relative  to  profit  or  loss  expe- 
rienced. 

A  balance  sheet  merely  supplies  information  as  to  the 
items  of  money  received,  and  the  mode  in  which  such  receipts 
have  been  disposed  of.  It  can  express  no  opinion  as  to 
whether  any  advantage  or  disadvantage  has  been  derived 
from  the  way  in  which  the  money  has  been  laid  out,  but 
simply  conveys  the  facts  as  they  have  occurred ;  and,  as 
such,  it  is  useful  and  necessary  for  the  protection  of  the 
shareholders,  because  it  shows  clearly  how  the  pecuniary 
affairs  of  the  association  are  managed.  In  the  other  point 
of  view,  it  is  not  of  much  value,  as  something  more  is  re- 
quired than  a  mere  statement  of  money  received  and  money 
spent  or  invested  to  attain  a  satisfactory  knowledge  of  the 
position  of  the  society,  as  regards  profit  and  loss  incurred. 
When  the  auditors  see  under  the  head  of  Cr.  a  heavy  item 
for  expenses  of  management,  it  does  not  occur  to  them  that 
so  much  money  is  sunk  and  gone  from  the  society  for  ever  ; 
the  money  is  accounted  for,  that  is  all. 

Art.  99. — To  arrive  effectually  at  the  actual  value  of  the 
shares,  an  annual  valuation  of  quite  a  different  character 
should  be  made,  on  the  same  plan  as  that  adopted  by  life 
assurance  companies  ;  by  which  not  only  the  sums  received 
and  then  invested  or  spent,  or  paid  out  on  withdrawal,  are 
considered;  but  the  present  value  also  is  estimated  of  the 
profit  to  be  expected  from  the  advantageous  nature  of  the 
society's  investments  in  the  advances  to  the  borrowers,  rela- 


532  appendix  i.  Ch.  VI. 

tively  with  the  present  value  of  its  engagements  in  respect 
to  the  shares  held  by  non-borrowers.  This  is  not  the  busi- 
ness of  a  mere  balance  sheet,  but  must  be  effected  by  a 
correct  mathematical  calculation,  in  which  the  expected 
duration  of  the  subscriptions,  and  the  interest  actually  real- 
ized, are  taken  into  account. 

Art.  100. — This  distinction  has  been  overlooked  by  several 
writers  in  periodicals  treating  of  this  subject,  who,  in  re- 
viewing balance  sheets,  appear  to  believe  that,  in  order  to 
ascertain  correctly  the  yearly  profit  or  loss  of  a  society,  it  is 
sufficient  to  form  a  profit  and  loss  account,  placing  on  the 
one  side  the  various  items  of  receipts  from  entrance  fees, 
redemption  fees,  fines,  etc.,  and  on  the  other  side  the 
expenses,  and  to  consider  the  balance,  whichever  it  be,  profit 
and  loss,  as  representing  the  true  value  of  the  shares.  The 
same  rule  being  applied  indiscriminately  to  every  descrip- 
tion of  benefit  building  society,  without  any  reference  to 
the  essential  consideration  as  to  whether  the  rates  of  invest- 
'ors'  subscriptions  or  borrowers'  repayments  are  adequate  to 
the  originally  promised  results.  The  members,  however, 
can  feel  no  security  respecting  the  actual  progress  of  the 
society  and  their  own  future  liabilities,  unless  an  accurate 
estimate  of  the  profit  and  loss  experienced  by  it  be  made 
from  time  to  time  ;  and  we  would  strongly  impress  upon 
them  the  necessity  of  insisting  on  the  production  periodically 
of  a  complete  valuation  of  the  position  of  the  society,  dis- 
tinct from  the  ordinary  balance  sheets.  [See  Schedule  C, 
Art.  103.] 

Art.  101. — Having  mentioned  the  correct  method  which 
ought  to  be  adopted,  we  will  proceed  to  give  three  speci- 
mens of  balance  sheets,  taken  at  random  from  a  number  of 
similar  reports,  for  the  purpose  of  showing  how  they  have 
hitherto  been  prepared,  and  to  draw  attention  to  the  inju- 
rious effect  of  exaggerated  declarations  of  profit. 

Art.  1<»± — It  is  essential  to  bear  in  mind  that  the  mischief 
produced  by  an  erroneous  view  of  the  profits  of  the  society 
is  even  more  serious  in  the  earlier  stage  of  its  existence  than 
afterwards,  as  the  loss  created  by  paying  away  the  money 
in  shape  of  bonus  to  persons  withdrawing  is  increased  with 
1  lie  number  of  years  yet  remaining  of  the  proposed  dura- 
tion of  the  association.  For  example,  suppose  £500  be  de- 
clared by  way  of  profit  at  th<'  end  of  the  third  year  of  a 
thirteen  years'  society,  which  is  realizing  an  average  rate  of 
interest,  of  7  percent.,  since  money  doubles  at  7  per  cent,  in 
ten  years,  the  6500  profit,  if  paid  away  when  declared,  would 
cause  a  deficiency  of  £1,000  at  I  he  end.  As  no  evil  is  gen- 
erally  without  a  remedy,  so  immediate  steps  may  serve  to 


Art.  102.  ON   BENEFIT   BUILDING   SOCIETIES.  533 

restore  the  association  to  its  sound  position.  We,  there- 
fore, urge  upon  the  directors  of  all  such  societies  to  have 
their  last  balance  sheet  carefully  readjusted,  and  the  basis 
of  their  subsequent  statements  settled  upon  correct  and 
intelligible  principles.  The  matter  presents  comparatively 
little  difficulty,  and  a  downward  course  of  injudicious  pay- 
ment of  supposed  profit  out  of  capital  may  be  stayed. 
They  would  thus  be  enabled  not  only  to  ascertain  satisfac- 
torily, from  time  to  time,  the  precise  value  of  the  unad- 
vanced  shares,  but  also  to  determine  the  probable  duration 
of  the  borrowers'  mortgage  repayments ;  a  point  in  itself  of 
vital  importance  to  that  responsible  class  of  members. 


BALANCE  SHEETS. 

No.  1. 

Extract  from  the  first  report  of  the Society 

Shares,  £120  ;  monthly  subscriptions,  10s.  per  share : 
"  The  directors  have  to  congratulate  the  members  on  the 
success  which  has  attended  the  operations  of  the  society 
during  the  past  year — a  success  which  verifies  the  correct- 
ness of  the  prospectus  issued  at  its  formation. 

"  The  balance  sheet  shows  the  superior  advantage  of 
building  societies  over  other  modes  of  investment ;  for  if  the 
amount  received  had  been  placed,  say  in  a  savings  bank,  the 
profit  would  have  been  about  £43,  or  Is.  104d.  per  share  ; 
while,  by  the  legitimate  operations  of  the  society,  the  profit 
secured  has  amounted  to  £2,738  18s.  8d.,  or  £6  0s.  9-kl.  on 
the  £6  per  share  paid ;  making  the  present  value  £12  0s. 
9|d." 

Copy  of  the  balance  sheet  annexed  to  the  report,  given 
verbatim : 
Dr. 

Entrance  money £70    2  6 

Subscriptions  in  advance 1     0  0 

Subscriptions  for  twelve  months 2,530  10  0 

Forfeited  shares 2    0  0 

Fines 12     1  0 

Transfer 9    5  0 

Postage 2  11  0 

Interest 21  12  10 

2,649    2    4 

1,016    5  0 

Premiums  (or  discount)  on  33  (£120)  shares, 

taken  up 

Premiums  on  12+  shares,  not  taken  up,  but  for 

which  the  society  has  funds 764  10    0 

2,680  15    0 


53-±  APPENDIX  I.  Cll.  VI. 

ARREARS. 

Subscriptions 190  10    0 

Fines 17  16    0 

Interest 2    0    0 

Postage 1     1     6 

211     7    6 

£5,541     4  10 

Cr. 

By  formation  expenses,  including  enrollment 

of  rules  and  deed  boxes £25  14  2 

Manager's  salary 50    0  0 

Postage 5  12  0 

81     6    2 

By  mortgage  property 480    0  0 

240    0  0 

"                "            240    0  0 

"         "                "            2,040    0  0 

"         "                "            960    0  0 

3,960    0    0 

By  arrears  of  subscription £211    7    6 

Premiums 764  10    0 

Casb  at  bankers 524    0  10 

Cash  in  manager's  hands 0    0    4 

1,499  18    8 

5.459  18    8 

£5,541     4  10 

To  balance   in   favor  of  the  society 

brougbt  down £5,459  18    8 

Deduct  subscriptions  on  453^  shares, 

at  £6  per  share 2,721     0    0 

Net  profit  realized £2,738  18    8  to  £6    0  9i  p.  share 

Cash  paid 6    0  0 

The  present  value  of  each  share £12    0  9£ 

The  directors  in  the  above  congratulate  the  members  on 
the  success  of  the  society,  which  they  affirm  is  manifested 
by  the  profit,  I'o  its.  Did.  per  share,  realized  in  one  year 
beyond  the  I'O  year's  subscription  paid,  a  result  equivalent 
to  more  than  loo  per  cent,  interest  for  the  money. 

This  statement  is,  however,  not  correct;  and  the  error 
arises  from  the  whole  nominal  a/mount  of  the  33  advanced 
shares,  or  £3,960,  being  entered  to  the  Cr.  as  having  been 
lenl  in  mortgage,  whereas  in  reality  the  difference,  £2,043 
L5s.  Od.  (between  63,960  and  the  discov/nt  or  premiums, 
61,916  5s.  0d.,  given  by  the  borrowers  for  the  loan),  is  all 
that  has  been  advanced.  Moreover,  the  item  £764  10s.  0d., 
respecting  the  shares  not  taken  up,  but  for  which  premiums 
have  nominally  been  given,  has  obviously  nothing  to  do 


Art.  102.  ON    BENEFIT    BUILDING    SOCIETIES.  535 

with  the  business  of  the  past  year,  and  ought  not  have  ap- 
peared in  the  balance  sheet. 

These  conditions  change  the  result.     The  following  is  a 

copy  of  the  preceding  balance  sheet,  arranged  as  it  should  be, 

viz.,  by  placing  only  the  money  actually  received  or  due  for 

arrears  on  the  one  side,  and  money  actually  paid on  the  other : 

Dr. 

Entrance  money £70    2    6 

Subscriptions  in  advance  1    0    0 

Subscriptions  for  twelve  months 2,530  10    0 

Forfeited  shares 2    0    0 

Fines 12    1     0 

Transfers 9    5    0 

Postage  (received  from  members) 211     0 

Interest 21  12  10 

2,649    2    4 


ARREARS. 

Subscription 190  10  0 

Fines    17  16  0 

Interest 2    0  0 

Postage 1    1  6 


211     7    6 
£2,860    9  10 


Cr. 
By  formation  expenses,  including  enrollment 

of  rules  and  deed  boxes £25  14    2 

Manager's  salary 50    0    0 

Postage  (year's  expense  to  the  society) 5  12    0 


By  33  shares  taken  up,  value  at  £120  each 3,960    0    0 

Less  the  discount  (or  premiums)  1,916    5    0 


81    6    2 


By  arrears  of  subscription £21 1     7 

Cash  at  bankers 524    0  10 

Cash  in  manager's  hands 0    0    4 


2,043  15    0 


735    8    8 


2,779  3    8 

£2,860  9  10 

To  balance  in  favor  of  the  society  brought  down £2,779  3    8 

Deduct  one  year's  subscrijitions  on  453^  shares,  at  £6  per 

share,  and  the  £1  in  advance 2,722  0    0 


Difference £57    3    8 

"Which,  divided  among  the  number  of  investors,  shares,  or 
those  which  have  not  been  advanced,  will  give  the  dividend 
apparently  realized  per  share  for  the  past  year. 

But  the  number  of  unadvanced  shares  is  453  14-  less  33, 
or  420  1,  and  £57  3s.  8d.  divided  by  420  |  equals  2s.  5d. 
nearly,  Avhich  is  the  result  of  the  past  year's  operations  of 
this  building  society,  as  far  as  the  above  debtor  and  creditor 


536  appendix  i.  Ch.  VI. 

account  is  concerned,  and  entitles  the  investors  to  receive  2s. 
5d.  per  share  at  its  termination,  in  addition  to  the  £6  paid 
by  each. 

The  true  value  of  each  share  can  only  be  ascertained  by 
the  method  described  in  the  preceding  pages,  in  which 
would  enter  the  various  considerations  deduced  from  the 
particular  nature  of  the  society. 

No.    2. 
The Mutual  Association. 

Original  entrance  fee,  2s.  6d.  Monthly  subscriptions, 
10s.     Redemption,  4s.  per  share  of  £120  each. 

In  the  third  annual  report  of  this  society,  the  directors 
state  that  85-j  shares  have  been  advanced  during  the  last 
year,  which,  added  to  those  in  the  two  previous  years,  make 
a  total  of  261i  shares,  on  account  of  which  securities 
have  been  lodged  with  the  society. 

"  Since  the  auditing  of  the  accounts,  5-J  shares,  not  in- 
cluded in  that  number,  have  been  further  advanced,  which 
will  make  267  out  of  635  shares  subscribed  for  ;  and  the 
directors  are  under  engagements  to  advance  20  shares  out 
of  the  fourth  year's  capital." 

"  The  present  entrance  fee  upon  new  and  additional  shares 
is  £6  ;  but  upon  shares  being  taken  to  complete  a  purchase  it 
is  only  £2  2s.  0d.,  at  which  sum  it  was  agreed  they  should  con- 
tinue until  after  the  shareholders'  meeting  in  January  last." 

"  The  minimum  premium  or  discount  upon  purchased 
shares  has  been  fixed  by  the  directors  at  £55  per  share  for 
the  fourth  year. 

Summary  of  the  Financial  Statements  as  Appended  to  the  Report  ; 
General  Account  for  the  Third  Year. 

Dr. 

To  cash  as  per  last  account £  8329  17  1 

Subscriptions,  third  year 3650  16  6 

1  Interest,  entrance  fees,  fines,  rules,  transfers,  etc 590    0  7 

Forfeit  on  purchased  shares 60    0  0 

1  Arrears  of  subscriptions,  fines,  interest,  etc 100  16  0 

Cash  advanced  as  a  loan 4085    0  0 

Premiums  as  per  last  report 10626  19  5 

Premium,  third  year 4938  17  6 

£82,882  7  1 


l  The  practice  of  throwing  B6V-  is  unfair,  and  may  justly  become 

eral  items  together  to  accounl   for  the    subject     of    animadversion 

o  large  a  Bum  as  £500,  as  the  third  among  the  shareholders, 
line  of  t  he  above  debtor  accounl , 


Art.  102.         ON   BENEFIT   BUILDING    SOCIETIES.  537 

Cr. 

Expenses,  first  and  second  year 204  113 

Interest  on  loans  (2  years) 65    4  0 

176  shares  advanced,  first  and  second  year 21120    0  0 

851  ditto,  third  year 10260    0  0 

Management    Expenses   third  year 77  18  2 

Interest  on  loans 183    4  4 

Ground  rent  and  insurance 11     12 

Arrears,  as  above 100  16  0 

Cash  with  bankers 358  12  2 


£32,382   7  1 

Profit  Account. 
•  Dr. 

Expenses  for  three  years 282    9  5 

Subscriptions,  ditto 11361     9  0 

Interest,  ground  rent  and  insurance 259    9  6 

Arrears 100  16  0 

Loans 4085    0  0 

Cash  with  bankers 359  12  2 

Profit  and  bonus  15933  11  0 

£32,382    7  1 

Cr. 
By  account  as  above £32,382    7  1 

£32,382    7  1 
Showing : 

Profit  and  bonus  brought  down,  divided  between  635 

shares  of  £120  each 25    2  0 

Subscriptions  paid 18    0  0 

Estimated  portion  of  each  share  cancelled  in  three  years    £43    2  0 


The  above  account  contains  various  errors,  and  the  items 
are  injudiciously  mingled  together.  The  profit  £15,933  lis. 
does  not  in  reality  exist,  as  it  is  in  great  measure  an  imag- 
inary advantage,  supposed  to  have  arisen  from  the  discount 
given  by  borrowers  on  their  shares,  and,  as  such,  ought  not 
to  have  appeared  in  the  balance  sheet. 

We  will  not  examine  what  would  be  found  to  be  the  ac- 
tual value  of  shares,  supposing  a  proper  calculation  made, 
but  simply  remark,  that  the  above  furnishes  ample  evidence 
of  the  deficiency  arising  from  the  expenses,  which  must 
exist  towards  the  epoch  of  a  society's  termination,  if  they 
so  considerably  diminish,  even  in  three  years,  the  interest 
realized  on  the  investor's  subscription  ;  for  the  receipts  from 
interest  and  fees,  including  the  forfeited  shares,  altogether 
only  amount  to  £650  0s.  Yd.,  of  which  £541  18s.  lid.  has 
been  absorbed  by  the  expenses,  leaving  £108  Is.  8d.  to  be 
divided  between  368  unadvanced  shares,  which  is  about  5s. 


538  appendix  i.  Ch.  Vi. 

lOd.  per  share,  and  is  all  the  interest  obtained  for  three 
years'  subscriptions  on  each. 
Such  a  result  speaks  for  itself. 

No.  3. 
The Society. 

Original  entrance  fee,  2s.  6d.  Present  one,  £1  per  share. 
Shares,  £120.  Monthly  subscriptions,  10s.  Redemption 
fee,  4s.  per  share. 

In  the  first  annual  report  the  directors  allude  to  the  suc- 
cess which  has  attended  the  progress  of  the  society  : — 

"  There  are  113  members  holding  2 Hi  shares,  and  the 
total  profits,  after  deducting  expenses,  amount  to  £1069 
17s.  9d.,  being  £5  Is.  2d.  per  share  ;  which,  added  to  the 
subscription  of  £6  paid  on  each  share,  shows  a  profit  of  £11 
Is.  2d.  to  be  the  progress  made  towards  the  realization  of 
each  share." 

The  following  are  abstracts  of  the  financial  statements  : — 

Dr.  Cash  Amount 

Subscriptions  on  shares £  1258  10  0 

Entrance  and  redemption  fees,  fines,  rules,  etc...  • 60  13  9 

£1319    3  9 

Cr. 

Expenses  ..." £66  14    9 

Advances  on  19i  shares £2,340    0    0 

Less  premiums  thereon 1,160    5    0 

1,233  15    0 

Balance  with  bankers 18  14    0 

£1,319    3    9 
Profit  Account. 
Dr. 

To  expenses £60  14    9 

Balance  or  profit  of  the  first  year 1,069  17    9 

£1,136  12  6 
Cr. 

Premiums  on  V.)\  shares £1,106    5  0 

Subscriptions  and  fines  in  arrears 11  13  6 

1.117  18     6 
Balance  in  banker's  hands. . .- 18  14    0 

£1,136  12  6 
Profits  brought  down  : 

61,069  17s.  9dM  divided  by  211*  shares,  gives £5    1  2 

Subscripj  ions  paid 6    0  0 

Actual  value  of  each  share £11    1    2 

The  above   result  is  fictitious  in  consequence  of  the  dis- 


Alt.  103.         ON   BENEFIT    BUILDING   SOCIETIES.  539 

count  or  premiums,  £1,100  5s.  0d.,  given  by  the  borrower 
on  the  nominal  value  of  their  shares,  being  entered  as  actual 
profit  or  cash  realized.  Instead  of  any  interest  having  been 
produced  by  the  last  year's  business,  we  find  that  the  ex- 
penses have  been  entrenched  on  the  receipts  from  subsc/'ij>- 
tions  : 

For  the  expenses  paid  amount  to £GG  14    9 

Less  fees,  fines,  etc.,  to  be  received  in  arrear GO  13    9 

Leaving  a  deficiency  of £6     1     0 

which,  divided  among  the  192  unadvanced  shares,  gives  a 
deficiency  of  about  T|  per  share. 


1  Art.  103.— Schedule  C. 

Form  of  Liabilities  and  Assets  Account. 

Dr. 

1.  Outstanding  accounts  unpaid,  viz £ 

£ 

2.  Loans  and  interest  thereon  due  by  the  society,  viz. .  £ 

£ 

3.  To  net  subscriptions  actually  received  upon 

shares  (now  actually  in  existence)  of  depositing  or 
(non-borrowing)  members,  from  the  of 

18     ,  to  the  18     £ 

4.  To  interest  due  thereon  up  to  this  date,  and  calcu- 

lated at  per  cent,  rate  of  interest  (being  the 
rate  obtained  from  the  borrowers,  or  that  prom- 
ised to  the  depositors  by  the  rules) £ 

5.  To  reserve  for  future  expenses  dur- 

ing years £ 

Total £ 

Cr. 

1.  By  cash  in  hand,  viz. : 

£...., 

£  

£ 

2.  Value  of  property  in  possession,  through  default,  if 

sold  to  produce  assets £ 

3.  Arrears  due  upon  existing  mortgages,  viz.: 

Repayment  subscriptions £ 

Fines  and  fees £ 

£ 

4.  2By  arrears  of  fines  and  fees  due  from  the  non- 

borrowers  £ 

1  Schedules  A  and  B  relate  to  the  general  business  of  the  society. 

2  The  arrears  of  subscriptions  due  from  non-borrowers  must  not 
be  taken  into  account,  as  the  society  is  only  made  debtor  to  them  for 
the  net  subscriptions  received. 


540 


APPENDIX    I. 


Ch.  VI. 


5.  Present  value  of  future  repayments  on  existing  mort- 
gages calculated  at        per  cent,  rate  of  interest. .  £. 


Total £. 


Balance £. 


The  above  has  been  prepared  by  me, ,  Chairman  ) 

or  Secretary,  this  of  18    ,  at  J 


Schedule  F. 

Return  to  be  made  for  the  purpose  of  a  valuation  of  the  amount  due 
in  respect  to  the  unadvanced  shares  in  force 18 . . 


z 

2 

u 

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O 

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SUBSCRIPTION. 

6 

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6 

Total 
amount  of 

subscripti'ns 
on   such 
shares  to 
date  inserted 
as  if 
regularly- 
kept  up. 
Arrears 
being 
inserted  in 
column  g. 

Addition  to 

present 

liability  in 

respect  to 

ultimate 

realization. 

Remarks. 

RULES  FOR  A 

PERMANENT  BENEFIT  BUILDING  SOCIETY. 


CONSTITUTION  OF  THE  SOCIETY. 


I. — NAME    AND    PLACE    OF    BUSINESS. 

This  society  will  be  called  the  "  Permanent 

Building  Society,"  and  is  established  in  conformity  with  the 
provisions,  and  under  the  authority  and  sanction,  of  the 
Act  of  Parliament  6  and  7  William  IV.,  cap.  32.  The  gen- 
eral business  thereof  shall  be  held  and  conducted  at 

,  in  the  county  of  ,  or  at  such  other 

place  to  which  the  place  of  business  is  legally  removed,  as 
the  directors  from  time  to  time  appoint. 

II. —  OBJECTS. 

The  objects  of  this  society  are  to  raise  a  fund  to  enable 
any  member  to  obtain  interest  on  the  subscription  payable 
by  him  on  unadvanced  shares ;  or  to  receive  an  advance  in 
full  of  his  share  or  shares  therein,  for  the  purpose  of 
erecting  or  purchasing  a  dwelling-house  or  houses,  or  other 
real  or  leasehold  estate  in  any  part  of  ; 

and  to  lend  the  amount  or  value  of  a  share  or  shares  to 
members,  on  the  security  of  real  or  leasehold  estate ;  and 
generally  for  the  purposes  allowed  by  the  Act  6  and  7 
William  IV.,  cap.  32. 

III. — SUBSCRIPTION  MEETINGS. 

Art  1. — The  first  subscription  meeting  of  this  society 
shall  be  held  on  the  day  of  ,  18 

at  the  office  of  ,  and  a  subscription   meeting  of  the 

society  shall  be  held  on  the  in  every  month  at  the 

same  place,  or  at  such  other  place  as  the  director, 

from  time  to  time  appoint. 

Art.  2. — Such  subscription  meeting  shall  commence  at 
o'clock  precisely  in  the  evening,  and  shall  terminate 
at  ,  unless  any  special  matter  shall  arise,  in  which 

case  the  chairman  may  extend  the  time. 

541 


542  appendix  r. 

IV. ANNUAL  MEETINGS. 

Art.  1. — The  annual  meeting  of  the  society  shall  be  held 
in  the  month  of  ,  in  every  year,  at  such  time  and 

place  as  the  board  of  directors  appoint.  One  week's  notice, 
signed  by  the  secretary,  shall  be  given  to  each  member,  by 
circular  previous  to  the  meeting. 

Art.  2. — At  every  animal  meeting  of  the  society  a  gen- 
eral report  signed  by  three  directors  and  the  secretary, 
showing  the  transactions  of  the  society  during  the  past 
year,  its  present  condition  and  the  state  of  its  affairs  gener- 
ally, and  the  auditor's  report  and  balance  sheet,  shall  be  read 
to  the  society,  and  the  books  and  accounts,  and  the  state- 
ment of  accounts,  audited  and  approved  by  the  auditors, 
shall  be  produced  for  the  inspection  of  the  members.  A 
copy  of  such  statement  shall  be  supplied  to  every  member 
on  payment  of  a  penny.  At  the  annual  meetings  also,  new 
directors  and  auditors  shall  be  elected  by  ballot  in  the  place 
of  those  who  retire  from  office,  and  other  vacant  offices  (if 
any)  be  filled  up ;  and  the  present  state  and  future  prospects 
of  the  society  may  be  discussed,  and  such  other  business 
transacted  as  may  be  deemed  proper  and  expedient. 

\The  annual  meeting  should  he  fixed  at  such  a  time  as  would 
allow  two  or  three  months  for  the  preparation  and  auditing 
of  the  year's  accounts.] 

v. — directors'  meetings. 

Art.  1. — The  directors  shall  meet  as  often  as  necessary, 
at  such  place  and  time  as  they  determine  upon,  for  the  pur- 
pose of  conducting  the  business  of  the  society. 

Art.  2. — Three  elected  directors  shall  constitute  a  quorum, 
except  when  the  funds  of  the  society  are  advanced  to  bor- 
rowers, when  a  quorum  of  five  must  be  present. 

Art.  3. — The  chairman,  deputy-chairman,  any  two  of  the 
directors  or  the  secretary  may  call  a  meeting  of  the  directors 
at  any  time  upon  giving  two  clear  days'  notice  in  writing. 
In  case  the  requisite  number  of  directors  do  not  attend,  the 
secretary  may  adjourn  the  meeting  to  some  other  time. 

VI. SPECIAL  GENERAL  MEETINGS. 

Art.  1. — A  special  general  meeting  of  the  members  shall 
be  summoned  by  the  secretary  whenever  the  directors  re- 
quire him  to  do  so,  or  upon  his  receiving  a  requisition  in 
writing  signed  by  not,  Less  ihan  seven  members  of  the  society, 
stating  the  object  for  which  such  meeting  is  required. 

Art.  2.  -The  members  subscribing  such  requisition  shall 


RULES    FOR   BENEFIT   BUILDING    SOCIETIES  543 

deposit  with  the  secretary  such  a  sum  as  shall  be  deemed 
sufficient  to  pay  the  expenses  of  the  meeting,  shall  decide 
whether  the  said  expenses  shall  be  paid  out  of  the  funds  of 
the  society  or  out  of  the  sum  so  deposited  as  aforesaid. 

Art.  3. — Every  special  general  meeting  shall  be  sum- 
moned by  circular  posted  seven  clear  days  prior  to  the  day 
appointed  for  the  meeting,  and  such  circular  shall  state  the 
objects  for  which  the  meeting  is  to  be  held. 

Art.  4. — In  the  event  of  the  secretary  neglecting  to  sum- 
mon a  special  general  meeting  in  manner  aforesaid,  he  shall 
be  fined  one  pound  ;  and  in  case  of  such  neglect,  the  chair- 
man, deputy-chairman,  or  any  two  directors,  or  the  members 
signing  the  requisition,  may  summon  such  special  general 
meeting  by  circular  in  manner  aforesaid. 

Art.  5. — No  other  business  shall  be  transacted  at  any 
special  general  meeting  than  that  stated  in  the  circular  by 
which  such  meeting  is  summoned. 

vii. — adjournment  of  meetings. 

Any  meeting  of  the  members  or  of  the  directors  may,  by 
a  resolution  duly  carried,  be  adjourned  or  removed  from  one 
time  or  place  to  another,  or  any  number  of  other  times  or 
places  ;  and  every  meeting  by  adjournment  or  removal,  shall 
be  deemed  a  continuation  of  the  original  meeting-. 

VIII. NOTICES. 

Art.  1. — All  general  notices  to  members  (except  where 
otherwise  directed  by  these  rules),  shall  from  time  to  time 
be  affixed  in  some  conspicuous  place  in  the  subscription 
room  for  the  time  being ;  and,  unless  when  the  directors 
think  it  necessary,  or  the  rules  require  that  circulars  should 
be  sent  to  each  member  of  the  society,  all  notices  so  affixed 
shall  be  considered  sufficient  and  duly  served. 

Art.  2. — In  no  case  shall  the  proceedings  of  any  meeting, 
whether  of  the  directors  or  members,  be  void  or  voidable 
merely  on  account  of  the  omission  to  give,  or  of  any  defect 
in,  the  notice  required  by  these  rules,  unless  an  objection  on 
such  grounds  be  taken  previously  to  entering  on  the  busi- 
ness of  the  meeting. 

IX. — VOTING. 

Every  question  submitted  to  any  meeting  of  the  directors 
or  members,  shall  be  decided  by  the  votes  of  the  majority 
of  those  present  entitled  to  vote.  Such  votes  shall  be  first 
taken  by  the  show  of  hands,  upon  which  the  decision  of  the 
chairman  of  such  meeting  shall  be  final,  unless  a  scrutiny 


54-1  APPENDIX   I. 

be  demanded,  in  which  case  it  shall  be  forthwith  taken 
by  ballot ;  and  then  every  member  qualified  to  vote,  whose 
subscriptions  are  not  in  arrear,  shall  have  one  vote  (or,  one 
vote  for  every  shares  held  by  him,  provided  that  no 

member  shall  have  more  than  votes  in  the  whole), 

and  in  either  case  if  there  be  an  equality  of  votes,  the  chair- 
man shall  give  the  casting  vote  in  addition  to  his  vote  as  a 
member.  No  member  shall  be  entitled  to  attend  any  meet- 
ing of  the  society,  or  to  vote  on  any  question,  without  pro- 
ducing his  certificate  of  shares  if  required  so  to  do  by  any  of 
the  directors,  nor  until  he  has  been  three  months  a  member 
of  the  society,  and  has  duly  paid  his  subscriptions  for 
that  period.  JSTo  member  or  officer  of  this  society  shall  be 
allowed  to  attend  during  the  discussion  of,  or  to  vote  on, 
any  question  affecting  his  individual  interest  or  conduct. 

X. — ARBITRATION. 

Art.  1 . — At  the  first  meeting  of  the  society,  after  these 
rules  are  certified,  five  arbitrators  shall  be  appointed,  none 
of  them  being  interested,  directly  or  indirectly,  in  the  funds 
of  the  society.  In  case  of  dispute,  the  names  of  the  arbi- 
trators shall  be  written  on  pieces  of  paper  and  placed  out  of 
view  in  a  box ;  and  the  three  whose  names  are  first  drawn 
out  by  the  complaining  party,  or  by  some  one  appointed  by 
him,  shall  be  the  arbitrators  to  decide  the  matter  in  differ- 
ence, and  their  decision  shall  be  final. 

Art.  2. — Every  member  requiring  a  reference  to  arbitra- 
tion shall  deposit  with  the  society  one  pound  sterling,  and 
sign  an  undertaking  to  abide  the  result  of  the  reference. 
The  arbitrators  may  direct  the  expenses  of  the  reference,  or 
any  part  thereof,  to  be  paid  by  such  member. 

A  bt.  3. — If  any  arbitrator  die,  resign  the  office,  or  refuse 
or  become  incapable  to  act,  the  society  at  its  next  meeting 
shall  appoint  another  in  his  place. 

I.       ALTERATION,    ADDITION,    AND    CONSTRUCTION   OF    RULES. 

A  bt.  1. — None  of  the  rules  of  this  society  shall  be  repealed 
altered,  or  added  to,  unless  at  a  special  general  meeting  of 
the  members  convened  for  the  purpose  pursuant  to  Rule  VI. 
The  circular  convening  the  mee1  ing  shall  contain  the  exact 
alteral  ions  and  addil  ions  proposed,  and  no  repeal,  alteration 
or  addition  shall  be  made  but  \v  it  h  the  concurrence  of  three- 
fourths  of  the  members  present  nt  the,  special  general  meet- 
in  <_••.  Any  amendments  relating  t<>  the  particular  rule  to  be 
altered  or  added  to  may  be  proposed  ;  but  no  rule  not  men- 


RULES    FOR   BENEFIT    BUILDING   SOCIETIES.  545 

tioned  in  such  requisition,  shall  be  in  any  respect  altered  or 
repealed,  except  so  far  as  the  same  may  relate  to  the  sub- 
ject-matter of  any  rule  so  mentioned  in  the  requisition. 
All  alterations  in  or  additions  to  these  rules,  shall  be  duly 
enrolled  and  certified. 

Art.  2. — In  the  construction  of  these  rules,  the  word 
"  share  "  shall  apply  as  well  to  a  fraction  of  a  share  as  to  a 
whole  share;  the  word  "month"  shall  be  held  to  be  a 
calendar  month  ;  the  word  "  year  "  shall  mean  the  society's 
year,  and  every  such  year  shall  be  taken  to  expire  with  the 
day  of  ;  the  word  "  board,"  or  directors, 

shall  mean  the  board  of  directors  for  the  time  being.  The 
term  "  repayment  subscription  "  shall  be  held  to  mean  the 
sums  or  subscriptions  periodically  paid  by  members  in  dis- 
charge of  their  advanced  shares ;  and  whenever  any  word 
importing  the  singular  number  or  the  masculine  gender 
only,  is  used,  it  shall  be  held  to  include  and  apply  to  the 
plural  number  or  feminine  gender,  as  the  case  may  be,  and 
vice  versa,  unless  there  be  something  in  the  subject  or  con- 
text repugnant  to  such  constructions. 

Art.  3. — If  any  question  or  dispute  arise  on  the  construc- 
tion or  meaning  of  any  of  the  rules  of  the  society,  such  ques- 
tion or  dispute  shall  be  referred  to  the  solicitors  of  the  soci- 
ety, whose  decision  shall  be  final,  except  reference  is  made 
to  arbitration ;  and  such  decision  shall  be  put  into  writing, 
and  deposited  with  the  secretary  if  required  by  the  directors. 

XII. EXPENSE    AND    CONTINGENT    FUND. 

Art.  1. — Every  member,  whose  shares  are  not  fully  real- 
ized, shall  pay  quarterly,  in  addition  to  his  subscription  on 
unadvanced  or  advanced  shares,  the  sums  of  per 

share,  as  a  contribution  towards  a  separate  fund  to  be  called 
"  the  expense  and  contingent  fund."  In  case  of  non-pay- 
ment, the  same  may  be  charged  upon  the  first  subsequent 
payments  of  the  member  becoming  due  for  his  subscriptions 
on  his  shares,  and  deducted  from  the  same,  or  treated,  if  not 
paid,  as  subscriptions  in  arrear.  Where  a  member  pays  up 
the  whole,  or  any  portion  of  his  shares  in  advance,  and  re- 
ceives discount  thereon,  the  expense  of  quarterage  for  the 
whole  of  the  time  which  it  would  ordinarily  take  up  his 
share  in  full  shall  still  be  payable,  and,  if  not  paid,  treated  as 
a  subscription  in  arrear,  and  as  such  be  liable  to  the  fines 
set  forth  in  Kule  XLIII. 

Art.  2. — All  fines,  contributions  and  fees  whatsoever 
mentioned  in  these  rules,  except  remuneration  fees  payable 
to  the  officers,  shall  be  passed  to  the  expense  and  contingent 
35 


546  APPENDIX   I. 

fund ;  and  so  also  shall  a  deduction  at  £  per  cent, 

per  annum,  from  the  amount  of  income  derived  from  the 
repayment  subscriptions  of  advanced  shares. 

Akt.  3. — The  general  expenses  of  management  and  of 
periodical  valuations  and  estimates,  and  any  losses  that  may 
be  incurred  by  the  societ}^,  shall  be  defrayed  out  of  the  ex- 
pense and  contingent  fund  ;  but  if  such  expenses  and  losses 
be  greater  than  the  amount  of  such  expense  and  contingent 
fund,  the  excess  shall  be  borne  rateably  per  cent,  by  the 
holders  of  unadvanced  shares  not  realized,  in  proportion  to 
the  number  of  years  the  same  shall  have  been  in  force ;  but 
not  by  those  who  leave  their  realized  shares  as  a  deposit  in 
the  society's  hands,  and  receive  interest  for  the  use  thereof, 
pursuant  to  Rule  XXVIII.  The  rate  of  contribution  per 
share  shall  be  settled  by  the  consulting  actuary,  so  that  each 
share  may  be  debited  with  the  same,  but  the  payment  there- 
of may  be  deferred  until  the  withdrawal  or  realization  of 
the  share. 

Art.  -t. — At  the  end  of  the  first  three  years,  and  every 
subsequent  three  years,  a  valuation  of  the  liabilities  and  as- 
sets of  the  society,  and  of  the  expense  and  contingent  fund 
shall  be  made  by  the  consulting  actuary  ;  and  if,  after  all 
losses  and  expenses  shall  have  been  satisfied,  and  bonus 
under  clause  32  set  aside  for  the  borrowing  members,  any 
surplus  profit  remain,  arising  from  excess  of  assets  over 
liabilities,  the  same  shall  be  appropriated  thus : — 

to  a  permanent  guarantee  fund,  to  meet  future  con- 
tingencies ;  and  the  remaining  among  the  holders  of  all 
unadvanced  shares  which  are  not  yet  realized  nor  in  arrear 
for  subscriptions  and  fines,  in  proportion  to  the  number  and 
amount  of  the  shares  they  hold,  and  to  the  number  of  years 
such  shares  respectively  have  been  in  force,  such  bonus  shall 
be  paid  when  the  shares  are  fully  realized.  No  portion  of 
the  bonus  shall  be  paid  to  unadvanced  shareholders  with- 
drawing previously  to  the  realization  of  their  shares,  unless 
the  withdrawal  be  compulsory,  pursuant  to  Rule  XXIX.1 

Art.  5. — After  the  society  has  been  nine  years  in  exist- 
ence, the  members  at  a  special  general  meeting  summoned 
for  the  purpose,  with  the  advice  of  the  consulting  actuary, 
may  alter  the  above  proportion  in  the  division  of  surplus 
profits;  and  increase  or  diminish  the  amount  of  the  per- 
manent guarantee  fund. 

1  In    making   a   valuation,    care  mortgages,  as  the  result  would  be 

should  be  taken  not  to  use  a  with-  doubly   erroneous:    the  liabilities 

drawal  table  t<>  measure  the  liabil-  would  be  underestimated,  and  as- 

itv  on   unadvanced  shares,  nor  a,  sets  would  be  overvalued, 
redemption    table    to    value    the 


EULES   FOE   BENEFIT   BUILDING   SOCIETIES.  547 


MEMBERS. 

XIII. — ADMISSION  OF   MEMBERS. 

Article  1. — Members  may  be  admitted  into  this  society  at 
any  time,  on  making  application  to  the  directors  in  the  form 
(A)  annexed  to  these  rules. 

Art.  2. — Every  member,  at  the  time  of  entering  into  the 
society,  shall  be  furnished  with  a  pass-book,  containing  a 
copy  of  these  rules  (for  which  he  shall  pay  ),  in  which 

book  his  account  with  the  society  shall,  at  the  termination 
of  every  year,  be  made  up  by  the  secretary. 

XIV. LOST    PASS-BOOK. 

Art.  1. — Any  person  losing  his  pass-book  will  be  supplied 
with  another  containing  a  copy  of  his  account,  on  payment 
of  a  fine  of  over  and  above  the  cost  of  the  book. 

Art.  2. — If  any  person  other  than  the  member  to  whom 
it  belongs  shall  produce  any  pass-book,  and  represent  him- 
self to  be  the  member  therein  named,  and  shall  thereupon 
withdraw  or  receive  any  money  in  respect  of  the  account 
contained  in  the  pass-book,  neither  the  society  nor  any  of 
its  officers  shall  be  held  responsible  for  the  same,  unless 
notice  in  writing  of  the  loss  of  the  pass-book  shall  have  pre- 
viously been  given  to  the  secretary. 

XV. PASS-BOOKS  TO  BE  LEFT  FOR  AUDIT. 

Each  member  shall  leave  his  pass-book  at  the  offices  of 
the  society  or  of  one  of  its  agents,  on  or  before  the 
day  of  in  each  year,  for  the  purpose  of  examination 

by  the  auditors,  or  in  default  thereof  shall  be  fined 
There  shall  be  delivered  to  him  a  receipt  for  his  book,  which 
we  shall  return  on  applying  for  the  same  at  the  annual 
meeting. 

XVI. QUALIFICATIONS    OF   MEMBERS. 

Art.  1. — The  holder  of  a  share  or  part  of  a  share  (unad- 
vanced  or  advanced)  shall  be  deemed  a  member  of  this 
society. 

Art.  2. — At  any  time  within,  after  the  payment 

of  the  entrance  fee  by  any  person,  the  directors  may  decline 
admitting  or  continuing  such  person  as  a  member;  and 
notice  thereof  shall  be  given  in  writing  to  such  person,  and 
the  entrance  fee,  and  any  other  payment  made  to  the  society 


548  APPENDIX   I. 

by  him,  shall  be  returned  or  tendered  to  him  by  the  secre- 
tary. Upon  such  notice  being  given,  and  payment  or  tender 
made  to  such  person,  he  shall  cease  to  be  a  member  of  the 
society,  and  the  secretary  shall  strike  out  his  name  from  the 
register  book  of  members. 

Art.  3. — All  shares  on  which  the  entrance  fee  only  shall 
have  been  paid,  shall  be  forfeited  on  the  monthly 

subscription  meeting  next  after  such  shares  have  been  taken. 

XVII. REGISTERS    OF   MEMBERS,  SHARES,  ETC. 

Art.  1. — A  register  shall  be  kept,  on  which  shall  be  entered 
the  Christian  and  surname,  occupation  and  place  of  abode, 
of  every  member  of  the  society ;  and  as  often  as  any  mem- 
ber shall  change  his  place  of  abode,  he  shall  within 
give  notice  thereof  to  the  secretary  or  forfeit  for 

neglect.  On  such  notice  being  given  the  alteration  shall  be 
entered  in  the  register  by  the  secretary,  and  all  notice  by 
circular  shall  be  deemed  duly  given  by  the  secretary  by  put- 
ting the  same  in  the  post  office,  at  ,  addressed  to 
the  member  according  to  the  last  entry  on  the  register. 

Art.  2. — A  register  of  every  member  of  the  society  shall 
be  also  kept,  in  which  shall  be  entered  the  number  and 
numerical  order  of  the  shares  held  by  him,  the  date  of 
entry,  transfer  or  cancelling  of  the  same,  and  any  other 
details  deemed  necessary. 

XVIII. MEMBERS  MAT  INSPECT   BOOKS. 

Any  member  may  inspect  his  account  in  the  society's 
books  during  the  time  the  books  are  open  for  the  receipt  of 
subscriptions,  and  any  member  may  have  a  copy  of  his  ac- 
count on  applying  to  the  secretary,  after  days' pre- 
vious notice  in  writing  for  that  purpose,  and  the  payment 
of 

XIX. — MARRIAGE  OF  FEMALE  MEMBERS. 

Any  female  member  who  may  marry,  shall  give  notice  in 
writing  thereof  to  the  secretary,  and  of  the  Christian  and 
surname,  place  of  abode,  and  profession  or  business  of  her 
husband  ;  and  thereupon  the  shares  of  such  female  members 
shall  be  duly  transferred  into  the  name  of  her  husband. 
Upon  such  transfer,  the  same  fees  and  lines  shall  be  payable 
as  in  other  cases  of  transfer  of  shares.  In  case  such  notice 
as  aforesaid  shall  not  be  given  within  one  month  after  the 
marriage,  ;i  fine  of  per  share  shall  be  paid  by  such 

member  to  the  society  and  ;i  furl  her  fine  of  pershare 

For  every  additional   month  which  shall  elapse  before  the 
shares  are  duly  transferred  to  the  husband. 


RULES   FOR    BENEFIT    BUILDING    SOCIETIES.  549 


XX. BANKRUPTCY    OF    A    MEMBER. 

On  any  member  becoming  bankrupt,  or  making  an  assign- 
ment for  the  benefit  of  his  creditors,  or  having  any  judgment 
or  execution  against  his  estate  and  effects,  or  if  his  shares  or 
any  of  them  shall  be  charged  in  favor  of  any  person,  by  or 
through  a  judge's  order,  or  otherwise,  the  assignee,  execution 
creditor  or  person  obtaining  such  charge,  shall  not  by  reason 
thereof  become  a  member  of  the  society,  but  shall  be  at 
liberty  to  sell  or  transfer  the  share  or  shares  or  interest  of 
such  member  to  any  other  person  duly  admitted  a  member 
of  the  society.  Such  shares  shall,  nevertheless,  be  subject 
to  all  the  rules  and  regulations  of  the  society  to  which  they 
would  have  been  liable  in  the  hands  of  the  member  holding 
the  same. 

XXI. LUNACY    OF    A    MEMBER. 

Art.  1. — In  the  event  of  any  member  becoming  lunatic  or 
of  unsound  mind,  no  fines  shall,  during  such  lunacy  or  un- 
soundness of  mind,  be  payable  for  arrears  of  subscription, 
or  otherwise,  on  share  or  shares  he  may  hold,  but  the 
committee  or  guardian  of  such  afflicted  member,  legally  ap- 
pointed, shall  be  entitled  to  withdraw  the  amount  payable 
to  such  member  in  the  manner  prescribed  in  the  rules  for 
withdrawals. 

Art.  2. — In  case  no  guardian  or  committee  be  legally  ap- 
pointed, the  board  may  direct  payment  of  the  amount  to 
which  such  member  would  have  been  entitled  on  with- 
drawal from  the  society,  to  the  person  having  the  care  of 
such  member,  at  the  expiration  of  three  months  after  a 
request  in  writing,  signed  by  such  person,  has  been  left  with 
the  secretary,  upon  evidence  satisfactory  to  the  directors  of 
the  lunacy  or  unsoundness  of  mind  of  the  member  being 
given,  and  upon  such  person  giving  such  indemnity  against 
all  claims  in  respect  of  such  shares  as  the  directors  think  fit 
to  require  for  the  security  of  the  society. 

Art.  3. — In  case  the  afflicted  member  has  received  an  ad- 
vance of  shares,  the  committee  or  guardian  having  the  care 
of  such  member  may  dispose  of  the  mortgage  property,  or 
redeem  the  mortgage,  and  exercise  any  other  privileges 
pertaining  to  the  shares ;  and  in  such  case  the  transfer  or  re- 
demption fee  chargeable  by  the  society  under  these  rules 
shall  be  reduced  one-half ;  provided,  nevertheless,  that,  on 
application  being  made  by  the  secretaiy  in  writing  to  some 
relative  or  interested  friend  of  the  afflicted  member  to  see 
to  the  due  payments  of  his  subscriptions  and  other  pay- 
ments, the  full  amount  of  all  fees  and  fines  that  may  there- 
after become  due  according  to  these  rules  may  be  enforced, 


550  APPENDIX  I. 

and  the  directors  may  then  take  the  ordinary  steps  for  the 
recovery  of  all  arrear  payments  whatsoever,  which  may 
be  then  due  in  respect  of  the  shares  or  mortgaged  property 
of  the  afflicted  member,  and  if  requisite  may  proceed  to  a 
sale  of  such  mortgaged  property. 

XXII. DEATH    OF    A    MEMBER. 

Art.  1. — Upon  the  death  of  the  society  holding  shares, 
upon  which  no  advance  shall  have  been  made,  his  legal 
personal  representative  shall,  within  one  month  afterwards, 
give  notice  thereof  in  writing  to  the  secretary,  stating  the 
Christian  and  surname,  place  of  abode,  and  profession  or 
business  of  such  personal  representative,  or  of  any  other 
person  or  persons  entitled  to  the  shares  of  such  deceased 
member,  or  in  default  thereof  shall  pay  a  fine  of  and 

upon  such  notice  being  given,  the  shares  of  such  deceased 
member  shall  be  transferred  into  the  name  of  such  personal 
representative,  or  other  person  or  persons,  and  the  same 
fees  shall  be  payable  upon  such  transfer  as  upon  any  other 
transfer  of  shares.  In  case  such  shares,  or  any  of  them,  shall 
not  be  transferred  as  aforesaid,  at  or  before  the  third 
monthly  subscription  meeting  next  after  the  death  of  such 
member,  a  fine  of  shall  be  paid  to  the  society 

for  every  monthly  subscription  meeting  which  will  elapse 
before  such  transfer  shall  have  been  made. 

Art.  2. — When  the  shares  of  the  deceased  member  are 
transferred  into  the  names  of  more  than  one  person,  the 
eldest  in  age  only  shall  be  entitled  to  vote. 

A  bt.  3. — If  no  probate  of  will  or  letters  of  administration 
be  produced  to  the  directors  at  any  meeting  within  three 
months  after  the  decease  of  any  member,  the  directors  may, 
at  or  after  the  fourth  monthly  subscription  meeting  after 
such  decease,  pay  or  distribute  the  subscriptions  paid  by 
the  said  member  to  his  widow  or  children,  or  next  of  kin, 
with  any  interest  which  may  have  been  added  thereto,  pur- 
suant to  these  rules,  provided  the  amount  do  not  exceed 
£20;  subject,  however,  to  the  same  conditions  as  affect 
members  giving  notice  of  withdrawal,  or  as  the  directors 
for  the  security  of  the  society  may  think  proper  to  require 
from  the  parties  receiving  the  money. 


SHAKES  AM)  SUBSCRIPTIONS. 

XXIII. —  I'NAWVANCKI)    SHAKES. 

Vltimate  Value. 
A  in  [OLE  1.— The  unadv.ineed  sharesshall  beof  the  ultimate 
Value  of  £  each,  realizable  by  a  monthly  payment  of 


RULES   FOR    BENEFIT   BUILDING   SOCIETIES.  551 

in  a  period  of  years,  and  a  month  in  a 

period  of  years,  and  also  of  such  other  amounts,  and 

realizable  in  such  periods  of  years,  and  in  consideration  of 
such  payments  or  subscriptions  as  the 

directors  from  time  to  time  deem  fit. 

Akt.  2. — Each  member  shall  pay  an  entrance  fee  of 
per  cent,  on  the  amount  of  his  shares  at  the  date  of  his  sub- 
scribing for  the  same,  and  the  subscription  per  share  fixed 
by  the  board  for  and  during  the  full  term  or  terms  in  which 
the  same  may  be  realizable. 

XXIV. RECEIPT    OF    SUBSCRIPTIONS. 

All  subscriptions  for  unadvanced  shares,  repayment  sub- 
scriptions, fines,  and  other  monies  whatsoever,  becoming 
due  and  payable  to  the  society,  shall  be  received  only  at  the 
usual  subscription  meetings.  All  moneys  so  received  at  such 
subscription  meetings  shall  be  paid  to  the  bankers  of  the 
society  for  the  time  being,  and  a  book  containing  the 
banker's  entries  of  money  so  paid,  or  the  banker's  receipt 
in  lieu  thereof,  shall  be  produced  at  the  next  meeting  of  the 
directors,  to  be  initialed  by  the  chairman,  as  duly  examined. 

XXV. CERTIFICATE    OF    SHARES. 

Each  member  upon  subscribing  for  a  share  or  shares  shall 
be  entitled  to  a  certificate  of  such  shares,  specifying  the 
number  and  amount  thereof  respectively,  signed  by  three 
directors,  and  countersigned  by  the  secretary,  which  certifi- 
cate shall  be  evidence  of  his  title  thereto. 

XXVI. PAYMENTS    IN    ADVANCE. 

The  directors  may  allow  interest,  by  way  of  discount,  on 
subscriptions  paid  in  advance  at  such  rate  (not 

exceeding        per  cent.),  as  they  deem  fit. 

XXVII. TRANSFER  OF  UNADVANCED  SHARES. 

Any  member  may  transfer  his  unadvanced  shares  to  any 
person  approved  by  the  board,  or  to  any  existing  member  of 
the  society,  on  payment  to  the  society  of  all  arrears,  fines, 
and  other  payments  then  due,  and  of  per  share  as  a 

transfer  fee.  ]STo  transfer  shall  be  valid  unless  made  in  the 
form  (B)  annexed  to  these  rules,  and  a  proper  record  of  all 
transfers  shall  be  made  in  a  book  to  be  kept  for  that  pur- 
pose by  the  secretary. 

XXVIII. WITHDRAWAL  OF  UNADVANCED  SHARES. 

Art.  1. — Any  member  may  withdraw  his  unadvanced 
shares  on  giving  one  month's  notice,  in  writing,  of  his  inten- 


552  APPENDIX   J. 

tion  to  do  so  to  the  secretary  at  any  subscription  meeting 
of  the  society,  and  leaving  his  pass  book  at  the  society's 
offices. 

Art.  2. — The  board  shall  have  full  power,  from  time  to 
time,  to  limit  the  number  of  shares  that  may  be  advanced  in 
one  month,  but  all  prior  application  for  an  advance  shall  have 
priority  over  notices  of  withdrawal. 

Akt.  3. — In  case  any  share  is  withdrawn,  on  which  the 
member  has  been  allowed  interest  for  payments  in  advance, 
the  directors  shall  deduct  a  proportionate  part  of  such  in- 
terest for  the  time  not  already  expired  (if  any)  in  respect  of 
which  interest  was  allowed. 

Akt.  4. — Part  of  a  share  may  be  withdrawn  and  the  re- 
mainder continue  in  force,  entitled  to  the  same  privileges, 
and  subject  to  the  same  conditions  as  the  original  share ;  in 
which  case  a  new  certificate  for  the  reduced  amount 
bearing  profits  from  the  original  date  of  the  whole  share) 
shall  be  issued.  In  like  manner  a  part  of  a  share  may  be 
transferred,  and  the  remainder  be  retained  by  the  original 
member.  Such  withdrawal  or  transfer  shall  be  subject,  how- 
ever, to  the  consent  of  the  board,  and  to  any  regulations 
they  ma}7  make  from  time  to  time  in  respect  thereto. 

Art.  5. — The  following  fees  shall  be  paid  upon  the  with- 
drawal of  unadvanced  shares,  viz  : —  in  the  pound  if 
the  share  be  withdrawn  during  the  first  year  after  it  shall 
have  been  issued,  and  in  the  pound  if  withdrawn 
during  any  subsequent  year. 

[The  amount  of  tin  withdrawal  fee  should  he  determined  by 
the  special  c'>  mi  instances  of  the  locality.] 

Akt.  6. — Shares  to  be  withdrawn  (not  wholly  subscribed 
for)  shall  be  paid  out  in  rotation  according  to  the  order  of 
the  applicants  on  a  list  kept  by  the  secretary  for  that  pur- 
pose ;  or  if  the  directors  should,  from  the  number  of  appli- 
cations for  withdrawal,  think  it  desirable,  then  in  such  man- 
ner that  each  member  may  receive  an  equal  proportion  of 
his  subscriptions  paid  in,  so  that  all  such  members  may  be 
simultaneously  accommodated  with  a  portion  of  their  shares. 
In  cast;  the  expenses  of  the  society,  and  any  loss  sustained  by 
it,  exceed  the  monies  appropriated  to  the  management  and 
contingent  fund,  all  withdrawn  shares  shall  be  chargeable 
with  a  due  proportion  (measured  by  number  and  amount)  of 
such  excess,  according  to  the  number  of  years  such  shares 
shall  have  been  in  Force;  and  this  rule  shall  equally  apply  to 
members  cancelling  their  unadvanced  shares  previously  to 
their  taking  a  loan  from  the  society. 

Aim.  7. —  In  case  of  the  death  or  insanity  of  a  member 
before  receiving  an  advance,  and   upon  application  of  the 


RULES    FOR    BENEFIT    BUILDING    SOCIETIES.  553 

wife,  widow,  or  representatives  of  such  member,  she  or  they 
shall  be  entitled  to  a  preference,  before  ordinary  members. 

Art.  8. — Next  after  payment  out  of  withdrawn  shares  of 
deceased  and  lunatic  members,  the  persons  holding  unad- 
vanced  shares  realized  by  subscription  for  the  term  selected, 
shall  have  the  preference,  and  shall,  unless  the  directors 
decide  otherwise,  be  paid  out  in  rotation,  according  to  the 
times  at  which  the  shares  become  realized,  subject,  however, 
to  the  aforesaid  deduction  for  excess  of  expenses  or  losses 
(if  any) ;  and  from  the  date  of  the  realization  until  such  pay- 
ment interest  payable  annually  at  a  rate  not  exceeding 
5  per  cent,  per  annum  shall  be  allowed  to  such  members,  on 
the  amounts  respectively  due  to  them. 

Art.  9. — Subject  to  the  provisions  aforesaid,  the  sums 
payable  on  withdrawn  shares,   realizable  in  years 

(upon  which  all  subscriptions  and  fines  shall  have  been  duly 
paid)  shall  be  according  to  the  following  table  :  and  where 
a  member  voluntarily  withdraws  his  shares  in  course  of  a 
year,  the  sum  set  down  in  the  tables  at  the  close  of  the  year 
previous  shall  be  payable,  with  interest  thereon,  and  also 
any  monthly  subscriptions  subsequently  paid  ;  and  so  in  pro- 
portion for  a  fractional  part  of  a  share. 

{Here  insert  Withdrawal  Tables.) 

The  amount  to  be  payable  on  the  withdrawal  of  shares, 
realizable  in  other  periods  of  years  (if  any),  shall  be  deter- 
mined from  time  to  time  by  the  consulting  actuary. 

[A  very  good  principle  to  adopt  in  the  constructions  of 
withdrawal  tables  is  that  of  an  increasing  rate  of  compound 
interest,  so  that  members  may  have  an  inducement  to  abstain 
from  withdrawing  in  the  prospect  of  an  increasing  advantage 
by  remaining  members.^ 

Art.  10. — In  every  case  of  a  member  withdrawing  from 
the  society,  all  fees  and  fines  due  by  him  shall  be  deducted 
from  the  amount  which  he  would  otherwise  be  entitled  to 
receive. 

Art.  11. — Shares  in  course  of  withdrawal  shall  be  subject 
to  such  other  conditions,  payments,  deductions  and  regula- 
tions as  the  directors  determine,  having  reference  to  the 
capital,  means,  liabilities  and  general  state  of  the  aifairsand 
funds  of  the  society,  and  the  directors  may  reduce  or  ab- 
solutely waive  the  payment  of  the  withdrawal  fees  provided 
for  by  clause  5  of  this  rule  or  may  suspend  the  requiring 
payment  of  such  withdrawal  fees  for  any  period  they  think 
expedient. 


554  APPENDIX  I. 

XXIX. — SURPLUS    FUNDS. 

Art.  1. — The  trustees  may,  from  time  to  time,  invest,  pur- 
suant to  10  Geo.  4,  c.  56,  s.  13,  any  sums  of  money  which 
the  exigencies  of  the  society  do  not  call  for  the  immediate 
application  or  expenditure  of.  In  case  a  larger  amount  of 
money  shall  be  at  any  time  unappropriated  and  not  applied 
for  to  meet  advances  or  other  claims  than  the  board  con- 
sider advisable  so  to  invest,  the  directors,  after  giving  notice 
of  at  least  fourteen  days  prior  to  a  monthly  meeting,  may 
cause  the  same  to  be  taken  by  the  investing  members  (not 
under  notice  of  withdrawal,  nor  having  received  an  advance), 
and  the  same  shall  be  at  once  wholly  withdrawn,  or  be  taken 
by  such  members  upon  the  security  of  mortgages  in  the 
usual  w&y. 

Art.  2. — In  case  any  member  shall  not  attend  to  receive 
the  same,  and  to  give  such  acknowledgment  of  his  share 
being  paid  off  as  the  board  may  require,  no  further  interest 
sh;ill  be  allowed  on  the  amount  standing  to  his  credit  in  the 
books  of  the  society. 

Art.  3. — In  balloting  for  compulsory  withdrawals  each 
share  shall  be  drawn  separately,  and  no  member  holding- 
more  than  one  share  shall  be  liable  to  compulsory  with- 
drawal of  more  than  one,  till  every  other  member  has  with- 
drawn one,  and  in  like  manner  if  further  compulsory  with- 
drawals be  necessary. 


ADVANCED   SHAKES. 

XXX. ADVANCES    OF    MONEY. 

Art.  1. — Whenever  the  money  in  hand  is,  in  the  opinion 
of  the  directors,  sufficient  for  the  purpose,  it  shall  be  em- 
ployed in  advancing  the  shares  of  those  members  whose 
subscriptions  are  not  in  arrear,  and  the  order  in  which  mem- 
bers become  entitled  to  advances  shall  from  time  to  time  be 
determined  by  sale,  the  bidding  to  be  by  ticket,  and  the 
highest  bidder  to  be  entitled  to  the  advance.  Such  sale  shall 
take  place  at  eight  o'clock  in  the  evening,  to  the  exclusion 
of  all  oilier  business.  In  case  there  be  no  bidding  for  the 
space  of  fifteen  minutes,  the  members  shall  be  entitled  to 
an  advance,  without  premium,  in  the  order  of  their  applying 
tor  I  he  same. 

Art.  '2.  The  paymentof  the  premium  or  premiums  which 
a  purchaser  shall  give  for  his  share  or  shares  may  be  secured 
to  the  society  by  the  mortgage  deed,  and  be  made  in  any  num- 
ber of  equal  monthly  instalments,  not  exceeding  to 


BULES   FOR   BENEFIT   BUILDING    SOCIETIES.  555 

commence  from  the  date  of  the  purchase,  and  the  purchaser 
shall  be  liable  to  the  same  fines  and  forfeitures  for  non-pay- 
ment of  such  instalments  as  are  provided  by  Rule  XL  1 1 1.,  in 
case  of  the  non-payment  of  monthly  repayment  subscriptions. 
Akt.  3. — The  advance  shall  be  for  terms  from  to 

years,  repayable  by  monthly  or  quarterly  contri 
tions,  covering  principal  and  interest,  at  the  rati  Iter 

specified,  or  at  such  other  rates  as  the  board,  acting  under 
the  advice  of  the  consulting-  actuary,  from  time  to  time 
direct. 

{Here  insert  the  Repayment  Table.) 

Art.  4. — Any  member  not  being  in  arrear  for  subscrip- 
tions or  fines  (and  having  made  payment  during  at  least 
three  months  on  his  shares),  shall  be  eligible  to  bid  or  apply 
for  an  advance,  not  exceeding  the  realizable  amount  of  his 
shares.  Every  application  must  be  made  in  writing  to  the 
secretary  in  the  form  (C)  appended  to  these  rules,  stating 
the  amount  desired.  Every  member  applying  for  an  ad  vance 
shall  receive  notice  of  all  subsequent  meetings  for  advance 
of  money,  until  declared  entitled  to  an  award. 

Art.  5. — No  member  will  be  allowed  to  receive  an  advance 
of  shares  exceeding  the  number  he  has  previously  subscribed 
for,  unless  he  pay  down  the  entrance  fees,  and  continue  to 
pay  half  the  subscriptions  on  the  whole  number  of  shares 
required,  from  the  date  of  his  being  placed  on  the  list. 

Art.  6. — Every  member  entitled  to  an  advance  shall  pay 
to  the  secretary  a  sufficient  deposit  to  cover  the  solicitor's 
and  surveyor's  fees,  in  the  event  of  the  title  or  value  of  the 
property  proving  insufficient  or  inadequate  as  a  security  ;  or 
of  his  otherwise  failing  to  complete  the  same. 

Art.  7. — Every  member  entitled  to  an  advance  shall, 
within  one  month  from  the  date  of  notice  forwarded  to  him 
through  the  post-office,  find  a  good  and  sufficient  security 
by  way  of  mortgage  for  the  same,  and  in  case  of  failure  he 
shall  be  allowed  a  further  period  of  one  month  to  complete 
the  same,  provided  he  pay  interest  on  the  advance,  at  the 
rate  of  percent,  per  annum,  to  commence  with  the  second 
month  so  allowed  him,  at  the  end  of  which  time  his  right  to 
such  advance  shall  be  forfeited  to  the  next  member  then  on 
the  list,  unless  he  consent  to  make  his  repayments  in  respect 
of  his  awarded  advance  from  that  date. 

Art.  8. — Every  member  entitled  to  an  advance  shall  fur- 
nish duplicate  particulars  of  the  property  proposed  as  secur- 
ity, on  a  form  to  be  given  him  by  the  secretary  ;  and,  the 
security  being  accepted  by  the  directors,  who  shall  have  been 
previously  satisfied  by  the  surveyor  and  solicitor  of  the  suffi- 


556  APPENDIX    I. 

ciency  of  the  security  offered,  and  all  other  preliminaries 
being  arranged,  the  money  agreed  to  be  advanced  shall  be 
paid  over  to  the  member.  In  case  the  money  is  applied  to 
the  purchase  of  land,  and  afterwards  to  erect  buildings 
thereon,  the  advance  shall  be  made  in  such  instalments  as 
the  surveyor  shall  advise  the  board  of  directors. 

Art.  9. — l>o  money  shall  be  advanced  by  way  of  a  second 
mortgage,  unless  the  prior  mortgage  be  to  the  society. 

Art.  10. — If  any  member  be  desirous  of  ascertaining  the 
amount  which  the  directors  would  be  willing  to  advance  on 
any  proposed  security,  in  the  event  of  his  entitling  himself 
to  receive  such  advance,  he  shall  give  written  notice  to  the 
secretary,  and  deposit  with  him  the  surveyor's  fee,  and  the 
surveyor  shall  thereupon  make  his  report  to  the  directors, 
if  required  by  them,  and  the  directors  shall  announce  to  the 
member  the  amount  they  consider  proper  to  be  advanced  on 
the  property  proposed  as  security. 

Art.  11. — When  an  advance  is  required  for  twelve  years, 
not  more  than  three-fourths  of  the  value  of  the  mortgaged 
property  shall  be  advanced  thereon,  nor  more  than  two- 
thirds  of  its  value,  when  the  advance  is  taken  for  any  longer 
period. 

\For  shorter  periods  it  will  be  for  the  directors,  on  the 
ad/vice  of  the  surveyor  and  solicitor,  to  decide  what  proportion 
of  the  value  of  the  property  shall  be  lent.  They  should  bear 
in  mind  that  the  risk  of  subsequent  deterioration  in  the  value 
of  a  security  increases  with  the  length  of  the  period  of  the 
mortgage.'] 

Art.  12. — Any  member  obtaining  an  advance  from  the 
society  may  continue  to  hold  his  unadvanced  shares  or  can- 
cel  the  same,  in  which  latter  case  the  amount  due  to  him 
under  the  rule  for  withdrawals  shall  be  returned  to  him  in 
cash. 

XXXI. EXPENSES  OF  SURVEY,  MORTGAGES,  ETC. 

The  expenses  of  inquiry  into  title  and  of  every  survey, 
valuation,  mortgage  and  supervision  by  the  surveyor  of  the 
society,  of  any  buildings  erected  upon  property  previously 
mortgaged  to  the  society,  and  all  expenses  connected  with 
the  security,  shall  be  borne  by  the  member  applying  for  or 
receiving  the  advance.  The  expenses  of  the  mortgage,  ex- 
cepting the  cost  of  stamps,  registration  and  other  moneys 
paid  out  of  pocket  at  the  time  by  the  solicitor  or  surveyor 
may  be  repaid  by  an  additional  and  proportional  monthly 
subscription,  extending  over  a  period  not  exceeding 
calendar  months,  [n  case  of  default,  the  amount  due  from 
time  to  t ime  shall  l»e  chargeable  on  t he  mortgaged  property 
and  betreated  as  repaymenl  subscriptions  in  arrear. 


RULES    FOR    BENEFIT   BUILDING    SOCIETIES.  557 

XXXII. — COMMISSION. 

Art.  1. — A  commission  after  the  following  scale  shall  be 
deducted  from  all  advances  made  to  members  and  1x3  appro- 
priated to  the  expense  and  contingent  fund.  Jn  considera- 
tion of  the  aforesaid  commission,  a  borrowing  member  shall 
not  be  called  upon  to  contribute,  after  the  date  of  the  ad- 
vance, in  respect  of  the  shares  upon  which  lie  has  borrowed, 
any  other  sums  towards  expenses  or  contingencies,  except- 
ing the  quarterage,  fines,  transfer,  and  other  fees  and  pay- 
ments mentioned  in  these  rules. 

{Here  insert  Scale  of  Commission). 

{The  rate  of  commission  that  should  he  charged  is  a  matter 
for  practical  consideration,  and  varies  with  the  circumstances 
of  the  locality.'] 

Art.  2. — Should  the  directors  consider  it  expedient,  at 
their  own  discretion  in  each  particular  case,  the  commission 
to  be  deducted  as  aforesaid  may  be  allowed  to  stand  over 
as  a  further  charge  upon  the  property  mortgaged  to  the 
society,  and  be  treated  as  an  additional  advance,  subject  to 
the  same  rate  of  repayment  as  provided  in  the  rule  applica- 
ble to  advances. 

Art.  3. — If,  at  the  first  and  subsequent  divisions  of  profits, 
it  should  appear  to  the  directors  that  the  expenses  or  losses 
which  the  society  has  incurred  anterior  to  such  division  of 
profits,  or  which  in  their  estimation  are  likely  to  arise 
upon  the  mortgages  then  in  force,  have  not  absorbed  the 
whole  of  the  commission  contributed  by  borrowers  upon 
advances  made  upon  them,  then  the  directors,  with  the 
advice  of  the  consulting  actuary,  may  credit  the  borrowing 
members  in  proportion  to  the  number  of  shares  which  shall 
have  been  advanced  to  them  respectively  (in  diminution  of 
their  future  repayment  subscriptions),  with  such  a  bonus  out 
of  the  unabsorbed  commission  above  referred  to  as  shall 
not  exceed  the  bonus  allotted  to  an  unadvanced  share  of 
like  standing. 

[The  effect  of  this  rule  is  to  make  the  society  a  mutual 
one.] 

[These  clauses  would  have  to  be  modified  where  the  bidding 
system  is  adopted^ 

XXXIII. ADVANCES  TO  PURCHASE  AT  AUCTION. 

Art.  1. — Should  any  member,  having  become  entitled  to 
any  advance,  as  aforesaid,  be  desirous  of  purchasing  prop- 
erty about  to  be  sold  by  auction,  and  require  the  assistance 


558  APPENDIX   I. 

of  the  society  to  enable  him  to  pay  the  deposit  money  pay- 
able at  such  sale,  the  directors  may,  upon  such  member 
making  his  desire  known  to  them,  in  the  form  (D)  annexed 
to  these  rules,  order  the  surveyor  to  report,  and  the  solicitor 
to  investigate,  the  conditions  of  sale  and  the  title  of  such 
property,  so  far  as  the  same  can  be  ascertained,  upon  pay- 
ment of  the  usual  fees  ;  and  may  instruct  the  secretary 
to  attend  such  sale,  and  (provided  such  member  can  buy 
such  property  at  a  price  not  exceeding  the  sum  of  money 
the  directors  are  willing  to  advance  on  such  property)  to  pay 
the  amount  of  deposit  at  such  sale,  the  balance  of  the  pur- 
chase money  to  be  advanced  when  the  conveyance  and 
mortgage  are  completed  ;  provided  that,  if  the  member  shall 
bid  a  larger  sum  than  the  sum  awarded  by  the  directors,  the 
difference  between  the  sum  awarded  by  them  and  the  sum 
agreed  to  be  given  for  the  property,  shall  be  deposited  by 
the  member  in  the  hands  of  the  secretary,  before  any  deposit 
is  paid,  and  the  directors  shall  take  such  legal  security  for 
such  sums  paid  on  deposit  as  they  may  be  advised. 

Art.  2. — When  any  member  shall  be  desirous  of  building, 
the  directors  may,  from  time  to  time,  make  such  advances 
during  the  progress  of  the  building  as  they  deem  expedient, 
on  having  the  amount  secured  on  the  property. 

Art.  3. — If  any  member,  receiving  an  advance  for  the  pur- 
pose of  erecting  or  completing  the  erection  of  any  buildings, 
shall  leave  the  same  unfinished,  and  shall  not  proceed  to 
complete  the  same  after  the  expiration  of  seven  days'  notice 
in  writing  given  to  the  member,  his  executors  or  adminis- 
trators, by  leaving  the  same  upon  the  premises,  the  trustees 
of  the  society  under  the  direction  of  the  committee,  may 
complete  the  same;  and  the  trustees  may  also,  with  the 
sanction  of  the  committee,  sell  the  premises  mortgaged, 
either  in  their  incomplete  state,  or  upon  the  same  being 
completed,  as  aforesaid,  in  which  case  all  the  powers,  trusts, 
clauses  and  provisions  contained  in  the  mortgage  deed  to 
arise  and  take  effect,  and  be  exercisable  upon  default  being 
made  in  payment  of  any  instalment,  shall  upon  the  expira- 
tion of  such  notice  as  aforesaid,  arise,  take  effect,  and  be  ex- 
ercisable in  such  and  the  same  manner,  and  with  the  same 
consequences  in  all  respects  as  if  such  default  had  really 
been  made. 

XXXIV. AS   TO   MORTGAGES. 

Art.  1. — Every  member  executing  a  mortgage  to  the 
society,  shall,  within  two  days  from  the  time  of  such  ex- 
ecution,  give  to  the  secretary  a  written  statement  of  any 
trade  carried  on,  in  or  about  any  part  of  the  premises  com- 


RULES   FOR   BENEFIT   BUILDING    SOCIETIES.  559 

prised  in  such  mortgage  or  of  the  existence  of  any  stove  or 
furnace  erected  thereon,  or  other  matter  or  thing  which 
would  in  any  way  aifect  the  validity  of  the  policy  of  insur- 
ance :  and  if  at  any  subsequent  period  any  such  trade  shall 
be  commenced,  or  erection  made,  the  like  statement  shall  be 
given,  and  the  member  neglecting  to  give  such  statement 
shall  pay  a  fine,  at  the  discretion  of  the  directors,  of  not 
more  than  ten  shillings,  but  not  less  than  one  shilling  per 
week  for  each  share  ;  and  the  directors  shall,  if  they  think 
fit  to  do  so,  at  least  once  in  each  year,  appoint  some  com- 
petent person  to  obtain  all  the  information  he  can,  with 
respect  to  trades,  etc.,  carried  on,  in  or  about  the  mortgaged 
premises,  and  to  report  to  the  board  accordingly. 

Every  borrowing  member  shall  from  time  to  time  permit 
the  directors  or  such  person  or  persons  as  they  appoint,  to 
inspect  the  mortgaged  premises,  and  to  obtain  information 
with  respect  to  any  trade  or  trades  carried  on  therein  ;  or 
pay  such  fines  as  the  directors  shall  think  fit. 

Art.  2. — The  repayment  subscription  for  advances  shall 
be  made  at  the  end  of  the  first  calender  month,  or  of  the 
first  quarter  (as  may  be  agreed  upon  by  the  directors)  next 
following  the  receipt  of  the  advance,  or  any  portion  thereof, 
and  shall  continue  to  be  so  made  for  the  full  period  for 
which  the  advance  may  have  been  originally  taken,  unless 
the  mortgage  be  previously  redeemed  ;  and  in  all  cases,  such 
repayment  subscriptions  shall  be  due  on  the  first  day  of  each 
month,  and  be  respectively  made  thereon  if  it  be  a  day  of 
meeting,  or  on  the  first  subscription  meeting  thence  ensuing. 

Art.  3. — Every  member  obtaining  an  advance  from  the 
society  shall  be  bound  by  and  subject  to  these  rules,  and  any 
alteration  or  amendment  thereof,  although  the  intent  or 
meaning  of  the  same  or  any  part  of  them  may  not  be  fully 
set  forth,  or  may  be  omitted  in  the  mortgage  deed  or  other 
security,  and  no  defect  or  omission  in  any  mortgage  or 
security  shall  be  available  by  any  member  if  such  defect  or 
omission  be  provided  for  by  the  rules  of  the  society. 

Art.  -i. — Upon  full  payment  being  made  of  all  the  monthly 
repayment  subscriptions,  interest  or  other  monies  secured  by 
any  mortgage  in  accordance  with  these  rules  and  the  cove- 
nants therein  contained,  the  trustees  shall,  at  the  request  in 
writing  of  the  directors,  and  under  the  advice  of  the  solicitor 
to  the  society,  deliver  up  to  the  members  by  whom  such 
mortgage  was  effected,  or  to  his  legal  or  personal  representa- 
tives, as  the  case  may  be,  the  title  deeds  and  other  documents 
which  have  been  deposited  with  them  by  such  member,  and 
shall,  free  of  all  expense  to  such  member,  indorse  on  his 
mortgage  security  a  receipt  for  all  the  monies  intended  to  be 


560  APPENDIX   I. 

thereby  secured,  pursuant  to  the  Act  6  and  7  William  IV., 
cap.  32,  sec.  5. 

XXXV. SECURITY    FOE    ADVANCES. 

All  property  on  the  security  of  which  an  advance  is  made 
to  a  member  shall  be  mortgaged  to  the  society  until  the  ad- 
vance be  repaid,  and  the  mortgage  deed  shall  be  so  prepared 
by  the  solicitors  of  the  society,  or  their  counsel,  as  to  meet 
the  requirements  of  each  particular  case,  and  for  that  pur- 
pose snail  be  in  such  form  and  contain  such  powers, 
covenants,  stipulations,  and  conditions,  as  they  consider 
necessary  ;  and  among  other  things  it  shall  be  provided 
therein,  that  in  case  the  mortgagor  shall  fail,  neglect  or 
refuse,  for  the  space  of  four  calendar  months,  to  observe 
and  perforin  all  or  any  of  his  covenants  for  pajmient  of  re- 
payment subscriptions,  according  to  the  terms  and  condi- 
tion of  these  rules,  and  the  said  mortgage  as  well  as  any 
fines  inflicted  for  neglect  of  payment,  on  his  part  to  be  ob- 
served and  performed,  then  the  trustees  named  in  the  said 
mortgage,  or  the  survivors  of  them,  or  the  executors  or 
administrators  of  the  last  survivor  or  the  trustees,  for  the 
time  being,  of  the  society,  may  either  with  or  without  the 
privity  or  consent  of  said  mortgagor,  his  heirs,  executors, 
administrators  or  assigns,  take  absolute  possession  of  the  said 
premises  and  may  let  the  same,  and  may  appoint  a  person 
to  be  approved  by  the  board,  to  collect  the  rent  of  the 
premises  thereby  mortgaged ;  and  may  at  anytime  there- 
after absolutely  sell  all  or  any  part  of  the  said  premises, 
either  by  public  auction  or  private  contract,  and  either  to- 
gether or  in  lots,  and  at  one  time,  or  separate  times,  if  desir- 
able, for  the  most  money  that  can  reasonably  be  had  or 
gotten  1'or  the  same;  ami  every  receipt  of  the  trustees  for 
the  time  being  shall  bea  good  and  sufficient  discharge  to  the 
purchaser  paying  the  purchase  money,  who  shall  not  be 
obliged  to  see  the  application  of  the  same,  nor  be  required 
to  see  whet  her  any  or  what  monies  shall  be  due  under  such 
mortgage,  or  whether  there  has  or  has  not  been  any  breach 
on  the  part  of  any  such  mortgagor  of  the  rules  of  the  society 
or  of  tin;  stipulations  of  such  mortgage  deed,  nor  whether 
he  has  failed  to  pay  any  of  the  advanced  repayments,  lines 
or  other  payments  either  for  the  space  of  four  calendar 
months,  or  for  any  other  period,  nor  whether  such  trustees, 
or  the  executors  or  administrators  of  the  last  survivor  of 
them,  or  t  he  trustees  of  t  he  society,  for  the  time  being,  have 
or  have  not  authority  for  disposing  of  the  premises  com- 
prised t  herein,  but  tin;  possession  of  the  title  deeds  and 
mortgage  deed,  and  the  written  instructions  of  the  board  of 


RULES    FOR   BENEFIT    BUILDING   SOCIETIES.  561 

directors,  shall  be  considered  sufficient  authority  for  the  dis- 
posing of  the  said  premises  ;  provided  always  that  the  money 
produced  from  such  rents  and  profits,  or  such  sale  as  afore- 
said, shall,  in  the  first  place,  be  applied  in  payment  of  all 
costs  and  expenses  which  may  be  incurred  on  account  thereof ; 
and,  in  the  next  place,  to  reimburse  the  society  in  the 
amount  of  repayment  subscriptions  and,  in  the  event  of  a 
sale,  of  the  then  value  of  the  future  repayment  subscriptions 
then  due  and  unpaid,  together  with  all  fines  and  commission 
in  respect  thereof;  and,  in  the  event  of  a  sale,  of  the  then 
value  of  the  future  repayment  subscriptions  in  respect  of 
such  mortgaged  property,  with  interest  on  the  aforesaid 
amount  of  arrears  and  fines  up  to  the  completion  of  the  sale, 
and  on  the  then  value  of  such  future  repayment  subscriptions 
at  the  rate  of  per  cent,  per  annum  from  the  date  of 

the  first  default.  The  present  value  of  such  future  repay- 
ments shall  be  calculated  by  the  consulting  actuary  from  the 
date  of  the  completion  of  the  sale  or  sales  to  the  end  of  the 
term  for  which  the  mortgage  was  originally  taken,1  discount 
being  allowed  at  a  rate  to  be  fixed  by  a  majority  of  the  board 
of  directors  present  at  any  meeting,  not  less  than 
per  cent,  per  annum  on  such  future  repayment  subscriptions 
to  the  end  of  the  mortgage  term.  In  case  the  rents  and 
profits  of  the  mortgaged  property,  and  produce  of  the  sale 
thereof,  after  deducting  expenses,  be  not  sufficient  to  dis- 
charge the  amount  of  such  repayment  subscriptions  in  arrear, 
with  the  present  value  of  the  future  repayment  subscriptions 
so  calculated,  and  interest  thereon,  the  mortgagor  so  in 
default  shall  immediately  pay  the  balance  due  thereon  to  the 
society  ;  but  the  trustee  shall  pay  the  surplus  (if  any)  arising 
from  the  receipt  of  the  rents  and  profits,  and  from  the  sale 
of  such  premises  as  aforesaid  to  the  said  mortgagor,  his  heirs, 
executors,  administrators,  or  assigns ;  provided  always,  that 
in  case  any  of  the  mortgagors  named  in  any  mortgage  deed 
or  his  heirs,  executors,  administrators  or  assigns,  having 
obtained  an  interest  in  such  property  (so  long  as  the  said 
premises  continue  in  mortgage  to  the  society)  shall  be  im- 
prisoned for  debt,  or  be  made  bankrupt,  then  such  trustees, 
or  the  executors  or  administrators  of  the  last  survivor  of 
them,  or  the  trustees  for  the  time  being  of  the  society,  with 
the  sanction  of  the  board  of  directors  for  the  time  being, 
shall  have  full  power  and  authority  immediately  to  take 
possession  of  the  premises  mortgaged,  and  let  and  manage 

1  The  rate  of  discount  to  be  al-  be   oppressive    to    the    borrower, 

lowed  on  future  subscriptions  in  should  be  such  as  to  afford  a  suffi- 

case  of  sale  under  the  provisions  in  cient  protective  margin  in  favor  of 

this  clause,  while  not  so  low  as  to  the  society. 
36 


662  APPENDIX   I. 

the  same,  and  collect  the  rents  thereof,  whether  such  mort- 
gagor, or  his  heirs,  executors,  administrators  or  assigns,  be  in 
arrear  or  not ;  and  to  sell  the  said  premises,  if  the  rent  so 
received  be  not  sufficient  to  meet  the  repayment  subscrip- 
tions falling  due  in  respect  thereof  ;  and  in  case  any  of  the 
premises  mortgaged  to  the  society  be  left  incomplete,  the 
trustees  for  the  time  being,  under  the  direction  of  the  board, 
may  complete  the  same,  and  the  money  expended  and 
laid  out  in  so  doing  shall  be  considered  as  part  of,  and  in 
addition  to,  the  original  mortgage.  And  the  said  trustees 
shall  also,  with  the  sanction  of  the  board,  have  the  option  of 
selling  and  disposing  of  the  premises  mortgaged,  either  in 
their  incomplete  state,  or  upon  the  same  being  so  completed 
as  aforesaid. 

XXXVI. REDEMPTION    OF   MORTGAGED    PROPERTY. 

If  any  member  be  desirous  of  having  his  property  dis- 
charged from  the  mortgage  to  the  society,  before  the  expi- 
ration of  the  full  term  thereof,  he  shall  be  allowed  to  do  so 
on  giving  a  notice  of  two  clear  calendar  months  prior  to  the 
ordinary  meeting  at  which  the  redemption  of  such  mortgage 
is  proposed  to  be  completed  ;  and  on  payment  of  all  repay- 
ment subscriptions  and  fines  due  in  respect  thereof  up  to  the 
time  of  such  redemption,  and  of  the  present  value  of  the 
future  repayment  subscriptions  calculated  by  the  consulting 
actuary  upon  the  principle  of  payments  made  at  the  end  of 
each  year  to  the  end  of  the  original  term,  and  discounted 
after  a  rate  of  interest  to  be  fixed  by  the  consulting  actuary 
not  lower  than  per  cent,  together  with  the  redemp- 

tion fee  of  ,  the  trustees  for  the  time  being  shall,  at 

the  request  of  the  directors,  and  at  the  cost  of  the  member, 
cause  to  be  indorsed  on  the  mortgage  deed  a  receipt  or 
acknowledgment  for  the  full  payment  of  the  amount  secured 
in  such  mortgage  in  the  form  (E)  annexed  to  these  rules  ac- 
cording to  the  Act  6  and  7  of  Wra.  IV.,  cap.  32,  sec.  5. 
Members  giving  notice  of  a  redemption  of  a  mortgage  shall 
be  liable  to  the  usual  lines  for  non-payment  of  the  repayment 
subscriptions  up  to  the  time  such  redemption  shall  be  com- 
pleted. 

|  In  cases  of  redemption  under  this  rule,  the  protective 
margin  to  the  society  need  not  be  so  large  as  in  the  case  of  sale 
under  Rule  35.] 


RULES    FOR   BENEFIT    BUILDING    SOCIETIES.  563 


GENERAL  REGULATIONS  AS  TO  SECURITIES. 

XXXVII. POWER   TO    EXTEND    PERIOD    OF    REPAYMENT. 

Article  1. — In  the  event  of  a  borrower  being  subsequently 
desirous  of  altering  the  period  allowed  for  the  repayment  of 
an  advance,  he  shall  be  allowed  to  do  so  subject  to  the  con- 
sent of  the  directors,  on  giving  not  less  than  one  clear  cal- 
endar month's  notice  of  the  wish  thereto,  provided  that  the 
new  term  for  the  repayment  of  the  remainder  of  his  advance 
be  approved  by  the  directors,  and  that  his  monthly  repay- 
ment subscriptions  for  the  new  term  be  after  the  same 
rates  per  centum  for  the  remainder  of  his  debt,  according 
to  the  established  rates  for  advances;  the  debt  at  the  same 
time  of  the  alteration  of  the  term  being  estimated  upon  a 
compound  interest  table,  at  such  rate  of  interest  as  the 
consulting  actuary  shall  certify. 

Art.  2. — Previously  to  any  alteration,  the  mortgagor  shall 
furnish  satisfactory  evidence  as  to  the  unimpaired  value  of 
the  security,  and  shall  pay  all  expenses  of  procuring  such 
evidence. 

Art.  3. — When  an  existing  mortgage  is  to  be  altered,  a 
percentage  commission  shall  be  charged,  proportionate  to 
the  remaining  amount  due  from  the  borrower,  for  the  num- 
ber of  additional  years  which  he  has  added  to  the  duration 
of  the  mortgage ;  and  the  commission  shall  be  after  the 
same  rate  as  that  for  new  advances. 

xxxviii. — reduction  of  mortgage  debt. 

If  any  member,  who  shall  have  mortgaged  property  to 
this  society,  shall  at  any  period,  after  he  shall  have  reduced 
his  mortgage  debt,  be  desirous  of  procuring  any  portion  of 
the  premises  comprised  in  such  security  to  be  discharged 
from  such  mortgage,  the  directors  may,  upon  being  satisfied 
that  adequate  and  sufficient  security  will  remain  to  cover 
the  payment  of  the  future  repayment  subscriptions,  direct 
the  trustees  to  discharge  such  portion  of  the  said  premises 
as  the  directors  think  proper. 

xxxix. — transfer  and  sale  of  advanced  shares. 

Art.  1. — Any  member  entitled  to  an  advance  on  a  share 
or  shares,  which  he  may  have  subscribed  for,  and  upon  which 
all  subscriptions,  fees  or  fines  are  paid,  shall  be  allowed  to 
transfer  to  any  other  member  the  right  of  such  advance, 


564  APPENDIX   I. 

with  or  without  the  shares  belonging  thereto,  on  payment 
of  a  transfer  fee1  of  per  share  to  the  funds  of 

the  society,  provided,  nevertheless,  that  every  share  so 
transferred  shall  be  subject  to  the  advance  awarded  or  to  be 
awarded  on  sucli  share,  and  to  all  other  charges  payable 
according  to  these  rules. 

Art.  2. — If  any  member,  who  shall  have  obtained  an 
advance,  be  desirous  to  sell  the  property  mortgaged,  the 
purchaser,  on  becoming  a  member  of  this  society,  may  take 
the  property  subject  to  such  mortgage,  and  thenceforth  shall 
become  answerable  for  the  payment  of  all  repayment  sub- 
scriptions in  arrear,  and  tines  then  due  thereon,  as  well  as 
for  all  future  repayment  subscriptions  and  tines  thereon  from 
time  to  time  to  fall  due  in  respect  to  such  mortgaged  prop- 
erty ;  an  account  of  all  which  repayment  subscriptions  and 
fines  then  due  and  unpaid  shall  be  made  up  and  acknowl- 
edged (in  writing)  by  the  persons  proposing  to  receive  such 
liabilities  and  property  in  mortgage,  which  said  account 
shall  be  duly  signed  by  the  person  so  becoming  a  member, 
in  the  presence  of  the  secretary,  solicitor,  or  one  of  the 
directors  of  the  society ;  and  provided  the  sanction  of  the 
directors  be  given  to  such  transfer,  the  trustees  for  the  time 
being  shall,  at  the  request  and  cost  of  the  member  so  trans- 
ferring his  interest  in  the  mortgaged  property,  then  release 
him  from  all  future  responsibilities  in  respect  of  such  prop- 
erty so  transferred. 

Art.  3. — Every  such  conveyance  to  a  purchaser,  subject 
to  the  mortgage,  shall  be  pursued  and  settled  by  the  solicitor 
of  the  society,  at  the  expense  of  the  mortgagor ;  and  shall, 
when  executed,  be  delivered  to  the  solicitor  of  the  society, 
and  by  him  deposited  with  the  other  title  deeds  relating  to 
the  property  comprised  therein,  as  a  further  security  for  the 
money  secured  by  the  mortgage. 

XL. SUBSTITUTION    OF    MORTGAGED    PROPERTY. 

If  any  member  be  desirous  of  having  his  property  be  dis- 
charged from  the  claim  of  this  society,  he  may,  with  the 
sanction  of  the  directors,  transfer  the  same  toother  premises 
of  adequate  value,  either  belonging  to  himself,  or  to  any 
other  person  willing  to  take  the  transfer  of  the  shares  so 
advanced,  and  to  give  security  for  the  same,  to  be  approved 
of  by  the  directors  on  the  report  of  the  surveyor. 

XLI. FIRE   INSURANCE. 

Art.  1. — All  property  mortgaged  to  this  society  shall  be 

1  Tf  it  he  thought  undesirahle  to  advances,  the  transfer  fee  in  this 
encourage  traffic   in   the  right  to    clause  should  he  fixed  high. 


RULES    FOB   BENEFIT   BUILDING   SOCIETIES.  5G5 

insured,  in  pursuance  of  any  covenant  contained  in  the  lease 
or  deed  under  which  such  property  shall  be  held,  or  as  the 
directors  shall  determine;  and  the  secretary  shall  imme- 
diately effect  such  insurance  in  the  names  of  the  trustees  of 
the  society,  in  conformity  with  written  instructions  to  be 
furnished  to  him  by  the  solicitor;  or,  in  case  of  neglect, 
shall  be  fined  twenty  shillings  ;  and  he  shall  pay  all  pre- 
miums for  insurance  of  mortgaged  property  as  the  same 
shall  respectively  become  due,  or  be  fined  twenty  shillings 
for  each  insurance  left  unpaid;  and  the  members  on  whose 
account  such  premiums  for  insurance  shall  be  paid  shall  on 
demand  refund  the  amount  so  paid. 

Art.  2. — Whenever  any  property  mortgaged  to  this 
society  shall  receive  any  damages  from  fire,  or  any  other 
cause  for  which  the  insurance  company  may  be  liable  to 
give  compensation,  the  trustees  for  the  time  being  of  the 
society  shall  receive  the  amount  payable  for  such  damage  so 
sustained  from  the  insurance  company  ;  the  receipt  of  three 
directors,  countersigned  by  the  secretary  of  the  society,  shall 
be  sufficient  discharge  to  the  insurance  office  for  the  money 
herein  expressed  to  be  received  ;  and  the  directors  shall  have 
full  power  to  settle  and  adjust  with  the  insurance  office  any 
question  relating  to  such  insurance,  and  the  amount  to  be 
paid  by  the  insurance  office  in  respect  of  the  damage  done 
to  the  premises;  or  to  make  such  arrangements  with  the 
insurance  office  as  the  rebuilding  or  repairing  of  the  said 
premises,  or  relating  thereto,  as  the  directors  think  reason- 
able. 

XLII.— -GROUND    RENT    AND    OTHER    PAYMENTS. 

When  any  property  secured  or  mortgaged  to  the  society 
is  subject  to  any  land  or  property  tax,  chief  or  ground  rent, 
quit  rent,  fines,  reliefs,  heriots,  or  other  payments,  the  mem- 
ber to  whom  the  property  belongs  shall  "furnish  the  secre- 
tary with  a  statement  containing  the  amount  of  such 
payments,  the  name  and  address  of  the  person  or  persons  to 
whom,  and  the  day  or  respective  days  on  which  the  same 
becomes  due  and  payable ;  and  shall  from  time  to  time  pro- 
duce to  the  secretary  a  receipt  or  acknowledgment  thereof 
respectively,  within  fourteen  days  after  the  same  becomes  due 
or  payable ;  or  in  default  thereof  shall  pay  a  fine  of 
In  case  any  of  the  said  payments  be  not  duly  made  within 
such  period  as  aforesaid,  a  further  fine  shall  be  paid  by  the 
member,  for  every  £1  so  due  in  respect  to  the  said  payments, 
and  the  directors  shall  order  the  sum  due  to  be  paid  out  of 
the  funds  of  the  society,  and  the  mortgagor  shall  repay  the 
amount  at  the  next  monthly  subscription  meeting,  together 


56Q  APPENDIX   I. 

with  the  said  fines ;  and,  in  default  of  payment  thereof 
accordingly,  the  same  shall  be  treated  as  repayment  sub- 
scriptions in  arrear,  and  be  subject  to  further  fines  according 
to  the  Kule  XLIII. 


OTHER  REGULATIONS  AS  TO  SHARES. 

XLIII. FIXES,    AXD    POWER   TO    SUSPEXD. 

Article  1. — The  fines  for  non-payment  of  unadvanced 
shares  subscriptions  shall  be  at  the  rate  of  per  pound 

per  month  for  each  default. 

Art.  2. — The  fines  for  non-payment  of  repayment  sub- 
scriptions on  advanced  shares  shall  be  at  the  rate  of 
in  the  pound  per  month  on  the  amount  thereof.1 

Art.  3.— When  the  fines  on  an  unadvanced  share  equal 
the  amount  of  subscriptions  paid  in  respect  of  the  same,  the 
said  share  shall  be  forfeited  to  the  societ\r ;  and  the  member 
to  whom  such  share  belonged  shall  thenceforth  cease  to  have 
any  interest  in  the  funds  of  the  society  in  respect  to  such 
share,  but  the  directors  may,  at  their  own  discretion,  remit 
or  waive  such  forfeiture,  or  allow  a  member  specially  to 
suspend  his  subscriptions  on  unadvanced  shares,  on  such 
terms  and  conditions  as  they  in  each  case  may  deem  fit,  on 
his  making  application  to  them  for  that  purpose,  prior  to  each 
subscription  becoming  due. 

[  This  clause  will  enable  the  directors  to  meet  the  circum- 
stances of  members  who,  through  finding  themselves  tempo- 
rarily unable  to  Tceep  up  the  payments,  do  not  wish  to  relin- 
quish their  shares,  >>/■  withdraw  from  th<-  society.'] 

Art.  4. — When  an  advance  is  made  to  a  member,  the 
directors  shall  have  power,  at  their  own  discretion  in  each 
particular  case,  to  allow  the  repayment  subscriptions  to  be 
di'frrrcfl  for  a  period  not  exceeding  two  years;  provided 
interesl  attherateof  percent,  per  annum  on  the  amount 
of  the  advance  be  paid  monthly  by  the  member  during  the 
time  that  the  repayment  subscriptions  are  so  deferred.  The 
drin  for  which  an  advance  is  so  granted  shall  exceed  oneof 
1  he  terms  given  in  the  table  of  repayment  subscriptions  by  a 
number  of  months  that  the  first  repayment  subscription  has 
been  allowed  to  be  so  deferred  and  the  repayment  subscrip- 
tions (including  principal  and  interest)  shall  be  made  after 
the  rates  given  in  the  said  tables,  from  t  he  end  of  the  period 
of  deferment  to  the  close  of  the  term  of  the  mortgage.2 

1   ia  to  fines,  see  Parker  v.  Butcher.     ;  v>  i"  i  his  rule,  see  Art.  69. 
M  Law  Journal  [Ch.)  558. 


RULES    FOR   BENEFIT   BUILDING   SOCIETIES.  567 

Art.  5. — If  any  member  be  in  arrear  in  respect  of  his  sub- 
scriptions, interest,  or  other  sum  for  more  than  one  meeting, 
every  payment  afterwards  made  by  such  members,  if  not 
sufficient  to  discharge  the  whole  amount  in  arrear,  shall  be 
applied,  first,  to  the  liquidation  of  the  fines  incurred,  and 
then  in  the  liquidation  of  the  subscriptions,  interest,  and 
other  sums  in  arrear. 

Art.  6. — Members  holding  advances  upon  quarterly  re- 
payment subscriptions  shall  be  considered  to  be  in  arrear  of 
four  months  when  any  quarterly  repayment  lias  remained, 
unsatisfied  for  the  period  of  one  calendar  month  after  the 
same  became  due. 

Art.  7. — When  the  consulting  actuary  is  consulted  by 
the  directors  ,  at  the  request  of  any  member,  or  by  cause  of 
the  default  of  a  member,  the  fees  payable  to  the  consulting 
actuary  shall  be  charged  against  the  said  member,  and  be 
treated  as  subscriptions  in  arrear. 

XLIV. ALTERATION    IN    RATE    OF    INTEREST. 

In  order  to  meet  the  contingency  of  any  alteration  in  the 
value  of  money,  or  of  the  current  rate  of  interest,  or  if  it 
hereafter  appear  that  the  well-being  of  the  society  shall  so 
require,  the  directors  may,  on  the  advice  of  the  consulting 
actuary,  with  the  sanction  of  a  majority  of  the  members 
actually  present  at  a  meeting  of  shareholders  specially  con- 
vened for  that  purpose,  reduce  the  rate  of  interest  allowed 
on  the  amounts  substituted  by  unadvanced  shareholders  (so 
that  such  decrease  does  not  reduce  the  rate  of  interest  to 
less  than  £3  per  cent,  compound  interest,  reckoned  annually 
on  the  amount  of  subscriptions  paid  by  them),  and  there- 
upon shall  make  a  relative  decrease  in  the  monthly  or  quar- 
terly sums  to  be  paid  by  the  members  who  receive  any  ad- 
vance on  their  shares ;  or,  on  the  contrary,  may  increase 
the  rate  of  interest  to  be  paid  on  unadvanced  shares,  making 
a  corresponding  increase  in  the  sums  to  be  paid  by  advanced 
shareholders,  in  such  manner  as  shall  from  time  to  time  be 
deemed  expedient,  just,  and  equitable;  provided  that  such 
decrease,  or  such  increase,  as  the  case  may  be,  of  the  rates 
on  unadvanced  and  advanced  shares  respectively  shall  in 
all  cases  bear  the  same  relative  proportion  to  each  other 
as  the  tables  herein  contained  for  payment  to  unadvanced 
shareholders  and  payments  by  advanced  shareholders,  or  as 
near  thereto  as  possible;  provided  also  that  such  deductions 
or  alterations  shall  only  affect  the  holder  of  shares  which 
shall  be  issued  or  advanced  respectively,  after  the  time  of 
making  such  decrease  or  increase,  and  provided  such  decrease 


568  APPENDIX   I. 

or  increase  shall  be  first  submitted  to  the  consulting  actuary 
and  be  certified  by  him  to  be  safe  and  equitable. 


MANAGEMENT  AND  OFFICERS. 

XLV. APPOINTMENT    OF    OFFICERS. 

For  the  conduct  and  management  of  the  affairs  of  the 
society  the  following  officers  shall  be  appointed  :  Trustees, 
a  board  of  directors,  consisting  of  members,  bankers, 

consulting  actuary,  auditors,  solicitor,  secretary,  and  such 
other  officers  as  may  be  deemed  necessary  by  the  board,  who 
shall  fix  the  amount  of  their  salaries,  fees,  and  other  re- 
muneration, and  the  duties  from  time  to  time  to  be  per- 
formed by  them  respectively. 

The  bankers,  consulting  actuary,  solicitor,  secretary,  and 
other  officers  deemed  necessary  by  the  board,  and  appointed 
by  them  shall  hold  their  respective  situations  at  the  pleasure 
of  the  board. 

[As  to  the  officers,  see  Treatise,  chapter  5.] 

XLVI. OFFICERS  TO  GIVE  SECURITY. 

The  directors  may,  if  they  think  fit,  require  any  officer  or 
other  person  whatever,  who  shall  be  appointed  to  any  office 
in  any  wise  touching  or  concerning  the  receipt,  management 
or  expenditure  of  any  money  of  the  society,  to  give  security 
by  bond  with  two  securities  (in  the  manner  mentioned  in  the 
Act  10,  Geo.  IV.,  cap.  56,  sec.  11.) 

X  L  VII. TRUSTEES. 

I —  Esquires,  arc  thereby  appointed  the  first  trustees 

of  the  society. 

Article  2.  -  All  the  monies  and  funds  of  the  society  shall 
be  paid  into  the  bands  of  the  bankers,  to  the  credit  of 
t  lie  i  rustees  of  1  he  society. 

Art.  3.  All  deeds,  writings  and  securities  in  favor  of  the 
society  shall  be  taken  in  the  name  of  the  trustees,  and  im- 
mediately on  the  receipt  of  anydeeds,  writings  or  securities, 
on  behalf  of  the  society,  the  same  shall  be  lodged  at  the 
society's  solicitors,  in  a  box  furnished  by  the  society;  the 
and  no  documents  whatever  shall  be  allowed  to  be 
removed  from  such  box,  unless  by  an  order  of  flic  directors, 
signed  by  at  least  three  members  of  the  board  then  present. 

Aim.    I.     The  trustees    shall    in    no  case    be  required  to 


RULES   FOR   BENEFIT   BUILDING    SOCIETIES.  569 

do  any  act  without  the  express  request  and  sanction  of  the 
directors  in  writing,  and  they  shall,  for  every  such  act,  be 
indemnified  out  of  the  funds  of  the  society  from  any  loss, 
damage,  or  expense,  and  a  written  indemnity  shall,  if 
demanded,  be  given  by  the  directors,  not  being  trustees,  and 
countersigned  by  the  secretary. 

Art.  5. — The  trustees  shall  be  ex-ojficio  directors,  but  shall 
not  vote  on  any  question  unless  they  are  qualified  in  like 
manner  as  the  directors. 

Art.  6. — In  case  the  said  trustees,  or  any  or  either  of  them, 
or  any  future  trustees  shall  die,  or  be  desirous  of  resign- 
ing or  of  being  discharged  from,  or  shall  become  incapable 
of  acting  in  the  trusts  in  them  reposed,  or  be  guilty  of  any 
gross  neglect  or  improper  conduct  (of  which  the  directors 
shall  be  the  only  judges),  or  shall  remove  a  distance  of  more 
than  twenty  miles,  or  cease  to  have  a  place  of  business  or 
residence  within  that  distance ;  or  a  difficulty  of  access 
to  them  shall  impede  the  business  of  the  society,  or  if  they 
shall  become  bankrupt  or  shall  compound  with  their  creditors, 
the  secretary  shall  convene  a  special  meeting  of  the  direc- 
tors, and  the  directors  shall  hear  and  determine  thereon, 
and  may  thereupon  remove  such  trustees ;  and  as  often  as 
any  new  trustee  shall  be  elected  or  appointed,  the  trustee 
removed  shall  cease  to  be  a  trustee,  and  shall  be  incapable 
as  acting  as  a  trustee  after  such  removal,  or  after  the  appoint- 
ment of  a  new  trustee  has  taken  place.  Any  vacancy  in  the 
office  of  trustee,  from  any  cause  whatever,  shall  be  filled  up 
at  the  quarterly  meeting  next  ensuing  by  the  members  then 
present,  and  after  every  fresh  appointment  of  a  new  trustee 
the  resolution  of  the  appointment  shall  be  signed  by  the 
chairman  of  the  directors  for  the  time  being,  or  by  the  chair- 
man of  the  meeting  at  which  such  appointment  shall  be 
made,  and  by  two  members  and  the  secretary,  and  the  same 
shall  be  duly  entered  on  the  minutes  of  such  meeting,  and 
be  enrolled  as  a  new  rule  of  the  society  ;  and  the  estate, 
monies,  securities,  funds,  deeds,  papers,  and  property  of  the 
society  shall  become  at  once  vested  (without  any  assignment) 
in  the  continuing  and  newly  appointed  trustees. 

Art.  7. — In  the  meantime,  and  until  the  appointment  of 
such  new  trustee,  the  continuing  trustees  shall  be  competent 
to  sit  as  fully  as  if  they  were  the  sole  trustees  of  the  society. 

Art.  8. — The  trustees  respectively  shall  be  chargeable  only 
for  their  own  acts  and  defaults  respectively,  and  not  for  the 
acts  or  defaults  of  the  others  or  other  of  them,  nor  for  the 
acts  or  defaults  of  any  other  person  or  persons. 

Art.  9. — In  case  it  shall  be  deemed  necessary  or  expedient 
to  bring  or  defend  any  action,  suit  or  prosecution  at  law  or 


570  APPENDIX   I. 

in  equity  touching  or  concerning  the  property  or  assets 
rights  or  claims  of  the  society,  or  touching  or  concerning 
the  breach  or  non-performance  of  any  of  the  articles,  matters 
and  things  herein  contained,  or  of  the  conduct  of  any 
member  or  officer  of  this  society,  the  same  shall  be  brought 
or  defended  by,  or  in  the  names  of  the  trustee  for  the  time 
being  ;  and  they  shall  be  indemnified  from  all  loss  or  damage 
to  be  b}T  them  sustained  in  consequence  thereof;  but  no 
such  proceedings  shall  be  taken  or  defended  until  the  appro- 
bation of  a  majority  of  the  members  present  at  a  special 
meeting,  to  be  convened  for  that  purpose,  shall  be  first  heard 
and  obtained. 

Art.  10. — When  any  trustee  of  this  society  shall  receive 
an  advance  on  his  shares,  or  do  any  act  as  a  trustee  of  this 
society,  emanating  from  himself  alone,  then  all  his  securities 
and  undertakings  shall  be  made  in  the  names  of  the  other 
trustees  of  the  society  for  the  time  being. 

XLVIII. DIRECTORS. 

Art.  1. — The  elected  directors  shall  be  holders  of  at  least 
one  unadvanced  share,  and  one-third  of  them  shall  go  out  of 
office  after  the  first  two  years  but  be  eligible  for  re-election. 

Art.  2. — The  future  election  of  directors  shall  take  place 
at  the  annual  general  meeting,  except  in  the  case  of  death 
during  the  year,  when  any  vacancy  shall  be  filled  up  by  the 
board. 

Art.  3. — If  any  director  becomes  bankrupt  or  resign,  his 
office  shall  become  vacant,  and  if  during  the  }Tear,  the  va- 
cancy shall  be  filled   up  by  the  board,  as  in  case  of  death. 

Art.  4. — The  directors  shall  annually  appoint,  out  of  their 
body,  a  chairman  and  a  deputy-chairman ;  and,  in  the 
absence  of  either  chairman  or  deputy-chairman,  the  directors 
shall  appoint  a  chairman  for  the  several  meetings. 

Art.  5. — One  of  the  directors  (in  rotation)  with  the  secre- 
tary shall  attend  the  meetings  for  the  receipt  of  money, 
within  the  hours  specified  in  these  rules,  or  at  such  other 
time  as  the  directors  may  think  lit.  Any  director  failing 
to  attend  his  rotation  at  the  receipt  meetings,  or  to  procure 
a  substitute,  shall  pay  a  line  of  2s.  (Id.  or  if  he  fail  to  be 
presenl  within  ten  minutes  of  the  appointed  hour,  he  shall 
forfeit  one.  shilling. 

Aim.  6.  The  directors  may  divide  themselves  into  rotas, 
or  can  in  it  lees,  for  the  conduct,  of  the  business,  as  they  may 
think  fit  (such  committees  or  rotas  to  be  open  to  the  other 
members  of  the  board);  provided,  however,  no  rota  shall 
continue  longer  than  three  calendar  months  at  one  time, 
without  some  change  of  members. 


RULES   FOR   BENEFIT   BUILDING    SOCIETIES.  571 

Art.  7. — The  board  shall,  from  time  to  time,  inspect  the 
books  of  the  society. 

Art.  8. —  Each  director  shall  be  paid  s.  for  every  attend- 
ance at  a  board,  or,  in  rotation,  at  a  subscription  meeting; 
the  chairman  shall  be  entitled  to  s.  per  board  meeting  in 
addition. 

XLIX. SURVEYOR. 

Art.  1. —  ,  of  ,  is  hereby  appointed, 

surveyor  of  this  society. 

Art.  2. — The  following  fees  shall  be  allowed  to  him  : 

(Here  /Scale  of  Surveyors  Zees.) 

Art.  3. — In  all  cases  where  the  surveyor  is  required  to 
superintend  the  erection  of  any  buildings  on  behalf  of  the 
society,  the  remuneration  shall  be  especially  agreed  upon  by 
himself  and  the  board. 

l. — SOLICITOR. 

Art.  1. —  ,  of  ,  is  hereby  appointed 

solicitor  of  this  society. 

Art.  2. — The  solicitor  shall  transact  all  the  legal,  equi- 
table, and  conveyancing  business  of  the  society ;  and,  if 
any  dispute  arise  with  reference  to  his  charges,  the  case 
shall  be  referred  to  ,  whose  decision  shall 

be  final  and  conclusive. 

\In  some  cases  colicitors  agree  f<>  transact  lusiness  for 
building  societies  at  fxed  charges,  depending  on  the  amountqf 
the  loan.  Win  re  this  is  done  the  scale  of  charges  should  be 
inserted  in  the  rule*.] 

LI. AGENTS. 

Art.  1. — The  directors  may,  from  time  to  time,  appoint 
or  remove  any  persons  they  think  expedient  to  act  as  agents 
for  the  disposal  of  shares,  or  the  promotion  in  any  other  way 
of  the  objects  of  the  society. 

Art.  2. — The  duties,  powers  and  remuneration  of  the 
agents  shall  be  fixed  by  the  board  from  time  to  time. 

LII. BANKERS. 

Art.  1. — The  directors  shall,  from  time  to  time,  select 
the  bankers  of  the  society,  and  the  signature  of  a  trustee 
shall  not  be  necessary  in  any  case  to  cheques  drawn  on  the 
society's  account.  No  payment  shall  be  made  out  of  the 
society's  funds  to  the  amount  o.f  £5  and  upwards,  except  by 
cheque,  to  be  signed  by  not  less  than  directors,  and 

countersigned  by  the  secretary,  and  all  payments  so  made 


572  APPENDIX   I. 

shall  be  valid  and  effectual  as  between  the  trustees  and  the 
members. 

Art.  2. — All  money  received  from  the  members  shall  be 
paid  in  to  the  bankers  to  the  credit  of  the  society  by  the 
secretary,  or  such  other  person  as  the  board  appoint. 

Art.  3. — For  the  payment  of  current  petty  expenses,  the 
secretary  shall,  from  time  to  time,  receive  a  cheque  of 
pounds,  which  shall  be  duly  renewed  on  a  proper  account  of 
his  former  payments,  to  the  amount  of  the  last  cheque  re- 
ceived by  him,  being  made  to,  and  allowed  by,  the  board. 

LIII. SECRETARY. 

Art.  1. —  is  hereby  appointed  the  secre- 

tary of  the  society. 

Art.  2. — If  the  secretary  shall  neglect  to  attend  any 
meetings  of  the  society  at  the  time  named  for  the  com- 
mencement of  such  meeting,  without  showing  sufficient 
cause  to  the  members  then  present,  he  shall  be  fined 
He  shall  enter  minutes  of  all  resolutions  passed  at  the  meet- 
ings of  the  board  in  the  rough  minute  book,  and  the  same 
shall  be  fairly  copied  into  another,  to  be  read  as  part  of  the 
business  of  the  next  meeting,  and  both  to  be  signed  by  the 
chairman.  He  shall  keep  the  accounts  in  order,  in  proper 
books  to  be  provided  for  that  purpose,  shall  send  all  circu- 
lars, conduct  the  correspondence  of  the  society,  and  per- 
form such  .other  duties  as  the  directors  shall  require. 

I.I  V. AUDIT    OF    ACCOUNTS    AND    CONSULTING    ACTUARY. 

Art.  1. — At  the  first  meeting  of  the  society  two  auditors 
shall  be  chosen,  one  by  the  directors  and  one  by  the  mem- 
bers present,  for  the  purpose  of  auditing  the  accounts  and 
watching  over  the  expenses  of  the  society,  prior  to  the 
annual  general  meeting.  The  future  appointments  of  au- 
ditors shall  be  made  at  the  annual  general  meetings,  except 
in  the  case  of  death  during  the  year,  when  the  vacancy  shall 
he  Riled  at  the  next  monthly  meeting  by  the  directors  and 
members  respectively  present. 

Art.  2. — The  consulting  actuary  shall  make  an  investiga- 
tion <>f  the  accounts  of  the  society  at  the  end  of  each  year, 
and  at  such  other  times  as  the  directors  think  right,  and  to 
him  all  questions,  as  they  arise,  relating  to  the  value  of 
shares,  redemption  of  mortgages,  etc.,  shall  be  especially 
referred. 

T/V. — REMUNERATION    OP   OFFICERS. 

The  members,  al  an  annual  general  meeting,  may,  with 
tin'  advice  <>f  the  consulting  actuary,  vote  a  sum  of  money 

to  he  paid  to  the  < I i rei ■! ors  ;nid  auditors  for  the   past  year's 


RULES   FOR   BENEFIT   BUILDING   SOCIETIES.  573 

services,  and  likewise  to  the  other  officers  of  the  society, 
over  and  above  any  salaries,  fees  or  other  remuneration, 
which  they  may  have  had  guaranteed  to  them. 

LVI. INDEMNITY    TO    OFFICERS. 

The  trustees,  directors,  auditors,  and  other  officers  of  the 
society  shall  be,  and  hereby  are,  indemnified  and  saved 
harmless  out  of  its  funds  and  property,  from  all  losses,  costs, 
charges,  damages  and  expenses,  which  they  may  incur  or 
bo  put  to  in  execution  of  their  respective  offices,  services,  or 
trusts;  and  none  of  them  shall  be  answerable  for  any  act 
or  default  of  any  other  of  them,  or  for  the  insufficiency  or 
deficiency  in  title  or  otherwise  of  any  security  whatsoever 
which  shall  be  taken  for  the  repayment  of  any  advance,  or 
otherwise,  on  behalf  of  the  society,  unless  the  loss  arising 
by  any  such  means  shall  happen  through  their  own  wilful 
neglect ;  nor  shall  they  be  liable  for  any  banker,  broker  or 
any  person  with  whom  the  funds  of  the  society  shall,  from 
time  to  time,  be  deposited  or  placed  out  for  safe  custody, 
investment  or  otherwise  ;  nor  for  any  involuntary  loss,  mis- 
fortune, or  damage  whatsoever,  which  may  happen  in  the 
execution  of  their  respective  offices,  services,  or  trusts,  or  in 
relation  thereto,  respectively. 

CONSULTING    ACTUARY'S    CERTIFICATE. 

I  hereby  certify  that  the  rules  and  rates  of  the  " 
Permanent  Benefit  Building  Society"  are  founded   upon 
equitable  and  sound  principles,  and  may  safely  be  adopted 
for  its  use. 


Consulting  Actuary. 


"We  hereby  certify  that  the  foregoing  are  the  rules  of 
the  "  Permanent  Benefit  Building  Society." 

)  Three  of  the  Mem- 

I      bers  of  the  said 

)      Society. 

Secretary. 

I  hereby  certify  that  the  foregoing  rules  are  in  conform- 
ity to  law,  and  with  the  provisions  of  the  statute  6  and  7 
"William  IV.,  cap.  32. 

The  Barrister-at-Law  appointed  to  certify 
the  Rules  of  Savings  Banks. 
London,  ,18     . 

Copy  Sent  to  the  Clerk  of  the  Peace. 


574  APPENDIX   I. 

SCHEDULE  OF  FORMS. 

(A.) 

To  the  Directors  of  the  "  Permanent  Benefit 

Building  Society : " 

I  request  to  be  admitted  a  member  of  your  society  in 
respect  of  share. 

Dated  this  day  of  ,  18     . 

Name 

Residence 

Occupation 

(B.) 

Form  of  Transfer. 

I  ,  one  of  the  members  of  the  " 

Permanent  Benefit  Building  Society,"  in  consideration 
of  ,  paid  to  me  by  ,  do  hereby  assign 

and  transfer  my  share  in  the  said  society,  numbered  ,  to 
the  said  ,  his  (or  her)  executors,  administrators, 

and  assigns,  subject  to  the  payments,  rules  and  regulations 
prescribed  by  the  society.     And  I,  ,  sanctioned 

by  the  board  of  directors,  do  hereby  agree  to  accept  the  said 
share  (or  shares)  subject  to  the  same  payments,  rules  and 
regulations. 

As  witness  our  hands  and   seals,   this  day 

of  ,18     . 

(0.) 

To  the  Directors  of  the  "  Permanent  Benefit 

Building  Society : " 

I  request  that  you  will  make  an  advance  to  me  of  £  , 
in  respect  of  share  No.  I  hold  in  the  society,  the  advance 
to  l)c  repaid  in  years. 

Dated  this  day  of  ,  18     . 

Name 

Address 

Occupation 

(D.) 

To  the  Manager  of  the  "  Permanent  Benefit 

Building  Society :" 
Sir:— -I  send  you  the  following  particulars  of  property, 


RULES   FOR    BENEFIT   BUILDING   SOCIETIES.  575 

which  I  am  desirous  of  purchasing  by  auction,  to  be  held 
at  the  in  on  the  day  ,  and 

I  request  that   you   will  take   the   steps  contemplated  by 
Article  I  of  Section  XXXIII  of  the  rules  of  the  society. 
Dated  this  day  of  ,  18     . 

Name 

Address 

No.  of  Certificate 

Date 

Description  and  Extent  of  Property. 

"Where  situate — parish,  county,  etc.  ? 

The  value  per  annum  ? 

By  whom  held  ? 

To  what  use  to  be  applied  by  applicant  \ 

(E.) 

Receipt  to  he  Indorsed  on  Mortgage  Security. 

We,  the  undersigned,  the  trustees  for  the  time  being  of  the 
within-mentioned  Permanent  Benefit  Building  Society,  do 
hereby  acknowledge  to  have  received  of  and  from  the  within- 
named  ,  his  heirs,  executors,  administrators 
and  assigns,  all  monies  intended  to  be  secured  by  the  within- 
written  deed. 

As  witness  our  hands  this  day  of  ,  18 


MR.  SCRATCHLEY'S  FORMS 


OF 


ACCOUNT  BOOKS  AND  EEGISTEES. 

SUITABLE  FOR  A 

BUILDING    SOCIETY. 

REVISED  ISSUE,    1884. 


LONDON : 

C.  and  E.  LAYTON,  FAEKINGDON  BUILDINGS. 


NOTICE. 

The  annexed  specimens  of  the  principal  forms  of  account 
books  and  registers  for  building  societies  (including  that 
given  on  pages  2  and  3  of  the  First  Supplement)  have  been 
tested  by  the  experience  of  more  than  a  quarter  of  a 
century. 

They  were  originally  prepared  with  the  aid  of  our  friend, 
the  late  eminent  accountant,  Mr.  W.  H.  Grey,  of  Lincoln's 
Inn  Fields,  whose  professional  standing  was  marked  by  the 
fact  that  he  was  selected  by  the  Government  to  assess  and 
settle  the  payments  to  be  made  under  the  grant  of  £30,000 
from  Parliament,  with  respect  to  certain  defalcations  in 
savings  banks. 

The  forms  have  been  revised  to  suit  the  latest  systems,  and 
will  only  occasionally  require  such  modifications  as  may  be 
dependent  upon  any  special  directions  and  provisions  in  the 
rules  of  the  society  adopting  them. 

2  Plowden  Building,  Temple,  London. 


MEMORANDUM. 

I. — In  addition  to  the  books  for  which  forms  are  given, 
.'i  Ledger  must  also  be  kept,  in  which,  among  others,  the  fol- 
lowing accounts  should  be  opened  : 
576 


FOEMS.  577 

(i)  Investments  on 

Subscription  Shares. 
Paid-up  Ordinary  Shares. 
Paid-up  Preferential  Shares. 

(ii)   Withdrawals  on 

Subscription  Shares. 
Paid-up  Ordinary  Shares. 
Paid-up  Preferential  Shares. 

(iii)  Advances  on  Mortgage. 

Repayment  Subscriptions. 

Redemption  of  Mortgages. 

Temporary  Advances  to  Members  for  Insurance  and 

Ground  Rents,  etc. 
Management  and  Contingent  Fund. 
Debentures  and  Deposits. 
Interest. 
Bank. 

II. — The  following  are  some  of  the  subsidiary  books : 

(i)  A  Book  of  the  Management  <u><l  Contingent  Fund, 
the  monthly  totals  to  be  transferred  to  the 
Cash-Book. 
(ii)  A  Sub-Ledger  for  the  Borrowing  Members'  Tem- 
porary Advance  Accounts  for  Insurance  and 
Ground  Rents,  etc. 
(iii)  A  Debenture  or  Deposit-Book. 


ACCOUNT  BOOKS  AND  REGISTERS. 

List  of  Forms. 

i. registers. 

1. — Register  of  Members  (  Investing  and  Borrowing). 

2. — ■         "  "    Unadvanckd  Shares. 

3. —         "  "    Withdrawal  ok  Sharks. 

4. —        "  "   Application  for  Advances. 

5. —         "  "    Advancks. 

6. —         "  "   Redemption  of  Mortgages. 

ii. — account  books. 

7. subscription-book. 

8. — Cash-Book. 

9. — Unadvanced  Shareholders'  Ledger. 
10. — Advanced  Shareholders'  Mortgage  Ledger. 

37 


678 


APPENDIX   I. 


No.  I. — Register  of  Members  (Investing  and  Borrowing.) 

[Copyright.] 


s 
< 

0) 

P 

Christian  and 
Surname  of 
Member. 

Occupation. 

Address 

Denomination    of 

shares  held 

whether 

Date  of 
Cessa- 
tion of 

Member 
ship. 

J3 

a 

z 

"So 

Unad- 
vanced 
Shares 

Class  A. 

Class  B. 

Class  C. 

or 
Ad- 
vanced 
Shares. 

[Note — The  bo<>k  prepared  from  this  form  is  to  be  merely  a  register 
of  i  In'  members,  without  any  particulars  respecting  the  shares  held  by 
i  hem.     Each  member's  name  is  to  be  entered  once  only. J 


roitMS. 


579 


No.  2. — Eeffister  of  Fnadvanced  Shares. 


Date    of 

Issue 

of 

Shares. 


Denomination  of  shares 
whether: — 
Subscription  Shares 
(Class  A.);  Paid  up  Or- 
dinary Shares 
(Class  P>) ;  Paid-up 
Preferential  Shares 
(Class  C.) 


-c-a  u 
c~°  Mi 

.sjH 


5     H 


580 


APPENDIX   I. 


No.  3. — Register  of  Withdrawals. 

Investing    Members    who    have    given    notice    (in  accordance  with 

Rule ) ,   that  they  are  desirous  of  withdrawing  from  the  funda 

of  the  Society  the  present  value  of  their  share  or  shares. 


id 

- 

ft 

(3 

.2 

B 

U 

a 

< 

c 
a) 

~ 

o 

■73 
0) 
O 

i"8  • 

■2-S  S 
P-g  « 

Q    1-1-1 

"o 

a> 
.a 

s 
1 

X. 

M 

>   aj 

--2 

e 
2; 

Denomination  of  shares 
whether  : — 
Subscription    Shares 
(Class  A) ;   Paid-up  Or- 
dinary Shares 
(Class  B.) :    Paid-up 
Preferential  Shares 
( Class  C.) 

■3 
'1 

0) 
ft 

Amount  Withdrawn. 

< 

o.S 
u  ~ 
u 

= 
3 

Subscrip- 
tions. 

Interest 

[and 
Eonusj. 

Total. 

roiiMS. 


581 


a 


si 
•w 

ft 

ft 

© 


if) 
© 


© 


•uoispaQ  jo  ajEQ 

•uo;jE3i[ddv  aip 
no  sjo)iaJi([  ju  uoispaQ 

•saqpjpadg 

■uonBAjasqo 

Nature  of  Title  of 

Property. 
If  Freehold  ; 
If  Copyhold,  state 
name  of  Manor  ; 
If  Leasehold,  state 

the  number  of 

years  unexpired  of 

the  lease,  and  the 

rent. 

rt  *.  h 

—    0>   V 

c  3  a. 
'■Sri  o 

M    «    U 

Property 

Proposed  as 

Security. 

Where 

Situated. 

Object  for  which   advance 
is  applied  for : 

For  Building  Purposes. 

For  Purchase  of  Land. 

For  Purchase  of  Houses. 

For  Redeeming  Existing 
Mortgages. 

Number  of 

Shares, 

and  Sums 

Applied 

for. 

c 

a 

< 

6 

3.2 

0) 

■a 

O    3 
V  u 

• 

•uoiyeoqddY  JO  3JEQ 

uaqum^ 

jajsiSa'jj 
i 

bb-2 


APPENDIX   I. 


- 

d 

eg 
© 


if 


© 


•(Xue  ji  ) 

SJEp^DllJEJ  J31JJ0 

P!M  "3qA\ 

ana  uaqAV 

•ju3}j 
punojQ  jo  junouiv 

* 

•prej    uai[A\ 

■ana  «»qAV 

■suimui3i<i 
SDUEJnsuj  jo  junouiy 

# 

Name  of 
( Iffice  in 

which  the 

Property  is 

Insured. 

If 

Property 

is  in  a 

Register 

County 

state  date 

of    Regis 

nation  of 

Mortgage. 

1  >escription 

oi 

Property 

Mortgaged 

and   where 
Situate. 

ffjpf 

=       |  -ajqcAEj  A\Of{ 

Repay 

•jaSpa^j    38e§jjoj\[ 
(sjapioqa.iEqg 

p3DUE.\pV     UI  Ol[0,J 

•psjUEiS  SEW 
SDUEApV  3l|l  IpIqM 
J..'    S.1B3X    J"    IIU3J, 

■-  -.  ~                 junomy 

|J«|     |  uaqurnN 

nnii--L|.\ 

Name  of  Member. 

^  "fc» 


5s 


-: 


«*» 


"K 


o  ^ 


s 

♦a 

o 

C 

i 

- 

o 
- 
— 

I. 

l'OKMS. 


583 


No.  6.— Register  of  Redemptions  of  Mortgages. 

Borrowing  members  who  have  given  notice  to  the  society  ( in  accor- 
dance with  Rule  ),  that  they  are  desirous  of  redeeming  the  mort- 
gages in  connection  with  their  advanced  share  or  shares. 


5   '/>   « 


2       £ 


Name   of  Borrowing 
Member. 


Amount  of 
Redemption 

Money  Pay  Outstanding 
able  rnclu-  |  „„_..„„„  & 
sive  (if   any) 


of  Arrears 
Fines,   Fees, 
and  Expen- 
ses due. 


£.  s.  d. 


Bonuses 

Allotted 
(if  any). 


£.  s.  d. 


—  c  - 


■s.s^ 


584 


APPENDIX    I. 


© 
© 
- 


^© 


© 


Balance  re- 
maining   due, 
and  to  be 
carried  for- 
ward to  next 
month's 
account. 

saupung 
pus  sauijj 

•  uouduosqng 

•JO  JO     JfJ 

jaq:aqAV 

-d 

> 

u 
a 

3 
o 
E 
■< 

•junoosiQ 

FJOX 

■(Aire  jt) 
sjusujXej  JaqJO 

•s.iaquiaT\j  oj 
saauEApy   A"jEJoduia£ 

•(Xue     gi)    sapuaS 
-UJIU03  puE   sasuadxjf 
spjE.woj    suopnqujuof) 

•saaji 
jaqjo  puE  jajsuEJX 

•sauij 

•siuio  j  JaqtO  PUE  duag 
's^oog     ssej      'saitv^ 

•saaj  aDUEJjug 

.2" 

J  J 

3  " 
en 

•auauiA'Eda-y 

•sjuaui;saAUj 

s  Due 

:lusive 
flight 
n  last 
innt. 

•ana  p-'iox 

Total  Amoun 
by  each  mei 
this  month,  in 
of  arrears  br 
forward   froi 
month's  ace 

•saup 
-ung  piiEsauij 

■suonduosqng 

Number 

of 
Shares 

held. 

•paauEApy 

paauEApEUj  1 

•uorj 
-duasqng   /CpqjuojA]    )"  junouiv 

•jaSpari  aS«3}Jo|\;  's.iap[ou.i.u:qs  [ 
pmia'Apv  10                    ■   ii'"l  i 
-ajEqs  P"  iiii.'Apru   |   ui  o 

•jaqiunjti  i°  3"JEfI 

■inqiun\  j.i;  -;       ,  [ 

No.  i 

nightly, 

to  be  tnt 
oj  the  a 

-[This 

tlily. 

ii  .11  mui 
tin-  colt 

form  is  an 
lib  crip 
V'liere    the    Subs 
lunar  m 

rwise,  the  net  1  • 
ti  le  I     Th 

inns  on  this  side 
mmettcet 

or  a 

llen- 

:rip- 
fort- 

•  en- 
are 
uent 

No.  2. — [The   money,   brought   by 
the  member  each  month,  must  be  ap- 
plied to  discharge — 1st,  fines  and  fees; 
2d,  arrears;  and  3d,  current  subscrip- 
tions due.)    The  entries  in  the  columns 
on  this  side  are  made  after  the  mem- 
bers have  paid  their  motiey. 

FORMS. 


585 


© 
o 


00 
© 


•pnox 

•SIU3JI  Jamo  °X 

'i"«a  °x 

•jsajaiuj  oj_ 

c 
to 

e 
o 
U  ■• 

T> 

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ll 

bo 
rt 

<5 
O 

H 

•(Aue  ji)  'sap 
-uaSuiuiof)  puE 
sasuadxg  pju.w 
-o)  snoqnqiajuo3 

•saaj   jaqjo 

pUE   J3JSUEJX 

•sautjj 

•suuojj  Jaqjo 

puE  duay  's^oog 

sse,£  'sa[n^j_ 

■saaj[  aDUEilug 

•sajru 
-uaqaQ  jo  sjisodaQ  ox 

•sasiuiajj 

A\iE.iodiuax  no  saaq 

-uiaj\[  iuojj  pa.uaDa^j  ox 

•aSsS 
-jjojq  jo  suopduiapay;  ox 

•uop 
-duosqng  juaiuAEda^j  ox 

2 

tS 

"en  c 
a  ° 

£ 

o 

H 

•3  sse(3 

saiEqc;    junua 
-japj  j  dn-piE<£ 

•g  sse[3 
•saiEqg  Xjeu 

uoi^duasqng 

R 

CO 

to  s-i 

C   © 


or 

p 

_ 

O 

= 

to 

© 

ri 

-M 

0; 

O) 

^ 

© 

'/. 

>H 

r* 

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co 

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586 


APPENDIX    I. 


O 


IBIOX 

•SU13JI   J3l|JO   *a 

w*u  *a 

•}S8J3JU[    A; J 

JJ0  piE,I   S3.U1J 

-usqaQ  jo  snsodag  Xg 

SJaquOJA]    01 

IsaauEApY'  XjEJodwaj,  Xg 

•pun j  luaSupuo  > 

pUE    JUOUiaSl-'UEJ^   X;| 

c 
o 

"a 

"5 

>. 
- 

(D  s 

|E1JU3 

-jajnjt[    dn    piv(| 

0a  -  !:  0 

acqs  ajeu 
-\\,m  ,  dn  piE,| 

'ssjeqs 

Ivance 
on 

Mortgage. 

Jan. 

March 
April 

June 
July 

y. 


FORMS. 


587 


3 

?.) 

- 

m 

ft? 

CD 
if 

~ 

Q 

39 

0) 

-J 

„ 

o 

- 

£ 

Si 

a; 

-r 

Mi 

r. 

— 

«M 

c 

o 

r. 

^ 

— 

- 

sj 

X 

A 

6 

^ 

- 

<v 

V 

O 

-u 

— 

cS 

in 

1— 

S 

I  o 


03    , , 

3    S 


IP 


"l«l°X      a} 


■piEj  snuojr      |> 


•p3ZI[K3>l   U3l(.\\   3JEl|g 
3l[J  JCJ  ].IEdSE  JOS[E.\\Eip       *0 


•S3JIU[S  }0   IlOTlEZI[B3'a 

jo  [E.wEjpqii  \\  ao 
piEclay    uouduasqng 


pun  .j  oi[}  O)  "'airr,-!  ,\q 
p3LUE3  jsajaju]  Jo  nop 
-duDsqng  uo  sSejuso 

-J3<J     pilE     S33  ,J      'S3UI  J 


•S5[JEUI3^[        {<5 

'°!I°£        « 

•3JE(7        H 

T«°X     h 


•p3»0[[y    snuog 

0 

H 

(•aue  ji)    u:S.jej\; 

a\ 

^i 

•p3Jip3J3    }S3J3)UI 

00 

~«i 

•p3Ai3D3>i  uor.duDsqng 

t» 

•saupung 

puE  S33J  pUB  S3UI  j 

U3 

tt 

c 
o 

ft 

3 

•JE3JJV    UI 

LO 

ana 

■* 

•S>[JEUI3>J 

« 

•°!I°J 

N 

•a;EQ 

H 

(a)  The  amount  received  under  this  head  for  fines,  etc.,  should  at  the  yearly 
or  half-yearly  balancing  of  this  account  be  transferred  to  the  ace ount  ap-\ 
iointed  by  the  Rules,  which  should  provide  therefor. 

(b)  If  column  (S  I  credits  a  lower  rate  of  interest,  by  a  Withdrawal  Table,\ 
than  is  necessary  for  the  realization  of  the  Shares,  a  margin  will  have  to  | 
be  inserted  in  Col.  (y)  at  the  Annual  Estimates  of  Liabilities. 


APPENDIX    II. 


PEEMIUM  PLANS. 

The  following  pages  contained  in  Appendix  II  have  been 
taken  from  the  Ninth  Annual  Report  of  the  United  States 
Commissioner  of  Labor  (1893),  Hon.  Carroll  D.  Wright. 


PREMIUM   PLANS. 

The  funds  of  associations  are  loaned  to  shareholders  as  the  by-laws 
may  prescribe — usually  to  those  who  offer  the  highest  premium. 
Some  associations,  however,  have  a  fixed  or  established  premium  i-ate, 
and,  in  these  cases,  loans  are  awarded  to  the  members  in  the  order  of 
their  applications  or  by  lot. 

The  premium  is  the  amount  which  the  borrower  pays  in  excess  of 
the  legal  interest ;  or  it  may  take  the  shape  of  a  certain  number  of 
payments  of  dues  or  of  interest  to  be  made  in  advance. 

Loans  are  usually  made  only  to  the  shareholders.  If,  however, 
there  be  no  demand  for  money  from  the  shareholders,  some  associa- 
tions provide  for  loaning  their  funds  to  persons  not  shareholders  upon 
such  terms  and  conditions  as  may  be  approved  by  their  directors. 

Loans  are  secured  to  the  association  by  mortgage  on  real  estate  and 
by  a  pledge  of  the  stock  held  by  the  borrowing  member  or  any  other 
security  acceptable  to  the  directors.  When  the  loan  is  for  the  purpose 
of  erecting  a  house  the  real  estate  is  the  house  lot,  which  must  be 
owned  in  fee  simple,  and  the  house  to  be  built  upon  it.  The  borrower 
continues  the  regular  payment  of  dues  on  his  shares  and  interest  on 
his  loan,  and,  if  the  premium  is  not  entirely  paid  in  advance  or  de- 
ducted from  the  loan  in  advance,  then  such  portions  of  the  premium 
as  the  rules  of  the  association  may  require.  In  other  words,  dues  and 
interest  are  usually  paid  periodically  and  premium  may  be.  As  a  rule 
the  plans  of  the  associations  provide  that  loans  on  real  estate  shall  run 
to  the  maturity  of  the  shares  pledged,  the  maturing  value  of  the  shares 
being  equal  to  the  loan  and  by  maturity  satisfying  the  loan.  In  some 
associations,  however,  the  loans  run  for  a  fixed  period,  but  in  nearly 
all  associations  they  may  be  terminated  at  any  time  by  repayment. 

The  regulations  governing  loans  on  the  shares  held  by  a  stockholder, 
without  real  estate  security,  commonly  called  stock  loans,  vary  in 
different  associations.  While  some  advance  only  the  withdrawal  or 
present  values  (the  latter  usually  spoken  of  as  "  book  values  ")  of  the 
shares,  or  only  a  certain  percent,  of  such  values,  others  advance  the 
full  maturing  value  of  each  share  borrowed  on.  but  in  such  cases  bor- 
rowers are  required  to  pledge  such  additional  security  as  may  be 
acceptable  to  the  directors  of  the  association.  Some  associations  apply 
the  same  rules  to  both  real  estate  and  stock  loans,  while  others  have 
adopted  different  rules  for  each. 

589 


590  APPENDIX   II. 

PLAN  1. 

In  this  plan  there  is  no  auction  of  money  or  bidding  for  loans. 
Loans  are  usually  awarded  to  members  in  the  order  of  their  appli- 
cations or  by  lot.  The  borrower  makes  his  regular  payments  of  dues 
and  interest  on  his  loan  until  the  shares  pledged  for  such  loan  have 
reached  maturing  value,  unless  the  loan  is  previously  settled  ;  or  the 
number  and  the  amount  of  his  payments  are  fixed  by  the  rules  of  the 
association. 

PLAN  2. 

Under  this  plan  there  is  no  premium,  but  interest  on  the  loan, 
whether  at  a  fixed  rate  or  at  a  rate  determined  by  bid,  is  paid  by  the 
borrower  in  advance,  either  for  a  fixed  period  or  for  a  period  covered 
by  bid  in  cases  of  competition  for  loans.  The  borrower  receives  the 
remainder  and  pays  no  further  interest  until  the  interest  paid  in  ad- 
vance has  been  consumed.  No  part  of  the  interest  paid  in  advance  is 
returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
the  maturity  of  the  shares. 

Illustration:  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each,  on  which  lie  agrees  to  pay  interest  at  9  per  cent. 
per  annum  for  two  years  in  advance.  He  receives  $820,  but  gives 
security  for  .$1,000.  During  the  first  two  years  he  pays  only  his  regular 
dues.  At  the  expiration  of  two  years  his  monthly  payments  are  as 
follows:  Dues  at  $2  a  share,  $10  ;  interest  on  $1,000  at  9  percent, 
per  annum,  $7.50;  total,  $17.50.  These  payments  continue  until  the 
loan  is  settled  by  the  maturity  of  the  shares  or  by  repayment. 

PLAN  3. 

Under  this  plan  there  is  no  premium.  The  funds  of  the  association 
are  loaned  to  the  stockholder  who  bids  to  make  the  greatest  number 
of  payments  of  dues  and  interest  in  advance  for  the  right  of  prece- 
dence in  obtaining  such  loan:  The  borrower  receives  the  remainder  and 
pays  no  further  dues  and  interest  until  the  amount  of  such  advance 
payments  has  been  consumed. 

illustration:  A  member  secures  a  loan  on  one  share  of  a  maturing 
value  of  $100,  having  agreed  to  pay  dues  and  interest  for  twenty  weeks  in 
advance.  Dues  are  25  cents  a  week  and  interest  at  the  rate  of  6  per 
cent,  per  annum,  payable  for  forty-eight  weeks  each  year,  is  12^  cents 
a  week.  The  borrower  receives  $100,  Less  $5  dues  and  $2.50  interest, 
the  amount  covered  by  his  bid,  or  a  net  amount  of  $92.50.  During  the 
first  twenty  weeks  of  his  loan  he  is  exempt  from  all  payments.  At  the 
expiration  of  this  period  be  begins  the  payment  of  his  regular  monthly 
instalment  dues  and  interest  on  his  loan,  which  he  continues  until  the 
loan  has  been  satisfied. 

PI, AX  4. 

I  rnder  tins  plan  there  is  no  premium.  The  borrower  pays  interest  on 
his  loan  in  regular  instalments,  but  the  principal  is  reduced  period- 
ically by  the  amount  of  dues  paid  in  by  the  borrower,  and  interest  is 
charged  <»n  the  balance  onlj  . 

Illustration:  A  shareholder  having  borrowed  $1,000  on  ten  shares 
of  a  maturing  value  of  $100  each  at  8  per  cent,  per  annum  interest 

pays,  during  the  first  year,  in  add  it  ion  to  his  weekly  dues  of  25  cents  a 
bare, $80  interest  in  monthly  instalments  of  $6. 66f-.  The  dues  paid  by 
him  during  the  year  amounting  to  $\'M)  are  deducted  from  the  prin- 
cipal al  the  end  of  the  year,  leaving  $870  as  a  balance  of  principal  on 
ii  he  pays  $69.60  interest  in  monthly  instalments  of  $5.80 each  dur- 
ing the  second  year,  the  amount  on  which  interest  is  paid  being  in 
this  way  reduced  each  year  until  the  loan  has  been  satisfied. 


PREMIUM    PLANS.  591 


PLAN  5. 


Under  this  plan  there  is  no  premium.  The  principal  is  reduced 
periodically  hy  the  amount  of  dues  and  interest  paid  by  the  borrower, 
and  interest  is  charged  on  the  balance  only. 

Illustration:  A  shareholder  borrows  on  one  share  $200,  which  he 
receives  in  full.  His  first  monthly  payment  will  be  dues  $1,  and  interest 
on  $200  at  4+  per  cent,  per  annum,  75  cents.  The  second  month  lie 
pays  interest  on  $198.25,  the  interest-bearing  principal  being  reduce. I 
by  $1.75,  the  amount  of  dues  and  interest  paid  during  the  preceding 
month.  The  amount  on  which  interest  is  paid  being  in  this  way  re- 
duced each  month  until  the  loan  has  been  satisfied. 

PLAN  6. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  amount  thus  bid  is  deducted  from  the  maturing  value,  and  the 
borrower  receives  the  remainder.  He  gives  security  for  the  gross 
amount  and  pays  interest  thereon.  No  part  of  the  premium  paid  in 
advance  is  returned  to  the  borrower  in  case  of  the  repayment  of  the 
loan  before  the  maturity  of  the  shares. 

Illustration  :  A  loan  is  made  on  five  shares  of  a  maturing  value  of 
$200  each  at  a  premium  of  5  per  cent.,  or  $50.  The  borrower  receives 
$950,  and  thereafter  pays  interest  at  the  rate  of  6  per  cent,  per  annum 
«  mi  si  ,000,  in  monthly  instalments  of  $5  each,  in  addition  to  his  monthly 
dues  on  five  shares  of  stock  at  $1  a  share. 

PLAN  7. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  bid  is  deducted  from  the  maturing  value,  the  borrower 
receiving  the  remainder.  He  gives  security  for  the  gross  amount  and 
pays  interest  thereon.  A  part  of  the  premium  paid  in  advance  is 
returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
the  maturity  of  the  shares,  determined  by  the  length  of  time  the 
scheme  of  the  association  assumes  it  will  take  shares  to  mature. 

Illustration  :  A  shareholder  secures  a  loan  on  one  share  of  a  matur- 
ing \ali:e  of  $200  at  10  per  cent,  premium.  He  receives  $180  in  cash 
and  pays  interest  on  $200  at  6  per  cent,  until  his  loan  is  satisfied.  His 
monthly  payments  are  as  follows  :  Dues,  $1  :  interest,  $1.  It  is 
assumed  his  shares  will  mature  in  one  hundred  months.  If  he  repays 
his  loan  before  maturity,  he  will  be  allowed  one  one-hundredth  part  of 
the  premium  paid  by  him  in  advance  for  each  remaining  month. 

PLAN  8. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot.  A  fixed  premium  is  deducted  from  the  loan  in  advance,  the 
borrower  receiving  the  remainder.  He  gives  security  for  the  gross 
amount,  and  pays  interest  thereon  either  for  a  fixed  period  or  until  his 
loan  is  satisfied,  according  to  the  rules  of  the  association.  No  part  of 
the  premium  paid  in  advance  is  returned  to  the  borrower  in  case  of  the 
repayment  of  the  loan  before  the  expiration  of  the  period  or  the 
maturity  of  the  shares. 

Illustration  :  A  shareholder  secures  a  loan  on  two  shares  of  stock  of 
a  maturing  value  of  $500  each.  The  by-laws  of  the  association  provide 
for  a  uniform  premium  of  $10  on  each  share.  In  this  case  the  borrower 
receives  $0,s0  cash,  but  gives  security  for  $1,000  and  pays  interest 
thereon.  In  addition  to  his  weekly  dues  of  $2  he  pays  $1.20  interest 
per  week. 

PLAN  !>. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot.     A  fixed  premium  is  deducted  from  the  loan  in  advance,  the 


592  APPENDIX    II. 

borrower  receiving  the  remainder.  He  gives  security  for  the  gross 
amount,  and  pays  interest  thereon,  either  for  a  fixed  period  or  until 
his  loan  is  satisfied.  A  part  of  the  premium  paid  in  advance  is  returned 
to  the  borrower  in  case  of  the  repayment  of  the  loan  before  the  expira- 
tion of  the  period  or  the  maturity  of  the  shares. 

Illustration  :  A  shareholder  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $100  each  at  a  fixed  premium  of  20  per  cent.  He  receives 
in  cash  $400,  but  gives  security  for  $500  and  pays  interest  on  the  same. 
His  monthly  payments  are  as  follows  :  Dues  at  fifty  cents  a  share, 
$2.50  ;  interest  on  $500  at  8  per  cent,  per  annum,  $3.33+  ;  total  pay- 
ments each  month,  $5.83|.  If  the  loan  is  repaid  before  the  expiration 
of  the  eighth  year  after  the  issue  of  the  series  of  stock  on  which  the 
loan  has  been  made,  one  thirty-second  part  of  the  premium  paid  will 
be  refunded  for  each  quarter  of  a  year  of  the  said  eight  years  then 
unexpired. 

PLAN  10. 

The  premium,  whether  a  fixed  rate  or  determined  by  bid,  is  deducted 
from  the  loan  in  advance.  The  borrower  receives  the  remainder  and 
gives  security  for  the  gross  amount,  on  which  he  pays  interest.  The 
interest  is  reduced  periodically  by  crediting  the  principal  with  the 
amount  of  instalment  dues  paid  in,  and  charging  interest  on  the  bal- 
ance only. 

Illustration  :  A  shareholder  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $200  each  at  a  premium  of  10  per  cent.  He  receives  $900. 
but  gives  security  for  $1,000,  on  which  he  pays  interest  at  the  rate  of 
6  per  cent,  per  annum.  His  payments  during  the  first  three  months 
are  as  follows:  Dues  on  five  shares  at  $1  per  share  a  month,  $15; 
intei'est  on  $1,000  for  three  months  at  6  per  cent,  per  annum,  $15  ;  total 
for  first  three  months,  $30.  During  the  next,  and  each  succeeding 
three  months,  the  sum  total  of  the  dues  paid  in  by  the  borrower  on  his 
shares  during  the  preceding  three  months  is  deducted  from  the  prin- 
cipal, and  he  pays  interest  on  the  remainder.  His  payments  during 
the  second  three  months  are  :  Dues.  $15  ;  interest  on  $985  for  three 
months,  $14.77+  total,  $29.77|.  The  amount  on  which  he  pays  interest 
is  thus  reduced"  every  three  months  until  the  loan  is  satisfied. 

PLAN   11. 

The  premium  bid  by  the  bor-rower  is  deducted  from  the  loan  in  ad- 
vance, tin-  borrower  receiving  the  remainder.  He  gives  security  forthe 
gro  s  amounl  and  pays  interest  thereon.  He  has  the  option  of  nol  par- 
ticipating in  the  profits,  ami  in  lieu  thereof  has  his  inter*  st  reduced 
periodically  by  crediting  the  principal  with  the  amount  of  dues  paid  in 
and  paying  interest  on  the  remainder  only.  One  one-hundredth  part 
(,t  the  premium  paid  in  advance  is  returned  to  the  borrower  for  each 
unexpired  month  in  case  of  the  repayment  of  the  loan  before  the  ma- 
turity  Of  I  he  shares. 

Illii   trillion    I.:   The  borrower  participates  in  the   profits.      A    share- 
holder secures  ;i  Loan  on  one  share  of  a  maturing  value  of  $200  at  a 
premiumof  10  percent.;  the  borrower  then  receives  $180.     He  gives 
security  for  $200,  on  which  he  paj  3  interest.     1  lis  monthly  payments  are 
lows:    Dues,  $1 ;  interest  on$200a1  6  per  cent,  per  annum  $1. 
Illustration  II. :  The  borrower  who  selects  the  interest -reduction  plan 
i   icipate  in  the  profits.    Taking  the  above  Loan,  the  monthly 
payments  during  the  firsl  j  ear  would  be  as  follows  :  Dues,  $1  ;  interest  on 
■  tit.  per  annum,  $1  ;  total  payments  each  month  during  the 
ar,  $2.     At  the  end  of  the  year  the  principal  is  credited  with  the 
In  ■     paid   in  during  the  year,  reducing  the  interesl  bearing  debt  to 
on  which  t  he  borrower  pays  interesl  during  the  second  year,  his 
monthly  payments  being  as  follows:  hues,  si  ;    interesl  on  $188  at  <"> 
per  cent,  per  annum, 94  cents ;  total  pa\  mentseach  month  during  the 


PREMIUM  PLANS.  f>!i:J 

second  year,  $1.94.  The  amount  on  which  the  borrower  pays  interest 
is  thus  reduced  annually  until  the  loan  has  been  repaid. 

PLAN   12. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  I >i <  I  by  the  borrower  together  with  the  interest  for  the 
full  term  for  which  the  loan  has  been  made  are  deducted  from  the  loan, 

the  borrower  receiving  the  remainder.  He  repays  his  loan  in  equal 
monthly  instalments  in  the  time  specified  for  the  loan.  No  part  <>t  the 
interest  ur  premium  paid  in  advance  is  returned  to  the  borrower  in  case 
of  the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration  :  A  member  secures  a  loan  on  forty  shares  of  a  maturing 
value  of  $25  each  the  first  month  of  a  new  series  at  a  premium  of  5  per 
cent.  It  is  estimated  that  the  shares  will  require  seventy-six  months 
to  mature.  The  interest  on  $1,000  for  this  period,  fixed  by  the  association 
at  $428,  and  the  premium  bid  by  the  borrower,  amounting  to  $50,  are 
deducted  from  the  loan,  leaving  the  borrower  $522.  His  monthly  pay- 
ments then  consist  of  $10  dues  until  maturity  of  his  shares. 

PLAN   13. 

This  plan  is  in  every  respect  similar  to  plan  12,  except  that  a  part  of 
the  interest  paid  in  advance  is  returned  to  the  borrower  in  case  of  the 
repayment  of  the  loan  before  the  maturity  of  the  shares. 

PLAN    14. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium,  if  any,  is  deducted  from  the  loan,  the  borrower  receiving 
the  remainder.  He  gives  security  for  the  gross  amount  of  the  loan, 
and  pays  interest  thereon.  The  premium  bid  determines  the  time  for 
which  the  loan  is  to  run,  the  time  decreasing  as  the  premium  increases. 
No  part  of  the  premium  is  returned  to  the  borrower  in  case  of  the  re- 
payment of  the  loan  before  the  expiration  of  the  time  for  which  it  is 
made. 

Illustration  :  Weekly  payments  on  each  loan  of  $100  are  as  follows  : 
Dues,  25  cents  ;  interest,  15  cents  ;  total,  40  cents,  On  a  loan  made  at 
par  these  payments  continue  for  eighty-five  months  ;  on  a  loan  made  at 
10  per  cent,  premium,  payments  continue  seventy-five  months,  and  so 
on  reducing  the  time  one  month  for  each  $1  of  premium  bid,  except 
that  on  loans  running  for  less  than  four  years  one  month  is  deducted 
for  each  $1.25  of  premium  bid. 

PLAN   15. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  deducted  from  the  loan  in  advance,  the  borrower  receiv- 
ing the  remainder,  He  pays  interest  only  on  the  amount  actually 
received.  No  part  of  the  premium  paid  in  advance  is  returned  to  the 
borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity  of 
the  shares. 

Illusti-ation :  A  member  obtains  a  loan  on  one  share  of  a  maturing 
value  of  $100  at  10  per  cent,  premium.  He  receives $90  cash  and  pays 
interest  on  this  amount  at  the  rate  of  6  per  cent,  per  annum.  His  pay- 
ments are  as  follows  :  Dues  per  week,  25  cents  ;  interest  per  month,  45 
cents.  These  payments  continue  until  the  share  has  reached  the 
maturing  value  of  $100. 

PLAN   16. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  amount  thus  bid  is  deducted  from  the  loan,  the  borrower  receiving 
the  remainder.    The  borrower  pays  interest  only  on  the  amount  actually 


594  APPENDIX   II. 

received.  A  part  of  the  premium  paid  in  advance  is  returned  to  the 
borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity  of 
the  shares. 

Illustration  :  A  shareholder  secures  a  loan  on  one  share  of  a  maturing 
value  of  $300  at  10  per  cent,  premium.  He  receives  $180  and  pays 
interest  on  this  amount.  His  monthly  payments  areas  follows  :  Dues, 
$1  ;  interest  on  §180  at  6  per  cent,  per  annum,  90  cents.  These  pay- 
ments continue  until  the  share  has  reached  the  maturing  value  of  $200. 
One  one-hundredth  part  of  the  premium  paid  in  advance  is  returned  to 
the  borrower  for  each  unexpired  month  in  case  of  the  repayment  of  the 
loan  before  the  maturity  of  the  share. 

PLAN  17. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot.  The  premium,  a  fixed  rate,  is  deducted  from  the  loan  in 
advance,  the  borrower  receiving  the  remainder.  He  gives  security  for 
the  gross  amount,  but  pays  interest  only  on  the  amount  actually  received. 
No  part  of  the  premium  paid  in  advance  is  returned  to  the  borrower  in 
case  of  the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration :  A  member  secures  a  loan  on  one  share  of  a  maturing 
value  of  $100.  A  fixed  premium  of  10  per  cent,  is  deducted  in  advance, 
the  borrower  receiving  $90,  on  which  he  pays  interest  at  the  rate  of  8 
per  cent,  per  annum.  His  monthly  payments  are  as  follows  :  Dues,  50 
cents  ;  interest,  60  cents. 

PLAN  18. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot.  A  fixed  premium  is  deducted  from  the  loan  in  advance,  the 
borrower  receiving  the  remainder.  He  gives  security  for  the  gross 
amount,  but  pays  interest  only  on  the  amount  actually  received  either 
for  a  fixed  period  or  until  his  shares  mature.  A  part  of  the  premium 
paid  in  advance  is  returned  to  the  borrower  in  case  of  the  repayment 
of  the  loan  before  the  maturity  of  the  shares. 

I  llnst  rat  ion  :  A  shareholder  secures  a  loan  on  one  shareof  a  maturing 
value  of  $200.  A  fixed  premium  of  $10  is  deducted  in  advance,  the 
borrower  receiving  $190,  on  which  he  pays  interest  at  the  rate  of  6  per 
cent,  per  annum.  His  payments  are  as  follows:  Dues  per  week,  50 
cents  ;  interest  per  quarter,  $2.85. 


PLAN  19. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  deducted  from  t  he  loan  in  advance,  the  borrower  receiv- 
ing the  remainder.  Be  pays  interest  only  on  the  amount  actually 
received.  The  principal  is  reduced  periodically  by  the  amount  of  instal- 
ineiit  dues  paid  in,  interest  being  charged  only  on  the  balance.  Apart 
of  the  | Hen hii in  paid  in  advance  is  returned  to  the  borrower  in  case  of 
the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

I  lln-l  rat  ion  :  A  shareholder  secures  a  loan  on  oneshare  of  a  maturing 
value  of  $200,  at  a  premium  of  $20.  The  borrower  receives  $180,  on 
which  he  pass  interest  at  the  rate  of  6  per  cent,  per  annum.  The 
principal  is  reduced  annually  by  the  amount  of  dues  paid  in,  and  inter- 
i  i  i  charged  on  the  balance  remaining  at  the  end  of  each  year.  The 
monthly  payments  for  the  first  year  are  as  follows  :  Dues,  $1  ;  interest 
,i  6  per  cent,  per  annum,  90  cents.  For  the  second  year  :  Dues, 
ui:  iv  !  on  $168  at  6  percent,  per  annum.  s|  cents.  The  amount 
(.n  which  the  borrower  pave  interest  is  thus  reduced  annually  until  the 
loan  ha  i  been  repaid. 


PREMIUM   PLANS.  595 

PLAN  20. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  borrower  receives  the  full  amount  of  his  loan  and  pays  interest 
thereon.  The  premium  is  divided  into  a  certain  number  of  equal  parts, 
usually  into  as  many  parts  as  the  scheme  of  the  association  assumes  it 
will  take  months  or  other  periods  of  time  for  shares  to  mature.  These 
premium  instalments  are  paid  periodically,  usually  at  the  same  time 
with  the  dues  and  interest.  They  continue  until  the  entire  amount  of 
the  premium  has  been  paid,  after  which  the  borrower  pays  only  dues 
and  interest  until  the  loan  has  been  settled  either  by  repayment  or  by 
the  maturity  of  the  shares. 

Illustration:  A  shareholder  secures  a  loan  of  $200  at  a  premium  of 
5  per  cent.,  and,  assuming  that  it  will  take  one  hundred  months  lor  the 
shares  to  mature,  his  monthly  payments  for  one  hundred  months  are 
as  follows  :  Dues,  $1  ;  interest  on  $200  at  6  per  cent,  per  annum,  si  ; 
premium,  one  one-hundredth  part  of  $10,  10  cents  ;  total  payments 
each  month,  $2.10. 

PLAN  21. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot  at  a  fixed  premium.  The  borrower  receives  the  full  amount 
of  his  loan  and  pays  interest  on  the  same.  The  premium  is  divided 
into  a  certain  number  of  equal  parts,  usually  into  as  many  parts  as  the 
scheme  of  the  association  assumes  it  will  take  months  or  other  periods 
of  time  for  shares  to  mature.  These  premium  instalments  are  paid 
periodically,  usually  at  the  same  time  with  dues  and  interest.  They 
continue  until  the  entire  amount  of  the  premium  has  been  paid,  after 
which  the  borrower  pays  only  dues  and  interest  until  the  loan  has  been 
settled  by  repayment  or  by  the  maturity  of  the  shares. 

Illustration:  A  loan  of  $1,000  is  awarded  to  a  member  at  a  fixed 
premium  of  25  per  cent.  The  premium  is  divided  into  ninety-six  equal 
parts  ;  one  of  such  equal  parts  is  paid  monthly  at  the  same  time  with 
dues  and  interest.  The  monthly  payments  are  as  follows  :  Dues  on  five 
shares  at  $1  a  share,  $5  ;  interest  on  $1,000  at  8  per  cent,  per  annum, 
$6. 66$  ;  premium,  $2.60.  These  payments  continue  until  the  loan  has 
been  settled,  either  by  repayment  or  by  reason  of  the  shares  having 
reached  the  full  value  of  $200  each. 

PLAN  22. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  total  amount  of  the  premium  bid  is  divided  into  a  certain  number 
of  equal  parts,  usually  into  as  many  parts  as  the  scheme  of  the  associ- 
ation assumes  it  will  take  months  or  other  periods  of  time  for  shares  to 
mature.  A  certain  number  of  these  premium  instalments  are  deducted 
from  the  loan  in  advance,  the  borrower  receiving  the  remainder.  He 
gives  security  for  the  gross  amount  and  pays  interest  on  the  same. 
The  payment  of  the  remaining  instalments  begins  either  immediately 
or  at  the  expiration  of  the  period  for  which  the  premium  was  deducted 
and  continues  until  the  entire  amount  of  the  premium  has  been  paid, 
after  which  the  borrower  pays  only  dues  and  interest  until  the  loan  has 
been  settled  either  by  repayment  or  by  the  maturity  of  the  shares. 

Illustration  :  On  a  loan  on  five  shares  of  a  maturing  value  of  $200 
each,  at  a  premium  of  30  per  cent.,  the  total  premium  of  $300  is  divided 
into  one  hundred  equal  parts  of  $3  each.  Twelve  of  such  parts  are 
deducted  from  the  amount  of  the  loan,  leaving  the  borrower  $964.  The 
payments  each  month  for  eighty-eight  months  are  as  follows  :  Dues  at 
$1  a  share,  $5  ;  interest  on  $1,000  at  6  per  cent,  per  annum,  $5  ;  premium, 
$3  ;  total,  $13.  If,  at  the  end  of  eighty-eight  months,  the  shares  have 
not  matured  the  borrower  continues  to  pay  dues  and  interest  to  ma- 
turity. 


596  APPENDIX   II. 

PLAK  23. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot  at  a  fixed  premium.  Part  of  the  premium  is  deducted  from 
the  loan  in  advance,  the  borrower  receiving  the  remainder.  He  gives 
security  for  the  gross  amount  and  pays  interest  on  the  same.  The 
balance  of  the  premium  is  paid  in  equal  instalments,  usually  at  the 
same  time  with  dues  and  interest,  payment  beginning  either  at  once 
or  upon  the  expiration  of  the  period  for  which  the  premium  was 
deducted,  and  continuing  during  the  entire  term  of  the  loan  or  ceasing 
at  the  end  of  a  fixed  period,  after  which  the  borrower  pays  only  dues 
and  interest  until  the  loan  has  been  settled  either  by  repayment  or  by 
the  maturity  of  the  shares. 

Illustration  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  §200  each,  at  a  fixed  premium  of  30  per  cent.,  or  a  total  of 
$300.  Ten  per  cent,  of  the  premium,  or  $30.  is  deducted  from  the 
amount  of  the  loan,  leaving  the  borrower  $970.  The  balance  of  the 
premium,  $270,  is  divided  into  one  hundred  equal  parts  of  $2.70  each. 
The  monthly  payments  are  as  follows  :  Dues  at  $1  a  share,  $5  ;  interest 
on  $1,000  at  6  per  cent,  per  annum,  $5  ;  premium,  $2.70  ;  total,  $12.70. 
If,  at  the  end  of  one  hundred  months,  the  shares  have  not  matured, 
the  borrower  continues  to  pay  dues  and  interest  to  maturity. 

PLAN  24. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  total  amount  of  the  premium  bid  is  divided  into  a  certain  number 
of  equal  parts.  A  certain  part  of  the  premium  and  the  interest  on 
the  loan  for  a  certain  period  are  deducted  in  advance,  the  borrower 
receiving  the  remainder.  During  the  period  covered  by  the  prepay- 
ment of  the  premium  and  interest  the  borrower  pays  only  his  regular 
dues,  but  at  the  expiration  of  this  period,  in  addition  to  his  dues,  and  at 
the  same  time,  he  pays  one  of  the  remaining  premium  instalments 
and  interest  on  his  loan. 

Illustration :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  40|  per  cent,  premium.  Two-tenths  of  the 
premium  together  with  the  interest  for  one  year  at  the  rate  of  60  cents 
a  share  per  month  are  deducted  from  the  loan,  leaving  the  borrower 
$8  17.  During  the  first  year  of  his  loan  he  pays  only  his  regular  dues 
of  50  cents  a  share  per  month.  After  the  first  year  his  monthly  pay- 
ments are  as  follows:  Dues,  $5;  interest,  $6;  and  premium,  $3.75; 
being  one  one-hundred-and-eighth  of  the  premium  bid  by  him  upon  the 
purchase  of  his  loan. 

PLAN  25. 

The  premium,  whether  a  fixed  rate  or  determined  by  b;d,  is  divided 
into  a  certain  number  <>!'  parts,  usually  into  as  many  parts  as  the  scheme 
of  tint  association  asumes  it.  will  lake  i i ion t  lis  or  other  periods  of  time 
for  shares  to  mature.  These  premium  instalments  are  paid  period- 
ically, usually  at  the  same  time  with  dues  and  interest.  They  con- 
tinue until  the  entire  amount  of  the  premium  lias  been  paid,  after 
which  the   borrower  pays   only    dues   and    interest     until   the  loan    lias 

been  settled  by  repayment  or  by   the  maturity  of  the  shares.    The 
borrower  receives  the  full  amount  of  the  loan,  and  pays  interest  on  the 

same  :    but  the  principal  is  reduced  periodically  by  the  dues  paid  in, and 
intent   i  ,  charged  on  the  balance  only. 

Illustration  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each,  at  a  premium  of  $90.  Assuming  that  it  will  take 
ninety  months  for  the  shares  to  run  to  maturity,  the  premium  is 
divided  into  ninety  equal  parts,  one  of  which  he  pays  each  month.    He 

LVeS     the     full    amount     of    his     loan,    on     which     he     pays    <'»    per 
t,     The    principal    is   credited  every   three  months    with 


PREMIUM   PLANS.  597 

all  dues  paid  in  during  the  preceding  three  months,  and  interest  is 
charged  only  on  the  remainder.  The  payments  each  month  during  the 
first  three  months  are  as  follows  :  Dues  at  50  cents  a  share,  $2.50 ; 
interest  on  $1,000  at  6  per  cent,  per  annum,  $5  ;  premium,  $1;  total 
payments  each  month  during  first  three  months,  $8.50.  Payments  each 
month  during  the  next  three  months  are :  Dues,  $2.50  ;  interest  on 
$992.50  at 6  percent,  per  annum,  $4.96£  ;  premium,  $1  ;  total  payments 
each  month  during  the  second  three  months,  $8.46^.  The  amount  on 
which  the  borrower  pays  interest  is  thus  reduced  quarterly  until  the 
loan  has  been  repaid. 

PLAK  26. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  divided  into  a  certain  number  of  equal  parts,  payable 
at  such  times  as  the  rules  of  the  association  may  require.  An  arbitrary 
reduction  in  the  interest  rate  is  made  periodically. 

Illustration  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  a  premium  of  §100,  the  loan  having  been  taken 
during  the  first  year  of  the  series.  The  premium  is  divided  into  five 
annual  payments,  one  of  which  is  payable  each  year.  The  interest 
during  the  first  year  is  10  cents  per  week  per  share,  second  year  9  cents, 
third  year  8£  cents,  fourth  year  7  cents,  fifth  year  6  cents,  sixth  year  5 
cents,  seventh  year  4  cents,  after  that  3  cents  per  week  per  share. 
The  payments  each  week  during  the  first  year  are  as  follows  :  Dues  at 
25  cents  a  share,  $2.50 ;  interest  on  $1,000  at  10  cents  on  each  §100,  $1  ; 
total  payments  each  week  during  first  year,  $3.50.  The  payments  each 
week  during  the  second  year  are  :  Dues,  $2.50 ;  interest,  90  cents  ; 
total,  $3.40  ;  the  interest  being  reduced  each  year  according  to  the 
foregoing  interest  table. 

PLAN  27. 

Loans  are  awarded  to  shareholders  bidding  highest  premium.  The 
premium  bid  is  a  certain  rate  per  cent,  per  annum,  or  a  certain  amount 
each  month,  or  at  such  periods  of  time  as  the  rules  of  the  association 
require.  The  payment  of  premiums  either  continues  during  the  entire 
term  of  the  loan  or  ceases  at  the  end  of  a  fixed  period.  The  borrower 
receives  the  whole  amount  of  the  loan  and  pays  interest  on  the  same. 

Illustration  :  A  member  secures  a  loan  of  $2,000,  requiring  ten  shares 
of  stock,  on  which  he  has  bid  10  cents  per  share  per  month.  His 
monthly  payments  are  as  follows  :  Dues  at  $1  a  share,  $10  ;  interest 
on  $2,000  at  6  per  cent,  per  annum,  $10  ;  premium,  $1  ;  total  payments 
each  month,  $21.  These  payments  continue  until  the  loan  is  settled  by 
the  maturity  of  the  shares  or  by  repayment. 


PLAI  2§. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot.  The  borrower  receives  the  full  amount  of  his  loan  and  pays 
interest  on  the  same.  The  premium  is  a  certain  rate  per  cent,  per 
annum  or  a  certain  amount  each  month,  or  at  such  periods  of  time 
as  the  rules  of  the  association  require. 

Illustration  :  A  member  secures  a  loan  of  $1 ,000  at  6  percent,  interest 
per  annum  and  at  a  fixed  premium  of  $6.25,  paj-able  monthly.  He 
pledges  ten  shares  of  stock,  payable  monthly,  at  62^  cents  per  share,  to 
be  applied  to  the  payment  of  the  loan.  He  is  also  required  to  carry  one 
additional  share  called  premium  stock  for  each  $100  borrowed,  to  be 
applied  to  the  paymant  of  the  premium.  His  monthly  payments  are 
as  follows:  Dues,  $6.25;  premium,  $6.25;  interest  at  6  per  cent,  per 
annum,  $5  ;  total  payments  each  month,  $17.50. 

39 


598  APPENDIX   II. 

PLAN  29. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  bid  is  either  a  certain  rate  per  cent,  per  annum  or  a  cer- 
tain amount  each  month,  or  at  such  periods  of  time  as  the  rules  of  the 
association  require.  A  certain  number  of  these  premium  instalments 
are  deducted  from  the  loan  in  advance,  the  borrower  receiving  the 
remainder.  The  payment  of  the  remaining  premium  instalments  begins 
either  at  once  or  at  the  expiration  of  the  period  covered  by  the  advance 
payment  and  continues  during  the  entire  term  of  the  loan,  or  ceases  at 
the  end  of  a  fixed  period.  The  borrower  pays  interest  on  the  gross 
amount  of  the  loan. 

PLAN   30. 

Loans  are  awared  to  shareholders  in  the  order  of  their  applications 
or  by  lot.  The  premium  is  either  a  certain  rate  per  cent,  per  annum  or 
a  certain  amount  each  month,  or  at  such  periods  of  time  as  the  rules  of 
the  association  require.  The  premium  for  a  certain  period  is  deducted 
from  the  loan  in  advance,  the  borrower  receiving  the  remainder.  The 
payment  of  the  remaining  premium  instalments  begins  either  at  once 
or  "at  the  expiration  of  the  period  covered  by  the  advance  payment, 
and  continues  during  the  entire  term  of  the  loan,  or  ceases  at  the  end 
of  a  fixed  period.  The  borrower  pays  interest  on  the  full  amount  of 
the  loan. 

Illustration  :  A  member  secures  a  loan  on  ten  shares  of  the  maturing 
value  of  $100  each,  at  a  fixed  premium  of  50  cents  a  share  per  month. 
The  premium  for  the  first  six  months  is  deducted  in  advance,  the  bor- 
rower receiving  $970.  During  the  first  six  months  he  pays  only  dues 
and  interest  on  his  loan.  After  six  months  his  monthly  payments  are 
as  follows  :  Dues  at  60  cents  a  share,  $6  :  interest  at  6  per  cent,  per  an- 
num, $5  :  premium  at  50  cents  a  share,  $5  ;  total  payments  each  month 
until  maturity  of  shares,  §16. 

PLAN  31. 

The  premium,  whether  a  fixed  rate  or  determined  by  bid,  is  either  a 
certain  rate  per  cent,  per  annum  or  a  certain  amount  each  month,  or  at 
such  periods  of  time  as  the  rules  of  the  association  require.  The  bor- 
rower receives  the  full  amount  of  the  loan  and  pays  interest  on  the 
same  ;  but  the  principal  is  reduced  periodically  by  the  amount  of  dues 
paid  in,  and  interest  is  charged  on  the  balance  only. 

Illustration  :  A  member  secures  a  loan  of  §200  on  one  share,  at  a  pre- 
mium of  ten  cents  a  month.  He  receives  the  full  amount  and  pays  in- 
terest on  the  same.  The  "payments  each  month  during  the  first  year 
are  as  follows  :  Dues  on  one  share,  si  ;  interest  on  §200  at  6  per  cent, 
per  annum,  si  ;  premium,  10  cents  :  total  payments  each  month  during 
the  firs!  year,  $2.10.  Payments  each  month  during  the  second  year 
are  :  Dues,  §1  ;  interest  on  $188  at  6  percent,  per  annum,  94  cents  ; 
premium,  10  cents ;  total  payments  each  month  during  the  second  year, 
.-.'hi  ;  and  so  on,  the  interest  being  reduced  each  year  until  the  settle- 
ment of  1  be  loan. 

PL  AX   32. 

This  plan  is  in  every  respect  similar  to  plan  31,  except  that  the  prin- 
cipal  is  periodically  reduced  by  the  amount  of  t  he  dues  and  premiums 
pai<l  Win-in^  the  preceding  term  and  interest  charged  on  the  balance 
only. 

Mln  nation  :  On  a  loan  of  $200  on  one  share  at  a  monthly  premium 
oi   !5  cents  and  at  5  per  cent,  interest,  the  payments  each  month  during 

the    lii    t    year   areas    follows  :      Dues,   Si   ;    interest    at    5   per  cent,  per 

annum,  83    cenl    ;  premium,  26  cents  ;  total,  $2.08£.     Payments  each 
month  during  the  second  year  are  :  Dues,  si  ;  interest  on  $185  at  5  per 


PREMIUM   PLANS.  V.l'.t 

cent,  per  annum,  77T^  cents  :  premium,  25  cents  ;  total  payments  each 
month,  $2.02^g  ;  and  so  on,  the  interest  being  reduced  each  year  until 
the  settlement  of  the  loan. 

PLAN   33. 

This  plan  is  in  every  respect  similar  to  plan  31,  except  that  the  prin- 
cipal is  periodically  reduced  by  the  amount  of  the  dues  paid  in  during 
the  preceding  term,  plus  a  certain  part  of  the  premiums,  and  interest  is 
charged  on  the  balance  only. 

PLAN   34. 

This  plan  is  in  every  respect  similar  to  plan  31.  except  that  the  prin- 
cipal is  periodically  reduced  by  the  amount  of  the  dues  paid  in  during 
the  preceding  term,  plus  the  dividends  accrued,  and  interest  is  charged 
on  the  balance  only. 

PLAN   35. 

This  plan  is  in  every  respect  similar  to  plan  31,  except  that  the  prin- 
cipal is  periodically  reduced  by  the  amount  of  the  dues  and  interest 
paid  in  during  the  preceding  term,  and  interest  is  charged  on  the  bal- 
ance only. 

PLAN   36. 

This  plan  is  in  every  respect  similar  to  plan  31,  except  that  the  prin- 
cipal is  periodically  reduced  by  the  amount  of  the  dues,  premiums  and 
interest  paid  in  during  the  preceding  term,  and  interest  charged  on  the 
balance  only. 

PLAN   37. 

The  borrower  has  the  option  of  paying  interest  on  the  full  amount 
of  his  loan  during  its  continuance  and  participating  in  the  profits,  or  of 
having  his  interest-bearing  principal  periodically  reduced  by  the  amount 
of  the  dues  paid  in  and  receiving  no  dividends.  In  the  first  case  this 
plan  resembles  plans  27  or  28  ;  in  the  second  case,  plan  31. 

PLAN   38. 

The  premium,  whether  a  fixed  rate  or  determined  by  bid,  is  either  a 
certain  rate  per  cent,  per  annum  or  a  certain  amount  each  month,  or 
at  such  periods  of  time  as  the  rules  of  the  association  require.  The 
borrower  receives  the  full  amount  of  the  loan  and  pays  interest  on  the 
same.  An  arbitrary  reduction  in  the  interest  rate  is  made  periodically. 
The  reduction  of  the  interest  rate  may  continue  until  the  loan  has  been 
repaid,  or  until  it  has  reached  a  certain  rate,  at  which  it  continues 
until  the  settlement  of  the  loan. 

Illustration  :  A  member  secures  a  loan  of  $500  on  one  share,  at  a 
weekly  premium  of  10  cents.  His  payments  each  week  during  the  first 
year  are  as  follows  :  Dues,  50  cents  ;  interest,  60  cents  ;  premium,  10 
cents  ;  total  payments  each  week  during  the  first  year,  §1.20.  Payments 
each  week  during  the  second  year  are  :  Dues,  50  cents  ;  interest,  57  cents  ; 
premium,  10  cents  ;  total  payments  each  week  during  the  second  year. 
§1.17  ;  and  so  on,  reducing  the  weekly  interest  3  cents  each  year  until 
the  loan  has  been  settled  by  repayment  or  by  the  maturity  of  the  share. 

PLAN  39. 

The  premium,  whether  a  fixed  rate  or  determined  by  a  bid,  is  either 
a  certain  rate  per  cent,  per  annum  or  a  certain  amount  each  month,  or 
at  such  periods  of  time  as  the  rules  of  the  association  require.  The 
borrower  receives  the  full  amount  of  his  loan  and  pays  interest  on  the 
same  at  a  uniform  rate  for  a  certain  period  or  during  the  <•<  mtinuance  of 
the  loan.     The  premium  is  periodically  reduced  until  it  lias  reached  a 


600  APPENDIX   II. 

certain  rate,  at  which  it  may  continue  for  a  certain  period  or  until  the 
loan  has  been  satisfied. 

Illustration  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  a  premium  of  25  cents  per  share  per  month, 
interest  at  the  rate  of  5|  per  cent,  per  annum.  His  payments  each 
month  during  the  first  year  are  as  follows  :  Dues  at  55  cents  a  share, 
$5.50;  interest,  $4.50:  premium,  $2.50;  total  payments  each  month 
during  the  first  year,  $12.50.  Payments  each  month  during  the  second 
year  are  :  Dues,  $5.50  ;  interest,  $4.50  ;  premium,  $2  ;  total  payments 
each  month  during  the  second  year,  $12  ;  and  so  on,  reducing  the 
premiums  each  year  5  cents  per  share  per  month  for  five  years,  after 
which  the  premium  is  discontinued. 

PLAX  40. 

Under  this  plan  the  premium  and  interest  are  combined.  The  bor- 
rower pays  such  rate  of  premium  and  interest  on  his  loan  as  his  bid  or 
the  rules  of  the  association  require.  He  receives  the  full  amount  of 
the  loan. 

Illustration  :  A  member  secures  a  loan  upon  five  shares  of  a  matur- 
ing value  of  $200  each,  at  6  per  cent,  per  annum  premium  and  interest. 
His  monthly  payments  are  as  follows  :  Dues  at  $1  per  share.  $5  : 
premium  and  interest  on  $1,000  at  6  per  cent,  per  annum.  $5  :  total 
payments  each  month.  $10.  These  payments  continue  until  the  loan 
is  settled  by  repayment  or  by  the  maturity  of  the  shares. 

PLA\  41. 

Under  this  plan  premium  and  interest  are  combined.  The  borrower 
pays  such  rate  of  premium  and  interest  on  his  loan  as  his  bid  or  the 
rules  of  the  association  require.  He  receives  the  full  amount  of  the 
loan.  He  pays  thereon  dues  and  premium  and  interest,  and  an  addi- 
tional sum.  which  at  fixed  periods  is  credited  to  the  principal,  premium 
and  interest  being  charged  on  the  balance  only. 

Illustration:  A  member  secures  a  loan  of  $1,000  on  one  share,  at  6 
per  cent,  per  annum  premium  and  interest.  His  payments  each  month 
during  the  firs!  year  are  as  follows  :  Dues,  $2.50  :  payment  on  princi- 
pal, ss. :::;.'.  ;  premium  and  interest.  $5  :  total  payments  each  month 
during  the  first  year.  $15.83J.  At  the  end  of  the  year  the  principal  is 
credited  with  $100,  the  total  payment  made  during  the  year  on  account 
thereof ,  and  premium  and  interest  is  charged  on  the  balance  only. 
During  the  second  year  his  payments  are:  Dues.  $2.50  ;  payment  on 
principal,  $8,331  :  premium  and  interest.  $1.50  :  total  payments  each 
month  during  the  second  year,  $15.33^  ;  and  soon,  reducing  the  monthly 
payments  of  premium  and  interest  each  year  by  50  cents,  being  a  re- 
duction of  b>  per  cent,  of  the  premium  and  interest  hid.  until  the  sixth 
year,  when  the  principal  is  further  reduced  by  the  total  amount  of  in- 
stalment dues  paid  up  to  that  period  and  premium  and  interest  reduced 
accordingly. 

PLAN  12. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  deducted  from  the  loan  in  advance,  the  borrower  re- 
ceiving  the  remainder.  He  gives  security  for  the  gross  amount  and 
pa      inter    t  on  the  same.    Or,  if  the  borrower  elect,  he  may  receive 

the-  lull  amount  of  liis  loan  without    premium,  hut   in  that  case  he  pays 

a  higher  interest  rate.  A  part  of  the  premium  paid  in  advance  is  re- 
turned to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
t  he  mat  urity  of  t  he  shares. 

Illustration  I.:  \  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each,  at  a  premium  of  10  per  cent.  He  receives  $900, 
hui        i      ecurit}  for  $1,000  and  pays  interest  on  the  same  at  the  rate 


PREMIUM   PLANS.  G01 

of  10  cents  per  week  on  eaoli  $100.  His  bi-weekly  payments  are  as  fol- 
lows :  Dues  at  $1  a  share,  $5  ;  interest  on  $1,000  at  10  cents  a  week  per 
$100,  $2;  total  of  each  bi-weekly  payment,  $7.  These  payments  con- 
tinue until  the  maturity  of  the  shares,  unless  the  loan  has  been  settled 
by  repayment  before  the  expiration  of  the  sixth  year  from  the  date  of 
issue  of  the  shares,  in  which  case  one-sixth  of  the  premium  will  lie  re- 
funded for  every  entire  year  of  the  six  then  unexpired. 

Illustration  II. :  A  member  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $200  each  and  receives  the  full  amount.  $1,000.  He  pays 
no  premium,  but  interest  at  the  rate  of  7  per  cent,  per  annum  on  liis 
loan.  His  bi-weekly  payments  are  as  follows:  Dues  at  $1  a  share,  $5  ; 
interest  on  $1,000  at  7  percent,  per  annum,  $2.69T87;  total  of  each  bi- 
weekly payment,  $7.69Tsg.  These  payments  continue  until  the  loan  has 
been  settled  either  by  maturity  of  shares  or  repayment. 

PLAN  43. 

Loans  are  awarded  to  the  shareholders  in  the  order  of  their  applica- 
tions or  by  lot.  A  fixed  premium  is  deducted  from  the  loan  in  advance. 
The  boiToVer  receives  the  remainder  but  gives  security  lor  the  gross 
amount,  and  pays  interest  on  the  same.  Or.  if  the  borrower  elect,  he 
may  receive  the  full  amount  of  his  loan  without  premium,  but  in  that 
case  he  pays  a  higher  interest  rate.  In  either  case  the  monthly  pay- 
ments continue  until  the  maturity  of  the  shares,  unless  the  loan  has 
been  previously  settled  by  repayment.  No  part  of  the  premium  paid 
in  advance  is  returned  to  the  borrower  in  case  of  the  repayment  of  the 
loan  before  the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $200  each,  at  a  fixed  premium  of  15  percent.  He  receives 
$850,  but  gives  security  for  $1,000  and  pays  interest  on  the  same  at  7 
per  cent,  per  annum.  His  monthly  payments  are  as  follows  :  Dues 
at  $1  a  share,  $5 :  interest  on  $1,000  at  7  per  cent,  per  annum,  $5.83^  ; 
total  payments  each  month.  $10.83 .'. . 

Illustration  II.:  A  member  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $200 each,  and  receives  the  full  amount,  $1,000.  He  pays 
no  premium,  but  interest  at  the  rate  of  10  per  cent,  on  his  loan.  His 
monthly  payments  are  as  follows  :  Dues  at  $1  a  share.  $5;  interest  on 
$1,000  at  10  per  cent.,  $8.33J-  ;  total  payments  each  month.  $13.:;:.; . 

PLAX  44. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applica- 
tions or  by  lot.  A  fixed  premium  is  deducted  from  the  loan  in 
advance.  The  borrower  receives  the  remainder  but  gives  security  for 
the  gross  amount  and  pays  interest  thereon.  In  addition  to  the 
premium  deducted  in  advance,  he  pays  a  fixed  instalment  premium  at 
the  same  time  with  his  dues  and  interest  until  the  loan  is  set  lie!  either 
by  repayment  or  by  the  maturity  of  the  shares.  No  part  of  the 
premium  paid  in  advance  is  returned  to  the  borrower  in  case  of  the 
repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  10  per  cent,  premium.  He  receives  §900,  but 
gives  security  for  $1,000.  on  which  he  pays  interest  at  the  rate  of  ''>'  per 
cent,  per  annum,  and  an  additional  fixed  premium  of  12  cents  per 
share.  His  weekly  payments  are  as  follows  :  Dues  at  25  cents  a  share, 
$2.50  :  interest  on  $1,000  at  6i  per  cent,  per  annum,  $1.25  ;  premium, 
$1.25  ;  total  payments  each  week,  $5. 

PLAJf   45. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot.  A  fixed  premium  is  deducted  from  the  loan  in  advance,  the 
borrower  receiving  the  remainder.     He  gives  security  for  the  gross 


602  APPENDIX   II. 

amount  and  pays  interest  on  the  same.  In  addition  to  the  premium 
deducted  in  advance,  the  borrower  pays  a  fixed  instalment  premium 
at  the  same  time  with  his  dues  and  interest  until  the  loan  has  been 
settled  either  by  repayment  or  by  the  maturity  of  the  shares.  A  part 
of  the  premium  paid  in  advance  is  returned  to  the  borrower  in  case  of 
the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each.  A  premium  of  10  per  cent,  is  deducted  from  the 
loan  in  advance,  the  borrower  receiving  the  remainder,  $900.  He  gives 
security  for  the  gross  amount,  $1,000,  and  pays  interest  and  a  fixed 
premium  of  5  per  cent,  per  annum  on  the  same.  His  monthly  payments 
are  as  follows  :  Dues  at  75  cents  a  share,  $7.50  ;  interest  on  $1,000  at  5 
per  cent,  per  annum,  $4. 16| ;  premium  on  $1 ,000  at  5  per  cent,  per  annum, 
$-t.l6jj ;  total  payments  each  month,  $15.83$.  A  rebate  of  one-eighth  of 
the  premium  deducted  in  advance  is  refunded  for  each  unexpired  year, 
if  the  loan  is  repaid  before  the  maturity  of  the  shares. 

PLAN   46. 

Loans  are  awarded  to  shareholders  bidding  the  highest  instalment 
premium  in  addition  to  the  fixed  premium,  which  is  deducted  from  the 
loan  in  advance.  The  borrower  gives  security  for  the  gross  amount 
and  pays  interest  on  the  same.  The  instalment  premium  bid  is  paid  at 
the  same  time  with  dues  and  interest.  No  part  of  the  premium  paid  in 
advance  is  returned  to  the  borrower  in  case  of  the  repayment  of  the 
loan  before  the  maturity  of  the  shares. 

Illustration  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  a  premium  of  2T6^  per  cent,  per  annum,  or  5  cents 
per  week.  A  fixed  premium  of  $10  per  share  is  deducted  from  his  loan 
in  advance,  leaving  him  $900.  He  gives  security  for  $1,000  and  pays 
interest  on  the  same  at  6  per  cent,  per  annum.  The  weekly  payments 
are  25  cents  per  share,  which  includes  dues,  interest  and  premium. 
Every  six  months  the  interest  and  premium  are  deducted  from  the 
total  payments- and  the  remainder  is  credited  to  the  stock  as  dues. 
The  total  payments  on  ten  shares  for  six  months  are  $65  :  this  amount 
includes  $30  interest  and  $13  premium,  which,  deducted  from  $65, 
leaves  $22  to  be  credited  to  the  stock  as  dues. 

PLAN   47. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  either  deducted  from  the  loan  in  advance  or  paid  in 
instalments,  as  the  borrower  may  elect.  In  the  latter  case  it  is  divided 
into  a  certain  number  of  equal  parts,  which  are  paid  at  the  same  time 
with  dues  and  interest.  No  part  of  the  premium  paid  in  advance  is 
returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
the  trial  urity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  s-.'OO  each,  at  a  premium  of  10  per  cent.  He  receives  $900,  but 
gives  security  for  $1,000,  and  pays  interest  on  the  same  at  the  rate  of 
10  per  cent,  per  annum.  His  monthly  payments  are  as  follows  :  Dues 
at  .si  a  share,  $5 ;  interest  on  $1,000  at  10  per  cent,  per  annum,  $8.33$-; 
total  paj  ments  each  month,  $13.33$-. 

Illustration  II.:  If  the  borrower  elect  to  pay  his  premium  in  instal- 
ments, i  he  amount  of  the  premium  bid,  taking  the  above  case,  would 

be  divided  into  one  hundred  equal  parts,  one  of  which  is  payable 
uioi'l  hly  at  t  he  same  t  hue  w  it  h  dues  and  interest.  He  receives  the  full 
amount  of  his  loan,  for  which  be  gives  security,  and  on  which  he  pays 

interest.     His  monthly  payments  are  as  follows:  Dues,  $5 :  interest, 
premium,  si  ;  total  payments  each  month,  $14.83$.    These  pay- 
ment i  continue  until  the  entire  amount  of  the  premium  has  been  paid, 
after  which  the  borrower  pays  only  dues  and  interest,  until  the  loan 
ieen  lettled  bj  repayment,  or  by  the  maturity  of  the  shares. 


PREMIUM   PLANS.  603 

PLAN   48. 

Loans  are  awarded  to  .shareholders  bidding  the  highest  premium. 
The  premium  is  either  deducted  from  the  loan  in  advance  or  paid  in 
instalments,  as  the  borrower  may  elect.  In  the  latter  case  the  pre- 
mium is  divided  into  a  certain  number  of  equal  parts,  which  are  paid 
periodically  at  the  same  time  with  dues  and  interest.  When  the 
entire  premium  lias  been  paid  in  advance,  a  part  of  it  is  returned  to 
the  borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity 
of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  a  premium  of  15  per  cent.  He  receives  $850,  but 
gives  security  for  the  gross  amount,  $1,000,  and  pays  interest  on  the 
same.  His  monthly  payments  are  as  follows  :  Dues  at  50  cents  a  share, 
$5  ;  interest  on  $1,000  at  5  percent,  per  annum,  $4.1G:-;  ;  total  payments 
each  month,  $9.16f.  In  case  of  the  repayment  of  the  loan  before  the 
end  of  the  eighth  year,  one-eighth  of  the  premium  is  refunded  for  each 
year  that  remains  to  the  maturity  of  the  shares.  Shares  are  supposed 
to  mature  in  eight  years. 

Illustration  II.  :  If  the  borrower  elect  to  pay  his  premium  in  instal- 
ments, the  amount  of  his  premium  bid,  taking  the  above  case,  would 
be  divided  into  one  hundred  equal  parts,  one  of  which  is  payable 
monthly  at  the  same  time  with  dues  and  interest.  He  gives  security 
for  $1 ,000,  and  pays  interest  thereon  at  the  rate  of  5  per  cent,  per  annum. 
His  monthly  payments  are  as  follows  :  Dues  on  ten  shares  at  50  cents 
a  share,  $5;  interest  on  $1,000  at  5  per  cent,  per  annum,  $4.16£;  pre- 
mium, $1.50;  total  payments  each  month,  $10.66|.  These  payments 
continue  until  the  entire  amount  of  the  premium  has  been  paid,  after 
which  the  borrower  pays  only  dues  and  interest  until  the  loan  has  been 
settled  by  repayment  or  by  the  maturity  of  the  shares. 

PLA\  49. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot  at  a  fixed  premium  rate.  The  premium  is  either  deducted 
from  the  loan  in  advance  or  paid  in  instalments,  as  the  borrower  may 
elect.  In  the  latter  case  the  premium  is  divided  into  a  certain  num- 
ber of  equal  parts,  which  are  paid  at  the  same  time  with  dues  and 
interest.  No  part  of  the  premium  paid  in  advance  is  returned  to  the 
borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity  of 
the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  §200  each,  at  a  fixed  premium  of  15  per  cent.  He  receives 
$850,  but  gives  security  for  the  gross  amount,  $1,000,  on  which  he  pays 
interest  at  the  rate  of  10  per  cent,  per  annum.  His  monthly  payments 
are  :  Dues  at  $1  a  share,  $5  ;  interest,  $8.33*  ;  total  payments  each 
month,  $13.33§.  No  part  of  the  premium  paid  in  advance  is  returned 
to  the  borrower  in  case  of  the  repayment  of  the  loan  before  the 
maturity  of  the  shares. 

Illustration  II.  :  If  the  borrower  prefers  to  pay  his  premium  in 
monthly  instalments,  it  is  divided  into  one  hundred  equal  parts,  one 
of  which  is  payable  at  the  same  time  with  his  dues  and  interest.  He 
receives  the  full  amount  of  his  loan,  for  which  he  gives  security  and  on 
which  he  pays  interest.  Taking  the  above  case,  his  monthly  payments 
are  as  follows  :  Dues  on  five  shares  at  $1  a  share,  $5  ;  interest.  $8.33^  ; 
premium,  $1.50  ;  total  payments  each  month,  $14.83^.  These  payments 
continue  until  the  entire  amount  of  the  premium  has  been  paid,  after 
which  the  borrower  pays  only  dues  and  interest  until  the  loan  has  been 
settled  by  repayment  or  by  the  maturity  of  the  shares. 

PLA^J  50. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  either  deducted  from  the  loan  in  advance  or  paid  in 


604  APPENDIX   II. 

instalments  as  the  borrower  may  elect.  In  the  latter  case  the  premium 
is  divided  into  a  certain  number  of  equal  parts,  a  certain  number  of 
winch  ai'e  deducted  from  the  loan  in  advance  and  the  remainder  paid 
at  the  same  time  with  dues  and  interest.  The  borrower  gives  security 
for  the  gross  amount  of  the  loan  and  pays  interest  on  the  same.  IS'o 
part  of  the  premium  paid  in  advance  is  returned  to  the  borrower  in 
of  the  repayment  of  the  loan  before  the  maturity  of  the  shares. 
Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each,  at  15  per  cent,  premium.  He  receives  $850,  but 
gives  security  for  $1,000  and  pays  interest  on  the  same.  His  monthly 
payments  are  as  follows  :  Dues  at  $1  a  share,  $5  ;  interest  on  $1,000 
at  8  per  cent,  per  annum,  $6.66£  ;  total  payments  each  month,  $11. 66$. 
Illustration  II.  :  If  the  borrower  selects  the  instalment  plan  and  the 
premium  bid  is  30  per  cent.,  the  total  premium  of  $800  is  divided  into 
one  hundred  and  twenty  equal  monthly  instalments  of  $2.50  each. 
Twelve  of  these  monthly  instalments  are  deducted  in  advance,  leaving 
the  borrower  $970.  He  gives  security  for  $1,000  and  pays  interest 
thereon.  His  monthly  payments  are  as  follows  :  Dues  on  five  shares 
at  $1  a  share,  $5  ;  interest  on  $1,000  at  8  per  cent,  per  annum,  $6.G6£ ; 
premium,  $2.50  ;  total  payments  each  month,  $14.16|.  These  payments 
continue  for  one  hundred  and  eight  months,  after  which  only  dues  and 
interest  are  paid  until  the  loan  has  been  settled  by  repayment  or  by 
maturity  of  the  shares. 

PLAX  51. 

This  plan  is  in  every  respect  similar  to  plan  50,  except  that  borrowers 
in  this  case  pay  no  interest. 

PLAN  52. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  either  deducted  from  the  loan  in  advance  or  paid  in 
instalments,  as  the  borrower  may  elect.  In  the  latter  case,  the  premium 
is  divided  into  a  certain  number  of  equal  parts,  a  certain  number  of 
which  are  deducted  from  the  loan  in  advance  and  the  remainder  paid 
at  the  same  time  with  dues  and  interest.  When  the  entire  premium 
has  been  paid  in  advance  a  part  of  it  is  returned  to  the  borrower  in  case 
of  the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  a  premium  of  15  per  cent.  He  receives  $850,  but 
gives  security  for  $1,000  and  pays  interest  on  the  same.  His  monthly 
payments  will  be  as  follows  :  Dues  at  50  cents  a  share,  $5  ;  interest  on 
$1,000  at  6  per  cent,  per  annum,  $5  ;  total  payments  each  month,  $10. 
In  case  of  the  repayment  of  the  loan  before  the  maturity  of  the  shares 
all  the  premium  paid  in  advance  with  the  exception  of  one-forty-eighth 
pari  for  each  full  month  the  loan  has  run  is  returned  to  the  borrower. 

Qlustration  II.  :  If  the  borrower  elect  to  pay  his  premium  inmonthly 
instalments,  the  premium  is  divided  into  forty-eight  equal  parts.  One 
of  these  parts,  equal  to  .-•:;.  p."..  is  deducted  in  advance  I  rom  the  amount 
of  the  loan,  leavingthe  borrower  $996.87^.  He  gives  security  tor  $1,000 
and  pays  interest  on  the  same.  His  monthly  payments  are  as  follows  : 
Dues  on  ten  shares  at  50  rents  a,  share,  $5  ;  interest  on  $1,000  at  6  per 
cent,  per  annum,  $5;  premium,  $3. 12£ ;  total  payments  each  month, 
$13.12£.  These  payments  continue  until  the  entire  amount  of  the 
premium  lias  been  paid,  after  which  the  borrower  pays  only  dues  and 
mterei  I  unl  il  I  be  loan  has  been  settled  by  repayment  or  by  the  maturity 
of  the  shares. 

PLAN  53. 

Loans  are  awarded  <<>  shareholders  in  tl rder  of  their  applications 

or  by  lot  at  a  fixed  premium.  The  premium  is  cither  deducted  from 
the  loan  in  advance  or  paid  in  instalments  as  t  he  borrower  may  elect . 
[n  the  latter  case  the  premium  is  divided  into  a  certain  number  of  equal 


PREMIUM   PLANS.  605 

parts,  a  certain  number  of  which  are  deducted  from  the  loan  in  advance, 
and  the  remainder  paid  at  the  same  time  with  dues  and  interest.  The 
borrower  gives  security  for  the  gross  amount  of  the  loan  and  pays 
interest  on  the  same.  No  part  of  the  premium  paid  in  advance  is 
returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each  at  a  fixed  premium  of  L5  per  cent.  He  receives  $850, 
but  gives  security  for  $1,000  and  pays  interest  on  the  same.  His 
monthly  payments  are  as  follows  :  Dues  at  §1  a  share.  $5  ;  interest  on 
$1,000  at  8  per  cent,  per  annum,  $0,6G;j ;  total  payments  each  month, 
fll.66*. 

Illustration  II.  :  If  the  borrower  selects  the  instalment  plan,  the  pre- 
mium, a  fixed  rate  of  30  per  cent,  equal  to  $300  on  a  loan  of  si  ,000,  is 
divided  into  one  hundred  and  twenty  equal  instalments  of  $2.50  each. 
Twelve  of  these  instalments  are  deducted  from  the  loan  in  advance, 
leaving  the  borrower  $970.  He  gives  security  for  $1,000  and  pays  in- 
terest on  the  same.  His  monthly  payments  are  as  follows:  Hues  on 
five  shares  at  $1  a  share,  $5  ;  interest  on  $1,000  at  8  per  cent,  per 
annum,  $6.66£ ;  premium,  $2.50  ;  total  payments  each  month,  $14. 10.;. 
These  payments  continue  until  the  entire  amount  of  the  premium 
has  been  paid,  after  which  the  borrower  pays  only  dues  and  inter.  I . 
until  the  loan  has  been  settled  by  repayment  or  by  the  maturity  of  the 
shares. 

PL.AW  54. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot  at  a  fixed  premium.  The  premium  is  either  deducted  from  the 
loan  in  advance  or  paid  in  instalments  as  the  borrower  may  elect.  In 
the  latter  case  the  premium  is  divided  into  a  certain  number  of  equal 
parts,  a  certain  number  of  which  are  deducted  from  the  loan  in  advance, 
and  the  remainder  paid  at  the  same  time  with  dues  and  interest.  The 
borrower  gives  security  for  the  gross  amount  of  the  loan  and  pays 
interest  on  the  same.  A  part  of  the  premium  paid  in  advance  is 
returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each,  at  a  fixed  premium  of  15  per  cent.  He  receives 
$850,  but  gives  security  for  $1,000  and  pays  interest  on  the  same  at  7 
per  cent,  per  annum.  His  monthly  payments  are  as  follows  :  Dues  at 
$1  a  share,  $5  ;  interest  on  $1,000  at  7  per  cent,  per  annum,  $5.83^  ;  total 
payments  each  month,  $10,831.  Such  part  of  the  premium  paid  in 
advance  as  the  board  of  directors  may  determine  is  returned  to  the 
borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity  of 
the  shares. 

Illustration  II.  :  If  the  borrower  selects  the  instalment  plan,  the  pre- 
mium, a  fixed  rate  of  30  per  cent.,  equal  to  $300  on  a  loan  of  $1,000,  is 
divided  into  one  hundred  and  twenty  equal  instalments  of  $2.50  each. 
Twelve  of  these  instalments  are  deducted  from  the  loan  in  advance, 
leaving  the  borrower  $970.  He  gives  security  for  $1,000  and  pays 
interest  on  the  same,  His  monthly  payments  are  as  follows  :  Dues  on 
five  shares  at  $1  a  share,  $5  ;  interest  on  $1,000  at  7  per  cent.,  $5.83|  : 
premium,  $2.50  ;  total  payments  each  month,  $13. 33^.  These  payments 
continue  until  the  entire  amount  of  the  premium  has  been  paid,  after 
which  the  borrower  pays  only  dues  and  interest  until  the  loan  has  been 
settled  by  repayment  or  by  the  maturity  of  the  shares. 

PLAN  55. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  either  deducted  from  the  loan  in  advance  or  paid  in 
instalments  as  the  borrower  may  elect.     In  the  latter  case  the  premium 


606  APPENDIX   II. 

is  divided  into  a  certain  number  of  equal  parts,  which  are  paid  at  the 
same  time  with  dues  and  interest.  The  borrower  pays  interest  not  only 
on  his  loan  but  also  on  the  balance  of  his  premium  remaining  unpaid. 
"When  the  entire  premium  has  been  paid  in  advance  a  part  of  it  is 
returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 
the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  one  share  of  a  maturing 
value  of  $200,  at  20  per  cent,  premium.  He  receives  §100,  but  gives 
security  for  $200,  and  pays  interest  on  the  same.  His  monthly  pay- 
ments are  as  follows  :  Dues,  $1  ;  interest  on  $200  at  6  per  cent,  per 
annum,  $1  ;  total  payments  eath  month,  $2. 

Illustration  II.  :  If  the  borrower  selects  the  instalment  plan,  the 
premium  is  divided  into  a  number  of  equal  parts  equal  to  the  number 
of  months  remaining  of  the  existence  of  the  series  of  stock  upon  which 
the  loan  is  made,  calculating  upon  the  basis  of  eight  years  for  the 
existence  of  each  series.  Assuming  the  loan  to  have  been  made  at  the 
beginning  of  a  series,  the  premium  of  $40  would  be  divided  into  ninety- 
six  equal  parts  of  41|  cents  each.  The  borrower  receives  $200  and  pays 
interest  on  both  principal  and  the  premium  remaining  unpaid.  The 
interest  on  the  premium  is  averaged  yearly,  making  all  monthly  instal- 
ments payable  during  any  year  equal  in  amount.  The  monthly  pay- 
ments during  the  first  year  are  as  follows  :  Dues,  $1 ;  interest  on  loan, 
$1  :  premium,  41  f  cents ;  interest  on  premium,  18f  cents ;  total, 
$2.60T5o.  Monthly  payments  second  year  :  Dues.  $1  ;  interest  on  loan, 
$1  :  premium,  41| ;  interest  on  premium,  16^  cents ;  total,  $2.57-j4  ; 
and  so  on,  interest  on  the  premium  decreasing  each  year  by  2|  cents 
per  month. 

The  premium  is  averaged  annually  as  follows  : 

Total  premium  for  eight  years $40.00 

Total  payment  of  premium  during  the  first  year 5.00 


Leaving  balance  of  premium  due  at  end  of  first  year 35.00 

Add  to  this  one-half  of  premium  for  first  year 2.50 

Compute  interest  at  6  per  cent,  per  annum  on 37.50 

PLAX  56. 

This  plan  is  in  every  respect  similar  to  plan  55,  except  that  loans  are 
made  at  a  fixed  premium  rate  instead  of  to  the  highest  bidder. 

PLA1V  57. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
Tli'-  l>i<l  may  either  be  a  gross  amount  to  be  deducted  from  the  loan  in 
advance,  or  a  certain  amount  to  be  paid  periodically.  In  the  first 
case  the  premium  is  deducted  from  the  loan  in  advance,  but  the  bor- 
rower gives  security  for  the  gross  amount  of  tlie  loan,  and  pays  interest 
on  the  same.  A  part  of  the  premium  paid  in  advance  is  returned  to 
the  borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity 
of  the  shares.  In  t  lie  second  rase  tiie  borrower  receives  the  full  amount, 
gives  security  for  the  same,  and  pays  interest  thereon,  and  such 
amount  of  premium  periodically  as  Ids  bid  requires. 

Illustration  I.:  A  member  secures  a  loan  on  one  share  of  a  maturing 
value  of  $800,  at  a  premium  of  $30.  The  borrower  receives  $270,  but 
security  for  $300,  on  which  he  pays  6  per  cent,  interest  per 
annum.  The  payments  are  as  follows:  Dues  on  one  share,  payable 
weekly,  50  cents:  interest  on  $300  at  6  per  cent,  per  annum,  payable 
monthly,  $1.50.    These   payments  continue  until   the  share  reaches 

mat  urii  v.  unless  t  he  loan  is  pre\  ioiisly  repaid,  in  which  case  it   is  again 

awarded  to  the  highest  bidder,  and  the  former  premium  shall  be  paid 

to   the  original    borrower,    provided    the    premium   In*  no  less  than  the 


PREMIUM   PLANS.  607 

original ;  if  less  he  loses  the  difference,  and  if  more  the  advance  of  the 
premium  goes  to  the  benefit  of  the  association. 

Illustration  II.  :  A  member  secures  a  loan  on  one  share  of  a  matur- 
ing value  of  $100,  at  a  premium  of  5  cents  a  week.  He  receives  the  full 
amount  and  pays  interest  thereon.  His  weekly  payments  are  as  fol- 
lows :  Dues,  20  cents;  interest,  12  cents;  premium,  5  cents;  total 
payments  each  week,  87  cents. 

PLAN  5§. 

Loans  are  awarded  to  shareholders  in  the  order  of  their  applications 
or  by  lot  at  a  fixed  premium.  The  premium  is  either  deducted  from 
the  loan  in  advance  or  paid  in  instalments  as  the  borrower  may  elect. 
In  either  case  he  gives  security  for  the  gross  amount  of  the  loan  and 
pays  interest  on  the  same.  When  the  entire  premium  lias  been  paid  in 
advance  a  part  of  it  is  returned  to  the  borrower  in  case  of  the  repay- 
ment of  the  loan  before  the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  twenty  shares  of  a 
maturing  value  of  §100  each,  at  a  fixed  premium  of  $25  a  share.  He 
receives  $1,500,  but  gives  security  for  $2,000.  and  pays  interest  on  the 
same  at  the  rate  of  6  per  cent,  per  annum.  His  monthly  payments  are 
as  follows  :  Dues,  at  50  cents  a  share,  $10  ;  interest  on  $2,000  at  6  per 
cent,  per  annum,  $10  ;  total  payments  each  month.  $20.  In  case  of  the 
repayment  of  the  loan  before  the  maturity  of  the  shares  one-tenth  of 
the  premium  paid  in  advance  is  returned  to  the  borrower  for  every  year 
then  unexpired. 

Illustration  II.  :  In  this  case  the  borrower  pays  his  premium  in 
monthly  instalments  at  the  fixed  rate  of  50  cents  per  share.  He  gives 
security  for  $2,000,  on  which  lie  pays  interest  at  the  rate  of  6  per  cent. 
His  monthly  payments  are  as  follows :  Dues  on  twenty  shares  at  50 
cents  a  share,  $10 ;  interest  on  $2,000  at  6  per  cent,  $10  ;  premium  at 
50  cents  a  share,  $10  ;  total  payments  each  month,  $80. 

PLAN  59. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  entire  premium  is  either  deducted  from  the  loan  in  advance  or 
part  of  it  is  deducted  in  advance  and  the  balance  paid  in  instalments 
as  the  borrower  may  elect.  In  either  case  the  borrower  gives  security 
for  the  gross  amount  of  the  loan  and  pays  interest  on  the  same.  No 
part  of  the  premium  paid  in  advance  is  returned  to  the  borrower  in  case 
of  the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $200  each,  at  a  premium  of  GO  cents  a  share  per  month. 
Twelve  instalments,  equal  to  $36,  are  deducted  from  the  loan  in 
advance,  leaving  the  borrower  $964.  He  gives  security  for  $1,000,  and 
pays  interest  thereon.  The  remaining  premium  instalments  are  paid 
monthly,  with  dues  and  interest,  beginning  from  the  date  of  the  loan 
and  continuing  for  not  more  than  one  hundred  and  eight  months,  mak- 
ing a  total  premium  of  $360.  The  monthly  payments  for  one  hundred 
and  eight  months  are  as  follows  :  Dues  at  $1  a  share,  $5 ;  interest  on 
$i,000  at  7  per  cent,  per  annum.  $5.83^  ;  premium  at  60  cents  per  share, 
$3  ;  total  payment  each  month  for  one  hundred  and  eight  months, 
K18.83J-.  The  subsequent  payments  would  be:  Dues,  $5;  interest, 
$5.S3J  ;  total  payments  each  month,  $10.83^. 

Illustration  II.  :  In  this  case  the  premium  bid,  60  cents  a  share  per 
month  on  five  shares,  equals  for  ten  years  $360.  A  reduction,  determined 
1>\  the  board  of  directors,  is  made  if  the  premium  is  paid  in  advance. 
Supposing  a  reduction  of  40  per  cent,  is  allowed,  it  would  leave  a 
premium  of  $216  to  be  deducted  from  the  loan,  leaving  the  borrower 
$~S4.  He  gives  security  for  $1,000,  and  pays  interest  on  the  same  at  7 
per  cent,  per  annum.     His  monthly  payments  are  as  follows  :   Dues  on 


608  APPENDIX   II. 

five  share?  at  $1  a  share,  $5  ;  interest  on  $1,000  at  7  percent,  per  annum, 
$5,834.  No  part  of  the  premium  paid  in  advance  is  returned  to  the 
borrower  in  case  of  the  repayment  of  the  loan  before  the  maturity  of 
the  shares. 

PLA1V  60. 

Loans  are  awarded  to  shareholders  binding  the  highest  premium. 
The  entire  premium  is  either  deducted  from  the  loan  in  advance  or 
part  of  it  is  deducted  in  advance  and  the  balance  paid  in  instalments. 
In  either  case  the  borrower  gives  security  for  the  gross  amount  of  the 
loan  and  pays  interest  on  the  same.  When  the  entire  premium  has 
been  paid  in  advance  a  part  of  it  is  returned  to  the  borrower  in  case  of 
the  repayment  of  the  loan  before  the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  maturing 
value  of  $200  each,  at  a  premium  of  50  cents  a  share  per  month. 
Twelve  instalments,  equal  to  $30,  are  deducted  from  the  loan  in 
advance,  leaving  the  borrower  $970.  He  gives  security  for  $1,000  and 
pays  interest  on  the  same.  The  remaining  premium  instalments  are 
paid  monthly,  with  dues  and  interest,  beginning  from  date  of  loan  and 
continuing  for  not  more  than  one  hundred  and  eight  months,  making 
a  total  premium  of  $300.  The  monthly  payments  for  one  hundred  and 
eight  months  are  as  follows  :  Dues  on  five  shares  at  $1  a  share,  $5  ;  inter- 
est on  $1,000  at  7  per  cent,  per  annum,  $5.83£  ;  premium  at  50  cents  a 
share,  $2.50  ;  total  paj'ments  each  month  for  one  hundred  and  eight 
months,  $13. 33  J.  The  subsequent  payments  are:  Dues,  $5 ;  interest, 
$5,83£;  total  payments  each  month,  $10.83^. 

Illustration  II.  :  In  this  case  the  premium  bid,  50  cents  a  share  per 
month  on  five  shares,  equal  for  ten  years  $300.  A  reduction  of  this 
of  40  per  cent,  is  made  if  the  premium  is  paid  in  advance,  or  an  amount 
equal  to  $120,  leaving  the  premium  to  be  deducted  in  advance  $180. 
The  borrower  then  receives  $820,  but  gives  security  for  $1,000,  and 
pays  interest  on  the  same  at  7  percent,  per  annum.  His  monthly  pay- 
ments will  be  :  Dues  on  five  shares  at  $1  a  share,  $5  ;  interest  on  $1,000 
at  7  per  cent,  per  annum,  $5.83J.  In  case  of  the  repayment  of  the  loan 
before  the  maturity  of  the  shares,  one-tenth  of  the  premium  paid  in 
advance  is  returned  to  the  borrower  for  each  unexpired  year. 

FLAW  61. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  cither  deducted  from  the  loan  in  advance  or  paid  in 
instalments.  It  is,  however,  not  forfeited  to  the  borrower,  but  is 
placed  to  his  credit,  either  in  whole  or  in  part.  He  gives  security  for 
the  lull  amount  of  the  loan  and  pays  interest  thereon. 

illustration  I.  :  If  the  maturing  value  of  a  share  is  $200  and  a  member 
bids  'J5  per  cent,  premium,  he  receives  in  cash  $150  hut  pays  interest  on 
$200.  When  the  dues  and  profits  equal  the  net  amount  received  by 
the  borrower,  his  loan  is  cancelled. 

on  II.  :  At  a  premium  of  $1  a  share  a  loan  of  $200  costs  the 
borrower,  bi-weekly,  50  cents' dues,  $1  premium,  and  $1  interest — total 
of  each  bi-weekly  payment,  $2.50.  Of  this  amount  $1.50  paid  on  account. 
of  dues  and  premium  is  credited    to  the  borrower,  only  the  interest 

■  to  the  association.  If  the  borrower  bids  a  premium  of  more 
t  han  $1 .  I  he  excess  goes  to  the  general  fund  of  (he  associal  ion  and  not  to 

individual  credil  of  the  borrower.  The  payments  continue  until 
t  h^  dues,  together  with  the  premium  and  dividends,  equal  the  amount 
«,t  the  loan. 

PLAN  62. 

Under  this  plan  I  he  premium  is  either  a  fixed  rate  or  determined  by 

bid.    The  borrower  receives  the  full  amount  of  the  loan,  lml  gives 

irity  covering  both   the  loan  and  the  premium,  and  pays  interest 


PREMIUM    PLANS. 


609 


on  the  amount  actually  received  by  him  until  the  shares  reach  the 
value  of  the  face  of  the  mortgage. 

Illustration:  A  member  borrows  on  one  share  $100,  at  a  premium 
of  10  per  cent.  He  gives  security  for  both  the  loan  and  premium,  $1 10, 
but  he  pays  interestonlyon$l00,  on  amount  received.  His  weekly  pay- 
ments areas  follows  :  Dues,  25  cents  ;  interest  on  $100  at  0.24  per  cent, 
per  annum,  12  cents  ;  total  payments  each  week.  M7  cents.  These 
payments  continue  until  the  share  lias  reached  the  value  of  §110,  unless 
the  loan  has  been  previously  repaid. 

PLASi  63. 

Under  this  plan  the  premium  is  either  a  fixed  rate  or  determined  by 
bid.  The  borrower  receives  the  full  amount  of  the  loan,  but  gives 
security  covering  both  the  loan  and  the  premium,  and  pays  interest  on 
both  until  the  shares  reach  the  value  of  the  face  of  the  mortgage. 

Illustration  :  A  member  secures  a  loan  of  $200  on  one  share,  at  a 
premium  of  20  per  cent.  He  receives  the  full  amount  of  $200,  and  gives 
security  for  $240,  on  which  he  pays  interest.  His  monthly  payments 
are  as  follows  :  Dues,  $1  ;  interest  on  $240  at  6  per  cent,  per  annum, 
$1.20  ;  total  payments  each  month,  $2.20.  These  payments  continue 
until  the  share  has  reached  the  value  of  $240,  unless  the  loan  has  been 
previously  repaid. 

PLAN  64. 

Under  this  plan  the  premium  is  either  a  fixed  rate  or  determined  by 
bid.  The  borrower  receives  the  full  amount,  but  gives  security  covering 
both  the  loan  and  the  premium,  and  pays  interest  on  both.  The 
premium  is  paid  in  instalments,  usually  at  the  same  time  with  dues  and 
interest.  Payments  of  dues,  premiums,  and  interest  continue  until  the 
shares  reach  maturing  value. 

Illustration:  A  member  borrows  $1,000  on  ten  shares  of  a  maturing 
value  of  $100  each,  at  a  premium  of  25  per  cent.  He  receives  $1,000, 
but  gives  security  for  $1,250.  the  amount  of  his  loan  and  premium. 
He  pays  the  premium  in  monthly  instalments  by  taking  three  additional 
shares  and  paying  dues  thereon.  His  monthly  payments  are  as 
follows  :  Dues  on  ten  shares  at  50  cents  a  share,  $5  ;  dues  on  three 
additional  shares  in  payment  of  premium,  $1.50  ;  interest  on  $1,250  at 
7  per  cent,  per  annum,  $7.20 J- ;  total  payments  each  month,  $13. 79$. 
These  payments  continue  until  his  shares  have  reached  maturity,  when 
he  receives  $50,  the  difference  between  the  debt  and  the  maturity  value 
of  thirteen  shares. 

PLAIS  65. 

In  this  case  the  borrower  receives  the  full  amount  of  the  loan,  but 
gives  security  covering  both  the  loan  and  the  premium,  and  pays 
interest  on  both  until  the  shares  pledged  for  the  loan  reach  maturing 
value. 

Illustration  :  A  member  borrows  $150  on  one  share,  at  a  premium  of 
10  per  cent.  He  receives  the  full  amount  of  $150  and  gives  security 
for  $165,  on  which  he  pays  interest  at  the  rate  of  6  percent,  per  annum. 
Payments  are  bi-weekly  and  are  as  follows  :  Dues,  50  cents  ;  interest 
on  $165  at  6  per  cent.,  38^  cents.  These  payments  continue  until  the 
share  has  reached  the  value  of  $150,  being  the  maturing  value  of  shares, 
unless  the  loan  is  previously  repaid.  Although  the  premium  is  included 
in  his  mortgage,  the  borrower  does  not  really  pay  it  ;  in  fact,  the  only 
premium  he  pays  is  the  interest  on  the  difference  between  $105  and 
$150,  the  amount  actually  received. 

PLAN  66. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  borrower  gives  security  for  the  loan,  the  premium,  in  whole  or  in 
part,  and  the  total  dues  for  a  definite  period.     This  he  pays  off  in  equal 


610  APPENDIX    II. 

instalments  extending  over  a  definite  period,  at  the  expiration  of  which 
the  loan  is  cancelled.  A  rebate  is  allowed  if  the  loan  is  repaid  before 
the  end  of  the  period. 

Illustration  :  A  loan  of  $500  is  made  at  a  premium  of  $100  ;  these  two 
amounts  are  added  to  the  dues  on  one  share  of  stock  for  ten  years, 
which  at  25  cents  per  week  amount  to  $130.  The  borrower  receives 
$50  I,  but  gives  security  for  $780.  the  total  sum  of  the  loan,  dues,  and 
premium.  The  total  amount  cf  his  mortgage  is  paid  in  ten  years  in 
monthly  instalments  of  $6.08|each.  If  more  than  $100  premium  is  bid, 
the  excess  is  deducted  from  the  $500,  the  borrower  receiving  the 
remainder,  but  giving  security  for  the  full  amount,  and  discharging 
his  debt  by  monthly  payments  as  illustrated  above. 

If  a  loan  is  repaid  before  maturity,  rebates  are  allowed  as  follows : 
If  repaid  at  any  time  prior  to  the  expiration  of  five  years,  the  borrower 
is  allowed  a  rebate  of  one-half  of  the  premium  instalments  for  five 
years,  and  all  the  dues  for  five  years.  For  example  :  At  the  end  of 
the  year  he  has  paid  $73  on  his  mortgage,  of  which  $50  is  return  of 
loan.  $10  is  premium,  and  $13  is  dues.  He  now  desires  to  pay  off  his 
entire  indebtedness,  and  the  cash  required  of  him  for  this  purpose  is 
$567,  stated  as  follows: 

Original  amount  of  mortgage $730.00 

Deduct  amount  paid  during  one  year 73.00 

Balance  due 657.00 

From  this  balance  deduct  50  per  cent,  of  five  years'  premium 

instalments  (50  per  cent,  of  $50)  $'35.00 

Also  deduct  all  of  five  years'  dues  ($13X5) 65.00 

90.00 

Amount  required  to  pay  off  indebtedness 567.00 

If  the  debt  is  paid  at  any  time  after  the  expiration  of  five  years,  the 
borrower  is  allowed  a  rebate  of  50  per  cent,  of  the  premium  instal- 
ments,  and  all  of  the  dues  unpaid. 

Members  who  borrow  after  having  paid  dues  prior  to  borrowing  are 
given  credit  for  the  withdrawal  value  of  their  stock  at  the  time  the 
loans  are  made,  but  such  credit  is  not  given  until  the  expiration  of  one 
year  from  date  of  loan.  Thus,  suppose  in  the  case  of  the  borrower 
above  cited,  his  share  at  the  time  he  secured  his  loan  had  a  withdrawal 
value  of  $'25.  During  the  first  year  of  the  loan  he  is  required  to  pay  the 
full  amount  of  instalments,  $73.  At  the  end  of  the  year  he  is  credited 
with  the  withdrawal  value  of  his  share,  $25,  and  during  the  second 
year  of  his  loan  he  is  required  to  pay  only  $48.  After  the  second  year 
until  the  loan  is  paid  off,  he  pays  the  full  amount,  $73,  each  year. 

PLAN  67. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
Tli.'  premium  is  either  deducted  from  the  loan  in  advance  or  the  bor- 
r<  »wer  receives  the  full  amount  as  may  be  agreed  upon.  If  the  premium 
is  deducted,  the  borrower  receives  the  balance,  but  gives  security  for 
the  full  amount  and  pays  interest  thereon.  If  the  borrower  receives 
the  full  amount  of  the  loan,  he  gives  security  for  both  loan  and  pre- 
mium, and  pays  interest  on  the  same.  Payments  of  dues  and  interest 
continue  until  the  shares  reach  a  value  equal  to  the  amount  of  the  se- 
curity  given  by  the  borrower.  No  pari  of  the  premium  paid  in  advance 
i    returned  to  the  borrower  in  case  of  the  repayment  of  the  loan  before 

t  he  mat  in  il  \    of  1  he   shares. 

Illu  tration  t. :    A  mber  secures  a  loan  of  five  shares  of  a  maturing 

value  of  $100  each,  a1  a  premium  of  id  |mt  cent.     He  receives  $150,  but 

hi  itj    for  $500,  "u  which  he  pays  dues  and    interest. 


PREMIUM   PLANS.  (311 

Illustration  II.  :  In  this  case  the  borrower  receives  $500,  but  gives 
security  for  $550,  on  which  he  pays  dues  and  interest  until  the  shares 
reach  the  value  of  $550,  unless  previously  repaid. 

PLAN  68. 

Loans  are  awarded  to  shareholders  bidding  the  highest  premium. 
The  premium  is  either  deducted  from  the  loan  in  advance  or  the  bor- 
rower receives  the  full  amount  as  may  be  agreed  upon.  If  the  pre- 
mium is  deducted,  the  borrower  receives  the  remainder,  hut  gives  se- 
curity for  the  gross  amount  and  pays  interest  thereon.  If  the  bor- 
rower receives  the  full  amount  of  the  loan,  he  gives  security  on  both 
loan  and  premium  and  pays  interest  on  the  same.  In  either  case  the 
principal  is  reduced  periodically  by  the  amount  of  dues  paid  in  on  the 
shares  borrowed  on,  and  interest  is  charged  on  the  remainder.  No  re- 
bate of  premium  is  allowed  in  case  of  the  repayment  of  the  loan  before 
the  maturity  of  the  shares. 

Illustration  I.  :  A  member  secures  a  loan  on  five  shares  of  a  matur- 
ing value  of  $200  each,  at  a  premium  of  10  per  cent.  He  receives $900, 
but  gives  security  for  $1,000.  His  monthly  payments  for  the  first  three 
months  are  as  follows  :  Dues.  $5  :  interest  on  $1,000  at  6  per  cent.  $5  : 
total.  $10.  At  the  end  of  three  months  the  principal  is  credited  with 
$15.  the  dues  paid  in,  leaving  $985  principal,  on  which  interest  is 
charged.  Monthly  payments  during  the  second  quarter  are  :  Dues.  $5  : 
intereston  $985  at  6  per  cent,  per  annum,  $4,92|  ;  and  so  on.  reducing 
the  principal  each  quarter  until  the  loan  is  discharged. 

Illustration  II.  :  In  this  case  the  borrower  receives  $1,000,  but  gives 
security  for  $1,100,  on  which  he  pays  interest  at  6  percent,  per  annum. 
His  monthly  payments  for  the  first  quarter  are  as  follows:  Dues.  S5  ; 
interest  on  $1,100  at  6  per  cent,  per  annum,  $5.50  ;  total,  $10.50.  At  1  he 
end  of  three  months  the  principal  is  reduced  by  $15,  leaving  $1,085 
principal,  on  which  interest  is  charged.  Monthly  payments  during  the 
second  quarter  are  as  follows:  Dues,  $5;  interest  on  $1,085  at  6  per 
cent,  per  annum,  $5. 42£  ;  total,  $10.42£ ;  and  so  on,  reducing  the  prin- 
cipal each  succeeding  quarter  until  the  loan'  is  discharged. 


PLANS  OF  DISTRIBUTION  OF  PROFITS. 

While  a  great  variety  of  plans  are  in  vogue  for  the  payment  of  pre- 
miums, it  is  also  true  that  there  are  many  plans  for  the  distribution  of 
profits.  The  investigation  discloses  twenty-five  different  rules  or 
methods  of  distribution  of  profits. 

The  amount  of  interest  which  a  member  has  in  a  building  and  loan 
association  is  indicated  bythe  number  of  shares  which  he  holds,  the  age 
of  the  shares,  and  their  maturing  value. 

Shares  are  of  three  kinds,  called — instalment  or  running  shares,  pre- 
paid shares,  and  paid-up  shares.  When  a  member  desires  to  make 
weekly,  monthly,  or  other  periodical  payments,  he  subscribes  for  in- 
stalment shares  and  indicates  the  amount  of  the  periodical  payments 
he  desires  to  make  by  the  number  of  shares  for  which  he  subscribes. 
These  payments  are  continued  until  the  instalments  and  the  profits  on 
the  shares  have  caused  them  to  reach  their  maturing  or  par  value,  when 
they  are  wound  up  by  returning  to  the  non-borrowing  members  the 
value  of  their  shares  in  cash,  and  to  the  borrowing  members  their  mort- 
gages and  cancelled  obligations. 

Prepaid  shares,  known  also  as  partly  paid-up  shares,  are  issued  by 
some  associations  at  a  fixed  price  per  share  in  advance  :  such  shares 


612  APPENDIX    II. 

usually  participate  as  fully  in  the  profits  as  the  regular  instalment 
shares,  and  when  the  amount  originally  paid  for  such  shares,  together 
with  the  dividends  credited  thereon,  reaches  the  maturing  or  par  value 
then  such  shares  are  matured,  and  are  disposed  of  in  the  same  manner 
as  regular  instalment  shares.  A  few  associations,  however,  instead  of 
crediting  all  the  profits  made  on  this  class  of  shares,  allow  a  fixed  rate 
of  interest  on  the  amount  paid  therefor  at  each  dividend  period,  which 
is  paid  in  cash  to  the  holders  thereof.  This  interest  is  then  deducted 
from  the  profits  to  which  the  shares  are  entitled,  and  the  remainder  is 
credited  to  the  shares  until  such  unpaid  portion  of  the  profits,  added  to 
the  amount  originally  paid,  equals  the  maturing  or  par  value. 

Some  associations  allow  their  members  to  pay  in  the  full  maturity  or 
par  value  of  their  shares  at  any  time,  and  a  certificate  of  paid-up  stock 
is  then  issued,  and  the  owners  thereof  are  entitled  to  receive  in  cash 
the  amount  of  all  dividends  declared  thereon .  subject  to  such  conditions 
or  limitations  as  the  board  of  directors  of  each  particular  association 
may  have  adopted. 

In  some  instances  these  shares  participate  as  fully  in  the  profits  as 
the  regular  instalment  shares  ;  but  in  most  cases  a  fixed  rate  of  inter- 
est only  is  allowed,  the  holders  of  the  shares  usually  assigning  to  the 
association  all  right  to  profits  above  that  amount. 

In  some  cases  the  holders  of  regular  instalment  shares  that  have 
arrived  at  maturity  value  do  not  desire  to  draw  out  their  money,  but 
prefer  to  leave  it  with  the  association  as  an  investment.  Associations 
allowing  this  to  be  done  issue  to  holders  of  matured  shares  what  are 
known  as  certificates  of  matured  shares,  which  are  usually  governed 
by  the  same  conditions  as  are  attached  to  paid-up  shares. 

In  the  descriptions  of  the  various  plans  for  distributing  profits  which 
follow,  only  the  regular  instalment  shares  have  been  considered. 

The  most  common  as  wTell  as  the  most  important  difference  between 
the  methods  of  distributing  profits  employed  in  national  associations 
and  those  employed  in  local  associations  is  the  following  :  In  local 
associations  the  total  amount  of  dues  paid  in  by  the  shareholders  forms 
the  basis  for  such  distribution  ;  while  in  nearly  all  national  asso- 
ciations only  a  portion  of  the  dues  paid  in  by  the  shareholders  figures 
in  the  distribution.  For  instance,  in  national  associations  the  dues 
are  generally  (>0  cents  a  share  per  month,  out  of  which  either  8  or  10 
cents  are  carried  to  an  expense  fund,  the  remainder  being  credited  to 
the  loan  fund.  The  expense  fund  thus  created  is  lost  to  the  share- 
holders, except  in  the  case  of  a  few  associations  which  carry  the  unex- 
pended balances  to  the  profit  and  loss  account,  and  whatever  profits 
are  made  are  apportioned  on  the  amount  of  dues  credited  to  the  loan 
fund  only. 

The  tables  following  give  a  general  summary  of  the  situation  in 
respect,  to  the  twenty-five  plans  in  use  : 

PI..1N  1. 

This  plan  apportions  the  profits  among  series  just  as  profits  among 
partners  are  apportioned  in  a  linn  where  the  partners  enter  at  different 
e  LCh  scries  represent  Lng  a  partner. 

1.  Multiply  the  dues  pa  ill  in  on  t  lie  shares  in  force  in  each  series  by 
t  !"■  equated  t  ime  of  in\ est  menl  ■ 

.'.  Take  I  he  sum  of  t  hese  products  and  then  find  what  fractional  part 
each  product  is  of  the  sum. 

'.',.  These  fractions  are  the  parts  of  the  total  net.  profits  belonging  to 

each   Series. 

'I'm  illustrate  the  rule,  let  us  suppose  that,  an  association  whoso 
in  .hi  iil\    dues   are  $1   per  share    had    three   series  in  force  at  the  end    of 

the  third  year,  and  that  the  number  of  shares  in  each  series  ami  f  heir 

Value  per  'hari'  were  as  follows  : 

Firsl     'lie.,  500  shares,  value  per  share  $38.87;  second  series,  600 


PREMIUM    PLANS.  613 

shares,  value  per  share  $25.27  ;  third  series,  400  shares,  value  per  share 
$12.32  ;  that  a  fourth  series  of  500  shares  is  then  issued  ;  the  net  profits 
for  the  fourth  year  are  $3,000.  and  the  total  net  profits  for  the  four 
years  are  $5,325.  Required  :  The  value  of  a  share  of  each  series  ;it  the 
end  of  the  fourth  year. 

The  first  series  above  alluded  to  lias  run  four  years,  or  forty-eight 
months.  Forty-eight  $1  payments  have  therefore  been  made  on  each 
share  of  stock.  The  first  dollar  paid  has  been  invested  forty-eight 
months  ;  the  second  dollar  paid,  forty-seven  months  ;  the  third  dollar 
paid,  forty-six  months,  etc.,  the  last  dollar  of  the  forty-eight  having 
been  invested  one  month.  The  times  of  investment  thus  form  a  i\*'- 
ci'easing  arithmetical  series,  with  forty-eight  for  the  first  term,  one 
for  the  last  term,  and  forty -eight  for  the  number  of  terms.  The  total 
investment  is  thus  equal  to  SI  invested  for  1,176  months  (the  sum  of 
the  series),  equivalent  to  $48  invested  for  24|  months. 

Treating  the  other  series  in  the  same  way,  we  find  that  $36  paid  per 
share  in  the  second  series  has  been  invested  for  18A  months  ;  $24  paid 
per  share  in  the  third  series,  for  12-J  months  ;  and  $12  paid  per  share  in 
the  fourth  series,  for  6J  months  ;  then — 

$48  X  500  X  2U  =  $588,000,  first  series'  investment  for  one  month. 
$36  X  01)0  X  18£  =  $399,600,  second  series'  investment  for  one  month. 
$24  X  400  X  12jr=  $120,000,  third  series"  investment  for  one  month. 
$12  X  500  X    6£  =     $39,000,  fourth  series'investment  for  one  month. 


$1,146,600,  total  investment  for  one  month. 

Hence  the  total  net  profits  are  divided  as  follows  : 

ttWWo  or  tVtt  or*  tae  total  profits  belong  to  the  first  series. 

YYY''Y'>'f  '"'  I'YY'i  "''  ,il('  total  profits  belong  to  the  second  series. 

TTTifVo'V  or  t/tt  °f  the  total  pi*ofits  belong  to  the  third  series. 

TTTsljInT  or  xf  it  °f  *ne  total  profits  belong  to  the  fourth  series. 
Total  profits  to  be  divided  are  $5,325. 

Y'.m'Y  of  $5,325  =  $2,730.77,  first  series'  share  of  the  profits. 
i'i'YY  °t  $5,325  =  $1,855.81.  second  series'  share  of  the  profits. 
tYtt  of  $5,325  =  $557.30,  third  series'  share  of  the  profits. 
t! it  °t  $5,^25  =  $181.12,  fourth  series'  share  of  the  profits. 
$2,730.77  h-  500  +  $5.4(5,  profit  of  a  share  of  the  first  series. 
$1,855.81  h-  600  +  $3.09,  profit  of  a  share  of  the  second  series. 
$557.30  -H  400  +  $1.39,  profit  of  a  share  of  the  third  series. 
$181.12  -s-  500  +  $0.36,  profit  of  a  share  of  the  fourth  series. 
$48.00,  dues  paid,  +  $5.46,  profit,  =  $53.46,  value  of  a  share  of  the 

first  series. 
$36.00,  dues  paid,  +  $3.09,  profit,  =  $39.09,  value   of  a  share  of  the 

second  series. 
$24.00,  dues  paid,  -+-  $1.39,  profit,  =  $25.39,   value   of   a   share  of  the 

third  series. 
$12.00,  dues  paid,  +  $0.36,  profit,  =  $12.36,  value  of  a  share  of  the 

fourth  series. 

In  the  above  example,  all  the  net  profits  made  during  the  four  years 
have  been  apportioned  to  the  several  series,  but  some  associations 
apportion  only  each  year's  profits  in  this  way.  Other  associations 
using  this  plan  simplify  the  process,  but  obtain  the  same  results,  by 
dividing  the  total  investment  for  one  month  (or  for  one  week,  as  the 
case  may  be),  into  the  profits  to  be  apportioned,  for  the  profit  on 
$1  invested  for  one  month,  which  is  then  multiplied  successively 
by  the  sum  of  the  number  of  weeks,  months,  or  other  periods  of  time 
for  which  each  dollar  of  dues  in  each  series  has  been  invested.  The 
products  will  be  the  amount  of  the  profits  belonging  to  a  share  in  each 
series. 


614  APPENDIX   II. 

A  few  associations  have  been  found  that  arrive  at  the  same  results 
by  using  the  following  methods,  which  is  known  as  Clark's  plan  : 

1.  Multiply  the  number  of  shares  in  force  in  each  series  by  the 
quotient  obtained  by  dividing  the  sum  of  the  number  of  weeks,  months, 
or  other  periods  of  time  for  which  each  dollar  of  dues  in  each  series 
has  been  invested  by  the  product  obtained  by  multiplying  the  dues 
paid  in  on  one  share  during  the  first  year  by  the  average  time  of  invest- 
ment, for  the  equalized  results  for  each  series. 

2.  Take  the  sum  of  these  results  and  divide  it  into  the  total  profits 
since  the  beginning  of  the  association,  for  the  rate  per  cent,  of  profit. 

3.  Multiply  the  quotients  already  found  by  the  rate  per  cent,  of  profit, 
for  the  profit  of  a  share  in  each  series. 

We  have  before  seen  that  §48  dues  per  share  in  the  first  series  have 
been  invested  for  24+  months,  which  is  equal  to  §1  invested  for  1.176 
months.  In  like  manner  §36  dues  per  share  in  the  second  series  have 
been  invested  for  l&J  months,  which  is  equal  to  $1  invested  for  666 
months  ;  $24  dues  per  share  in  the  third  series,  for  12£  months,  which 
is  equal  to  $1  invested  for  300  months  ;  and  §12  dues  per  share  in  the 
fourth  series  for  6+  months,  weich  is  equal  to  §1  invested  for  78  months. 
The  average  time  of  first  year's  payments  is  simply  half  the  time  of 
investment,  which  is  6  months.  Twelve  dollars  invested  for  an  average 
period  of  6  months  is  equal  to  $1  invested  for  72  months. 

Then: 

1,176  --  72  =  16.333. 
666-^-72=    9.250. 
300 -h  72=    4.166. 
78  -h  72  =    1.083. 
500  X  16.333  =  8,166.50,  equalized  result  for  the  first  series. 
600  X    9.250  =  5,550.00,  equalized  result  for  the  second  series. 
400  X    4.166  =  1,666.40,  equalized  result  for  the  third  series. 
500  X    1.083  =     541.50,  equalized  result  for  the  fourth  series. 


15,924.40,  equalized  result  for  all  series. 

$5,325,  the  total  profits,  — 15.924.40  =  33.4392,  the  rate  per  cent,  of  profit. 
$0.334392  X  16.333  =  §5.46,  profit  of  a  share  of  the  first  series. 
$0.334392  X    9.250  =  §3.09,  profit  of  a  share  of  the  second  series. 
$0.334392  X    4.166  =  §1.39,  profit  of  a  share  of  the  third  series. 
$0.334392  X    1.083  =  §0.36,  profit  of  a  share  of  the  fourth  series. 

For  the  value  of  each  share,  add  the  dues  as  above. 

There  is  a  modification  of  plan  1,  which  follows  the  same  general 
method  as  that  shown  in  the  first  illustration,  but  differs  in  certain 
pari  icularsand  gi  ves  a  different  result.  The  modification  is  as  follows  : 
Instead  of  finding  the  exact  equated  time  of  investment,  many  associ- 
ations arrive  al  an  approximate  equated  time  by  taking  one-half  the 
number  of  months  a  series  has  run.  Using  the  same  data  as  in  the 
above  illustration,  we  get  24,  Is!,  12,  and  (!  as  the  average  number  of 
months  the  series  have  run.  It  is  this  modification  that  is  commonly, 
lull  erroneously,  called  the  partnership  plan. 

[LLUSTRATION. 

$48    <  r.iil)  x  24  =  $576,000,  first  series'  investment  for  one  month. 

600   •    L8      $388,800,  second  series' investment  for  one  month. 
100       I.'      $115,200,  third  series' investmenl  for  one  month. 
500  •'.  $36,000,  fourth  series'  investment  for  one  month. 


'  .  I  16,000,  total  invesl  nienl    for  one  month. 

The  total  net  profits  are  then  divided  in   proportion  to  each  series, 

I  iik  nl    for  one  monl  h,  t  hus  : 


PREMIUM    PLANS.  615 

YVVr,''.;;;',,  or  flfc  of  |5,325  =  $2,748.39,  first  series'  share  of  the  profits. 
i:mV.,"h"m  (,r  fiir  °f  $5,325       $1,855.16,  second  series'  share  of  the  profits. 
-lYi'Vo'iMi  or  i'.-."o  "''  $5,325  =     $549.68,  third  series'  share  of  the  profits. 
Tii""!!..  or  ,?,-,  of  $5,325  =     §171.77.  fourth  scries'  share  of  the  profits 
$2,748.39  -*■  500  =  $5.50,  profit  of  a  share  of  the  first  scries. 
$1,855. 16  -5-  600  =  $8.09,  profit  of  a  share  of  the  second  series. 
$549.68  -*-  400  —  $1.37,  profit  of  a  share  of  the  third  series. 
$171.77  -s-  500  =  $0.;i4,  profit  of  a  share  of  the  fourth  series. 
This  modification  of  plan   1    lias  been  simplified,  the  principle  con- 
sisting in  casting  out  common  factors  in  the  process  of  multiplication. 
The  first  series  lias  run  48  months  ;  the  second, 36  months;  t  he  t  hird, 
24  months  ;  and  the  fourth,  12  months.     The    average  time  of  invest- 
ment, as  we  have  before  seen,  is  24,   18,  12,  and  (i.  respectively.     Then 
we  proceed  thus  . 

48,  age  in  months,  X  24,  average  time,  X  500  shares. 

36,  age  in  months,  X  18,  average  time,  X  600  shares. 

24,  age  in  months,  X  12,  average  time,  X  400  shares. 

12,  age  in  months,  X    6,  average  time,  X  500  shares. 

It  will  be  readily  seen  that  12  is  a  factor  common  to  all  the  numbers 

of  the  first  column,  and  that  6  is  a  factor  common  to  all  the  numbers 

in  the  second  column.     Casting  out  these  factors,  we  have — 

4  X  4  X  500  =  8,000.     Hence  T85°g  of  the  total  profits  belong  to  the  first 

series. 
3  X  3  X  600  =  5,400.  J&  of  the  total  profits  belong   to    the 

second  series. 
2  X  2  X  400  =  1,600.  TW  of  the  total  profits  belong  to  the  third 

series. 
1  X  1  X  500  =     500.  Tfg  of  the   total    profits  belong  to   the 

fourth  series. 
Total,  15,500. 
Briefly  put,  then,  the  simplification  is  as  follows  :  Multiply  the  num- 
ber of  shares  in  force  in  each  series  by  the  square  of  the  time  of 
investment  expressed  in  terms  or  periods  corresponding  to  the  inter- 
vals between  the  series,  and  then  divide  the  profits  in  proportion  to 
these  products. 

The  foregoing  simplification  has  been  still  further  simplified  by  find- 
ing the  profit  of  a  share  in  each  series  directly,  instead  of  finding  each 
series'   share  of  the  profit,  as  follows  : 

1.  Multiply  the  number  of  shares  in  force  in  each  series  by  the 
square  of  the  time  of  investment  expressed  in  terms  or  periods  corre- 
sponding to  the  intervals  between  the  series. 

2.  Divide  the  sum  of  these  products  into  the  results  obtained  by 
multiplying  the  total  net  profit  by  the  square  of  the  time  of  investment 
expressed  as  above. 

The  total  of  the  products  as  in  the  last  illustration  is  15.500  ;  then — 
$5,325,  total  profits,  X  4  X  4  -r-  15,500  =  §5.50,  profit  of  a  share  of  the 

first  series. 
$5,325,  total  profits,  X  3  X  3  -f-  15,500  =  §3.09,  profit  of  a  share  of  the 

second  series. 
$5,325,  total  profits,  X  2  X  2  -=-  15,500  =  §1.37,  profit  of  a  share  of  the 

third  series. 
§5,32.-).  total  profits,  X  1  X  1  -*-  15,500  =  §0.34,  profit  of  a  share  of  the 

fourth  series. 

A  share  of  the  first  series  receives  16  times  as  much  profit  as  a  share 
of  the  fourth  series  ;  a  share  of  the  second  series,  9  times  as  much  ;  and 
a  share  of  the  third  series,  4  times  as  much.  This  method,  therefore, 
reveals  the  fact  that,  by  multiplying  the  number  of  shares  in  force  in 
each  series  by  the  square  of  the  time  each  series  has  been  invested, 
expressed  in  years,  half  years,  quarter  years,  etc..  corresponding  to 
the  intervals  between  the  series,  a  correct  basis  of  calculation  is  reached. 


616  APPENDIX   II. 

These  simplifications,  however,  are  practicable  only  where  series  are 
issued  at  regular  intervals,  as  fractions  complicate  the  operation.  This 
simplification  is  known  as  Rice's  rule. 

A  few  associations  arrive  at  the  same  results  by  dividing  the  total 
investment  for  one  month  into  the  profits,  for  a  rate  per  cent,  of  profit, 
and  then  applying  the  rate  to  each  series'  investment  for  one  month 
for  each  series'  share  of  the  profits.  The  process  is  also  varied  in  the 
following  manner  :  Find  what  annual  rate  of  interest  the  profits  are 
equivalent  to  on  the  amount  of  dues  paid  for  one-half  the  time  that  all 
the  dues  have  been  invested,  and  apply  this  rate  on  the  dues  paid  per 
share  for  one-half  the  time  of  investment,  for  the  profit  of  a  share  in 
any  series. 

Other  variations  are  the  following  : 

1.  The  profits  are  distributed  on  the  amount  of  dues  actually  paid  in 
on  the  shares  in  force  in  each  seizes  (not  what  the  regular  payments 
should  have  amounted  to),  multiplied  by  one-half  the  time  of  invest- 
ment. 

2.  The  profits  are  distributed  on  the  total  amount  of  dues  standing 
to  the  credit  of  the  shareholders  in  the  loan  fund  multiplied  by  one- 
half  the  time  of  investment. 

3.  The  series  are  not  allowed  to  participate  in  the  profits  for  the  term 
in  winch  they  were  issued. 

4.  The  profits  are  distributed  on  the  amount  of  dues  actually  paid  in 
on  all  shares  in  force  that  are  three  months  old  or  over,  multiplied  by 
one-half  the  time  of  investment,  shares  less  than  three  months  old  not 
participating. 

5.  The  profits  are  distributed  to  the  free  shares  only,  dues  on  shares 
borrowed  on  being  credited  on  loans. 

6.  Profits  arising  from  withdrawals  are  divided  equally  among  the 
shares  of  the  respective  series  from  which  the  shares  were  withdrawn. 

?.  Profits  arising  from  entrance  fees  are  divided  equally  among  the 
shares  of  the  respective  series  in  which  the  shares  are  taken. 

8.  A  profit  of  $1  is  given  to  all  shares  six  months  old  or  over.  The 
remainder  of  the  profits  is  distributed  on  the  dues  paid  in  on  the  shares 
in  force  six  months  old  or  over  multiplied  by  one-half  the  time  of  in- 
vestment. 

9.  Profits  arising  from  premiums  are  divided  equally  among  all  the 
shares  in  force  at  the  end  of  the  period  during  which  the  loans  were 
made  Profits  from  all  other  sources  are  distributed  in  accordance  with 
the  modified  rule. 

10.  A  fixed  rate  of  interest  is  given  on  the  total  amount  of  dues  paid 
on  the  shares  in  force  at  each  apportionment.  This  interest  is  deducted 
from  the  profits  for  tbe  term  and  the  remainder  distributed  according 
to  the  modified  rule. 

11.  A  fixed  rate  of  interest  is  given  on  the  value  of  the  shares  in  force 
as  declared  by  the  last  report.  This  interest  is  deducted  from  the 
profits  for  the  term  and  the  remainder  is  distributed  according  to  the 
modified  rule. 

12.  A  portion  of  the  total  amount  of  premiums  received  by  and  due 
the  association  is  arbitrarily  determined  upon,  and  held  in  reserve  to 
be  applied  in  future  dividends  ;  the  amount  thus  determined  upon  is 
ded  net  I'd  from  the  total  profits,  and  the  remainder  of  the  profits  is  dis- 

t  ributed  as  follows  :   The  interest  and  dividends  allowed  on  free  shares 

withdrawn  are  added  to  t  be  dues  paid  in  on  such  shares,  and  the  sum 

total  of  said  interest  and  dividends  is  deducted  from  the  amount  of  dis- 
tributable  profits;  t  be  balance  is  distributed  among  all  the  shares  in 
accordance  with  the  foregoing  modified  rule. 

There  is  still  another  modification  of  plan  1.  as  follows:  Multiply 
each  series'  in  vest  nun  t  r  t  bat  is.  the  dues  paid  in  on  the  shares  in  force) 
by  one  half  t  be  number  of  moid  lis  invested  plus  one  and  apportion  the 
profits  in  proportion  to  these  products. 


PREMIUM    PLANS.  617 

Using  the  same  data  as  before  we  proceed  as  follows  : 

ILLUSTRATION. 

$48  X  500  X  23  =  $600,000,  first  series'  investment  for  one  mouth. 
$36  X  600  x  19  =  $-110  4(i0,  second  scries'  investment  for  one  month. 
$24  x  400  x  13  =  $124,800,  third  series'  investment  for  one  month. 

$12  X  500  X    7  =    $42,000,  fourth  series'  investment  for  one  month. 


$1,177,200,  total  investment  for  one  month. 

Then,  proceeding  as  before,  we  find  that — 

r\%%%%%  or  fff  of  $5,325  =  $2,714.07,  the  first  series'  share  of  the  profits. 
^V^,%  or  fff  of  $5,325  =  $1,856.42,  the    second    series'  share    of    the 

profits. 
TTTTinfr  or  'si  of  $5,325  =  $564.53,  the  third  series'  share  of  the  profil  5. 
T4-K'»;;ri  or  Jfo  of  $5,325  =  $189.98,  the  fourth  series'  share  of  the  profits. 
$48,  dues,  +  ($2,714.07  -^-  500)=$53.43,value  of  a  share  of  the  first  series. 
$36,  dues,  +  ($1,856.42  -r-  600)=  $39.09,  value  of  a  share  of  the  second 

S61"16S 

$24,  dues,  +  (    $564.53  -v-  400)  =  $25.41,  value  of  a  share  of  the  third 

series. 
$12,  dues,  +  (    $189.98  -^  500)  =  $12.38,  value  of  a  share  of  the  fourth 

series. 

PLA.\  2. 

1.  Give  to  each  series,  except  the  last,  interest  at  the  legal  rate  upon 
the  value  of  the  shares  in  force  as  declared  at  the  last  report. 

2.  Deduct  this  interest  from  the  profits  for  the  term  and  divide  the 
remainder  equally  among  all  the  shares. 

Assuming  that  6  per  cent,  is  the  legal  rate,  and  using  the  same  data 
as  in  the  illustration  of  plan  1,  the  plan  is  worked  out  as  follows  : 

ILLUSTRATION. 

$38.87  X  .06  =  $2.33,  interest  on  one  share  of  the  first  series. 
$25.27  X  .06=  $1.52,  interest  on  one  share  of  the  second  series. 
$12.32  X   .06  =  $0.74,  interest  on  one  share  of  the  third  series. 

$2.33  X  500  =$1,165,  interest  belonging  to  the  first  series. 

si  .52  X  600  =    $912,  interest  belonging  to  the  second  series. 

$0.74  X  400  =    $296,  interest  belonging  to  the  third  series. 


$2,373,  total  interest  belonging  to  the  old  series. 
$3,000,  the  profits  for  the  term,  — $2,373  =  $627,  profits  remaining  to 

be  divided. 
$627  -h  2,000,  total  shares  in  force,  =  $0.31,  profit  of  each  share. 
$38.87,    previous   value,  +  $2.33,    interest,  +  $0.31,    profit,  +  $12,    dues, 

=  $53.51,  value  of  a  share  of  the  first  series. 
$25.27.  previous  value,  +  $1.52,  interest,  +  $0.31,  profit,  +  $10.  dues,  = 

$39.10,  value  of  a  share  of  the  second  series. 
$12.32,  previous  value, +$0.74,  interest,  +  $0.31,  profit,  +  $12,  dues.  = 

$25.37,  value  of  a  share  of  the  third  series. 
$0.31,  profit,  +  $12.  dues,  =  $12.31,  value  of  a  share  of  the  fourth  series. 

Undivided  profits.  $7. 

This  is  known  as  Wrigley's  rule. 

Many  associations  using  this  plan  of  distributing  profits  allow  a 
higher  or  a  lower  rate  of  interest  than  the  legal  rate,  but  no  separate 
classification  of  such  associations  lias  been  made. 

The  above  plan  is  varied  by  different  associations  in  the  following 
manner : 

1.  Interest  is  allowed  on  all  the  series  except  the  last. 

2.  Interest  is  allowed  on  the  dues  paid  in  up  to  the  last  report  on  the 
shares  in  force. 


618  APPENDIX    II. 

3.  Interest  is  allowed  on  the  withdrawal  value  of  the  shares  in  force. 

4.  Interest  is  allowed  on  the  value  of  the  shares  in  force  as  declared 
by  the  last  report,  plus  all  the  dues  paid  in  during  the  term. 

5.  Shares  less  than  six  months  old  do  not  participate  in  the  profits. 

6.  Interest  is  allowed  on  the  value  of  the  shares  in  force  as  declared 
by  the  last  report  plus  one-half  the  dues  paid  in  during  the  term. 

T.  Interest  is  allowed  on  all  the  dues  paid  in  on  the  shares  in  force 
for  one-half  the  time  they  have  been  invested. 

8.  Alter  the  legal  rate  of  interest  has  been  deducted  from  the  total 
profits,  the  remainder  of  the  profits  is  divided  in  proportion  to  the 
amount  of  dues  paid  in  during  the  term. 

9.  Profits  arising  from  withdrawals  are  divided  equally  among  the 
shares  of  the  respective  series  from  which  the  shares  were  withdrawn. 

10.  After  the  legal  rate  of  interest  has  been  deducted  from  the  total 
profits  the  remainder  of  the  profits  is  divided  as  follows  :  Ail  shares  in 
force  at  last  report  receive  an  equal  part,  while  shares  three  months 
old  receive  one-fourth  as  much  as  shares  one  year  old,  shares  six  months 
old  receive  one-half  as  much  as  shares  one  year  old,  etc. 

11.  Shares  less  than  three  months  old  are  not  allowed  any  part  of 
the  profits. 

12.  This  variation  of  the  rule  is  made  by  some  national  associations : 
After  the  interest  has  been  deducted  from  the  total  profits  the 
remainder  of  the  profits  is  divided  among  all  the  shares  in  force,  in 
proportion  to  the  amount  of  dues  paid  into  the  loan  fund  during  the 
term. 

13.  Each  series  except  the  larst  is  given  interest  at  the  legal  rate  upon 
the  value  of  the  shares  in  force  as  declared  by  the  last  report  ;  the  first 
scries  is  then  given  credit  for  all  the  interest  paid  during  the  term  on 
loans  made  prior  to  the  issuing  of  the  second  series.  The  first  and 
second  series  together  are  given  credit  for  all  the  interest  paid  during 
the  term  on  loans  made  during  the  existence  of  the  second  series  and 
prior  to  the  issuing  of  the  third  series,  the  apportionment  being  made 
equally  to  the  shares  in  each  ;  and  so  on  for  any  number  of  series. 
The  remainder  of  the  profits  is  divided  equally  among  all  the  shares 
in  force. 

14.  A  fixed  rate  of  interest  is  allowed  on  the  value  of  all  shares  in 
force  as  declared  at  the  last  report.  This  interest  is  deducted  from  the 
profits  and  the  remainder  divided  among  all  shares  three  months  old 
or  over,  in  proportion  to  the  amount  of  clues  paid  in  during  the  term. 

PLAX  3. 

1.  To  the  value  of  all  the  shares  in  force  as  declared  by  the  last 
reporl  add  one-half  the  dues  paid  in  during  the  term. 

'.'.  Divide  the  profits  for  the  term  by  tin's  sum  for  the  rate  per  cent. 
of  profit . 

:;.  To  the  value  of  each  share  as  declared  by  the  last  report  add  one- 

the  dues  paid    in    during  the  term   ami   multiply  the  sum  by  the 

per  cenl .  of  profit,  Tor  t  he  profit  of  each  share. 

4.  To  the  value  of  each  share  as  declared  by  the  last  report  add  the 

ihics  paid  in  on  the  same  during  the  term  and  the  profit  of  each  share, 

for  i  he  presenl  value. 

I  ing  the  same  data  us  in  the  previous  illustrations  the  result  is  as 
follows  : 

II. IJ  STB  \TImN. 

;       Mm      $19,435,  value  of  first  series  at  last  report. 

600      $15,162,  will f  second  series  at,  last  report. 

1,928,  value  of  third  series  at,  last  report. 

$39,525,   value  of  all  series  af  last  report. 


PREMIUM    PLANS.  619 

$l  +  22+      2,000  =  $12,000,  one  half  the  flues  paid  during  the  year. 

$39,525  +  $12,000  =  151,525,  total  dividend  bearing  capital. 

§3,000  the  profits  for  tlie  term,  -5-  $51,525  =  5.8224,  the  rate  per  cent, 
o!'  profit. 

($38.87  +  $6)  X  .058224  =  $2.61,  profit  of  a  share  of  the  first  series. 

($25.27 +  $6)  X  .058224  =$1.82,  profit  of  a  share  of  the  second  series. 

($12.32  + $6)  X  .058224  =  $1.07,  profit  of  a  share  of  the  third  series. 
$6    X  .058224  =  $0.35,  profit  of  a  share  of  the  fourth  series. 
$38.87,   previous  value,  X  $2.61,  profit  for    term,  X  $12,   dues,  =  5 

present  value  of  a  share  of  I  he  first  series. 
$25.27,   previous  value,  +  $1.82,  profit  for  term,  +  $12,  dues,  =  $39.09, 

present  value  of  a  share  of  the  second  series. 
$12.32,  previous  value.  +  $1.07,  profit  for  term,  X  $12,  dues,  =  $25.39, 

present  value  of  a  share  of  the  third  series. 
$0.35,  profit  for  term,  +  $12,  dues,  =  $12,35,  present  value  of  a  share  of 

the  fourth  series. 

The  above  rule  is  known  in  some  sections  of  the  country  as  the  third 
dividend  rule.  It  is  varied  by  different  associations  in  the  following 
manner  : 

1.  To  the  value  of  all  the  shares  in  force  as  declared  by  the  last  report 
add  one-third  of  the  dues  paid  in  during  the  term  for  the  dividend 
bearing  capital. 

2.  To  the  value  of  all  the  shares  in  force  as  declared  by  the  last  report 
add  two-thirds  of  the  dues  paid  in  during  the  term  for  the  dividend 
bearing  capital. 

3.  To  the  value  of  all  the  shares  in  force  as  declared  by  the  last  re- 
port add  eight-thirteenths  of  the  dues  paid  in  during  the  term  for  the 
dividend  bearing  capital. 

4.  To  the  value  of  all  the  shares  in  force  as  declared  by  the  last  re- 
port add  three-eighths  of  the  dues  paid  in  during  the  term  for  the  divi- 
dend bearing  capital. 

5.  To  the  value  of  all  the  shares  in  force  as  declared  by  the  last  re- 
port add  one-half  the  dues  paid  in  during  the  term,  not  including  the 
last  regular  payment,  for  the  dividend  bearing  capital. 

6.  Shares  less  than  six  months  old  do  not  participate  in  the  profits. 

7.  Instead  of  ascertaining  a  rate  of  profit  according  to  the  rule,  each 
series'  share  of  the  profits  is  represented  by  a  fraction  whose  numer- 
ator is  the  dividend  bearing  capital  of  the  respective  series  and  whose 
denominator  is  the  total  dividend  bearing  capital  of  all  the  series. 

8.  Profits  arising  from  withdrawals  are  divided  equally  among  the 
shares  in  force  of  the  respective  series  from  which  the  shares  were 
withdrawn. 

9.  The  profits  belonging  to  the  series  issued  since  the  last  report  are 
kept  separate  and  are  divided  equally  among  the  shares  of  that  series. 

10.  The  rate  of  profit  is  found  according  to  the  rule,  but  this  rate  is 
applied  upon  the  dues  paid  in  at  the  last  report  plus  one-half  the  dues 
paid  in  since,  previously  apportioned  profits  being  disregarded;  the 
remainder  of  the  profit  being  held  in  reserve. 

11.  The  rate  per  cent,  of  profit  annually  based  on  the  free  shares  only 
is  found  according  to  the  rule,  and  the  board  of  directors  arbitrarily 
declares  what  part  of  said  rate  shall  be  distributed  to  the  free  shares, 
the  l-emainder  being  carried  to  the  reserve  fund.  The  shares  borrowed 
on  do  not  participate  in  the  profits,  their  dues  being  credited  on  the 
principal  of  the  loan. 

12.  All  of  the  profits  are  distributed  to  the  free  shares  only.  The 
shares  borrowed  on  do  not  participate  in  the  profits,  their  dues  being 
credited  on  the  principal  of  the  loan. 

13.  To  the  value  of  the  free  shares  as  declared  by  the  last  report  add 
one-half  the  dues  paid  in  during  the  term  on  all  the  shares  in  force,  for 
the  dividend  bearing  capital.     The  shares  borrowed  on  receive  profits 


G20  APPENDIX   II. 

on  one-half  the  dues  paid  in  during  the  term  only.     These  profits  and 
the  dues  paid  in  are  credited  on  the  principal  of  the  loan. 

14.  This  variation  from  the  rule  is  largely  used  throughout  the  New- 
England  states,  and  is  known  as  the  Eldredge  plan.  It  differs  from 
the  rule,  in  that  the  rate  per  cent,  of  profit  is  not  computed  in  the 
usual  way,  but  instead  the  division  of  profits  is  based  on  an  assumed 
rate  per  cent.  This  assumed  rate  of  profit  is  distributed  to  each  share 
as  under  the  rule.  If  a  portion  of  the  profits  still  remains  undistrib- 
uted, the  profit  per  share  is  increased  by  one-half  per  cent.,  one  fourth 
per  cent.,  etc.,  according  to  the  amount  of  profit  remaining. 

To  illustrate  the  plan,  suppose  the  last  annual  report  shows  a  share 
of  a  given  series  to  be  worth  $38.87,  and  that  a  rate  of  6  per  cent,  is 
assumed. 

$38.87  X  .06  =  $2.33,  profit  on  previous  value  at  the  assumed  rate. 
$6.00  X  .06  =  $0.36,  profit  on  one-half  the  dues  at  the  assumed  rate. 

$2.69,  total  profit  of  the  share  at  the  assumed  rate. 

The  same  computation  is  made  upon  all  the  shares  in  force  of  the 
existing  series,  which  gives  the  total  profit  of  all  shares  in  force  at 
the  assumed  rate,  6  per  cent.  If,  after  deducting  this  profit  from 
the  total  profits,  it  is  found  that  the  profits  are  sufficient  to  allow  6£ 
per  cent,  instead  of  6  per  cent,  the  profit  per  share  is  increased  one- 
twelfth;  if  sufficient  to  allow  7  per  cent.,  the  profit  per  share  is  in- 
creased one-sixth,  etc. 

15.  The  series  issued  since  the  last  report  is  given  all  the  entrance 
fees.  The  profits  arising  from  withdrawn  shares  are  divided  equally 
among  all  the  shares  in  force  of  the  series  in  which  the  withdrawals 
took  place,  and  the  preceding  ones.  To  illustrate,  suppose  the  with- 
drawal profit  was  made  in  the  second  series  ;  then  such  profit  would  be 
divided  equally  among  all  the  shares  in  force  of  the  first  and  second 
series  ;  if  the  withdrawal  profit  was  made  in  the  third  series,  it  would 
be  divided  equally  among  the  shares  in  force  of  the  first,  second, 
and  third  series,  etc. 

16.  A  fixed  rate  of  interest  is  allowed  upon  the  value  of  all  the 
shares  in  force  as  declared  by  the  last  report  plus  one-half  the  dues 
paid  in  during  the  term.  The  remainder  of  the  profit  is  arbitrarily 
divided  among  all  the  shares  in  force,  a  large  portion  being  given  to 
the  shares  of  the  older  series  than  to  those  of  the  younger  series. 

1  7.  Sonic  permanent  associations  vary  the  rule  in  the  following  man- 
ner :  Members  may  pay  more  than  the  regular  required  weekly  or 
monthly  dues,  but  no  dividends  are  allowed  on  such  overpayments 
until  tin-  dose  of  the  current  term  in  which  they  are  paid.  Members 
may  also  withdraw  all  or  any  part  of  the  dues  paid  or  of  the  dividends 
declared,  future  dividends  being  based  on  the  amount  standing  to  the 
members'  credit  at  the  beginning  of  the  term  and  on  one-half  the  reg- 
ular dues  paid  during  the  term. 


l'LAN   1. 

I.  Tit  he  value  of  all  the  shares  in  force  as  declared  by  the  last  re- 
port .  add  t  lie  equated  amount  of  dues  paid  in  (luring  the  term. 

•.  Divide  the  profits  for  the  term  l>y  the  sum.  for  the  rate  per  cent. 
of  profil . 

:;.   Mull  [ply  each  share's  investment  by  the  rate  per  cent,  of  profit,  to 

lind   t  he  gaill  on  one  shale. 

I  '   in-  i  he  :  ame  data  as  before  t  he  result  is  as  follows  : 


PREMIUM    PLANS.  621 

ILLUSTRATION. 

*7  +  $6.50,  equated  dues),  X  500  =  $22,685,  dividend  bearing  capi- 
tal of  1st  series. 

($25.27  4-  $6.50,  equated  dues),  X  600  =  $19,062,  dividend  bearing  capi- 
tal of  2d  series. 
($12.32  +  $6.50,  equated  dues),  X  400  =    $7,528,  dividend  bearing  capi- 
tal of  3d  series. 
$5.50,  equated  dues,  X  500  =    $3,350,  dividend  bearing  capi- 
tal of  4th  series. 


$52,525,  dividend  bearing  capi- 
tal of  all  series. 
$3,000,  the  profits  for  the  term, -h$52,525  =  5.7115,    the     rate     per 

cent,  of  profit. 
($38.87  +  $6.50)  X  .057115  =  $2.59,  profit  of  a  share   of  the  first 

series. 
($25.27  +  $6.50)  X  .057115  =  $1.81,  profit  of  a  share  of  the  second 

series. 
($12.32  +  $8.50)  X  .057115  =  $1.07,  profit  of  a  share  of  the  third 

series. 
$6.50    X  .057115  =  $0.37.  profit  of  a  share  of  the  fourth 

$38.87  +  $12  +  $2.59  =  $53.46,  value  of  a  share  of  the 

first  series. 
$25.27  +  $12  +  $1.81  =  $39.08,  value  of  a  share  of  the 

second  series. 
$12.32  +  $12  +  $1.07  =  $25.39,  value  of  a  share  of  the 

third  series. 
$12  +  $0.37.=  $12.37,  value  of  a  share  of  the 
fourth  series. 
$6.00,  profits  undivided. 

This  rule  is  known  as  Dexter's  rule. 

Some  associations  arrive  at  the  same  results  by  using  the  following 
method:  (1)  To  the  value  of  the  shares  in  force  in  each  series  as  de- 
clared by  the  last  report,  add  the  equated  amount  of  dues  paid  in  each 
series  during  the  term,  and  multiply  each  sum  by  the  number  of 
months  in  the  term,  for  each  series'  investment  for  one  month.  (2) 
Find  the  sum  of  these  products,  which  gives  the  entire  capital  invested 
for  one  month,  and  then  divide  the  jn-ofits  of  the  term  in  the  same 
proportion  that  each  series'  investment  for  one  month  bears  to  the  en- 
tire capital  invested  for  one  month,  for  each  series' share  of  the  profits. 
(3)  Divide  the  profits  of  each  series  by  the  number  of  shares  therein r 
for  the  profit  of  one  share. 

The  process  is  also  varied  in  the  following  way  :  The  total  invest- 
ment for  one  month  is  divided  into  the  total  net  profits  for  a  rate  per 
cent.,  which  is  applied  to  each  series'  investment  for  one  month,  for 
profit  of  each  series. 

Other  variations  are  the  following  : 

1.  An  assumed  rate  of  profit  (generally  6  per  cent.)  is  given  on  the 
previous  value  of  the  shares  and  on  the  equated  amount  of  dues  paid 
in  during  the  term.  If  a  portion  of  the  profits  still  remains  undistrib- 
uted sufficient  to  allow  one-fourth  per  cent,  or  one-half  per  cent,  more, 
each  share's  investment  is  then  allowed  this  additional  rate  of  profit. 

2.  Multiply  the  value  of  the  shares  in  each  series  as  declared  at  the 
last  quarterly  apportionment  by  3  and  to  these  products  add  twice  the 
amount  of  dues  paid  in  on  each  series  during  the  current  quarter. 
Divide  each  of  these  sums  by  12,  for  the  dividend  bearing  capital  of 
each  series.  Divide  the  net  profits  of  the  quarter  by  the  dividend 
bearing  capital  of  all  the  series,  for  the  rate  per  cent,  of  profit.  Mul- 
tiply the  dividend  bearing  capital  of  each  series  by  the  rate  per  cent. 


622  APPENDIX    II. 

of  profit,  for  the  profit  of  each  series.  Divide  the  profit  of  each  series 
by  the  number  of  shares  in  the  series,  for  the  profit  of  a  share  in  the 
series. 

Using  the  same  data  as  before,  except  that  quarterly  profits  of  $7  07. 28 
are  assumed  instead  of  yearly  profits  of  $3,000,  we  proceed  thus  : 

(*:;s. 87X500X3)  +  (§3x500x3)  -h12=$5, 108. 75,  dividend  bearing  capital 

of  the  first  series. 
($25.27X600X3)  + ($3x600X2) -f-12=$4,090.50,  dividend  bearing  capital 

ofthe  second  scries. 
($12.33X400X3) +  ($3X400X2) -s-12=$l,432,00,  dividend  bearing  capital 

of  the  third  series. 
(3X500X2) -h  12=  $350.00,  dividend  bearing  capital 

ofthe  fourth  series. 


§10,881.35,  dividend  bearing  capital 
of  all  series. 
$707.38-5-810,881. 35=6.5,  the  rate  per  cent,  of  profit. 
$5,108.75 X.065=$332.07,  profits  of  the  first  series. 
$4,090.50X.065=$265.88,  profits  of  the  second  series. 
$1,432.00X.065=$93.08,  profits  of  the  third  series. 
$250.00X.065=$16.25,  profits  of  the  fourth  series. 

3.  The  profits  are  distributed  to  the  free  shares  only.  The  shares 
borrowed  on  do  not  participate  in  the  profits,  their  dues  being  credited 
on  the  principal  of  the  loan. 

4.  Profits  arising  from  entrance  fees  are  divided  equally  among  the 
shares  of  the  respective  series  in  which  the  shares  are  taken. 

5.  Profits  arising  from  withdrawals  are  divided  equally  among  the 
shares  of  the  respective  series  from  which  the  shares  are  withdrawn. 

6.  The  dividend  bearing  capital  of  the  free  shares  is  ascertained 
according  to  the  rule.  The  dividend  bearing  capital  of  the  shares 
borrowed  on  consists  of  the  equated  amount  of  dues  paid  in  during  the 
term.  The  dues  paid  in  on  shares  borrowed  on  during  the  term, 
together  with  the  dividends  thereon,  are  credited  on  the  loans. 

7.  Instead  of  finding  an  exact  dividend  rate,  some  associations  use  a 
fixed  rate,  which  is  applied  accordingto  the  foregoing  rule.  The  re- 
maining profits  are  divided  equally  among  all  the  shares  or  are  held  in 
reserve. 

8.  Instead  of  finding  the  dividend  bearing  capital  of  the  series  as  in 
the  foregoing  rule,  all  the  dues  paid  in  on  the  shares  in  force  up  to  the 
last  report,  plus  the  equated  amount  of  dues  paid  in  during  the  term, 
form  the  basin  fori  he  distribution  of  the  profits. 

9.  A  certain  rate  of  interest  is  given  to  each  series  based  on  the 
value  (if  the  shares  in  f< >rce  as  declared  by  the  last  report.  The  pre- 
miums received  during  the  term  are  divided  among  the  series  in  pro- 
portion to  the  receipts  of  each  series  during  the  term  from  dues,  hues, 
and  the  interest  allowed  on  the  previous  values.  The  remaining  profits 
are  di\  ided  among  all  the  shares  in  accordance  with  the  rule. 

Hi.    Payments  are  made  weekly.       Each  shareholder's  weekly  payment 

di'  dues  is  multiplied  by  the  number  of  weeks  invested  less  one  and 
then  averaged  for  the  equated  investment  of  each  shareholder's  dues 
tor  the  term.  Then  the  equated  investment  of  all  the  shareholders' 
dues  for  t  he  term,  added  to  the  amounl  standing  to  the  credit  of  the 
shareholders  at  the  beginning  of  the  term,  gives  the  dividend  bearing 
capital  for  (lie  term.  This  capital  divided  into  the  profits  for  the  term 
the  rate  per  cent,  of  profit.  This  rate  is  thenapplied  to  each 
I,  a  re  holder's  dividend  bearing  capital  to  ascertain  the  a  mount  of  profit 
belonging  to  each. 

l»l,A\  r>. 

I.   To  the    previous    ralue  Of  a   share  in  each   series  add  the  dues  paid 

in  during  the  term,  and  mull  iply  i  he  sum  by  the  number  of  shares  in 
the   eries. 


PREMIUM    PLANS.  623 

2.  Add  these  products  and  then  divide  the  sum  into  the  profits  for 
the  term  for  the  rate  per  cent,  of  profit.  Using  the  same  data  as  in  the 
preceding  illustrations,  the  rule  is  worked  out  as  follows: 

($38.87+$12)  X500=$25,433,  dividend  bearing  capital  of  the  first  scries. 
($25.27+$12)X600=$22,362,  dividend    bearing  capital  of    the  second 

series. 
($12.32+$12)  X400=  $9,728,  dividend  bearing  capital  of  the  third  series. 

($12X500=  $0,000,  dividend    bearing    capital    of  the    fourth 
series. 


$63,555,  dividend  bearing  capital  of  all  series. 
$3,000,  the  profits  for  the  term, -=-$63,525=4.7225,  the  rate  per  cent,  of 

profit. 
$25,435X.047225=$1,201.17,  the  first  series"  share  of  the  profits. 
$22,362X.047225=$1. 056.05,  the  second  series' share  of  the  profits. 
$9,728X. 047225=    $459.40,  the  third  series'  share  of  t  he  profits. 
$6 , 000 X. 047225=    $283.35,  the  fourth  series'  share  of  the  profits. 
$l,201.17-=-500=$2.40,  profit  of  a  share  of  the  first  series. 
|l,056.05-r-600=$1.76,  profit  of  a  share  of  the  second  series. 
$459.40-f-400=$1.15,  profit  of  a  share  of  the  third  series. 
$283.35-^500=$0.57,  profit  of  a  share  of  the  fourth  series. 
$38.87+$12+$2.40=$53.27,  value  of  a  share  of  the  first  series. 
$25.27 -t-$12+$1.76=$39.03,  value  of  a  share  of  the  second  series. 
§12.32+$12-|-$1.15=$25.47,  value  of  a  share  of  the  third  series. 
$12+$0.57=$12.57,  value  of  a  share  of  the  fourth  series. 
$0.03,  profits  undivided. 
The  following  modifications  of  plan  5  have  been  found  : 

1.  The  profits  are  distributed  only  upon  the  free  shares. 

2.  Profits  are  distributed  to  all  shares  six  months  old  and  over  in 
accordance  with  the  rule,  shares  less  than  six  months  old  not  partici- 
pating in  the  profits. 

3.  Profits  are  distributed  on  the  amount  standing  to  the  credit  of 
shareholders  three  months  previous  to  the  dividend  day. 

4.  Profits  are  distributed  on  the  values  of  the  shares  at  the  last 
report,  and  on  all  the  dues  paid  in  during  the  term  except  the  last 
regular  payment. 

5.  Profits  are  distributed  to  all  shares  thirty  weeks  old  and  over, 
shares  less  than  thirty  weeks  old  not  receiving  any  profit. 

G.  Instead  of  finding  an  exact  dividend  rate,  as  in  the  foregoing 
rule,  an  arbitrary  rate,  within  the  limit  of  the  profits,  is  allowed. 

7.  A  fixed  rate  of  interest  is  allowed  on  all  balances  at  the  beginning 
of  the  year  and  on  the  dues  paid  in  on  shares  then  in  force.  The  same 
rate  of  interest  is  allowed  on  the  dues  paid  in  on  shares  less  than  a  year. 
but  more  than  three  months,  old.  Shares  exactly  one  year  old  reeei .  e 
a  much  higher  rate  of  interest ;  but,  if  allowed  to  remain  in  the  associ- 
ation, the  dvies  and  dividends  would  become  a  balance  on  which  the 
lower  rate  of  interest  would  be  allowed  at  the  end  of  the  following 
year. 

8.  A  fixed  rate  of  interest  is  allowed  on  the  values  of  the  shares  in 
force  as  declared  by  the  last  report  and  on  all  the  dues  paid  in  during 
the  term.  This  interest  is  then  deducted  from  the  profits  for  the  term. 
and  the  remainder  divided  in  proportion  to  the  age  of  the  shares. 

9.  Profits  arising  from  premiums  are  distributed  in  accordance  with 
the  rule.  All  other  profits  are  divided  equally  among  the  shares  of  the 
respective  series  in  which  such  profits  were  made. 

10.  Profits  arising  from  interest,  fines,  withdrawals,  etc..  are  distrib- 
uted among  all  shares  three  months  old  or  over  in  accordance  with  the 
rule.  Profits  arising  from  premiums  are  divided  equally  among  all  the 
shares  in  force  three  months  old  or  over. 

11-,  Profits  arising  from  interest  and  from  premiums  on  interest  are 


624  APPENDIX   II. 

apportioned  according  to  the  rule.  Profits  arising  from  fines  and  from 
premiums  other  than  on  interest  are  divided  equally  among  all  the 
shares  in  force. 

12.  A  fixed  rate  of  interest  is  allowed  on  the  amount  standing  to  the 
credit  of  the  shareholders  at  each  semi-annual  term.  This  interest  is 
then  deducted  from  the  profits  for  the  term,  and  the  remainder  is 
divided  equally  among  the  borrowing  shares. 

13.  Profits  arising  from  interest  are  apportioned  according  to  the 
rule.  All  other  profits  are  apportioned  on  the  basis  of  the  dues  paid 
during  the  term  plus  the  interest  credited  for  the  term. 

14.  The  rate  per  cent,  of  profit  is  found  in  accordance  with  the  rule  ; 
but  the  rate  thus  obtained  is  applied  to  each  shareholder's  account  on 
his  dues  only,  the  remainder  of  the  profits  being  held  in  reserve. 

15.  The  profits  are  distributed  every  month.  The  gross  profits  of  the 
month  are  divided  by  the  total  capital,  for  the  rate  per  cent,  of  profit, 
which  is  then  applied  successively  to  the  values  of  the  shares  in  each 
series  as  determined  at  the  previous  apportionment,  for  the  gross  profit 
on  each  share.  The  monthly  expenses  are  apportioned  to  each  share 
on  the  same  basis,  and  the  net  profit  of  each  share  is  the  difference 
between  the  gross  profit  of  each  share  and  the  expense  of  each  share. 

PLA5J  6. 

1.  Divide  the  net  profits  for  the  term  by  the  total  amount  of  dues 
paid  in  on  all  the  shares  in  force,  for  the  rate  per  cent,  of  profit. 

2.  Multiply  the  total  dues  paid  in  on  one  share  of  each  series  by  the 
rate  per  cent,  of  profit,  for  the  profit  on  one  share. 

Using  the  same  data  as  before  the  result  is  as  follows  : 

ILLUSTRATION. 

$48  X  500  =  $04,000,  total  dues  paid  in  first  series. 
$36  X  600  =  $21,600,  total  dues  paid  in  second  series. 
$2  I  X  400  =    $9,600,  total  dues  paid  in  third  series. 
$12  X  500  =    $6,000,  total  dies  paid  in  fourth  series. 

$81,200,  total  dues  in  all  series. 

$3,000,  the  profits  for  the  term,  -h  $61,200  =  4.9019,  the  rate  per  cent  of 

profit. 
sis  x  .049019  =    $2.35,  profit  of  a  share  of  the  first  series. 
$36   <  ,049019=    §1.76,  profit  of  a  share  of  the  second  series. 
$24  X  .0101)19  =    §1.18,  profit  of  a  share  of  the  third  series. 
si  J  X  .049019  =    $0.59,  profit  of  a  share  of  the  fourth  series. 
$38.87    1   $2.35  +  $12  =  $53.22,  value  of  a  share  of  the  first  series. 
$25.27  -L  $1.76  +  $12  =  $39.03,  value  of  a  share  of  the  second  series. 
$12.32  -f  $1.18  +  $12  =  $25.50,  value  of  a  share  of  the  third  series. 
$0.59  +  $12  =  $12.59,  value  of  a  share  of  the  fourth  series. 
$2.00,  profits  undivided. 

This  rule  is  known  in  some  sections  of  the  country  as  the  second 
dividend  rule. 

The  following  variations  differ  from  the  rule  only  in  the  method  of 
computation,  as  exactly  the  s;une  results  are  obtained  : 

1.  Multiply  the  number  of  shares  in  force  in  each  scries  by  the  num- 
ber of   months  Hie   series   have  run.      Add   these   products  and   divide 

the  sum  into  the  net  profits  for  the  term,  for  the  profit  of  one  share  for 
one  monl  h.  Then  mull  [ply  the  profil  pershare  per  month  by  the  num- 
ber of  months  t  lie  series  lias  run.  for  t  lie  profit  of  a  share  in  any  series. 

j,   Multiply  the  number  of  shares  in  force  in  each  series  by  the  time 

of  inve  tmenl  expressed  in  terms  or  periods  corresponding  to  the  inter- 
vals bet  we.  n  the  series,  ^dd  these  products  and  divide  the  sum  into 
the  profits  for  the  term,  for  the  profit  of  a  share  of  the  youngest  series. 


PREMIUM    PLANS.  625 

Shares  twice  the  age  of  a  share  of  the  youngest  series  will  receive  twice 
as  much  profit ;  a  share  three  times  as  old  will  receive  three  times  as 
much,  etc. 

8.  Multiply  the  number  of  shares  in  each  series  by  the  dues  paid  in 
per  share,  or  by  one-half  the  dues  paid  in,  according  to  the  practice  of 
the  association.  Add  these  products  and  find  what  fractional  part  each 
product  is  of  the  sum  of  all  the  products.  These  fractions  represent  the 
parts  of  the  total  profits  belon^in^  to  each  series. 

4.  Multiply  the  dues  on  the  shares  in  force  for  one-half  the  time  of 
investment  by  an  assumed  rate  per  cent,  of  profit,  for  the  assumed 
profits.  Divide  the  actual  net  profits  of  the  term  by  the  assumed 
profits  and  multiply  the  quotient  by  the  assumed  profits  of  each  series, 
for  the  actual  profits  of  each  series. 

5.  The  legal  rate  of  interest  is  allowed  on  the  total  dues  paid  in  all 
the  series,  and  the  remainder  of  the  profits  divide  among  all  the  shares 
in  proportion  to  the  total  amount  of  dues  paid  in  each  series. 

The  variations  from  the  rule  which  give  different  results  are  the  fol- 
lowing : 

1.  Only  the  dues  standing  to  the  credit  of  the  shareholders  six 
months  prior  to  the  dividend  day  participate  in  the  profits. 

2.  Shares  must  be  three  months,  six  months,  or  one  year  old,  as  the 
rules  of  the  association  may  provide,  before  they  are  allowed  to  partici- 
pate in  the  profits. 

3.  The  last  three  months'  payments  of  dues  do  not  participate  in  the 
profits. 

4.  A  fixed  rate  per  cent,  of  profit  is  allowed  and  profits  are  dis- 
tributed only  when  a  sufficient  amount  has  accumulated  to  give  to 
each  share  this  rate  per  cent,  on  the  dues  paid  in. 

5.  A  rate  per  cent,  of  profit  is  ascertained  by  dividing  the  net  profits 
for  the  last  year  by  the  total  amount  of  dues  standing  to  the  credit  of 
the  free  shares,  plus  the  dues  paid  in  on  the  pledged  shares  during  the 
year.  This  rate  is  applied  on  the  dues  standing  to  the  credit  of  each 
share  at  the  end  of  the  year  and  the  profit  belonging  to  the  free  shares 
goes  to  increase  their  value,  while  the  profit  belonging  to  the  pledged 
shares,  with  the  dues  paid  on  them  during  the  year,  is  credited  on  the 
loan  as  a  partial  payment. 

(5.  The  profits  are  distributed  to  the  free  shares  only.  All  payments 
made  on  pledged  shares  are  credited  on  the  loans. 

7.  The  legal  rate  of  interest  is  allowed  on  all  the  dues  paid  in  except 
the  last  regular  payment.  The  remainder  of  the  profits  is  held  in 
reserve. 

8.  Profits  arising  from  fines  and  transfer  fees  are  divided  equally 
among  the  shares  of  the  series  in  which  such  profits  were  made.  The 
remainder  of  the  profits  is  distributed  in  accordance  with  the  rule. 

9.  A  fixed  rate  of  interest  is  allowed  on  all  the  dues  paid  in. 

10.  Profits  arising  from  interest  and  fines  are  distributed  in  accord- 
ance with  the  rule.  All  other  profits  are  divided  equally  among  all 
the  shares  in  force. 

11.  Profits  arising  from  premiums  are  divided  equally  among  all  the 
shares  in  force.  All  other  profits  are  distributed  among  all  shares 
three  months  old  or  over,  according  to  the  rule. 

12.  Profits  arising  from  interest  are  divided  in  accordance  with  the 
rule.  All  other  profits  are  divided  among  all  the  shares  in  force,  in 
proportion  to  the  amount  of  dues  paid  in  during  the  term. 

13.  No  profit  is  allowed  on  the  dues  paid  in  during  the  term. 

PLAN  7. 

1.  To  the  amount  of  dues  paid  in  on  one  share  in  each  series  up  to 
the  last  report  add  one-half  the  dues  paid  in  during  the  term,  and  mul- 
tiply these  sums  by  the  number  of  shares  in  each  series,  for  the  dividend 
bearing  capital  of  each  series. 


Q2Q  APPENDIX   II. 

2.  Add  these  products  and  divide  the  sum  into  the  profits  for  the 
term,  for  the  rate  per  cent,  of  profit. 

3.  Multiply  the  dividend  bearing  capital  of  each  series  by  the  rate 
per  cent,  of  profit,  for  the  profit  of  each  series. 

4.  Divide  the  profit  of  each  series  by  the  number  of  shares  in  the 
series,  for  the  profit  one  share  in  each  series. 

Using  the  same  data  as  before  we  proceed  thus  : 

ILLUSTRATION. 

($36  +  $6)  x  500  =  $21,000,  dividend  bearing  capital  of  the  first  series. 
($24  +  §6)  X  600  =  $18,000,  dividend  bearing     capital  of  the  second 

series. 
($12  -+■  $6)  X  400  =    $7,200,  dividend    bearing    capital    of  the    third 

series. 
$6  X  500  =    $3,000,  dividend  bearing  capital  of    the   fourth 

series. 


$49,200,  dividend  bearing  capital  of  all  series. 

$3,000,  the  profits  for  the  term,   h-  $49,200  =  6.0975,  the  rate  per  cent. 

of  profit. 
$21,000  X  .060975  =  $1,280.48,  the  first  series'  share  of  the  profits. 
$18,000  X  .060975  =  §1,097.55,  the  second  series'  share  of  the  profits. 
$7,200  X  .060975  =  §439.02,  the  third  series'  share  of  the  profits. 
§3,000  X  .060975  =  §182.93,  the  fourth  series'  share  of  the  profits. 
$1,280.48  h-  500  =  $-2.56,  profit  of  a  share  of  the  first  series. 
$1,097.55  -r-  600  =  $1.83.  profit  of  a  share  of  the  second  series. 
$439.02  h-  400  =  §1.10,  profit  of  a  share  of  the  third  series. 
$182.93  -f-  500  =  $0.37,  profit  of  a  share  of  the  fourth  series. 
$38.87  +  $12  +  $2.56  =  §53.43,  value  of  a  share  of  the  first  series. 
$25.27  +  $12  +  §1.83  =  $39.10,  value  of  a  share  of  the  second  series. 
$12.32  +  $12    -  si  .10  =  $25.42,  value  of  a  share  of  the  third  series. 
si2  +  $0.37  =  $12.:>7.  value  of  a  share  of  the  fourth  series. 
§0.02,  profits  undivided. 

The  following  variations  of  this  rule  have  been  found  : 

1.  The  profits  are  distributed  to  the  free  shares  only. 

2.  The  dividend  bearing  capital  of  the  free  shares  is  ascertained  in 
accordance  with  the  rule.  The  dividend  bearing  capital  of  the  shares 
borrowed  on  is  found  as  follows:  At  the  end  of  the  first  half  of  the 
year  one-half  of  the  dues  paid  in  on  such  shares  during  the  period  is 
taken;  al  the  end  of  the  second  half  of  the  fiscal  year,  all  the  dues 
paid  in  during  the  first  half  of  the  year,  and  the  dividend  thereon,  plus 
one-half  of  the  dues  paid  in  during  the  second  half  year,  forms  the 
di'.  id  end  bearing  capital  of  such  shares.  In  such  cases  the  association 
makes  an  annual  settlement  with  its  borrowers,  and  credits  the  dues 
paid  in  and  dividends  declared  each  year  on  their  loans. 

:;.  Profit  arising  from  entrance  and  transfer  fees  are  divided  equally 
among  all  the  shares. 

PLAN  §. 

1.  Find  the  legal  rate  of  interest  on  the  values  of  the  shares  as  de- 
clared  by  the  lasl  reporl  and  deduct  it  from  the  profits  of  the  term  for 
t  he  net  profil . 

2,  Divide  the  net  profit  by  the  sum  of  the  dues  paid  in  during  the 
term  and  the  interest  on  the  previous  series,  for  the  rate  per  cent,  of 
profit. 

:;.   Multiply  the  Bum  of  the  interest   ami  dues  for  the  term  on  one 
re  of  each  series  by  i  be  rate  per  cent  of  profit,  for  the  profit  on  one 
share. 

I.    Add  the  previous  value  of  a  share  of  each  series,  t  he  legal  interest 


PREMIUM   PLANS.  627 

on  this  value,  the  dues  paid  in  during  the  term,  and  the  profit  on  the 
share  to  find  the  present  value  of  a  share  of  each  series. 

Let  the  legal  rate  of  interest  be  6  per  cent.,  and  using  the  same  data 
as  in  the  preceding  illustrations,  we  proceed  thus : 

ILLUSTRATION. 

$38.87  X  .06  =  $2.33,  interest  on  a  share  of  the  first  series. 
$25.27  X  .06  =  $1.52,  interest  on  a  share  of  the  second  series. 
$12.32  X  .06  =  $0.74,  interest  on  a  share  of  the  series. 

$2.33  X  500  =  $1,165,  interest  on  first  series. 
$1.52  X  600  =      $912,  interest  on  second  series. 
$0.74  X  400  =     $296,  interest  on  third  series. 


$2,373,  total  interest  on  old  series 
$3,000,  the  profits  for  the  term,  -  $2,373  =  $627,  the  net  profits. 
$12  X  2,000,  the  number  of  shares  in  force,  =  $24,000,  the  dues  paid 
during  the  term. 
$24,000  +  $  2,373  =  §26,373,  the  active  capital. 

$627-h   $26,373  =  2.3774,  the  rate  per  cent,  of  profit. 
($12  +  $2.33)  X  .023774  =  $0.34,  the  profit  of  a  share  of  the  first 

SPF1PS 

($12  +  $1.52)  X  .023774  =  $0.32,  the    profit    of  a  share   of  the 

second  series. 
($12  +  $0.74)  X  .023774  =  $0.30,  the  profit  of  a  share  of  the  third 

series. 
$12  X  .023774  =  $0.29,  the  profit  of  a  share  of  the  fourth 
series. 
$38.87  +  $2.33  +  $12  +  $0.34  =  $53.54,  value  of  a  share  of  the  first 

scries 
$25.27  4-  $1.52  +  $12  +  $0.32  =  $39.11,  value    of    a  share  of    the 

second  series. 
$12.32  +  $0.74  +  $12  +  $0.30  =  $25.36,  value  of  a  share  of  the  third 

$12  +  $0.29  =  $12.29,  value  of  a  share  of  the  fourth 

series. 

The  above  rule  is  known  as  Brooks'  rule. 

Some  associations  using  this  rule  vary  it  by  allowing  less  than  the 
legal  rate  of  interest  on  the  old  values,  but  no  separate  classification  of 
such  associations  has  been  made. 

Another  variation  from  the  rule  consists  in  allowing  the  legal  rate  of 
interest,  not  only  on  the  values  of  the  old  series  at  the  beginning  of 
the  term,  but  also  on  the  equated  amount  of  dues  paid  in  on  all  the 
shares  during  the  term. 

Another  variation  from  the  rule  is  as  follows  :  After  the  legal  rate  of 
interest  for  the  term  on  the  values  of  the  old  series  has  been  deducted 
from  the  profits  for  the  term,  the  remainder  of  the  profit  is  divided  by 
the  sum  of  the  value  of  all  shares  at  the  beginning  of  the  term,  the 
dues  paid  in  during  the  term,  and  the  interest  for  the  rate  per  cent,  of 
profit.  This  rate  is  then  applied  to  the  sum  of  the  previous  value  of 
each  share,  the  dues  paid  in  during  the  term,  and  the  interest  on  the 
share  for  the  profit  on  one  share. 

PLABf  9. 

The  profits  are  divided  equally  among  all  the  shares  in  force.     This 
plan  is  used  principally  by  terminating  associations. 
The  following  variations  of  this  rule  have  been  found  : 

1.  The  profits  for  each  term  are  divided  equally  among  all  the  shares 
in  force. 

2.  The  profits  for  each  term  are  divided  equally  among  all  shares 


628  APPENDIX   II. 

three  months  old  or  over,  six  months  old  or  over,  or  nine  months  old  or 
over,  as  the  rules  of  the  association  may  provide.  In  such  cases  shares 
less  than  three  months,  six  months,  or  nine  months  old  do  not  partici- 
pate in  the  profits. 

3.  Shares  less  than  a  year  old  are  given  such  portion  of  the  profits 
as  the  board  of  directors  may  allow.  The  remainder  of  the  profits  is 
divided  equally  among  all  the  shares  one  year  old  or  over. 

4.  The  profits  for  each  term  are  divided  equally  among  the  free 
shares. 

5.  Shares  one  year  old  or  over  receive  equal  amounts  of  the  profits 
for  the  term.  Shares  nine  months  old  receive  three-fourths  as  much 
as  those  a  year  old  ;  shares  six  months  old  one-half  as  much,  etc. 

6.  The  profits  made  by  each  series  are  kept  separate,  and  are  divided 
equally  among  all  the  shares  of  the  series. 

7.  Profits  arising  from  premiums  and  fines  are  divided  equally  among 
the  shares  of  the  series  in  which  such  profits  were  made.  All  other 
profits  are  divided  equally  among  all  the  shares.* 

PLAN  10. 

The  profits  ai-e  distributed  according  to  the  value  of  the  shares  as  de- 
clared by  the  last  report  disregarding  dues  paid  in  during  the  term. 

ILLUSTRATION. 

Value  of  all  shares  in  force  at  last  report,  $25,800. 

Profits  to  be  distributed,  $1,612. 

$1,612  h-  $25,800  =  6.248,  rate  per  cent,  of  profit. 

Suppose  the  value  of  a  given  share  at  the  last  report  to  be  $52.60. 
Then  :  $52.60  X  .06248  =  $3.28,  profit  for  the  term.  $52.60,  previous 
value,  +  $3.28,  profit  +  $12,  dues  paid  during  term,  =  $67.88,  present 
value. 

The  above  rule  is  slightly  varied  by  some  associations  that  reserve  a 
small  portion  of  the  profits  which  is  arbitrarily  distributed  to  the  series 
issued  during  the  term.  The  remainder  of  the  profits  is  divided  ac- 
cording to  the  rule. 

Another  variation  from  the  rule  is  made  by  associations  that  distrib- 
ute the  profits  to  the  free  shares  only. 

PLAN  11. 

1.  The  legal  rate  of  interest  is  allowed  on  the  dues  standing  to  the 
credit  of  shareholders  at  the  beginning  of  the  year,  but  no  interest  is 
allowed  on  the  first  year's  payments. 

2.  Du<s  paid  in  after  the  first  year  bear  interest  from  the  end  of  the 
quarter  in  which  they  are  paid  ;  thus  the  first  quarter's  dues  bear  in- 
terest for  nine  months,  the  second  quarter's  dues  for  six  months,  and 
the  i  hird  quarter's  dues  for  three  months. 

Assuming  that  dues  are  $1  a  share  per  month  and  that  the  legal  rate 
of  interest  is  6  per  cent.,  the  result  would  be  as  follows  : 

hues  paid  <>n  one  share  the  lirst  year $12.00 

I  nteresl  or  I  bis  amounl  at  end  of  second  year 72 

Dues  paid  during  the  second  year 12.00 

1  Hid.  st  on  the  dues  paid  during  the  second  year 27 

Value  of  t  he  share  at  the  end  of  the  second  vear 24.99 

PLAN  12. 

1.   Members  who  have  $100,  or  any  multiple  thereof,  iii  the  associa- 
tion at  the  beginning  of  the  term  (quarter) ,  and  leaving  said  money 
with  the  a    ociation  during  the  term,  shall  receive  a  fixed  rate  of  in- 
1  t  hereon. 


PREMIUM  PLANS.  629 

2.  All  the  remaining  profits  are  divided  equally  among  all  shares 
that  are  three  months  old  or  over. 

ILLUSTRATION. 

Let  us  suppose  that  A,  B,  and  C  are  shareholders.  A  begins  the 
quarter  with  $98  paid  in  as  dues,  B  with  $216,  and  ('with  $398.50. 
Now,  A  would  get  nothing  under  the  fixed  interest  rate.  B  would 
get  the  fixed  rate  of  interest  on  $200,  and  C  the  fixed  rate  of  interest 
on  $300.  In  addition,  A,  B,  and  C  would  get  an  equal  amount  per  share 
of  the  remaining  profits. 

PLAN  13. 

1.  Profits  arising  from  interest  on  loans  are  divided  equally  among 
the  shares  of  the  series  in  force  when  the  loans  were  made. 

2.  The  remainder  of  the  profits  is  divided  equally  among  all  the  shares 
in  force. 

To  illustrate  the  rule,  let  us  suppose  that  an  association  is  three  years 
old  and  has  in  force  three  series  of  one  hundred  shares  each.  At  the 
end  of  the  second  year  the  report  showed  the  value  of  a  share  in  the 
first  series  to  be  $26,  and  in  the  second  series  $12.40.  During  the  third 
year  a  profit  of  $220  was  made,  of  which  $25  was  interest  on  loans 
made  when  only  the  first  series  was  in  existence  ;  $30  was  interest  on 
loans  made  after  the  second  series  was  issued  and  before  the  issuing  of 
the  third  series  ;  and  $45  was  interest  on  loans  made  after  the  third 
series  was  issued. 

ILLUSTRATION. 

$25  -r-  100  =  $0.25,  interest  due  each  share  of  the  first  series,  on  loans 
made  prior  to  issuing  the  second  series. 

$30  -r-  200  =  $0.15,  interest  due  each  share  of  the  first  and  second 
series,  on  loans  made  after  second  series  was  issued  and  prior  to  issu- 
ing the  third  series. 

$4.")  -=-  300  =  $0.15,  interest  due  each  share  of  first,  second,  and  third 
series  on  loans  made  after  the  third  series  was  issued. 

$220,  profit,  -  $100,  interest,  =  $120,  net  profit  to  be  divided  equally 
among  all  the  shares  in  force. 

$120  -r-  300  =  $0.40,  profit  due  per  share  in  each  series. 

$26,  previous  value,  +  ($0.25  +  $0.15  +  $0.15).  interest,  +  $0.40, 
profit,  +  $12,  dues,  =  $38.95,  value  of  a  share  of  the  first  series. 

$12.40,  previous  value,  +  ($0.15  +  $0.15),  interest,  +  $0.40,  profit,  + 
$12.  dues,  =  $25.10,  value  of  a  share  of  the  second  series. 

$0.15,  interest.  +  $0.40,  profit,  +  $12,  dues,  =  $12..-).-,,  value  of  a  share 
of  the  third  series. 

PLAN  14. 

The  value  of  shares  at  each  quarterly  meeting  shall  be  ascertained 
and  adjusted  as  follows  :  The  shares  of  each  series  shall  be  given 
credit  (1)  for  the  value  of  the  shares  at  the  previous  quarterly  meet- 
ing ;  (2)  for  the  dues  paid  in  on  the  shares  during  the  quarter  ;  (3)  for 
the  interest  paid  during  the  quarter  on  loans  as  follows  :  The  first 
series  shall  be  given  credit  for  all  the  interest  paid  during  the  quarter 
on  loans  made  prior  to  the  issuing  of  the  second  series  ;  the  first  and 
second  series  together  shall  be  given  credit  for  all  the  interest  paid 
during  the  quarter  on  loans  made  after  the  issuing  of  the  second 
series  and  prior  to  the  issuing  of  a  third  series,  to  be  apportioned 
between  said  two  series  in  proportion  to  the  amount  of  accumulations 
of  the  respective  series  during  the  existence  of  the  second  series  and 
prior  to  the  issuing  of  a  third  series,  asshown  by  the  previous  quarterly 
statement,  and  so  on  for  any  number  of  series  ;  provided,  however,  that 
should  any  loan  he  paid  off  after  the  issuing  of  a  second  or  any  later 
series  the  money  actually  paid  on  such  loan,  exclusive  of  dues,  pre- 
miums, fines,  and  interest  shall  be  immediately  reinvested,  and  there- 
41 


630  APPENDIX   II. 

after  all  the  series  which  were  in  existence  at  the  time  of  making  the 
original  loan  shall  be  entitled  to  interest  on  the  amount  so  reinvested 
at  the  rate  of  6  per  cent,  per  annum,  to  be  apportioned  between  the 
said  series  in  the  same  manner  as  interest  on  the  original  loan  was 
apportioned  prior  to  the  paying  off  of  said  original  loan,  and  the  inter- 
est so  credited  shall  be  deducted  from  the  interest  to  which  the  series 
in  existence  at  the  time  of  such  reinvestment  would  otherwise  have 
been  entitled  ;  and  provided  also,  that  the  amount  so  paid  off  and  rein- 
vested shall  not  be  regarded  as  receipts  of  the  current  quarter  to  be 
apportioned  among  the  then  existing  series,  the  same  having  already- 
formed  part  of  the  value  of  shares  of  the  series  which  existed  at  the 
time  of  making  the  original  loan  ;  (4)  the  remainder  of  the  receipts 
during  the  quarter,  after  deducting  all  expenses  of  the  association, 
shall  be  apportioned  among  the  several  series  in  proportion  to  the 
amount  of  dues  and  interest  hereinbefore  directed  to  be  credited  to  the 
respective  sei-ies  during  said  quarter. 

If  at  the  time  of  issuing  any  new  series  there  shall  not  be  sufficient 
funds  in  the  treasury  to  meet  all  payments  that  may  be  due  to  bor- 
rowers upon  loans  made  prior  to  the  issuing  of  such  new  series  and  to 
pay  all  debts  of  the  association  then  due,  then  the  amount  that  shall 
be  required  to  meet  said  payments  shall  bear  interest  at  the  rate  of  6 
per  cent,  per  annum,  and  the  amount  of  said  interest  shall  thereafter  be 
credited  to  all  the  series  in  existence  at  the  time  of  such  payments,  to 
be  apportioned  among  said  series  in  proportion  to  the  amount  of  dues 
paid  by  each  series  during  the  quarter  that  said  payments  shall  be 
made,  and  the  amount  of  said  interest  so  credited  shall  be  deducted 
from  the  interest  to  which  the  series  which  existed  prior  to  the  issuing 
of  such  new  series  would  otherwise  have  been  entitled.  Should  there 
be  any  funds  in  the  treasury  remaining  uninvested  at  the  time  of  the 
issuing  of  any  new  series  above  the  amount  of  debts  of  the  association 
then  outstanding  and  not  required  to  meet  payments  that  may  be  due 
to  borrowers  upon  any  loans  made  prior  to  the  issuing  of  said  new 
series,  the  series  which  were  in  existence  prior  to  the  issuing  of  such 
new  series  shall  be  entitled  to  interest  from  the  time  of  investment  of 
said  money  at  the  rate  of  6  per  cent,  per  annum  upon  the  net  amount  of 
said  funds,  said  interest  to  be  apportioned  among  said  last  mentioned 
series  in  the  same  manner  as  the  interest  upon  loans  is  hereinbefore 
directed  to  be  apportioned,  and  the  amount  of  said  interest  shall  be 
deducted  from  the  interest  to  which  the  series  in  existence  at  the  time 
such  funds  shall  lie  invested  would  otherwise  have  been  entitled. 

Should  any  shares  be  redeemed  or  cancelled,  the  money  paid  for  such 
redemption  or  cancellation  shall  be  deducted  from  the  accumulations 
of  the  current  quarter  belonging  to  the  series  to  which  said  shares  so 
redeemed  or  cancelled  belonged,  and  the  value  of  said  shares  shall  be 
credited  to  the  remaining  shares  of  said  series  in  equal  proportions. 

Should  any  loss  occur  on  any  loan,  the  amount  of  such  loss  shall  be 
deducted  from  the  value  of  the  shares  of  the  several  series  w  Inch  were 
in  existence  at  the  t  ime  of  making  said  loan,  to  be  apportioned  among 
said  series  in  the  same  manner  as  the  interest  on  said  loan  is  herein- 
before directed  to  be  apportioned. 

PLAN  15. 

The  profits  are  distributed  annually  on  the  ha  sis  of  each  $10  paid  into 

the  association.     A  member  who  has  paid  in  $100  receives  ten   parts; 

one  who  has  paid  in  (40  receives  (our  parts;   one   who  has  paid    in   $52 

ives  five   parts,  etc.,   the  excess  of  dollars  over  a  multiple  of  §10 

not   part  icipal  [ng   in  the  profits. 

PLAN  16. 

N  ociations  using  this  plan  declare  a  semi-annual  dividend,  but 
Bhare     le      than  a  year  old  are  not  allowed  any  part  of  the  profits. 


PREMIUM  PLANS.  631 

The  rate  per  cent,  cf  profit  is  ascertained  by  dividing  the  net  profits 
by  the  amount  of  dues  standing  to  the  credit  of  the  shares  at  the  time 
of  the  last  report,  plus  the  profits  that  were  credited  six  months 
previous  to  the  last  report. 

ILLUSTRATION. 

Total  dues  paid  up  to  last  report $18,120 

Total  profit  credited  six  mouths  previous  to  last  report 1,240 

Profit  made  during  the  term 908 

Then  :  $968-=-  ($18,120  +  $1,240)  =  5,  rate  per  cent,  of  profit. 

Total  dues  paid  on  a  share $36.00 

•  Dues  paid  on  a  share  at  the  last  report 30.00 

Profit  credited  on  a  share  at  last  report 3.40 

Profit  credited  on  a  share  six  months  previous  to  last  report. . . .       2.50 

$30  +  $2.50  =  $32.50,  amount  per  share  entitled  to  dividend. 

$32.50  X  .05  =  $1.62,  dividend  per  share  for  the  term. 

$36  +  $3.40  +  $1.62  =  $41.02,  present  value  of  a  share. 

pc  ax  ir. 

1.  Divide  the  net  profits  for  the  term  by  the  total  number  of  shares 
issued  since  the  organization  of  the  association. 

2.  Multiply  the  quotient  by  the  total  number  of  shares  issued  in  each 
series,  for  the  profit  of  each  series. 

3.  Divide  the  profit  of  each  series  by  the  number  of  shares  in  force 
in  each  series,  for  the  profit  per  share. 


•ies 
1 

9, 

ILLUSTRATION. 

Shares 
issued. 

500 

600 

Shares 
in  force. 

400 
350 

3 

4 

400 

500 

Total 2.000 

250 
300 

1.300 

$0.75  X 

$0.75  ;■ 

$0.75  X 

$0.75  -*- 

$375  -f- 

|450  -f- 

$300  -4- 

$375  -^- 

Profit  made  during  the  term,  $1,500. 

$1,500  -=-  2,000  =  $0.75,  profit  per  share  issued. 

500  —  $375,  the  first  series'  share  of  the  profit. 
600  =  $450,  the  second  series'  share  of  the  profit. 
400  =  $300,  the  third  series'  share  of  the  profit. 
500  =  $375,  the  fourth  series' share  of  the  profit. 
■  (oo        SO. Ill  pniiit  <>f  a  share  of  t  lie  first    series. 
350  =  $1.29,  profit  of  a  share  of  the  second  series. 
250  =  $1.20,  profit  of  a  share  of  the  third  series. 
300  =  $1.25,  profitofa  share  of  the  fourth  series. 

PLAN  1§. 

1.  To  the  value  of  the  free  shares  as  declared  by  the  last  report  add 
one-half  the  clues  paid  in  on  the  free  shares  during  the  term,  for  the 
dividend  bearing  capital  of  the  free  shares. 

2.  To  the  value  of  the  shares  borrowed  on.  as  declared  by  the  last 
report,  add  the  interest  paid  in  up  to  the  beginning  of  the  term  and  one- 
half  the  dues  and  interest  paid  in  on  the  borrowed  shares  during  the 
term,  for  the  dividend  bearing  capital  of  the  shares  borrowed  on. 

3.  Add  the  dividend  bearing  capital  of  the  free  shares  to  the  dividend 
bearing  capital  of  the  shares  borrowed  on.  and  divide  the  sum  into  the 
profits  of  the  term,  for  the  rate  per  cent,  of  the  profit. 


632  APPENDIX   Ho 


ILLUSTRATION. 

Suppose  the  dues  to  be  50  cents  a  share  per  month  ;  the  rate  of 
interest  paid  by  borrowers,  8  per  cent.  ;  maturing  value  of  shares,  $100  ; 
the  rate  of  earnings,  7  per  cent.  ;  and  profits  divided  annually. 

Non-borrower's  account. 

First  year's  dues  on  one  share $6.00 

First  year's  dividend  at  7  per  cent,  on  half  the  dues .21 

Value  of  a  free  share  at  end  of  first  year 6.21 

Add  half  the  dues  paid  the  second  year 3.00 

Amount  on  which  dividend  is  reckoned  the  second  year 9.21 

Second  year's  dividend $0.64 

Value  at  end  of  first  year 6.21 

Second  year's  dues 6.00 

Value  of  a  free  share  at  end  of  second  year 12.85 

Borrower's  account — Loan  of  $100. 

First  year's  dues  on  one  share $6.00 

First  year's  interest  on  loan 8.00 

Total  payments  of  dues  and  interest 14.00 

First  year's  dividend  at  7  per  cent,  on  half  of  dues  and 

interest $0.49 

First  year's  dues 6.00 

Value  of  a  share  borrowed  on  at  end  of  first  year 6.49 

Add  the  interest  paid  the  first  year .         8.00 

Add  one-half  the  dues  and  interest  paid  the  second  year 7.00 

A uut  on  which  dividend  is  reckoned  the  second  year 21.49 

Second  year's  dividend  at  7  per  cent $1.50 

Value  at  cud  of  first  year 6.49 

Second  year's  dues 6.00 

Value  of  a  share  borrowed  on  at  end  of  second  year 13.99 

PL.AN   19. 

1.  Give  a  fixed  rate  of  interest  to  the  various  series  in  proportion  to 
the  amount  of  invested  capital  as  determined  at  the  previous  month's 
apporl  Lonment. 

•j.  Give  the  profits  from  withdrawals,  premiums,  and  fines,  etc..  to 
the  series  which  have  furnished  the  money  from  which  the  profits 
have  been  made,  taking  into  consideration,  with  each  item  of  profit, 

the  amounl  of  m y  furnished  by  each  series  and  the  length  of  time 

for  which  it  is  furnished. 

This  rule  is  applicable  only  to  associations  organized  on  the  serial 
plan,  time  limil  of  series,  gross  premium  fully  earned,  and  monthly 
payments. 

II. 1. 1  STR  \TI<>\. 

Lei  there  be  three  series  of  1,000  shares  each,  series  A  being  24  moid  lis 
old,  erie  B  12  months  old,  and  series  C  jusl  issued.  Lei  the  invested 
capital  at  the  beginning  of  the  month  be  $33,000  for  series  A  and  $15,- 
000  for  series  B. 

Lei  108  months  be  the  length  of  time  each  series  is  to  run. 

line,  on  interest  in  arrears  are  counted  as  interest. 

lie,  on  dues  in  arrears  are  credited  to  the  respective  series  in  which 
the  ilin     v  ere  iii  arrears,  as  di 


PREMIUM    PLANS.  633 

Let  the    interest  paid  at  end  of  month   on  invested  capital, 

together  with  tines  paid  on  interest  in   arrears,  be $     320 

Let  dues  and  tines  paid  on  dues  in  arrears  in  series  A  at  end  of 

month  be 1,000 

Let  dues  and  tines  paid  on  dues  in  arrears  in  series  B  at  end  of 

month  be 1  000 

Let  dues  and  fines  paid  on  dues  in  arrears  in  series  C  at  end  of 

month  be ]  ,000 

Total  casli  paid  during  the  month  (including  interest  on 

capital) 3,320 

Let  $850  of  this  cash  be  used  in  withdrawing  stock,  as  follows  : 
Book  value  of  85  shares  withdrawn  from  series  A  at,  $33    $825  :  16  shares 

from  series  B,  at $15.00    $240 

Cash  paid  for  the  same  by  the  association,  at $2(5=$G50  ;  for  with- 
drawals from  series  B,  at $12.50      200 

The  profit  made  from  withdrawals  =  175  -f-  40 

or  $215  in  all 

At  the  end  of  the  month  series  A  has  yet  to  run  83  months  ;  series  B, 
95  months  ;  and  series  C,  107  months. 

Earned  gross  premium  for  loan  of  83  months,  stock  of  series  A  bor- 
rowed'on,  loan  of  SI. 000  =  $210. 
Earned  gross  premium  for  loan  of  =  95  months,  stock  of  series  B  bor- 

rowed  on,  loan  of  $1,000  =  $240. 
Earned  gross  premium  for  loan    of  107  months,  stock  of  series  C  bor- 
rowed on,  loan  of  81,000  =  8270. 

For  simplicity  of  illustration,  the  matter  of  expense  is  not  considered, 
but  the  expense  is  distributed  in  proportion  to  the  total  cash  received 
during  the  month. 

The  interest  and  fines  on  interest  in  arrears  received  during  the 
month,  and  amounting  to  $320,  are  distributed  to  series  A  and  B  in 
proportion  to  the  invested  capital  of  each  series  at  the  beginning  of 
the  month,  series  A  thus  receiving  $220.  and  series  B,  $100. 

The  cash  contributions  during  the  month  were,  therefore,  as  follows  : 
By  series  A  ft  1 . 000  +  $221 1  —  $1,220. 
Bv  series  B  $1.000 +$100  =  $1,100. 
By  series  C  $1,000. 
The  withdrawal  profit,  amounting  to  $215.  is  then  divided  in  propor- 
tion to  the  monthly  contributions  of  each   series,  which  gives  a  with- 
drawal profit  of  $79  to  series  A,  $71  to  series  B,  and  $05  to  series  C. 
Profits  arising  from  premiums  are  distributed  thus: 

1.  For  the  loan  of  $1,000  for  83  months  with  stock  borrowed  on  from 
series  A,  a  gross  premium  of  $210  was  paid.  The  money  furnished  for 
this  loan  by  the  various  series  all  remains  for  83  months,  so  that  in  this 
case  the  question  of  time  is  eliminated  and  the  distribution  of  the 
premium  is  the  same  as  for  profits  on  withdrawals.  This  gives  $77,  as 
series  A's  share  of  series  A's  premium  ;  $70.  as  series  B's  share  of  A's 
premium  ;  and  $03.  as  series  C's  share  of  series  A's  premium. 

2.  For  the  loan  of  $1,000  for  95  months  with  stock  borrowed  on  from 
series  B.  a  gross  premium  of  $240  was  paid.  The  money  furnished  by 
series  A  for  this  loan  remains  only  83  months  (as  series  A  matures 
then),  while  the  money  furnished  by  series  B  and  C  remains  for  95 
monl  lis  :   therefore, 

$1,320  for  83  months  =  $101,200,  series  A*s  investment  for  one  month. 
$1,100  for  95  months  =$104,500,  series  B's  investment  for  one  month. 
$1,000  for  95  months  =    $95,000,  series  C's  investment  for  one  month. 


$300.7C>0.  total  investment  for  one  month. 
The  premium  of  $240  is  then  apportioned  as  follows: 
$300,700  :  $101,260  :  :  $240:  $81,  series  A's  share  of  B's  premium. 
$300,700:  $104,500  :  :  $240  :  $83,  series  l»*s  share  of  B's  premium. 
$300,700  :    $95,000  :  :  $240  :  $76,  series  C's  share  ^<i'  B's  premium. 


634 


APPENDIX   II. 


3.  For  the  loan  of  $1,000  for  107  months  with  stock  borrowed  on  from 
series  C,  a  gross  premium  of  $270  was  paid.  The  money  furnished  by 
A  remains  only  83  months,  that  furnished  by  series  B,  95  months,  and 
that  by  series  C,  107  months  ;  then,  as  before, 

$1,220  for  83  months  =  $101,260,  series  A's  investment  for  one  month. 
$1,100  for  95  months  =  $104,500,  series  B's  investment  for  one  month. 
$1,000  for  107  months  =  $107,000,  series  C's  investment  for  one  month. 

$312,760,  total  investment  for  one  month. 
The  premium  of  $270  is  then  apportioned  as  follows  : 
$312,760  :  $101,260  :  :  $270  :  $88,  series  A's  share  of  C's  premium. 
$312,760  :  $104,500  :  :  $270  :  $90,  series  B's  share  of  C's  premium. 
$312,760  :  $107,000  :  :  $270  :  $92,  series  C's  share  of  C's  premium. 

Series  A.    Series  B.     Series  C. 

Value  of  series  at  beginning  of  month $33,000    $15,000    nothing 

Less  book  value  of  withdrawals 825  240    nothing 

32,175  14,760  nothing 

Amount  of  interest  to  each  series 220  100  nothing 

Dues  paid  and  fines  on  dues  in  arrears  1,000  1,000  1,000 

Profits  from  withdrawals 79  71  65 

Profits  from  premiums  on  loans  of  series  A, 

83  months _ 77  70  63 

Profits  from  premiums  on  loans  of  series  B, 

95  months 81  83  76 

Profits  from  premiums  on  loans  of  series  C, 

107  months 88  90  92 

Value  of  series  at  end  of  month 33,720      16,174         1,296 

Number  of  shares  in  force  at  end  of  month.  975  984         1,000 

Value  per  share 34.58        16.43  1.29 


PLAX  20. 

From  the  net  receipts  for  each  series  from  the  beginning,  as  shown 
at  the  previous  apportionment,  deduct  the  amount  of  withdrawals  from 
the  scrits  dviving  the  term,  and  to  this  remainder  add  dues  and  entrance 
fees  received  for  the  series  during  the  term.  To  find  each  series'  share 
of  interest  and  interest  share  of  premium  :  First,  find  the  dues  share  of 
premium, or  what  profit  has  been  made  on  loaning  out  dues  at  a  premium; 
and,  second,  the  interest  share  of  premium,  or  what  profit  has  been 
made  by  loaning  out  interest  received  at  a  premium,  by  the  following 
proportions  :  The  amount  of  dues  and  interest  received  during  the  term 
is  to  1  he  premium  received  during  term,  as  the  amount  of  dues  received 
during  the  term  is  to  the  dues'  share  of  the  premium  :  the  amount  of 
•  lues  and  interest  received  during  the  term  is  to  the  premium  received 
dii  riii".;  t  he  1 1  tiii.  as  the  interest  reeeiveil    (lining    the    term  is  to  the  in- 

i  share  of  t he  premium. 
A 1 1' I  I  he  interest  share  of  the  premium  to  the  interest  received  during 
the  term  and  form  these  proportions  to  divide  the  result  among  the 

series:   t  he  amount  of  total  receipts    since   beginning   is   to  the  amount, 

of  interesl  received  and  interest  share  of  premium  for  the  term,  as  the 
amount  of  A's  receipts  since  beginning  is  t<>  A's  share  of  interest  and 
inter  t  premium  ;  f  real  ing  each  series,  15,  C,  etc.,  in  the  same  way,  to 
find  i  heir  respeel  ive  shares. 

Ailil  lines'  share  of  premium  ami  lines  received  during  the  term  and 
divide  among  the  series,  as  follows:  The  amount  of  dues  received  by 
all  -erics  during  term  is  to  the'dues'  share  of  premium  and  lines  received 
during  the  term,  as  the  amounl  of  L's  dues  received  during  the  term,  is 
to  \'s  share  :  treating  each  series,  B,  C,  etc.,  in  the  same  way,  to  find 
their  re ipeel ive  shares 


PREMIUM   PLANS.  635 

Expenses  are  divided  among  the  series  by  the  following  proportions  : 
The  amount  of  total  receipts  from  dues,  interest,  and  interest  share  of 
premium  during  the  term  is  to  the  total  expense  during  the  term,  as 
the  amount  of  A's  receipts  from  dues,  interest,  and  interest  share  of  pre- 
mium for  the  term  is  to  A's  share  of  expense  ;  treating  eacli  series,  B,  C, 
etc.,  in  the  same  manner. 

Each  series'  net  gain  since  last  apportionment  of  profits  is  found  by 
adding  their  respective  shares  of  interest  and  interest  share  of  pre- 
mium and  their  dues,  share  of  premium  and  lines  together,  and  taking 
from  this  result  their  share  of  expense  and  whatever  incidentals  there 
may  be,  such  as  interest  on  withdrawals,  etc.  To  this  remainder  add 
dues  and  entrance  fees  received  during  the  term  and  each  series'  share 
of  the  profits  for  the  value  of  the  series. 

PLAK   21. 

1.  A  fixed  rate  of  interest  is  given  upon  the  value  of  the  shares  as  de- 
clared by  the  last  report  plus  the  equated  amount  of  dues  paid  during 
the  term. 

2.  Profits  arising  from  withdrawals  are  divided  equally  among  the 
shares  of  the  respective  series  from  which  the  withdrawals  took  place. 

3.  The  remainder  of  the  profits  is  divided  equally  among  all  the 
shares. 

To  illustrate  the  rule,  suppose  that  at  the  end  of  the  second  year  of 
the  existence  of  an  association  there  were  two  series  in  force  ;  first 
series,  100  shares,  present  value,  .$26  :  second  series,  200  shares,  present 
value,  $12.40.  At  the  beginning  of  the  third  year  another  series  of 
150  shares  was  issued.  During  the  year  a  general  profit  of  $569.50  was 
made,  and,  in  addition,  a  withdrawal  profit  of  $15  in  the  first  series 
and  $12  in  the  second  series. 

ILLUSTRATION. 

$26.00,  previous  value,  +  $6.50,  equated  amount  of  dues,  =  $32.50, 
amount  per  share  of  first  series  entitled  to  interest. 

$12.40,  previous  value,  +  $0.50,  equated  amount  of  dues,  =  $18.90, 
amount  per  share  of  second  series  entitled  to  interest. 

$6.50.  equated  amount  of  dues,  =  amount  per  share  of  third  series 
entitled  to  interest. 

$32.50  X  .06  =  $1.95,  interest  on  one  share  of  the  first  series. 

$18.90  X  .06  =  $1.13,  interest  on  one  share  of  the  second  series. 

$  6.50  X  .06  =  $0.39,  interest  on  one  share  of  the  third  series. 

$  1.95  X  100  =  $195.00,  interest  belonging  to  the  first  series. 

$  1.13  X  200  =$226.00,  interest  belonging  to  the  second  series. 

$  0.39  X  150  =  $  58.50,  interest  belonging  to  the  third  series. 

8479.50,  interest  belonging  to  all  series. 
$569.50  -  $479.50  =  $90.00,  net  profits  due  all  the  series. 
$  90.00  -r-  450,  shares  in  all  series,  =  $0.20,  profit  per  share. 
$  15.00  -r- 100,  shares  in  first  series,  =  $0.15,  withdrawal  profit  per  share 

in  first  series. 
$  12.00  -i-  200,  shares  in  second  series  =  $0.06,  withdrawal  profit  per 

share  in  second  series. 
$  26.00  +  $1.95  +  $0.20  +  $0.15  +  $12.00  =  $40.30,  value  of  a  share  in 

first  series. 
$  12.40  +  $1.13  +  $0.20  +  $0.06  +  $12.00  =  $25.79,  value  of  a  share  in 

second  series. 
$    0.39  +  $0.20  +  $12,00  =  $12.59,  value  of  a  share  in  third  series. 

PLAN   22. 

1.  Multiply  the  total  amount  of  interest  collected  by  the  average  rate 
paid  for  premiums  during  the  year  and  add  the  pi-oduct  to  the  interest 
collected. 


636  APPENDIX   II. 

2.  Divide  this  sum  among  the  shares  in  forco  in  proportion  to  their 
previous  values  and  the  average  amount  of  dues  paid  in  during  the 
year. 

3.  Deduct  the  premiums  already  apportioned  from  the  total  amount 
of  premiums  collected  during  the  year  and  divide  the  remainder  in  pro- 
portion to  the  dues  paid  in  during  the  year. 

4.  Divide  the  gross  losses  in  proportion  to  the  previous  values  of  the 
shares  and  the  average  amount  of  dues  paid  in  during  the  year. 

5.  From  the  sum  of  the  profits  gained  on  one  share  deduct  the  loss 
on  the  share  for  the  net  profits  of  one  share. 

PLAN  23. 

This  rule  applies  to  some  associations  whose  various  series  are  divided 
into  separate  classes.  For  instance,  the  monthly  series  issued  during 
the  first  year  form  class  A  ;  the  monthly  series  issued  during  the  sec- 
ond year  form  class  B,  etc. 

The  rule  is  as  follows  : 

1.  Profits  arising  from  fines  and  transfer  fees  are  credited  to  the 
shares  in  the  class  in  which  they  occur. 

2.  Interest  and  premiums  are  distributed  to  the  different  classes  in 
proportion  to  the  amount  of  dues  paid  into  the  loan  fund. 

3.  The  total  profits  apportioned  to  each  class  are  divided  by  the 
amount  of  dues  paid  into  the  loan  fund  for  the  rate  which  is  applied 
upon  the  dues  standing  to  the  credit  of  each  share. 

PLA1V   24. 

1.  Multiply  the  total  value  of  all  the  shares  in  force  as  declared  by 
the  last  report  plus  the  dues  paid  in  during  the  term  by  half  the  time 
of  investment  for  the  dividend  bearing  capital. 

2.  Divide  the  net  profits  by  the  dividend  bearing  capital,  for  the  rate 
per  cent,  of  profit. 

3.  The  dividend  bearing  capital  of  a  share  multiplied  by  this  rate  given 
the  profit  per  share. 

PLAN  25. 

The  net  profits  for  the  first  six  months  are  assigned  to  the  first 
series  ;  the  net  profits  of  the  second  six  months  are  divided  between 
the  first  ami  second  series,  giving  19  parts  to  the  former  and  7  parts  to 
the  latter  ;  for  the  third  six  months  the  division  is  made  by  giving 
to  the  first  series  :»1  parts,  to  the  second  series  19  parts,  and  to  the 
third  series  7  parts  ;  and  for  any  period  of  six  months  the  number  of 
parts  assigned  to  any  series  is  12  units  greater  than  the  number  as- 
signed to  the  same  series  the  preceding  six  months,  but  no  series  which 
has  not  been  in  existence  for  a  full  period  of  six  months  is  entitled  to 
share  in  I  lie  distribution. 


WITHDRAWAL  PLANS. 

\  in  i  in- case  of  premium  plans  and  plans  for  the  distribution  of 
profits  there  are  various  rules  for  withdrawals.  They  are  not  so 
numerous,  however,  as  in  the  other  eases,  although  there  are  twelve 
such. 

Shares  are  issued  by  building  and  loan  associations  upon  the  theory 

thai  when  the  periodical  dues  paid  thereon,  together  with  the  profits 

earned  thereby,  amounl  i<>  the  ultimate,  or,  technically,  (he  maturing 

ol  i'm-    hares,  (!><•   holders  shall   be  entitled  to  receive,  in  cash. 


PREMIUM   PLANS.  637 

such  value,  if  the  shares  have  not  been  pledged  for  loans ;  if  pledged 
for  loans,  equal  in  amount  to  their  maturing  value,  the  loans  shall  be 
cancelled  ;  if  the  loans  do  not  equal  in  amount  the  maturing  value  of 
the  pledged  shares  the  holder  shall  receive,  in  rash,  the  difference 

between  the  amount  of  the  loans  and  the  maturing  value  of  the  shares. 

Shareholders  are  not,  however,  as  a  rule,  required  to  continue  the 
periodical  payment  of  dues  until  the  maturity  of  their  shares,  but  may. 
if  they  so  desire,  cease  paying  such  dues,  and,  ii  their  shares  are 
unpledged  for  loans,  withdraw  the  amounts  already  paid  in.  subjecl  l<> 
widely  varying  regulations  ;  if  the  shares  have  been  pledged  for  loans, 
ami  the  holders  desire  to  settle  their  indebtedness  before  the  shares 
mature,  they  are  usually  permitted  to  do  so  by  paying  the  difference 
between  the  withdrawal  value  of  the  pledged  shares  and  the  amount 
of  their  indebtedness. 

Provision  is  usually  made  in  the  constitutions  or  by-laws  of  building 
and  loan  associations  for  the  giving  of  notice  by  shareholders  desiring 
to  withdraw,  ranging  from  one  week  to  ninety  days.  Such  not  ice  is 
not,  however,  universally  provided  for,  ami  when  provided  for  is  fre- 
quently not  enforced  if  sufficient  funds  are  on  hand  to  permit  with- 
drawal without  notice.  It  is  also  usually  provided  that  only  a  certain 
portion,  as  one-third  or  one-half,  of  the  receipts  of  the  association  shall 
be  applicable  to  the  demands  of  withdrawing  shareholders,  and  in  such 
case,  should  the  notices  of  intended  withdrawals  call  for  more  money 
than  the  designated  portion  of  receipts  could  satisfy,  the  withdrawing 
shareholder  would  be  compelled  to  wait  until  future  receipts  should 
supply  the  deficiency. 

In  nearly  all  national  associations  a  certain  portion  of  the  periodical 
dues  are  set  aside  for  expenses,  as  explained  in  Chapter  IV.  relating  to 
the  distribution  of  profits,  the  remainder  of  the  dues  being  carried  into 
what  is  ordinarily  termed  the  loan  fund.  The  money  in  the  loan  fund 
is  used  for  the  purposes  of  making  loans  to  members,  of  paying  off 
shares  which  have  reached  maturity,  and  of  meeting  the  demands  of 
withdrawing  shareholders  ;  and,  usually,  only  the  portion  of  the  dues 
included  in  the  loan  fund  is  returned  to  such  shareholders,  with  what- 
ever allowance  of  interest  or  profit  thereon  the  particular  withdrawal 
plan  of  each  association  may  provide  for,  the  portion  of  the  dues 
carried  into  the  expense  fund,  generally  amounting  to  about  one-sixth 
of  each  payment,  being  retained  by  the  association.  In  some  national 
associations  the  loan  fund  is  credited  with  whatever  balance  of  the 
expense  fund  remains  unexpended  at  the  end  of  certain  fixed  periods, 
and  withdrawing  shareholders  may  derive  some  benefit  from  such 
unexpended  balance,  but  this  course  is  exceptional.  The  plan  of 
separating  the  periodical  dues  into  a  loan  fund  and  an  expense  fund  is 
pursued  by  a  few  local  associations,  but  the  general  rule  in  such  asso- 
ciations is  to  return  to  withdrawing  members  all  the  dues  paid  in  by 
them,  with  or  without  interest  or  profits. 

In  associations  which  pay  to  withdrawing  shareholders  annual  inter- 
est on  dues  paid  in  prior  to  withdrawal  there  are  two  methods  of  cal- 
culating such  interest. 

First.  The  interest  is  calculated  on  the  total  amount  of  dues  paid  in 
for  one-half  the  time  during  which  they  have  been  paid,  commonly 
called  the  average  time  of  investment ;  for  example,  in  an  association 
requiring  monthly  payments  of  clues  at  the  rate  of  $1  per  share,  if  6 
per  cent,  per  annum  is  allowed  upon  withdrawal,  a  member  withdraw- 
ing at  the  end  of  one  year  would  receive  his  dues,  $12,  and  G  per  cent, 
interest  thereon  for  six  months,  or  36  cents,  making  a  total  of  $12.36 
per  share.  This  method,  on  account  of  its  simplicity,  is  the  one 
ordinarily  used  ;  a  few  associations,  however,  use  the  following 
method : 

Second.  The  interest  is  calculated  on  the  total  amount  of  dues  paid 
in  for  the  true  average,  or  equated  time  of  investment,  which  is  ascer- 


638  APPENDIX    II. 

tained  by  taking  one-half  of  the  sum  of  the  extremes  of  the  arithmet- 
ical series  representing  the  periods  of  time  during  which  the  periodical 
payments  of  dues  have  been  invested  ;  thus,  using  the  illustration 
given  above,  monthly  dues  having  been  paid  for  twelve  months,  the 
extremes  of  the  series  representing  the  periods  of  investment  of  the 
monthly  payments  are  1  and  12  ;  one-half  of  the  sum  of  the  extremes 
is  6i.  which  is  the  true  average  time  of  investment,  in  months,  and  6 
per  cent,  on  $12  for  &J-  months  amounts  to  39  cents,  which  added  to  the 
dues  paid  in  gives  a  withdrawal  value  of  §12.39  per  share  at  the  end  of 
one  year. 

No  reference  is  made  to  these  two  methods  of  calculating  interest  in 
the  descriptions  of  withdrawal  plans  which  follow,  the  difference 
between  the  amounts  obtained  by  them  being  small  and  growing  pro- 
portionately smaller  as  shares  increase  in  age.  For  the  sake  of  uni- 
formity, therefore,  and  because  it  was  the  simpler,  the  first  method 
has  been  used  in  all  the  illustrations. 

The  withdrawal  value  of  shares,  by  whatever  plan  it  may  be  deter- 
mined, is  always  subject  to  the  deduction  of  any  fines  charged  against 
their  holder  for  non-fulfilment  of  his  obligation  to  promptly  make  pay- 
ment of  his  periodical  dues. 

In  some  cases  shareholders  desiring  to  withdraw  are  required  to  pay 
fees  for  the  privilege  of  so  doing  ;  for  instance,  25  cents  or  50  cents 
may  be  exacted  for  each  share  upon  which  withdrawal  is  made.  The 
range  of  such  fees  is  stated  under  the  descriptions  of  the  different 
withdrawal  plans  in  connection  with  which  they  are  charged. 

A  few  associations  do  not  permit  their  members  to  withdraw  prior 
to  the  maturing  of  their  shares  ;  in  such  cases  the  only  method  by 
which  a  shareholder  can  realize  upon  his  shares  is  by  selling  them  to 
some  other  person  at  whatever  price  he  can  obtain. 


PLAN  1. 

Withdrawing  shareholders  receive  the  duties  paid  in  without  interest 
or  profit. 

Under  this  plan  withdrawing  shareholders  receive  only  the  dues 
paid  in  on  the  shares  upon  which  withdrawal  is  made,  the  profits 
earned  by  said  shares  being  retained  by  the  association. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  No  wit  hdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associations  as  follows :  Three  months;  six  months;  one  year. 

2.  Only  a  certain  portion  of  the  dues  paid  in  can  be  withdrawn,  vary- 
ing, in  the  associations  reporting  such  a  regulation,  as  follows :  75  per 
cent.:  90  per  cent.;  95  per  cent. ;  95  per  cent,  if  I  lie  shares  upon  which 
withdrawal  is  made  are  less  than  six  months  old  ;  95  per  cent,  or  9frper 
cent,  if  the  shares  upon  which  withdrawal  is  made  are  less  than  one 
year  old;  95  percent,  if  1  lie  shares  a  pun  which  withdrawal  is  made  are 

than  two  years  old  ;  95  per  cent,   if  the    shares  upon    which   with- 
drawal is  made  are  less  t  han  one  year  old  ;  97$  per  cent,  if  one  year  but 

Man  t  wo  years  old. 

:;.  Among  the  associations  reported  .is  operating  under  this  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
a  re  found  : 

c  I  >    Wit  hdrawal  fee  of  10  cents,  25  cents.  50  eenls,  or  $1  per  share  is 

Withdrawal  fee  of  25  cents  per  share  is  charged,  but  not  more 
1  ha  a  ■<<  per  t  ransacl  ion. 

(8)   Withdrawal  fee  of  50  cents   per  transaction    is  charged  if  the 

On  which  wit  hdrawal  is  made  are  less  I  han  one  year  old. 


PREMIUM   PLANS.  639 

(4)  The  dues  withdrawn  are  discounted,  the  rate  of  discount  being 
graduated  according  to  the  age  of  the  share  upon  which  withdrawal  is 
made. 

PLA\  2. 

Withdrawing  shareholders  receive  the  dues  paid  in  and  a  fixed  rate 
of  interest  per  annum  on  such  payments. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  upon  which  withdrawal  is  made  with  a  fixed  rate  of 
interest  thereon  per  annum,  which  varies  in  different  associations. 

Illustration  :  In  an  association  in  which  the  dues  are  $1  per  month 
per  share  6  per  cent,  interest  on  the  dues  paid  in  is  allowed  withdraw- 
ing shareholders.  If  a  shareholder  withdraws  when  his  shares  arc  four 
years  old  he  will  receive  on  each  share  upon  which  withdrawal  is 
made  $48,  the  dues  paid  in  thereon,  with  6  per  cent,  interest  on  the 
same  for  two  years,  the  average  time  of  investment,  or  $5.76,  making 
the  total  amount  he  will  withdraw  on  each  share  $48  plus  $5.76,  or 
$53.76. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  The  total  amount  to  be  withdrawn  must  not  exceed  95  per  cent, 
of  the  present  value  (consisting  of  dues  and  apportioned  profits)  of  the 
shares  upon  which  withdrawal  is  made. 

2.  This  plan  is  applied  to  withdrawals  in  all  series  except  the  oldest 
one  in  force,  in  which  either  the  full  value  of  the  shares  may  be  with- 
drawn, or  an  arbitrary  allowance  is  given. 

3.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  idi  different 
associations  as  follows:  Two  months;  three  months;  four  months; 
six  months  :  one  year  ;  two  years  ;  three  years  ;  any  time  which  may 
be  fixed  by  the  board  of  directors. 

4.  No  interest  is  allowed  if  withdrawal  is  made  upon  shares  which 
have  not  been  in  existence  for  a  certain  specified  time,  which  varies  in 
different  associations  as  follows :  One  month  ;  two  months  ;  three 
months-  four  months  ;  six  months ;  eight  months;  ten  months;  one 
year:  thirteen  months;  eighteen  months;  two  years;  twenty-six 
months:  three  years ;  four  years. 

5.  Among  the  associations  reported  as  operating  under  this  plan  and 
its  modifications  the  following  regulations  concerning  withdrawal  fe.es 
are  found  : 

(1)  "Withdrawal  fee  of  5  cents,  10  cents,  20  cents,  25  cents,  50  cents, 
si.  or  $2  per  share  is  charged. 

(2)  Withdrawal  fee  of  5  cents  per  share  is  charged  for  each  month 
the  shares  upon  which  withdrawal  is  made  have  been  in  existence. 

(3)  Withdrawal  fee  of  $1  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  less  than  six  months  old. 

(4)  Withdrawal  fee  of  $1  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  less  than  one  year  old. 

(5)  Withdrawal  fee  of  $2  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  less  than  two  years  old. 

(6)  Withdrawal  fee  of  50  cents  per  share  is  charged,  but  not  less 
than  Si  nor  more  than  82  per  transaction. 

(7)  Withdrawal  fee  of  50  cents  per  share  is  charged,  but  not  less 
than  si  nor  more  than  $2.50  per  transaction. 

(8)  Withdrawal  fee  of  50  cents  per  share  is  charged,  but  not  less 
than  81  nor  more  than  s:!  per  transaction. 

(!))  Withdrawal  fee  of  50  cents  per  share  is  charged,  but  not  more 
than  $5  per  transaction. 

(10)  Withdrawal  fee  of  $1.30  per  transaction  is  charged. 

(11)  Withdrawal  fee  of  $3  per  transaction  is  charged  if  the  shares 
upon  which  withdrawal  is  made  are  less  than  one  year  old. 


640  APPENDIX    II. 

(12)  Withdrawal  fee  of  $1  per  transaction  is  charged  if  withdrawal 
is  made  upon  less  than  six  shares ;  if  upon  six  shares  or  more  $3  is 
charged. 

(13)  Withdrawal  fee  of  1  per  cent,  of  the  dues  paid  in  is  charged. 

(14)  Withdrawal  fee  of  5  per  cent,  of  the  dues  paid  in  is  charged. 

(15)  Withdrawal  fee  of  5  per  cent,  of  the  dues  paid  in  is  charged  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  one  year  old. 

(16)  Withdrawal  fee  of  5  per  cent,  of  the  dues  paid  in  is  charged  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  one  year  old 
and  2$  per  cent,  if  one  but  less  than  two  years  old. 

( 17)  Withdrawal  fee  of  5  per  cent,  of  the  dues  paid  in  is  charged  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  three  years 
old. 

(18)  Withdrawal  fee  of  10  per  cent,  of  the  dues  paid  in  is  charged  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  one  year  old. 

(19)  Withdrawal  fee  of  5  per  cent,  of  the  present  value  of  the  shares 
upon  which  withdrawal  is  made  is  charged. 

(20)  Withdrawal  fee  is  charged  of  a  rate  per  cent,  of  the  dues  paid 
in.  graduated  according  to  the  number  of  months  the  shares  upon 
which  withdrawal  is  made  have  been  in  existence,  if  the  shareholder 
withdraws  during  the  first  year  of  the  existence  of  the  shares. 

(21)  Withdrawal  fee  is  charged  of  a  rate  per  cent,  of  the  dues  paid 
in,  graduated  according  to  the  number  of  months  the  shares  upon 
which  withdrawal  is  made  have  been  in  existence,  if  the  shareholder 
withdraws  during  the  first  two  years  of  the  existence  of  said  shares. 

(22)  Withdrawal  fee  is  charged  of  the  interest  at  the  fixed  rate  on 
the  dues  paid  in  during  the  first  year  of  the  existence  of  the  shares 
upon  which  withdrawal  is  made. 

(23)  Withdrawal  fee  is  charged  of  the  interest  at  the  fixed  rate  on 
the  dues  paid  in  during  the  last  six  months  of  the  existence  of  the 
shares  upon  which  withdrawal  is  made. 

(24)  Withdrawal  fee  is  charged  of  one-tenth  of  the  total  interest  cal- 
culated at  the  fixed  rate  on  the  dues  paid  in  on  the  shares  upon  which 
withdrawal  is  made. 

PLAX  3. 

Withdrawing  shareholders  receive  the  dues  paid  in  and  a  graduated 
rate  of  interest  per  annum  on  such  payments. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  upon  which  withdrawal  is  made,  with  interest  thereon 
at  various  increasing  rates  per  cent,  per  annum,  graduated  according 
to  the  age  of  the  shares. 

Illustration:  A  member  holding  shares  which  are  six  years  old.  four 
years  old,  and  two  years  old,  respectfully,  desires  to  withdraw  from 
the  association.  He  has  paid  $72  per  share  as  dues  in  the  first  class, 
$48  per  share  as  dues  in  the  second  class,  and  $24  per  share  as  dues  in 
the  third  class.  The  conditions  governing  withdrawals  are  as  follows  : 
Shares  withdrawn  during  the  first  two  years  receive  3  per  cent,  per 
annum  on  the  average  investment ;  during  the  third  year,  4  per  cent.  ; 
during  the  fourth  and  the  fifth  years,  5  per  cent,  and  after  the  fifth 
year,  '">  per  cent .  (  m  each  share  six  years  old  t  he  withdrawing  share- 
holder would  receive  the  dues  paid  in  by  him,  $72,  with  interest  thereon 
al  the  rate  of  6  per  cent,  per  annum  for  the  average  time  of  investment, 
amounting  to  $12.86,  making  a  withdrawal  value  of  §84.96.  On  each 
re  four  years  old  he  would  receive  the  dues  paid  in  by  him,  $48, with 
interest  thereon  al  the  rate  of  5  per  cent,  per  annum  for  the  average 
time  of  investment,  amounting  to  $4.80,  making  a  wit  hdrawal  value  of 
ich  -hare  t  wo  years  old  he  would  receive  the  dues  paid  in 
it  1 1  interest  thereon  at  the  rate  of  '■>  per  cent,  per  annum 
for  the  avera  '    investment.,  amounting  to  72  cents,  making  a 

wit  hdrawal  iralue  of  $24.72. 


PKEMIUM  PLANS.  041 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associations  as  follows  :  Three  months  ;  six  months  ;  one  year  ;  two 
years. 

2.  No  interest  is  allowed  if  withdrawal  is  made  upon  shares  which 
have  not  been  in  existence  for  a  certain  specified  time,  which  varies  in 
different  associations  as  follows:  One  month;  three  months;  six 
months  ;  nine  months  ;  one  year  ;  eighteen  months  ;  two  years  ;  three 
years  ;  four  years. 

3.  Some  associations  operating  under  this  plan  permit  withdrawal  on 
only  ten  shares  at  any  one  time  and  require  six  months  to  elapse  before 
another  withdrawal  can  be  made  by  the  same  person. 

4.  Among  the  association  reported  as  operating  under  this  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
are  found : 

(1)  Withdrawal  fee  of  5  cents,  10  cents,  25  cents,  50  cents,  or  $1  per 
share  is  charged. 

(2)  Withdrawal  fee  of  8  cents  or  10  cents  per  share  is  charged  for 
each  month  the  shares  upon  which  withdrawal  is  made  have  been  in 
existence. 

(3)  Withdrawal  fee  of  10  cents  per  share  per  month  is  charged  if  the 
shares  upon  which  withdrawal  is  made  are  less  than  two  years  old. 

(4)  Withdrawal  fee  of  25  cents  per  share  is  charged  if  the  shares 
upon  which  withdrawal  is  made  are  less  than  two  years  old. 

(5)  Withdrawal  fee  of  $1  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  less  than  one  year  old. 

(6)  Withdrawal  fee  of  $1  per  transaction  is  charged. 

(7)  Withdrawal  fee  of  50  cents  per  share  is  charged  and,  in  addition 
thereto,  2  per  cent,  of  the  dues  paid  in. 

(8)  Withdrawal  fee  of  2  per  cent,  of  the  dues  paid  in  is  charged. 

(9)  Withdrawal  fee  of  10  per  cent,  of  the  dues  paid  in  is  charged  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  six  months 
old. 

(10)  Withdrawal  fee  of  8  per  cent,  of  the  dues  paid  in  is  charged 
if  the  shares  upon  which  withdrawal  is  made  are  more  than  six 
months  and  less  than  one  year  old  ;  2£  per  cent,  of  the  dues  paid  in  if 
more  than  one  year  and  less  than  eighteen  months  old. 

(11)  Withdrawal  fee  of  5  per  cent,  of  the  dues,  or  of  10  per  cent, 
of  the  dues,  is  charged  if  the  shares  upon  which  withdrawal  is  made 
are  less  than  one  year  old  ;  2-J-  per  cent,  of  the  dues,  or  of  5  per  cent,  of 
the  dues,  is  charged  if  the  shares  are  more  than  one  year  but  not 
exceeding  two  years  old. 

PLAN  4. 

Withdrawing  shareholders  receive  the  dues  paid  in  and  a  fixed  por- 
tion of  the  profits. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid 
in  on  the  shares  upon  which  withdrawal  is  made  and  a  fixed  portion, 
varying  in  different  associations,  of  the  profits  apportioned  to  said 
shares. 

Illustration  :  The  maturing  value  of  a  share  is  §200  and  the  dues  per 
month  $1.  A  member  whose  shares  are  two  years  old  has  paid  in  on 
each  share  in  dues  $24,  and  the  profits  apportioned  each  share  are 
$2 ;  50  per  cent,  of  such  profits  can  be  withdrawn  :  therefore,  if  the 
member  withdraws  at  the  end  of  said  two  years  he  will  receive  on  each 
share  the  dues  paid  in,  $24.  plus  50  per  cent,  of  the  S3  profits,  or  $1, 
which  makes  the  total  amount  that  may  be  withdrawn  on  each  share, 
$25. 

The  portion  of  the  profits  allowed  on  withdrawal  ranges  in  different 
associations  from  5  to  95  per  cent. 


042  APPENDIX    II. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  One  association  allows,  in  addition  to  the  dues  paid  in,  a  fixed 
amount  on  each  share  upon  which  withdrawal  is  made  instead  of  a 
fixed  portion  of  the  profits  apportioned. 

2.  In  one  case  the  fixed  portion  allowed  is  not  a  fixed  portion  of  all 
the  profits  apportioned,  but  a  fixed  portion1  of  those  remaining  after 
deducting  the  profits  of  the  first  year. 

3.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associations  as  follows  :  Six  months  ;  one  year. 

4.  No  profit  is  allowed  if  withdrawal  is  made  upon  shares  which 
have  not  been  in  existence  for  a  certain  specified  time,  which  varies  in 
different  associations  as  follows:  One  month;  two  months;  three 
months  ;  six  months  ;  nine  months  ;  one  year  ;  eighteen  months ;  two 
years  ;  three  years ;  five  years. 

5.  No  profit  is  allowed  and  but  95  per  cent,  of  the  dues  paid  in  can  be 
withdrawn  if  withdrawal  is  made  upon  shares  less  than  one  year  old. 

6.  A  fixed  portion  of  the  profits  apportioned  can  be  withdrawn,  pro- 
vided such  portion  does  not  exceed  7  per  cent,  per  annum  interest  upon 
the  dues  paid  in. 

7.  Among  the  associations  reported  as  operating  under  this  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
are  found  : 

(1)  Withdrawal  fee  of  5  cents,  10  cents,  or  50  cents  per  share  is 
charged. 

(2)  Withdrawal  fee  of  25  cents  per  share  is  charged  for  each  year  the 
shares  upon  which  withdrawal  is  made  have  been  in  existence. 

(3)  Withdrawal  fee  of  25  cents  per  share  is  charged,  but  not  more 
than  $5  per  transaction. 

(4)  Withdrawal  fee  of  50  cents  per  share  is  charged  and,  in  addition, 
8  per  cent  of  the  dues  paid  in,  if  the  shares  upon  which  withdrawal  is 
made  are  not  over  one  year  old  ;  but  if  said  shares  are  over  one  year 
old,  then  50  cents  per  share  and  2  per  cent,  of  the  dues  paid  in  is 
charged. 

(5)  Withdrawal  fee  of  £1  per  transaction  is  charged. 

PI.  AX  5. 

Withdrawing  shareholders  receive  the  dues  paid  in  and  a  graduated 
portion  of  the  profits  or  a  graduated  amount. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  tlie  shares  upon  which  withdrawal  is  made,  with  a  portion  of  the 
profits  apportioned  to  such  shares,  such  portion  being  graduated 
according  to  the  age  of  t  he  shares.  ( )r,  instead  of  a  graduated  portion 
of  the  profits,  withdrawing  shareholders  receive,  in  addition  to  dues. 
an  amount  which  increases  periodically  according  to  the  age  of  the 
sha  res,  regardless  of  profits. 

[llustration  L  :  A  member  desires  to  withdraw  a1  t  lie  end  of  the  third 
year  a fter  having  paid  $36  in  dues.  The  scheme  of  t  he  associal ion  pro- 
vides thai  a  member  withdrawing  during  the  first  twenty-four  months 
shall  receive,  in  addition  to  the  'lues  paid  in,  75  per  cent,  of  t lie  profits 
apportioned  to  his  shares  ;  after  twenty -four  months,  80  percent.  ;  after 
thirty  months,  85  per  cent. ;  after  thirty-six  months,  90  percent.;  and 
after  forty-two  months,  95  per  cent.     The  profits  earned  by  a  share  at 

the  end  of  the  third  year  are  $4.06,  of   which  the  withdrawing  member 
would  receive  90  per  cent., or  $3.65,  which,  added  to  t  he  dues,  gives  the 

share  a   \\  il  hdra  wal  value  of  $39.65. 

[llustration  II.:  An  association  paying  the  withdrawing  shareholder 
iduated  amounl  per  share  instead  of  a  graduated   portion  of  the 

profits,  allows  t  lie  fol  low  i  1 1  •_•;  rates  :    If  the  wit  hdra  wal  takes  place  dnr- 

the  in ■  .1  year,  no  profits  are  allowed;  during  the  second  year,  50 


PREMIUM  PLANS.  643 

cents  ;  during  the  third  year,  $1  ;  during  the  fourth  year.  $3  ;  during 
the  first  six  months  of  the  fifth  year,  $5  ;  during  t  lie  second  six  months 
of  the  fifth  year,  $6.50  ;  during  the  first  six  months  of  the  sixth  year, 
$8;  during  the  second  six  months  of  the  sixth  year,  $10  :  during  the 
first  six  months  of  the  seventh  year,  $12  ;  during  the  second  six  moid  lis 
of  the  seventh  year,  $14  ;  during  the  first  six  months  of  the  eighth  year, 
$16;  during  the  second  six  months  of  the  eighth  year,  $18  ;  and  after 
the  eighth  year.  $30.  A  member  withdrawing  from  this  association  at 
the  end  of  the  fifth  year,  after  having  paid  $60  in  dues,  would  receive 
$8  in  addition  to  his  dues,  or  a  total  of  $68. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  No  withdrawal  is  allowed  to  be  made  upon  shares  less  than  one 
year  old. 

2.  No  profit  is  allowed  if  withdrawal  is  made  upon  shares  winch 
have  not  been  in  existence  for  a  certain  specified  time,  which  varies  in 
different  associations,  as  follows  :  Six  months  ;  nine  months  ;  one  year  ; 
two  years  ;  four  years  ;  eight  years. 

3.  In  some  cases  the  profits  allowed  must  not  exceed  a  fixed  per  cent, 
of  the  profits  apportioned,  which  varies  in  different  associations,  as 
follows  :  50  per  cent.;  80  per  cent. 

4.  Among  the  associations  reported  as  operating  under  tins  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
are  found  : 

(1)  Withdrawal  fee  of  10  cents  per  share  is  charged. 

(  2)  Withdrawal  fee  of  10  cents  per  share  is  charged,  but  not  less  than 
50  cents  per  transaction. 

(3)  Withdrawal  fee  of  $1  per  transaction  is  charged. 

(5)  If  withdrawal  is  made  upon  shares  less  than  one  year  old  only  90 
per  cent,  of  the  dues  paid  in  is  returned  to  the  shareholder. 

PLA1V  6. 

Withdrawing  shareholders  receive  the  dues  paid  in  with  a  fixed  rate 
of  interest  thereon,  and,  in  addition,  a  fixed  or  a  graduated  portion  of 
the  profits. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  on  which  withdrawal  is  made,  with  interest  thereon,  at 
rates  varying,  in  different  associations,  from  3  per  cent,  to  8  per  cent,  per 
annum,  and,  in  addition  thereto,  a  fixed  portion  of  the  profits  appor- 
tioned to  the  shares  in  excess  of  the  interest  allowed,  or  a  portion  of 
such  profits  graduated  in  accordance  with  the  age  of  the  shares. 

Illustration  :  In  an  association  in  which  the  dues  are  $1  per  share 
per  month  the  profits  at  the  end  of  four  years  amount  to,  say.  $10  per 
share  ;  a  shareholder  then  withdrawing  would  receive  on  eacli  share 
the  dues  paid  in  by  him,  $48,  with  interest  thereon  for  the  average 
time  of  investment,  amounting,  at  6  per  cent,  per  annum,  to  $5.76, 
and  in  addition  thereto,  a  fixed  portion  of  the  profits  in  excess  of 
$5.76,  of  twenty  per  cent,  thereof,  amounting  to  one-fifth  of  $4.24,  or  85 
cents,  making  a  total  of  $54.61 ;  if  instead  of  a  fixed  a  graduated  por- 
tion of  the  profits  is  allowed  in  addition  to  the  interest,  one-tenth  of 
the  profits  in  excess  of  interest  being  allowed  for  each  full  year  the 
share  has  been  in  force,  the  withdrawing  shareholder  would  be  entitled 
to  receive  at  the  end  of  four  years  the  dues  paid  in,  sis,  plus  the 
interest  thereon,  $5.76,  plus  40  per  cent,  of  the  profits  in  excess  of  said 
interest,  amounting  to  two-fifths  of  $4.24,  or  $1.70,  making  a  total  of 
$55.46. 

Some  associations,  instead  of  allowing  a  fixed  or  a  graduated  por- 
tion of  the  profits  in  addition  to  interest,  allow  a  fixed  or  a  graduated 
amount  per  share,  regardless  of  the  profits  ;  for  instance,  withdrawing 
members  may  be  paid  $1  per  share,  in  addition  to  interest,  on  all  shares 
one  year  old  or  over  ;  or,  the  additional  amount  may  be  increased  from 


044  APPENDIX    II. 

year  to  year,  as  the  shares  increase  in  age.  In  a  few  cases  the  addi- 
tional portion  of  profits  or  the  additional  amounts  are  not  allowed 
unless  the  shares  upon  which  withdrawal  is  made  are  two  and,  in  one 
instance,  three  years  old  at  the  time  of  withdrawal ;  and  occasionally 
only  the  dues  paid  in  are  returned  to  withdrawing  members  if  their 
shares  are  less  than  three  months,  six  mouths,  or  one  year  old. 

A  few  associations,  permitting  withdrawals  under  the  plan  above 
described,  pay  the  full  "  book  value,"  or,  as  it  is  sometimes  designated, 
the  "  present  value  "  of  the  shares  upon  which  withdrawal  is  made,  con- 
sisting of  the  dues  paid  in,  together  with  all  profits  apportioned  thereto, 
after  such  shares  are  eight  years  old. 

None  of  the  associations  in  which  withdrawals  are  made  in  accord- 
ance with  the  plan  described  are  reported  as  charging  withdrawal 
fees. 

PLAN  7. 

Withdrawing  shareholders  receive  the  dues  paid  in,  with  a  fixed  rate 
of  interest  thereon  during  a  fixed  period  and  a  fixed  or  a  graduated 
portion  of  the  profits  thereafter. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  on  which  withdrawal  is  made  and,  if  withdrawal  is  made 
within  a  fixed  period  from  the  date  of  issue  of  the  shares,  interest 
thereon,  both  the  rate  of  interest  and  the  length  of  the  period  varying 
in  different  associations  ;  if  withdrawal  is  made  after  the  expiration  of 
said  period,  shareholders  receive  instead  of  interest  either  a  fixed  por- 
tion of  the  profits  apportioned  to  the  shares  or  a  portion  of  such  profits 
graduated  according  to  the  age  of  the  shares. 

Illustration  :  In  an  association  in  which  the  dues  are  $1  per  share 
per  month  interest  at  the  rate  of  6  per  cent,  per  annum  on  the  dues  paid 
in  is  allowed  the  withdrawing  shareholder  if  withdrawn,  is  made  on 
shares  less  than  four  years  old,  and  thereafter,  in  lieu  of  said  interest, 
a  fixed  portion  of  50  per  cent,  of  the  profits  apportioned  is  allowed.  If 
a  shareholder  withdraws  when  his  shares  are  three  years  old  he  will 
receive  on  each  share  $36,  dues  paid  in.  with  interest  at  6  per  cent,  per 
annum  thereon,  amounting  for  the  average  time  of  investment  to  $3.24, 
making  the  total  amount  he  will  withdraw  on  each  share  $36  plus  $3.24, 
or  $39.24.  If  said  shareholder  withdraws  when  his  shares  are  five  years 
old,  the  profits  earned  by  each  share  being  $15,  he  will  receive  on  each 
.share  $60,  dues  paid  in  on  same,  together  with  50  per  cent,  of  the  $15, 
or  $7.50,  making  the  total  amount  he  will  withdraw  on  each  share  $60 
plus  $7.50,  or  |67.50.  If  instead  of  a  fixed  a  graduated  portion  of  the 
profits  is  allowed  after  a  fixed  period,  which  is,  say,  50  per  cent,  of  the 
profits  when  share  is  four  years  old,  60  per  cent,  when  five  years  old, 
70  per  cent,  when  six  years  old,  etc.,  then,  at  the  end  of  the  five  years, 
he  will  receive  on  each  share  $00,  dues  paid  in  on  same,  plus  60  per 
cent,  of  $15,  or  $9,  making  the  total  amounl  he  will  withdraw  $60  plus 
$9,  or  $69. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

I.  \  portion  of  the  profits  apportioned  to  the  shares,  arbitrarily  fixed 
bythe  board  of  directors,  is  given  after  the  expiration  of  the  fixed 
period  during  which  interest  is  paid,  instead  of  a  fixed  or  graduated 
P'  irl  ion  of  the  profits. 

I!hi  tratimi  :  If.  in  I  he  case  illustrated  above,  the  board  of  directors 
Bhou  i  shareholder,  withdrawing  when   his  shares  were  five 

years  old,  an  arbitrary  allowance  of  two-thirds  of  the  profits  appor- 
tioned  he  would  receiveon  each  share  $60,  dues  paid  in,  plus  two-thirds 
15,  or  $10,  making  the  amounl  withdrawn  on  said  share  $60  plus 
0,  Some  associations,  in  which  an  arbitrary  allowance  is 
given,  provide  that  SUCh  allowance  shall  not   he  less  than    51)    percent. 

of  the  profits  apportioned  and  sumo  that  it  shall  not  be  less  than  75 
•  hi .  of  i he  same. 


PREMIUM   PLANS.  645 

2.  All  the  profits  apportioned  are  given  after  the  expiration  of  the 
fixed  period  during  which  interest  is  paid,  instead  of  a  fixed  or  gradu- 
ated portion  of  said  profits. 

Illustration  :  If,  in  the  case  illustrated  above,  all  the  profits  are  given 
after  the  fixed  period  a  shareholder  withdrawing  when  his  shares  are 
five  years  old  will  receive  on  each  share  $60,  dues  paid  in,  plus  $15,  all 
the  profits  apportioned,  making  the  amount  he  will  withdraw  on  said 
share  $75. 

3.  Some  of  the  associations  allowing  a  fixed  rate  of  interest  for  a 
fixed  period  and  all  profits  thereafter  give,  in  addition  to  the  fixed  rate 
of  interest  during  part  of  the  fixed  period,  an  arbitrary  amount.  The 
particular  cases  reported  are  as  follows  : 

(1)  Fixed  rate  of  interest  allowed  where  shares  on  which  with- 
drawal is  made  are  less  than  six  years  old,  with  an  arbitrary  amount 
additional  from  the  fourth  to  the  sixth  year,  inclusive,  and  all  profits 
thereafter. 

(2)  Fixed  rate  of  interest  allowed  when  shares  on  which  withdrawal 
is  made  are  less  than  seven  years  old,  with  an  arbitrary  amount  addi- 
tional from  the  fourth  to  the  seventh  year,  inclusive,  and  all  profits 
thereafter. 

4.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associations  as  follows  :  Six  months  ;  one  year  ;  two  years. 

5.  No  interest  or  profit  is  allowed  if  withdrawal  is  made  upon  shares 
which  have  not  been  in  existence  for  a  certain  specified  time,  which 
varies  in  different  associations  as  follows  :  Two  months  ;  three 
months  ;  six  months  ;  one  year ;  a  time  arbitrarily  fixed  by  the  board 
of  directors. 

6.  The  fixed  period  during  which  a  fixed  rate  of  interest  is  siven  in 
case  of  withdrawal  varies  in  different  associations  as  follows  :  One 
year  ;  two  years ;  twenty-six  months  ;  three  years  ;  four  years  ;  five 
years  ;  six  years  ;  seven  years  ;  eight  years  ;  ten  years. 

7.  Among  the  associations  reported  as  operating  under  this  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
are  found  : 

(1)  Withdrawal  fee  of  10  cents,  20  cents,  25  cents,  50  cents,  or  $1 
per  share  is  charged. 

(2)  Withdrawal  fee  of  10  cents  per  share  is  charged  for  each  month 
the  shares  upon  which  withdrawal  is  made  have  been  in  existence. 

(3)  Withdrawal  fee  of  50  cents  per  share  is  charged  if  the  shares 
upon  which  withdrawal  is  made  are  less  than  one  year  old. 

(4)  Withdrawal  fee  of  50  cents  per  share  is  charged,  but  not  less 
than  $1  nor  more  than  $2.50  per  transaction. 

(5)  Withdrawal  fee  of  $1  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  six  years  old. 

(6)  Withdrawal  fee  of  $2  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  eight  years  old. 

(7)  Withdrawal  fee  of  $6  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  seven  years  old. 

(8)  If  the  shares  upon  which  withdrawal  is  made  are  in  the  sixth 
year  of  their  existence  a  withdrawal  fee  of  $5  per  share  is  charged,  if 
in  their  seventh  year  a  fee  of  $4  per  share,  if  in  their  eighth  year  a  fee 
of  $3  per  share,  if  in  their  ninth  year  a  fee  of  $2  per  share,  and  if  in 
their  tenth  year  a  fee  of  $1  per  share.  No  withdrawal  fee  is  charged 
prior  to  the  sixtli  year  nor  after  the  tenth  year  of  the  share's  existence. 

(9)  During  the  first  year  of  the  existence  of  the  shares  upon  which 
withdrawal  is  made  a  fee  of  25  cents  per  share  is  charged,  during  the 
second  year  a  fee  of  50  cents  per  share,  from  the  third  to  the  seventh 
years  inclusive  no  fee  is  charged,  during  the  eighth  year  a  fee  of  $8 
per  share,  and  after  the  eighth  year  a  fee  of  $6  per  share. 

42 


6-16  APPENDIX   II. 

PLA\  8. 

Withdrawing  shareholders  receive  the  dues  paid  in  with  a  graduated 
rate  of  interest  thereon  during  a  fixed  period,  and  either  a  fixed  or  a 
graduated  portion  of  the  profits  thereafter. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  on  which  withdrawal  is  made  and,  if  withdrawal  is  made 
within  a  fixed  period  (varying  in  different  associations)  from  the  date 
of  issue  of  the  shares,  interest  thereon  at  various  increasing  rates  per 
cent,  per  annum  graduated  according  to  the  age  of  the  shares  ;  if  with- 
drawal is  made  after  the  expiration  of  said  period  shareholders  receive 
instead  of  interest  either  a  fixed  portion  of  the  profits  apportioned  to 
the  shares  or  a  portion  of  such  profits  graduated  according  to  the  age 
of  the  shares. 

Illustration  :  An  association  in  which  the  dues  are  $1  per  month  per 
share  provides  for  paying  its  withdrawing  members,  during  the  first 
six  months  their  shares  are  in  force,  only  the  amount  of  dues  that  has 
been  paid  in  ;  during  the  second  six  months,  in  addition  to  the  dues,  5 
per  cent,  interest  per  annum  thereon  for  the  average  time  of  investment  ; 
during  the  second  year,  5-i-  per  cent.  ;  during  the  third  year,  6  per  cent.  ; 
during  the  first  six  months  of  the  fourth  year,  6^  per  cent.  ;•  during  the 
last  six  months  of  the  fourth  year.  7  per  cent.  ;  during  the  first  six 
months  of  the  fifth  year,  7-J  per  cent.  ;  during  the  last  six  months  of  the 
fifth  year,  8  per  cent.  ;  after  the  fifth  year,  at  any  time  prior  to  maturity, 
85  per  cent,  of  the  profits  apportioned  to  the  shares.  If  a  member  with- 
draws when  his  shares  are  fifty  months  old  he  receives,  per  share,  the 
dues  paid  thereon,  $50.  and  7+  per  cent,  per  annum  interest  thereon  for 
the  average  time  of  investment,  amounting  to  $7.81,  making  a  total  of 
$57.81.  Should  he  withdraw  at  the  end  of  the  sixth  year,  and  the 
profits  at  that  time  amount  to  $'20  per  share,  he  would  receive  the  dues 
paid  in,  $72,  and,  in  addition  thereto,  85  per  cent,  of  $00,  or  $17,  making 
a  total  of  $89. 

If,  after  the  fourth  year,  a  graduated  portion  instead  of  a  fixed  por- 
tion of  the  profits  is  allowed,  65  per  cent,  of  the  profits  being  allowed 
during  the  fifth  year.  70  per  cent,  during  the  sixth  year,  75  per  cent, 
during  the  seventh  year,  80  per  cent,  during  the  eighth  year,  85  per 
cent,  during  the  ninth  year,  and  CO  per  cent,  after  the  expiration  of  the 
ninth  year,  at  any  time  prior  to  maturity,  a  withdrawing  shareholder 
would  receive  upon  withdrawal  made  after  having  paid  in  dues  for  six 
years  the  amount  of  such  dues,  $72,  and  75  per  cent.,  of  the  profits,  $15, 
making  a  total  of  $87  per  share. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  If  withdrawal  is  made  alter  the  expiration  of  the  fixed  period 
during  which  a   graduated    rate  of  interest   is    allowed,    withdrawing 

shareholders  receive  such  port  ion  of  i  lie  profits  as  i  he  managers  of  the 
•iat  ion  may  from  time  to  time  determine. 

I.'.  It  withdrawal  is  made  after  the  expiration  of  the  fixed  period 
during   which   a  graduate, |    rate   of    interest    is  allowed,    withdrawing 

shareholders  receive  all  the  profits  which  have  been  apportioned  to 

tin  ir  -!ia  res  instead  of  a  fixed  or  a  graduated  portion  thereof. 

:;.  No  wit  hdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
i  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associal  ions. 

■I.  No  interest  orprofit  is  allowed  if  withdrawal  is  made  upon  shares 
Which  have  not  lieen  in  existence  for  a  certain  specified  time,  which 
varies  in  different  associations  as  follows:  Six  months;  one  year; 
eig  ht'  en  muni  hs  ;   I  wo  years. 

5.  Withdrawing  shareholders  receive  the  dues  paid  in  with  a  gradu- 
ated rate  of  inter esl  thereon  until  dues  and  profits  amount  to  one-half 

mat  ii  rin'.';  value  of  a  share,  and  eif  her  a  fixed  or  a  graduated  portion 

of  f  hi   pr<  fil    t  hereafter. 


PREMIUM   PLANS.  647 

6.  The  fixed  period  during  which  a  graduated  rate  of  interest  is 
given  in  case  of  withdrawal  varies  in  different  associations  as  follows: 
Three  years  ;  four  years  ;  four  and  one-half  years  ;  five  years  ;  six  years  ; 
seven  years  ;  eight  years  ;  nine  years. 

7.  Among  the  associations  reported  as  operating  under  this  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
are  found  : 

( 1 )  Withdrawal  fee  of  25  cents  per  share  is  charged. 

(2)  Withdrawal  fee  of  10  cents  per  share  is  charged  for  each  month 
the  shares  upon  which  withdrawal  is  made  have  been  in  existence. 

(3)  Withdrawal  fee  of  10  cents  per  share  is  charged  if  the  shares 
upon  which  withdrawal  is  made  are  less  than  six  months  old. 

(4)  Withdrawal  fee  of  35  cents  per  share  is  charged  if  the  shares 
upon  which  withdrawal  is  made  are  less  than  one  year  old,  10  cents  per 
share  if  between  one  and  two  years  old. 

(5)  Withdrawal  fee  of  10  per  cent,  of  the  dues  paid  in  is  charged  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  one  year  old. 

(6)  Withdrawal  fee  of  $5  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  nine  years  old. 

PLAJJ  9. 

Withdrawing  shareholders  receive  the  dues  paid  in  with  a  graduated 
portion  of  the  profits  during  a  fixed  period,  and  all  the  profits  there- 
after. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  on  which  withdrawal  is  made  and,  if  withdrawal  is  made 
within  a  fixed  period  (varying  in  different  associations)  from  the  date 
of  issue  of  the  shares,  a  portion  of  the  profits  apportioned  to  the  shares 
graduated  according  to  the  age  of  the  shares  ;  if  withdrawal  is  made 
after  the  expiration  of  said  period,  shareholders  receive  all  the  profits 
apportioned  to  the  shares  instead  of  a  portion. 

Illustration  :  The  by-laws  of  an  association  provide  that  shareholders 
withdrawing  at  the  end  of  the  first  fifteen  months  from  the  date  of 
issue  of  their  shares  shall  receive  all  dues  paid  by  them  together  with 
16J  per  cent,  of  the  profits  apportioned  to  their  shares  ;  after  two  years, 
334,  per  cent.  ;  after  three  years,  50  per  cent.  ;  after  four  years,  66f  per 
cent.  ;  after  five  years,  83^  per  cert.  ;  after  six  years,  all  profits  appor- 
tioned. A  shareholder  in  the  above  association  desires  to  withdraw 
after  having  paid  dues  for  three  years  at  si  per  share  per  month.  The 
profits  apportioned  to  his  shares  equal  $8.80  per  share,  of  which, 
according  to  the  foregoing  scheme,  he  receives  50  per  cent.,  or  $4.40. 
This  amount  added  to  $36,  the  amount  of  dues  paid  by  him.  gives  a 
withdrawal  value  of  $40.40  per  share  at  the  end  of  the  third  year.  But 
if  the  shareholder  retains  his  membership  until  the  expiration  of  the 
sixth  year  the  withdrawal  value  of  a  share  will  be  an  amount  equal  to 
the  total  dues  paid  in  plus  all  the  profits  apportioned  thereto. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  Instead  of  all  profits  the  shareholder  withdrawing  at  the  expira- 
tion of  a  fixed  period  receives,  in  addition  to  his  dues,  such  rate  of 
interest  or  specific  amount  as  the  board  of  directors  may  from  time  to 
time  determine. 

2.  Instead  of  a  graduated  portion  of  the  profits  the  shareholder  with- 
drawing during  a  fixed  period  receives,  in  additiou  to  lus  dues,  a  fixed 
portion  of  the  profits. 

3.  Withdrawing  shareholders  receive  the  dues  paid  in  with  a  fixed 
portion  of  the  profits  during  a  fixed  period,  and  a  graduated  portion  of 
the  profits  thereafter. 

4.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  indifferent 
associations  as  follows  :  Six  months  ;  one  year. 


648  APPENDIX   II. 

5.  No  profit  is  allowed  if  withdrawal  is  made  upon  shares  which  have 
not  been  in  existence  for  a  certain  specified  time,  which  varies  in  differ- 
ent associations  as  follows  :  One  month  ;  three  months  ;  six  months  ; 
nine  months  ;  one  year ;  two  years  ;  three  years ;  four  years ;  five 
years. 

6.  The  fixed  period  during  which  a  graduated  portion  of  the  profits 
is  given  in  case  of  withdrawal  varies  in  different  associations  as  fol- 
lows :  One  and  one-half  years  ;  two  years  ;  two  and  one-half  years ; 
five  years  ;  six  years  ;  seven  years  ;  eight  years  ;  nine  years  ;  ten  years  ; 
eleven  years  ;  twelve  years. 

7.  If  withdrawal  is  made  after  the  expiration  of  the  fixed  period  dur- 
ing which  a  graduated  portion  of  the  profits  is  allowed,  a  deduction  of 
5  per  cent,  is  made  on  all  profits  apportioned  to  the  shares. 

8.  Some  associations  charge  a  withdrawal  fee  of  15  cents  per  share  ; 
others  of  25  cents  per  share,  regardless  of  the  age  of  the  shares  upon 
which  withdrawals  are  made. 

PLAX    10. 

Withdrawing  shareholders  receive  the  due°  paid  in  and  an  arbitrary 
allowance  of  profits. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  on  which  withdrawal  is  made  with  such  rate  of  interest, 
portion  of  the  profits,  or  specific  amount  as  the  management  of  the 
association  may  from  time  to  time  determine. 

Illustration  :  In  an  association  requiring  monthly  payment  of  dues  at 
the  rate  of  .$1  per  share  the  board  of  directors  decides,  at  the  end  of  the 
sixth  year,  that  the  earnings  have  been  sufficient  to  justify  the  payment 
to  withdrawing  shareholders  of  6  per  cent,  interest  per  annum  on  the 
dues  paid  in  for  the  average  time  of  investment.  A  member  then  with- 
drawing would  be  paid  his  dues,  $72,  and  6  per  cent,  interest  thereon, 
$12.96,  making  a  total  o*  $S4.96.  If,  instead  of  interest,  a  part  of  the 
apportioned  profits  is  allowed  and  at  the  end  of  the  sixth  year  the  board 
of  directors  decides  to  allow  75  per  cent,  thereof ,  the  entire  profits 
amounting  to  $20  per  share,  the  withdrawing  shareholder  would  receive 
$87  per  share,  and  if,  instead  of  either  interest  or  a  part  of  profits,  it 
should  be  decided  to  pay  a  specific  amount,  as,  for  instance,  $10  per 
share,  he  would  receive  $s2. 

Anion-'  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associations  as  follows:  Six  months  ;  one  year:  two  years. 

2.  No  interest  or  profil  is  allowed  if  withdrawal  is  made  upon  shares 

which  have  aot  I a  in  existence  for  a  certain  specified  time,  which 

varies  in  different  associations  as  follows:  One  month,  sixty  days  ;  two 
months; three  months;  six  months  ;  nine  months;  one  year ;  eighteen 
months  ;  t  wo  years  ;  three  years  :  four  years. 

3.  The  allowance  in  addition  to  dues  must  not  be  less  than  interest 
at  a  certain  6xed  rate  per  cent,  per  annum  thereon,  which  varies  in 
differenl  associations  as  follows:  3 ;  4  ;  1 '  :  5 :  (J :  8. 

I.  The  allowance  in  addh  ion  to  dues  must  not  be  more  than  interest 
at  a  certain  fixed  rate  per  cent,  per  annum  thereon,  which  varies  in 
differenl  associat  ions  as  follows  :  4  ;  6  ;  8  :  12. 

5.  The  allowance  in  addition  to  dues  must  not  be  less  than  a  certain 
fixed  portion  of  the  apportioned  profits,  which  varies  in  dil  ■  renl  asso- 
ciations as  fallows  :  50  per  cent.:  60  per  cent.:  7(1  per  cent.;  ?5  per  cent. 

6.  The  allowance  in  addition  to  due;  must  not  be  more  than  a  certain 
fixed  portion  of  the  apportioned  profits,  which  varies  in  different  asso- 
ciations as  follows :  7'.">  per  cent.;  90  per  cent. 

lition  to  dues  musl  not  he  less  than  -U  per  cent. 
pei  annum  thei   on,  i    withdrawal  is  made  during  the  first  two  years 


PREMIUM   PLANS.  649 

of  the  existence  of  the  shares  ;  after  two  years  such  allowance  must  not 
be  less  than  75  per  cent,  of  the  apportioned  profits. 

8.  The  allowance  in  addition  to  dues  must  be  within  certain  fixed 
limits,  varying  in  different  associations  as  follows  :  Not  less  than  3  nor 
more  than  '»  per  cent,  per  annum,  or  not  less  than  3  nor  more  than  8  per 
cent,  per  annum  on  the  dues  paid  in  ;  not  less  than  70  nor  more  than  90 
per  cent,  of  the  apportioned  profits. 

9.  Withdrawal  is  not  allowed  on  more  than  ten  shares  at  one  time, 
nor  on  more  than  five  shares  during  the  three  months  succeeding  such 
withdrawal  by  the  same  shareholder. 

1C.  If  withdrawal  is  made  during  the  first  three  months  of  the  exist- 
ence of  the  shares,  the  dues  only  are  returned  ;  during  the  next  three 
months,  the  dues  paid  in  with  4  per  cent,  interest  per  annum  thereon  ; 
after  six  months  the  allowance  is  arbitrary. 

11.  All  the  apportioned  profits,  in  addition  to  dues,  are  paid  to  with- 
drawing shareholders  after  their  shares  are  five  years  or  six  years  old. 

12.  Among  the  associations  reported  as  operating  under  tins  plan  and 
its  modifications  the  following  i-egulations  regarding  withdrawal  fees 
are  found  : 

(1)  Withdrawal  fee  of  5  cents,  25  cents,  50  cents,  or  $1  per  share  is 
charged. 

(2)  Withdrawal  fee  of  $1  per  share  is  charged  if  the  shares  upon  which 
withdrawal  is  made  are  less  than  one  year  old. 

(3)  Withdrawal  fee  of  5  per  cent,  of  the  dues  paid  in  is  charged. 

(4)  Withdrawal  fee  of  5  per  cent,  of  the  dues  paid  in  is  charged  if  the 
shares  upon  which  withdrawal  is  made  are  less  than  six  months  old. 

(5)  Withdrawal  fee  of  5  per  cent,  or  10  per  cent,  of  the  dues  paid  in  is 
charged  if  the  shares  upon  which  withdrawal  is  made  are  less  than  one 
year  old. 

(6)  Withdrawal  fee  of  all  profits  apportioned  if  the  shares  upon  which 
withdrawal  is  made  are  less  than  one  year  old. 

PLAN  11. 

Withdrawing  shareholders  receive  the  dues  paid  in  and  all  the 
profits. 

Under  this  plan  withdrawing  shareholders  receive  the  dues  paid  in 
on  the  shares  upon  which  withdrawal  is  made  and,  in  addition,  all  the 
profits  earned  by  or  credited  to  such  shares.  In  some  cases  interest  is 
allowed  on  the  dues  paid  in  since  the  date  of  the  last  apportionment  of 
profits  at  rates  varying  in  the  different  associations  as  follows  :  3  per 
cent.  ;  4  per  cent.  ;  6  per  cent.  ;  10  per  cent. 

Illustration  :  In  an  association  in  which  the  dues  are  $1  per  month 
per  share  and  the  profits  are  apportioned  semi-annually  all  the  profits 
credited  are  allowed  on  withdrawal.  A  shareholder  withdraws  when 
his  shares  are  four  years  old  ;  he  has  paid  in  on  each  share  during  said 
four  years  $48  in  dues,  and  the  profits  apportioned  to  each  share  are  $8  ; 
said  shareholder  will  therefore  receive,  on  each  share  upon  which  with- 
drawal is  made.  $48  plus  $8,  or  $56.  In  case  interest  is  allowed  on  the 
dues  paid  in  since  the  last  distributing  period,  suppose  the  rate  of  such 
interest  to  be  (5  per  cent,  per  annum,  and  the  shares  upon  which  with- 
drawal is  made  to  be  four  years  and  three  months  old  :  the  dues  paid  in 
on  each  share  are  $51,  and  the  profits  shown  as  credited  at  the  end  of  four 
years,  date  of  last  apportionment,  are  $8.  The  shareholder  will  then 
receive  on  each  share  upon  which  withdrawal  is  made  851 .  dues  paid  in 
thereon  ;  $8,  profits  last  apportioned,  and  6  percent,  interest  on  s:!  paid 
in  as  dues  since  last  apportionment,  which,  for  one  and  one-half  months, 
the  average  time  of  investment,  would  be  2  cents,  making  a  total  of 
$59.02. 

Among  the  associations  reported  as  operating  under  this  plan  the 
following  modifications  and  regulations  are  found  : 

1.  In  some  associations  all  the  profits  credited  are  allowed  only  in 


650  APPENDIX   II. 

case  they  do  not  exceed  interest  on  the  dues  paid  in  at  a  certain  fixed 
rate  which  varies  in  the  different  associations  as  follows  :  6  per  cent.  ; 
8  per  cent. 

2.  In  one  association  the  profits  paid  on  withdrawal  must  amount  to 
at  least  6  per  cent,  interest  on  the  dues  paid  in  whether  the  profits 
earned  or  credited  amount  to  so  much  or  not. 

3.  No  withdrawal  is  allowed  to  be  made  upon  shares  which  have  not 
been  in  existence  for  a  certain  specified  time,  which  varies  in  different 
associations  as  follows  :  Three  months  ;  six  months  ;  one  year  ;  two 
years :  three  years. 

4.  No  interest  or  profit  is  allowed  if  withdrawal  is  made  upon  shares 
which  have  not  been  in  existence  for  a  certain  specified  time,  which 
varies  in  different  associations  as  follows  :  One  week  ;  two  weeks  ;  one 
month  ;  three  months  ;  thirteen  weeks  ;  four  months  ;  twenty  weeks  ; 
six  months;  thirty  weeks  ;  eight  months;  nine  months;  one  year; 
fifteen  months  ;  eighteen  months  ;  two  years  ;  three  years  ;  thirty-nine 
months  ;  four  years  ;  five  years. 

5.  In  one  association  withdrawal  is  not  allowed  upon  more  than  ten 
shares  at  one  time,  nor  upon  more  than  five  shares  at  one  time  during 
the  six  months  succeeding  such   withdrawal  by  the  same  shareholder. 

6.  Among  the  associations  reported  as  operating  under  this  plan  and 
its  modifications  the  following  regulations  regarding  withdrawal  fees 
are  found  : 

(1)  Withdrawal  fee  of  5  cents,  8  cents,  10  cents,  15  cents,  25  cents,  30 
cents,  50  cents,  $1,  or  $1.50  per  share  is  charged. 

(2)  Withdrawal  fee  of  5  cents  per  share  is  charged  if  the  shares  upon 
which  withdrawal  is  made  are  less  than  six  months  old. 

(3)  Withdrawal  fee  of  5  cents  per  share  is  charged  for  each  week  the 
shares  upon  which  withdrawal  is  made  have  been  in  existence. 

(4)  Withdrawal  fee  of  5  cents  per  share  is  charged  for  each  week  the 
shares  upon  which  withdrawal  is  made  have  been  in  existence,  if  less 
than  one  year  old. 

(5)  Withdrawal  fee  of  5  cents  per  share  is  charged  for  each  month 
the  shaves  upon  which  withdrawal  is  made  have  been  in  existence. 

(6)  Withdrawal  fee  of  5  cents  per  share  is  charged  for  each  six 
months  the  shares  upon  which  withdrawal  is  made  have  been  in  exist- 
ence. 

(7)  Withdrawal  fee  of  5  cents  per  share  is  charged  for  each  month 
the  shares  upon  which  withdrawal  is  made  have  been  in  existence,  if 
less  than  one  year  old  ;  if  one  year  but  less  than  two  years  old,  4  cents 
per  share  for  each  month  of  existence  ;  if  two  but  less  than  three  years 
old,  3  cents  per  share  for  each  month  of  existence,  and  if  three  years 
old  or  over,  2  cents  per  share  for  each  month  of  existence. 

Withdrawal   fee  of  10  cents  per  share  is  charged,  but  not  more 
than  $5  per  1  rani  ad  ion. 

(9)  Withdrawal  fee  of  20  cents  per  share  is  charged,  but  not  less  than 
si  per  l  ransaction. 

(10)  Withdrawal  fee  of  50  cents  per  share  is  charged,  but  not  less  than 
SI  nor  more  than  $3  per  transaction. 

(11)  Withdraw;. I  fee  of  $1  per  share  is  charged,  if  the  shares  upon 
i  wit  hdrawal  is  made  are  less  than  one  year  old. 

With  Irawal  fee  of  $1  per  share  is  charged,  but  only  if  the  appor- 
:  i  profits  amount  to  $1 ;    if  not,   the  apportioned  profits  only  are 

a   u  it  lulia  wal  fee. 

Withdrawal  fee  of  1.0  cents,  25  cents,  50  cents,  or  $1  per  trans- 
i    charged. 

Withdrawal  fee  of  a  fixed  portion  of  the  dues  pa  id  in  is  charged, 
which  varies  in  different  associations  as  follows:  6  percent.;  10  per 
cent.  ;  25  per  cent.  ;   8  per  cent,  if  t  he  shares  upon  which  wit  In  Ira  wal  is 

mad<  tone  yearold,  and  r.  per  cent  if  said  shares  are  one 

year  bnl  I  two  years  old  ;  5percent.   if  the  shares  upon  which 

withdrawal   i     made    are  less  than  one  year  old  ;    H»  per  cent,  if  the 


PREMIUM   PLANS.  651 

shares  upon  which  withdrawal  is  made  are  less  than  six  months  old  ;  10 
percent,  if  the  shares  upon  which  withdrawal  is  made  are  less  than  one 
year  old  ;  the  first  payment  of  dues  ;  one  week's  dues  ;  dues  paid  during 
first  three  months  of  shares'  existence. 

(15)  Withdrawal  fee  of  a  portion  of  the  dues  paid  in,  graduated 
according  to  the  age  of  the  shares  upon  which  withdrawal  is  made  if 
less  than  one  year  old. 

(16)  Withdrawal  fee  of  a  fixed  part  of  the  apportioned  profits  which 
varies  in  different  associations  as  follows  :  2  per  cent,  of  said  profits  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  one  year  old  ; 

5  per  cent,  of  said  profits;  10  per  cent,  of  said  profits  ;  40  per  cent,  of 
the  last  declared  dividend  ;  one-half  of  the  last  declared  dividend  ;  one- 
half  of  the  last  six  months'  profits  ;  the  last  declared  dividend  ;  profits 
of  the  last  three  months  ;  profits  of  the  last  six  months  ;  profits  of  the 
last  two  years  ;  10  per  cent,  of  the  last  two  dividends  ;  profits  of  the 
first  ten  weeks  ;  profits  of  the  first  thirteen  weeks;  profits  of  the  first 
six  months  ;  ten  weeks'  profits  and  10  cents  per  share  additional. 

(17)  Withdrawal  fee  of  a  fixed  portion  of  the  book  or  present  value 
(dues  paid  in  plus  the  apportioned  profits)  of  the  shares  upon  which 
withdrawal  is  made,  which  varies  in  the  different  associations  as  follows: 
2  per  cent.  ;  5  percent.  ;  10  percent.  ;  5  per  cent,  if  the  shares  upon  which 
withdrawal  is  made  are  less  than  one  year  old;  5  per  cent,  plus  the 
profits  made  by  the  dues  paid  in  upon  the  shares  npon  which  with- 
drawal is  made  during  the  first  year  of  their  existence  ;  8  per  cent,  if 
the  shares  upon  which  withdrawal  is  made  are  less  than  two  years  old  ; 

6  per  cent,  if  two  but  less  than  three  years  old  ;  5  per  cent,  if  three  but 
less  than  four  years,  and  4  per  cent,  if  four  years  old  or  over  ;  10  per  cent, 
ami,  in  addition,  whatever  the  shareholder  may  bid  for  the  privilege  of 
withdrawing. 

(18)  Withdrawal  fee  of  such  an  amount  as  the  shareholder  may  bid 
for  the  privilege  of  withdrawing. 

(1!))  Withdrawal  fee  of  an  amount  equal  to  the  average  premium 
paid  on  the  loans  made  to  members  of  the  association  previous  to  the 
date  of  withdrawal. 

(20)  Withdrawal  fee  of  an  amount  equal  to  the  average  premium  paid 
on  the  loans  made  to  members  of  the  association  during  the  month  in 
which  the  withdrawal  is  made. 

(21)  Withdrawal  fee  of  25  per  cent,  of  the  profits  is  charged  unless  5 
per  cent,  of  the  difference  between  the  book  or  present  value  (dues  paid 
in  plus  the  apportioned  profits)  and  the  maturing  value  is  less  than  25 
per  cent,  of  the  profits,  in  which  case  5  per  cent,  of  said  difference  is 
charged  as  the   withdrawal  fee. 

(22)  Withdrawal  fee  of  an  amount  graduated  according  to  the  age  of 
the  shares  upon  which  withdrawal  is  made. 

(23)  One-fifth  of  the  profits  resulting  from  fines  and  premiums. 

PLAN  12. 

Withdrawing  shareholders  receive  the  dues  paid  in,  with  such  propor- 
tion of  the  profits  as  the  present  value  of  their  shares  is  of  the  maturing 
value. 

Illustration  :  In  an  association  requiring  payment  of  dues  at  the  rate 
of  SI  per  share  per  month  the  apportioned  profits  at  the  end  of  the  third 
year  amount  to  $14  per  share,  which,  added  to  the  dues  paid  in,  $36, 
makes  the  present  value  of  a  share  $50  ;  the  maturing  value  is  $'200.  and 
the  present  value  is  to  the  maturing  value  as  1  is  to  4,  or  it  is  one-fourth 
thereof;  therefore,  a  shareholder  then  withdrawing  would  lie  entitled 
to  receive  one-fourth  of  the  pi-ofits,  $3.50,  in  addition  to  his  dues,  making 
a  total  withdrawal  value  of  $39.50  per  share.  If  withdrawal  is  made 
upon  shares  before  any  profits  have  been  apportioned  thereto  their 
holder  receives  the  dues  paid  in. 

No  withdrawal  fees  are  reported  as  being  charged  in  connection  with 
this  plan. 


APPENDIX  III 

The  following  by-laws,  belonging  to  a  very  successful  In- 
diana building  association,  may  be  used  as  an  outline  for 
those  desiring  to  form  building  associations.  It  will  be  observed 
that  these  by-laws  provide  for  an  "  Expe7tse  Fund.''''  lit  many 
associations  this  feature  is  omitted.  This  particular  feature 
has  been  the  source  of  much  contention  and  considerable  scan- 
dal ;  for  the  reason  that  it  has  qforded  grasping  and unscr •/> vp- 
ulous  officers  an  opportunity  to  secure  remtmeration  beyond 
the  value  of  their  services.  We  omit  the  instrument  of  organi- 
zation; for  the  reason  that  that  instrument  is  peculiar  to 
each  particular  state. 


BY-LAWS  OF  A  PERMANENT  ASSOCIATION. 

ARTICLE  I. — Name,  Location,  Object,  Capital. 

Section  1. — The  name  of  this  Association  shall  be 

Sec.  2. — The  home  office  of  this  Association  shall  be  in  the  city  of 
,  and  all  contracts  made  with  this  Association  shall  be 
deemed  to  have  been  made  at  such  home  office,  [and  any  suit  against 
this  Association  shall  be  brought  in  the  courts  of  .] 

Sec.  3. — The  object  of  this  Association  shall  be  to  conduct  the  busi- 
ness of  a  Building,  Loan  Fund,  Savings  and  Investment  Company, 
[subject  to  the  statutes  of  Indiana  pertaining  to  such  corporations.] 

Sec.  4.— The  capital  stock  of  this  Association  shall  be  $1,000,000; 
but  the  capital  stock  may  be  increased  by  action  of  the  Board  of 
Directors  when  deemed  advisable  or  necessary. 

ARTICLE  II. — Management. 

Section  1. — The  management  of  the  affairs  of  this  Association  shall 
be  vested  in  a  Board  of  eleven  Directors,  who  shall  exercise  the 
general  corporate  powers  of  the  Association,  and  shall  be  elected  and 
continue  in  office  as  provided  in  the  following  sections  of  this  article. 

Sec.  2. — The  Directors  named  in  the  articles  of  incorporation  shall, 
as  nearly  as  practicable,  be  divided  equally  into  three  classes,  one  of 
which  shall  serve  until  the  annual  stockholders'  meeting  in  1896-'7-'8 
and  1899,  respectively,  or  until  their  successors  are  duly  elected  and 
qualified. 

Sec.  3. — The  election  of  Directors  subsequent  to  the  provisions  of 


654  APPENDIX   III. 

Section  2  of  this  article  shall  be  by  ballot,  at  the  annual  stockholders' 
meetings,  and  the  term  of  service  shall  be  four  years.  If  a  vacancy 
occur  iu  the  board,  it  may  be  filled  for  the  unexpired  term,  by  the 
Directors,  at  any  regular  or  special  meeting.  The  Board  of  Directors, 
by  a  three-fourths  vote,  may  remove  any  of  its  members  for  mal- 
feasance in  office,  after  due  hearing,  at  a  regular  meeting  of  the  board. 

Sec.  4. — Regular  meetings  of  the  Board  of  Directors  shall  be  held  on 
the  second  Tuesday  of  each  month.  Special  meetings  may  be  called  at 
any  time  by  the  President  and  Secretary,  by  written  notice  given  to 
each  member  of  the  board. 

Sec.  5. — The  Board  of  Directors  shall  have  general  supervision  over 
the  business  affairs  of  the  Association,  and  the  duties  and  compensa- 
tion of  officers  ;  and  shall  declare  all  dividends. 

Sec.  6. — A  majority  of  the  Board  of  Directors  shall  constitute  a 
quorum. 

ARTICLE  III.— Franchise  of  Stock. 

Section  1. — Each  share  of  stock  in  good  standing,  not  in  arrears  for 
any  sum  to  the  Association,  shall  be  entitled  to  one  vote  on  all  ques- 
tions brought  before  any  regular  or  special  meeting  of  stockholders ; 
but  no  stockholder  shall  be  permitted  to  vote  upon  any  question  affect- 
ing the  claims  of  the  Association  against  him  or  her. 

Sec.  '2. — Shares  may  be  voted  by  proxy;  but  the  proxy  authority 
shall  be  filed  with  the  Secretary  of  the  Association  at  least  five  days 
before  the  meeting  at  which  it  is  to  be  used  :  and  no  clerk  or  travelling 
agent  of  the  Association  shall  be  permitted  to  vote  by  proxy  authority. 

Sec.  3. — The  owners  of  a  majority  of  the  stock  of  the  Association,  or 
their  proxies,  present  at  any  stockholders'  meeting  shall  constitute  a 
quorum. 

Sec.  4. — Regular  meetings  of  stockholders  shall  be  held  at  the  Home 
Office  of  the  Association  on  the  third  Tuesday  of  January,  of  each 
year.  At  least  fifteen  days  prior  thereto,  notice  of  such  meeting  shall 
be  given  by  publication  in  some  newspaper  of  general  circulation  in  the 
State  of  Indiana. 

ARTICLE  IV.— Officers. 

Section  1. — The  officers  of  this  Association  shall  be  a  President, 
Vice-President,  Secretary,  Treasurer,  and  Attorney  ;  but  in  case  of 
necessity,  the  Board  of  Directors  may  make  further  appointments. 

Sec.  2. — The  officers  of  the  Association  shall  be  selected  from  among 
the  Directors,  the  first  officers  to  serve  until  the  first  Directors'  meet- 
ing following  the  annual  stockholders'  meeting  in  189G,  and  then,  and 
annually  thereafter,  their  successors  shall  be  elected  by  ballot  of  the 
Directors.  Each  officer  shall  continue  in  the  discharge  of  his  duties 
mil  1 1  Ins  successor  shall  have  been  duly  elected  and  qualified. 

Sic.  :;. —  In  case  of  a  vacancy  occurring  in  any  office,  the  Board  of 
Directors  may  fill  sucli  vacancy  lor  t lie  unexpired  term,  from  among 
their  number,  at  any  meeting  of  the  hoard. 

SEC.  I.  The  officers  of  the  Association  shall  execute  such  bonds  for 
the  faithful  performance  of  their  duties  as  the  Board  of  Directors  shall, 
from  i  inie  lot  iiue.  require. 

Sec.  5.  The  Presidenl  shall  acl  as  t  be  executive  head  of  the  Associa- 
tion, and  shall  preside  al  all  meetings  of  stockholders  and  Directors; 
ill  ci  rtificates  of  stock  and  all  wan-ants  drawn  on  the  Treasurer 
by  order  of  the  Board  of  Directors  or  Executive  Committee,  and  per- 
form such  other  duties  as  the  Hoard  of  Directors  may,  from  time  to 
i  ime,  -  pecify. 

Sec.  6.  In  the  case  of  the  death,  disability,  or  absence  of  the  Presi- 
dent,  his  dui  ies  shall  devolve  ii i ion  t  he  Vice  President ;  and  in  case  of 
his  concurrent  death,  disability,  or  absence,  the  Board  of]  Erectors  may 
appoint  a  President  pro  tempore  to  discharge  the  duties  of  the  office. 
i .     The  Treasurer  of  the  Association  shall  daily  receive  from  the 


BY-LAWS.  655 

Secretary  all  moneys  paid  to  him  in  the  business  of  the  Association, 

giving  his  receipt  therefor,  and  shall  pay  the  same  ou1  only  (iii  orders 
signed  by  the  President  and  Secretary.  He  shall  render  a  monthlj  ac- 
count of  his  transactions  to  the  Board  of  Directors  at  their  regular 
meeting,  and  perform  all  other  duties  that  usually  pertain  to  his  office 
in  similar  organizations.  In  event  of  his  absence  or  disability  the 
Executive  ( lommittee  shall  appoint  a  'treasurer  /</•<>  tempore. 

Sec.  8. — The  Secretary  shall  attend  all  meetings  of  the  stockholders, 
Board  of  Directors,  and  Executive  Committee,  and  beep  complete  and 
accurate  records  of  their  proceedings.  He  shall  receive'  and  receipt 
for  all  moneys  paid  to  the  Association  and  daily  paj  the  same  to  the 
Treasurer,  taking- his  receipt  therefor;  he  shall  keep  accurate  records 
of  accounts  between  the  Association  and  each  stockholder,  as  veil  as 
all  other  necessary  accounts,  and  draw  all  orders  on  the  Treasurer.  He 
shall  have  charge  of  the  office  business  of  the  Association:  attend  to 
all  correspondence  and  notifications;  have  recorded  ail  legal  instru- 
ments for  record  belonging  to  the  Association  ;  sign  all  certificates  of 
stock  and  other  instruments  as  required  in  the  usual  course  of  business 
or  designated  by  the  Board  of  Directors.  He  shall,  at  the  monthly 
meeting  of  the  Board  of  Directors,  make  a  complete  written  statement 
of  all  financial  transactions  during  the  preceding  month,  and  shall 
present  for  approval  the  complete  minutes  of  all  meetings  of  the  Board, 
or  any  committees,  standing  unapproved. the  same,  if  ratified,  to  receive 
the  signature  of  the  President.  He  shall  keep  insured  all  interests  the  As- 
sociation may  have  in  any  property,  liable  to  loss  or  damage  by  fire, 
and  protect  the  interests  of  the  Association  in  all  tax  sales,  or  for- 
feitures, under  direction  of  the  Board.  He  shall  have  charge  of  the 
agency  system  of  the  Association,  and,  with  the  approval  of  the  Ex- 
ecutive Committee,  shall  appoint  such  agents  as  shall  be  by  him 
deemed  for  the  best  interests  of  the  Association,  and  shall  compensate 
them  from  the  general  fund  of  the  Association.  He  shall  have  the 
power  to  remove  such  agents  for  cause,  at  any  time.  He  shall  have 
in  his  charge  the  corporate  seal  and  ail  books  of  the  Association,  ex- 
cept those  in  the  special  custody  of  other  officers.  He  shall  be  the 
custodian  of  all  securities  of  the  Association,  subject,  however,  to  the 
provisions  of  Article  XVI..  Section  8,  of  these  By-Laws.  He  shall,  in 
conjunction  with  the  President,  attend  to  the  employment  of  the 
office  service  of  the  Association,  subject  to  the  approval  of  the  Board 
of  Directors,  and  shall  perform  such  other  duties  as  usually  devolve 
upon  the  Secretary  of  a  similar  organization.  He  may,  under  con- 
tract, be  deemed  an  employe  of  the  Association,  for  such  period  as 
may  he  specified  in  such  contract. 

SEC.  9. — The  Attorney  shall  examine  all  title  papers  and  otherwise 
investigate  the  title  to  property  offered  to  the  Association  as  security 
for  loans,  and  report  the  result  of  such  investigation  in  writing.  He 
shall  prepare  all  legal  instruments  required  in  the  usual  course  of 
business,  by  the  Association.  It  shall  not  be  a  part  of  his  duty  to 
attempt  to  quiet  defective  titles.  His  compensation  may  be  determined 
by  contract  with  the  Association. 

ARTICLE  V.— Committees. 

Section  1. — The  President,  with  the  concurrence  of  the  Board  of  Di- 
rectors, shall  appoint,  from  among  the  Directors,  annually,  an  Executive 
Committee  of  five  members,  three  of  whom  shall  constitute  a  quorum 
for  business:  and  such  other  special  or  standing  committees  as  may. 
from  time  to  time,  be  deemed  necessary. 

Sec.  2. — The  Executive  Committee  shall  examine  into  and  pass  upon 
the  sufficiency  of  all  securities  offered  on  loans,  and  shall,  in  writing. 
indorse  their  action  upon  each  application  for  loan  ;  except  collateral 
loans  upon  the  stock  of  this  Association,  which  shall  not  require  the 
action  of  this  committee.     It  shall  fix  all  salaries  of  officers  and  em- 


G56  -  APPENDIX    III. 

ployes,  and  shall  also  perform  such  other  duties  as  may  be  assigned  to 
it  by  the  Board  of  Directors,  and  shall  present  a  complete  and  detailed 
report  of  its  actions  for  approval  at  the  next  ensuing  regular  meeting  of 
the  Board  of  Directors.  The  President,  Secretary  and  Treasurer  .shall  be 
ex  officio  members  of  the  Executive  Committee. 

ARTICLE  VI.— Members. 

Section  1. — Any  person  owning  one  or  more  shares  of  the  capital 
stock  of  this  Association  shall  be  considered  a  member  thereof,  entitled 
to  all  its  privileges,  and  obligated  to  be  governed  by  the  rules  and  pro- 
visions of  its  Charter  and  By-Laws. 

Sec.  2. — Each  stockholder  shall  receive  a  certificate  of  stock  for  the 
number  of  shares  held  by  him,  which  certificate  shall  set  for  the  fact  of 
his  membership ;  the  amount  of  monthly  instalments  ;  the  date  said 
instalments  are  to  be  paid  ;  the  penalty  for  non-payment  and  the  guar- 
anteed extreme  number  of  instalments  upon  such  stock,  all  being 
subject  to  the  Charter  and  By-Laws  of  the  Association. 

Sec.  3. — Time,  punctuality  and  strict  performance  on  the  part  of  each 
shareholder  shall  be  of  the  essence  of  all  contracts  between  him  and  the 
Association,  and  the  waiver  by  the  Association  of  any  default  or  failure 
on  the  part  of  a  shareholder  to  make  any  payment  or  perform  any  duty 
incumbent  upon  him,  shall  not  be  taken  as  a  precedent  or  estop  the 
Association  from  availing  itself  of  any  other  default  or  failure  on  the 
part  of  such  shareholder. 

Sec.  4. — In  case  of  change  of  postofnce  address  of  a  member,  notice 
thereof  shall  at  once  be  given  the  Secretary,  and  such  change  be  recorded 
on  the  books  of  the  Association. 

ARTICLE  VII.— Stock  Issue. 

Section  1. — The  stock  of  this  Association  shall  be  issued  in  shares  of 
§100  each,  in  five  classes,  to  be  known  respectively  as  "  A,"  "  B,"  "  C," 
«'D"and  4>  E." 

Sec.  2. — Classes  A,  B  and  C  shall  paid  for  by  monthly  instalments  of 
$1.00,  $0.80  and  $0.50  respectively,  and  the  stockholder's  liability  for 
such  instalments  shall  be  limited  to  sixty-three,  seventy-two  and 
ninety-six  instalments  respectively.  But  if  shares  in  either  class  shall 
mature  before  the  extreme  number  of  instalments  has  been  paid,  then 
.such  maturity  shall  annul  the  liability  for  any  further  instalments. 

Sec.  2. — All  instalments  on  stock  in  Classes  A,  B  and  C  shall  be  due 
and  payable  at  tin-  Heme  Officeof  the  Association  on  the  first  and  delin- 
quent after  the  twenty-fifth  of  each  month,  beginning  with  the  month 
in  which  the  certificate  of  stock  is  dated  ;  and  each  share  of  stock  shall 
be  subject  to  a  lien  for  the  payment  of  unpaid  instalments  and  other 

charges  incurred  t hereon. 

Sec.  1.  New  shares  in  any  class  may  be  issued  in  lieu  of  shares 
withdrawn,  cancelled  or  matured. 

Sec.  5.     Instalments  on  stock    may  be  paid  in  advance,  and  if  the 

ame  be  for  a  period  of  six  months  and  less  than  one  year,  a  discount  of 

six  percent,  per  annum  shall  be  allowed  lor  Hie  average  time  of  such 

advance  payment ;  if  for  a    period  of  one  year  or  more,  the  discount 

hall  be  seven  per  cent. 

Sec.  6.  Fines  shall  be  assessed  against  delinquent  stockholders  at 
the  rate  of  ten  cents  per  share  per  month  on  each  delinquent  instal- 
ment, and  the  same  rale  on  delinquent  interest  and  premium. 

Si.< j.  ; .  The  Association  shall  dispose  of  unpledged  shares  remaining 
dcii. H 1 1 lent  for  six  consecutive  months,  l>y  crediting  to  the  Association 
all  fines  and  charges,  and  returning  all  balances  to  the  owner  of  such 

:  hares. 

.  3.     A  membership  fee  of  $1.00  shall  he  charged  for  each  share 


BY-LAWS.  657 

of  stock  issued  in  Classes  A,  B,  C  and  1),  and  the  same  shall  be  paid  to 
the  agent  taking  the  application  for  stock  ai  the  time  the  same  is  made, 

and  such  fee  shall  entitle  the.  member  to  carry  the  number  of  shares  on 
which  the  same  is  paid,  during  life. 

Sec.  9. — Stock    shall    be   transferable    only    by    written    instrument, 
signed  by  the  vendor  ;  and  such  transfer  must  be  recorded  on  the  I  looks 
of  the  Association  in  order  to  he  valid.     Transfers  shall  in  no  manner 
exempt  stock    or   stockholders   from   Liabilities  created    prior   to    s  u 
transfer;  and  shares  pledged  ascollateral  security  cannot  be  transferre 
unless  the  mortgaged   property  is  transferred  to,  and  all  obligati 
assumed  by,  the  purchaser  of  such  shares, or  the  obligations  lirst  dis- 
charged.    No  transfer  shall  be  recognized  except  as  above  provided.    A 
transfer  fee  of  twenty-five  cents  per  share,  no  fee  to  exceed §2.00,  must 
be  paid  at  the  time  of  recording  the  transfer. 

Sec.  10. — Class  D  stock  shall  be  issued  upon  payment  of  $1.00  per 
share  membership  fee,  and  a  further  sum  of  §50  per  share,  which 
amount  shall  be  in  full  prepayment  of  all  instalments  or  charges  upon 
such  shares. 

Sec.  11. — Holders  of  Class  D  stock  shall  have  the  privilege  of  with- 
drawing partial  dividends  semi-annually,  from  the  dividend  declared, 
at  a  rate  not  to  exceed  nine  per  cent,  per  annum  on  the  amount 
deposited.  Such  dividends  shall  be  payable  on  the  first  day  of  January 
and  July  of  each  year. 

Sec.  12. — Class  E  stock  shall  be  issued  on  payment  of  $100  per  share, 
which  amount  shall  be  in  full  of  all  charges  of  whatever  kind  against 
such  shares.  Dividends  shall  accrue  at  the  rate  of  not  to  exceed  eight 
per  cent,  per  annum,  payable  in  equal  semi-annual  instalments  on  the 
first  day  of  January  and  July  of  each  year,  such  dividends  to  accrue  for 
the  actual  time  the  money  is  in  the  hands  of  the  Association  and  to  be 
in  lieu  of  any  and  all  other  share  in  the  profits  of  the  Association. 
Such  stock  shall  not  be  issued  to  an  amount  in  excess  of  one-third  of 
the  mortgage  securities  of  the  Association,  and  each  certificate  of  such 
stock  shall  be  indorsed  with  the  certificate  of  the  depository  of  the 
Association  that  it  holds  such  mortgage  securities  in  three  times  the 
amount  of  the  total  issue  of  such  stock. 

Sec.  13. — Certificates  of  Class  E  stock  may  be  retired  by  action  of  the 
Board  of  Directors  after  one  year  from  their  date  by  giving  sixty  days' 
written  notice  to  their  recorded  holders,  and  on  such  retirement  shall 
receive  their  par  value,  together  with  all  accrued  dividends  remaining 
unpaid  ;  but  such  retirement  shall  be  in  the  numerical  order  of  issue  of 
such  certificates  only. 

Sec.  14. — In  no  month  shall  any  Class  E  stock  be  issued  when  the  loan 
fund  income  from  other  sources  is  equal  to  or  greater  than  the  amount 
of  approved  applications  for  loans  on  hand. 

ARTICLE  VIIL— Maturity  of  Stock. 

Section  1. — Stock  issued  in  Classes  A,  BandC  shall  mature  as  soon  as 
the  total  loan  fund  portion  of  monthly  instalments,  added  to  the  appor- 
tioned profits,  shall  equal  the  face  value  of  such  shares. 

Sec.  2. — Shares  of  Class  D  stock  shall  participate  in  the  profits  of  the 
Association  arising  from  interest  and  premium,  and  shall  mature  as 
soon  as  such  profits,  less  withdrawn  dividends  and  the  general  fund 
deduction  from  the  same,  as  provided  in  Article  X., section  2.  added  to 
the  original  deposit  of  $50  per  share,  shall  equal  the  lace  value  of  such 
shares. 

Sec.  3. — Shares  of  Class  E  stock  shall  mature  at  any  time  after  one 
year  from  their  date. 

Sec.  4. — Matured  shares  in  any  class  shall  become  due  and  payable  to 
the  recorded  owners  of  such  shares  within  sixty  days  from  their 
maturity. 


G58  APPENDIX   III. 

ARTICLE  IX.— Withdrawal  of  Stock. 

Section*  1. — The  Loan  Fund  portion  of  monthly  instalments  on  stock 
issued  in  Classes  A,  B  and  C  may  be  withdrawn  at  any  time  in  full,  on 
demand,  with  full  credited  earnings.  If  the  funds  of  the  Association 
are  pledged  on  approved  applications  for  loans,  the  right  is  reserved  to 
require  sixty  days'  written  notice  before  paying  withdrawing  share- 
holders ;  and  in  no  month  shall  more  than  one-half  the  loan  fund 
receipts  of  the  Association  be  applicable  to  the  payment;  of  withdraw- 
ing shareholders  of  any  class  without  the  consent  of  the  Board  of 
Directors.  All  shares  must  be  in  good  standing  at  the  time  of  with- 
drawal. 

Sec.  2. — Shares  of  stock  in  Class  D  may  be  withdrawn  at  any  time 
after  one  year  from  their  date  on  sixty  days'  written  notice  to  the  Asso- 
ciation, and  on  such  withdrawal  shall  receive  the  full  deposit  of  $50  per 
share,  and  in  addition  thereto  all  accrued  earnings  at  not  to  exceed 
nine  per  cent,  per  annum  on  the  amount  deposited  for  the  full  time  of 
the  deposit,  less  any  and  all  dividends  that  have  been  paid  under  the 
provisions  of  Article  VII.,  section  11. 

Sec.  3. — Shares  of  stock  in  Class  E  may  be  withdrawn  at  any  time 
after  one  year  from  their  date,  upon  sixty  days'  written  notice  to  the 
Association,  and  shall  receive  the  full  deposit  of  $100  per  share,  and  in 
addition  thereto,  all  accrued  and  unpaid  dividends  at  the  rate  of  not  to 
exceed  eight  per  cent,  per  annum  for  the  time  of  such  deposit. 

ARTICLE  X.— Funds. 

Section  1. — The  funds  of  this  Association  shall  be  known  as  the  Loan 
Fund,  the  General  Fund  and  the  Guaranty  Fund. 

Sec.  2. — All  fees  shall  be  placed  in  the  General  Fund,  together  with 
ten  cents  per  month  on  each  share  of  stock  in  Classes  A,  B  and  C, 
which  may  be  taken  from  the  monthly  instalments,  or  an  equivalent 
amount  may  be  taken  from  the  earnings  of  the  Association,  as  the 
Directors  may  decide  from  time  to  time  by  vote;  ten  cents  per  share 
per  month  to  be  deducted  from  the  gross  earnings  of  shares  in  ClassesD 
and  E  at  the  time  of  apportionment  of  semi-annual  dividends,  and  $2.00 
per  share  of  the  amounts  deposited  on  shares  in  Class  E. 

Sec.  :'. — In  the  Loan  Fund  shall  be  placed  all  receipts  of  the  Associa- 
tion other  than  as  provided  in  Section  2  of  this  Article. 

ARTICLE  XL— Uses  of  Funds. 

Se<  Hon  1. — The  receipts  of  the  Loan  Fund  shall  be  available  for  the 
following  purposes:  Paymenl  of  withdrawals  to  withdrawing  share- 
holders; loans  to  members  on  approved  securities;  borrowed  money 
interesl  thereon,  it'  any;  dividends  to  shareholders  ;  discount  on 
advance  payments;  paymenl  of  matured  shares. 

Sec.  2. — The  receipts  of  the  General  Fund  shall  be  applicable  to  the 
paymenl  of  all  expenses  of  the  Association.  Any  surplus  remaining 
after  such  expenses  have  been  paid  shall  be  placed  in  a  third  fund  to  be 
known  as  t  he  <  luaranty  Lund. 

SEC.  3.  \ny  losses  to  l  he  Loan  Fund  from  depreciation  of  securities, 
or  otherwise,  shall  be  chargeable  to  "and  paid  from  the  Guaranty  Fund. 

Sec.  I.  All  moneys  in  the  Guaranty  Lund  shall,  as  promptly  as 
practicable,  be  placed  in  the  Loan  Lund  to  be  loaned  to  members.  All 
profits  accruing  on  such  Guaranty  Fund  moneys  shall  be  credited  to  the 
profit  accounl  of  t he  Loan  Fund. 

ARTICLE  XII.     Dividends. 
ctiom  l.    On  the  firsl  daj  of  January  and  July  of  each  year  the 

lall    pay    such    dividends  as   have   accrued  and  are  due  and 

toch   i     in-, I  in  ( 'lasses  I )  and   L.  sha II  a  pport  ion   and    credit 

on  the  book    of  the    Association  all  dividends  earned  and  unpaid  on 


BY-LAWS.  659 

stock  issued  in  Classes  A,  B,  C  and  D,  and  shall  issue  to  the  share- 
holders certificates  for  such  credited  dividends. 

Sec.  2. — Apportioned  dividends  shall  begin  to  earn  dividends  the 
same  as  cash  payments,  from  and  after  the  date  of  their  credit. 

SEC.  3. — Loan  Fund  instalments  on  Classes  A,  B  and  C  shall  begin  to 
earn  dividends  from  and  after  the  first  of  the  month  following  that  in 
which  they  are  due  and  payable. 

ARTICLE  XIII.— Reduction  of  Shares. 

Section  1. — On  payment  of  a  fee  of  $  1.00,  certificates  issued  in  Classes 
A,  B  or  C  may  be  surrendered  and  new  certificates  for  a  less  number  of 
shares,  bearing  the  same  date,  be  issued,  and  the  full  amount  of  in- 
stalments paid  upon  the  old  certificate  be  applied  upon  the  new  :  in 
the  case  of  pledged  shares,  no  reduction  shall  be  to  a  less  amount  than 
the  face  of  the  obligation  to  the  Association. 

ARTICLE  XIV.—  Power  to  Borrow  Money. 

Section  1. — This  Association,  by  its  Board  of  Directors,  may  borrow 
money  on  the  credit  of  the  Loan  Fund  and  its  securities  tor  the  purpose 
of  supplying  loans  to  shareholders,  but  at  no  time  shall  any  money  be 
borrowed  when  the  receipts  of  the  Loan  Fund  from  other  sources  are 
sufficient  to  meet  the  approved  demand  for  loaiis,  and  repayment  of 
such  borrowed  money  shall  be  made  as  soon  as  the  receipts  of  the  Loan 
Fund,  from  other  sources,  shall  exceed  the  amount  of  approved  appli- 
cations for  loans  on  hand. 

ARTICLE  XV.— Loans  on  Stock. 

Section  1. — Loans  may  be  made  upon  the  stock  of  this  Association 
in  amounts  not  to  exceed  the  Loan  Fund  value  of  such  stock  ;  but  no 
loan  shall  be  made  in  any  sum  less  than  §10.00. 

Sec.  2. — Stock  loans  shall  be  secured  by  promissory  note,  and  the 
assignment  of  the  stock  pledged  as  collateral  security,  to  the  Associa- 
tion, and  shall  be  at  the  same  rates  of  interest  and  premium  as  are 
other  loans  of  the  Association. 

ARTICLE  XVI.—  Loans  on  Real  Estate. 

Section  1. — Loans  on  real  estate  shall  in  no  case  exceed  the  face 
value  of  stock  pledged  as  collaterial  security  for  the  same,  and 
shall  in  every  case  be  evidenced  by  bond  or  promissory  note  and  secured 
by  a  non-negotiable  first  mortgage  on  real  estate  appraised  at  least 
double  the  amount  of  the  loan. 

Sec.  2. — All  notes  shall  bear  interest  at  the  rate  of  six  per  cent,  per 
annum,  and  premium  at  the  rate  of  six  per  cent,  per  annum,  both  pay- 
able in  advance,  monthly,  at  the  same  time  as  instalments  on  stock 
(not  later  than  the  25th  day  of  each  month);  and  in  case  any  pledged 
shares  become  delinquent  as  to  any  payment  of  instalments,  interest 
or  premium  for  a  period  of  three  months,  or  if  taxes,  insurance  or 
any  lien  thereon  be  not  paid  within  thirty  days  from  the  time  the 
same  shall  become  delinquent,  then  the  whole  sum  of  the  note  to  the 
Association  and  the  mortgage  securing  the  same,  shall  immediately  be- 
come due  and  payable,  and  the  Association  may  forthwith  proceed  to 
collect  all  amounts  due  the  Association,  with  costs,  charges  and  at- 
torneys' fees,  and  to  foreclose  such  mortgage  in  such  manner  as  may  be 
deemed  advisable  by  the  Board  of  Directors. 

Sec.  3. — Any  stockholder  desiring  a  loan  shall  make  application 
therefor  on  the  regular  printed  forms  of  the  Association,  and  shall 
furnish  a  complete  abstract  of  title  to  the  property  offered  as  security, 
together  with  an  appraisal  report  of  such  property  from  at  least  two 
disinterested  parties.  If  approved  by  the  Executive  Committee,  such 
loan  shall  be  filed  in  the  regular  order  in  which  the  application  therefor 


660  APPENDIX   III. 

was  received  ;  but  no  application  shall  be  considered  from  any  share- 
holder who  is  in  arrears  to  the  Association. 

Sec.  4. — Loans  for  building  purposes  may  be  advanced  in  instal- 
ments as  the  building  progresses  ;  but  in  all  such  cases  a  bond  against 
mechanics'  and  other  liens  shall  be  bled  with  the  Association. 

Sec.  5. — At  the  completion  of  any  loan  the  abstract  of  title  to  the 
mortgaged  property  shall  be  completed,  showing  the  mortgage  of  this 
Association  to  be  the  first  lien  upon  the  property,  and  such  abstract 
shall  then  be  returned  to  the  Association. 

Sec.  6. — All  buildings  on  property  mortgaged  to  the  Association  shall 
be  kept  fully  insured  for  the  benefit  of  the  Association  at  the  owner's 
expense,  and  all  policies  shall  be  renewed  and  delivered  to  the  Asso- 
ciation at  least  ten  days  before  their  expiration.  If  such  insurance  or 
renewal  be  not  obtained  by  the  owner,  or  his  agent,  it  shall  be  done  by 
the  Association,  and  the  expense  thereof  shall  be  charged  as  a  lien 
against  the  account  of  such  stockholder,  and  be  subject  to  the  pro- 
visions of  Section  2  of  this  Article. 

Sec.  7. — Each  abstract  of  title  to  property  offered  as  security  for  a 
loan  shall  be  accompanied  to  the  Home  Office  by  a  fee  of  §5.00  to  cover 
cost  of  examination  of  same.  A  fee  of  §1.00  shall  be  paid  in  each  case 
for  the  preparation  of  the  papers  necessary  for  closing  the  loan.  Any 
fees  not  applied  to  the  purpose  for  which  paid  shall  be  returned  to  the 
applicant.  Borrowers  shall  meet  incidental  expenses  connected  with 
loans,  such  as  the  preparation  and  completion  of  abstract,  expense  of 
appraisement,  recording  of  mortgage,  etc. 

Sec.  8. — All  notes,  bonds,  mortgages,  insurance  policies  or  securities 
received  by  this  Association  in  the  course  of  its  business  may  be  de- 
posited in  trust  with  one  or  more  responsible  banks  or  trust  companies 
for  the  benefit  of  members,  as  provided  in  Article  XIV.,  Section  1,  and 
Article  VII.,  Section  12. 

Sec.  9. — Upon  the  maturity  of  shares  pledged  as  security  for  a  loan, 
the  face  of  such  shares  shall  be  payable  to  the  shareholder  less  his  in- 
debtedness to  the  Association  ;  and  the  certificate  of  stock  shall  be  sur- 
rendered to  the  Association  and  cancelled,  and  the  Association  shall 
release  its  claims  upon  said  shareholder  and  its  liens  upon  his  property. 

SEC.  10. — Loans  not  delinquent  for  instalments,  interest,  premium 
or  other  payments,  may  be  repaid  at  any  time  in  amounts  of  one  share 
or  any  multiple  thereof,  stopping  interest  and  premium  liability  on  the 
amount  so  repaid. 

ARTICLE  XVII.— Miscellaneous. 

Section  1. — In  case  of  large  accumulation  of  funds  unapplied  for  by 
shareholders  and  not  applicable  to  the  retirement  of  stock  in  Class  E, 
.shares  of  stock  in  Class  D  may  be  retired  upon  sixty  days'  written 
not  ice  to  their  recorded  owners,  at  their  then  book  value,  and  any 
further  surplus  may  be  applied  to  pay  off  money  transferred  from  the 
Guaranty  Fund. 

Sec.  2.— Any  officer  or  director  may  resign  by  filing  written  notice 
of  his  desire  so  to  do  with  the  Secretary;  and  such  resignation  shall 
[feci  from  and  alter  its  acceptance  by  the  Board  of  Directors. 

Sir.  3.     Should    the   Board  of  Directors  deem  ii  advisable,  in  any 

particular  ease,  to  suspend   the  By-Laws,  the 

majority  in  each  case  by  no1   less  than  a  two-thirds  vote  of  the 

entire   board,  and   such    vote  shall    be  placed  on  record  by  ayes  and 

Sec.  I.  -Local  boards  of  this  Association  may  be  organized,  whose 

functions    ball  be  to  aid   the  Borne  Office  in  the  prosecution  of  the 

iciation's  business  in  their  local itj  ;  examine  into  and   report,  upon 

loan    ecuril  Ies,  and  in  all  ways  advance  i  he  best  interests  of  t  he  A.sso- 

on.    The  officers  of  a  Local  Loan  I  may  comprise  a,  President,  Vice- 

Pn    identj  Secretary,  Treasurer,  Appraisers,  and  such  other  Directors 


FORMS.  601 

as  may  seem  for  the  best  interests  of  the  local  work,  and  these  officers 
may,  on  the  organization  of  such  board,  be  appointed  by  the  Special 
Agents  of  the  Association  to  serve  for  one  year,  or  until  their  success- 
ors are  elected  and  qualified.  The  Local  Treasurer  shall,  as  agent  of 
tht1  local  members,  receive  all  payments  due  the  Association,  and  re- 
mit the  same  to  the  Home  Office. 

Sec.  5. — Under  no  circumstances  is  any  agent  authorized  to  make, 
alter  or  waive  contracts  or  forms,  or  to  change  terms  or  conditions  of 
same,  or  to  borrow  money  or  contract  bills  or  debts  in  the  name  of  or 
on  the  credit  of  this  Association,  or  to  bind  the  association  in  any 
manner,  without  specific  authority  in  writing  or  by  telegraph,  from 
the  proper  officers  of  the  Association  at  the  Home  Office.  Agents  shall 
collect  the  full  membership  fees  on  all  stock  solicited  by  them,  and 
report  the  same  promptly  to  the  Home  Office. 

Sec.  6. — These  By-Laws  may  be  amended  or  repealed  by  a  two- 
thirds  vote  of  the  Board  of  Directors  at  a  regular  or  special  meeting 
called  for  that  purpose. 


FORMS. 


BO\D-\01V-]VE«OTIABLE. 

[On  foregoing  By-Laws.] 
No $.. 


Know  all  Men  by  these  Presents,  That 

of  County,  in  the  State  of   Indiana held 

and  firmly  bound  unto  The  Building  and  Loan  Association  of , 

in  the  sum  of Dollars,  which  well  and  truly  to 

be  paid bind heirs,  executors, 

and  administrators,  firmly  by  these  presents. 

Sealed,  signed  and  dated  this day  of 189. . 

The  Conditions  of  this  Obligation  are  Such  :    Whereas,  the  above 

bounden  obligor.  .  ha.  .  subscribed  for share.  .  of  stock  of  the 

face  value  of  $100.00  each  in  said  Association,  for  which  share.,  of 

stock  .  .he.  .  received  from  said  Association  the  sum  of 

Dollars  as  a  loan,  which  shares  of  stock  are  hereby  transferred  as  col- 
lateral  security  for  the   payment  of    this  bond,  with  agreement   on 

part,  that  .  .he. .  will  continue  to  pay  monthly  dues  on  the 

said  share.  .  of  stock  at  the  rate  of  $ per  month  on  each 

share  as  provided  by  Art.  VII.,  Sec.  2,  of  the  By-Laws  of  said  Associa- 
tion, together  with  a  premium  of  six  (6)  per  cent,  per  annum  on  each 
share  of  stock,  and  interest  on  said  loan  at  the  rate  of  six  it',)  per  cent. 
per  annum,  all  to  be  due  and  payable  on  the  first,  and  delinquent  after 
the  twenty-fifth  day  of  each  month,  until  such  shares  mature,  as  pro- 
vided by  the  By-Laws  of  said  Association  :  also  pay  all  lines  and  assess- 
ments on  such  shares  as  provided  for  in  said  By-Laws  :  all  such  pay- 
ments of  money  hereunder  to  be  made  at  the  office  of  the  Association  in 
the  city  of ... 

Now,  If  the  above  bounden  obligor. .  shall  well  and  truly  keep  and 
perform  said  bond  in  every  part,  then  the  above  obligation  shall  be  void 
and  of  no  effect  :  but  if  default  be  made  in  any  part  thereof,  then  the 
above  obligor . .  shall  forfeit  all  the  premiums,  tines,  assessments  and  in- 
terest so  paid  into  said  Association,  and  pay  back  said  loan  less  all 
such  dues  credited  thereon. 

All  payments  of  money  hereby  secured  shall  be  made  without  relief 
from  valuation  or  appraisement  laws  [and  with  ten  per  cent,  attorney's 
fees]. 

[Seal.] 

[Seal.] 

43 


662  APPENDIX   III. 

MORTGAGE-lVO^-BfEGOTIABLE. 

[On  foregoing  By-Laws.] 

This  Indenture  Witnesseth,  That of 

Count  v.  State  of  Indiana,  mortgage. .  and  warrant. .  to  The — Building 

and  Loan  Association  of the  following  real  estate,  situate 

in County,  State  of ,  and  described  as 

follows,  to-wit  : 

This  mortgage  is  executed  as  security  for  the  performance  of  the 
stipulations  and  agreements  of  a  certain  bond  of  even  date  herewith, 

executed  by  said to  said  Association  in  the  sum 

of    Dollars,  which  is  a  just   and    full  loan ;  Conditioned, 

that  said shall  continue  to  pay   monthly  dues 

upon. .. share. .  of  the  capital  stock  of  said  Association,  at  the 

rate  of  $ per  month  on  each  share  of  stock,  as  provided  in  Article 

7,  Section  2,  of  the  By-Laws  of  said  Association,  and  six  (6)  percent, 
premium  per  annum  on  each  share  of  stock,  and  interest  on  said 
loan  at  the  rate  of  six  (6)  per  cent,  per  annum,  all  due  and  payable 
on  the  first  and  delinquent  after  the  twenty-fifth  day  of  each  month, 
until  such  share. .  matui'e,  as  provided  in  said  By-Laws  ;  also  pay  all 
fines  and  assessments  on  said  shares  as  provided  in  said  By-Laws  ;  and 
pay  all  money  herein  provided  for  at  the  office  of  the  Association  in  the 
city  of 

And  it  is  Further  Agreed,  If  said  obligor. .  shall  well  and  truly  keep 
and  perform  said  bond  in  every  part,  then  said  bond  shall  be  void  and 
of  no  effect :  but  if  default  be  made  in  any  part  thereof,  the  above 
obligor.  .  shall  forfeit  all  premiums,  fines,  assessments,  and  interest  so 
paid  said  Association,  and  repay  said  loan,  less  all  dues  credited  thereon. 

The  mortgagor.  .  further  agree.  .  to  keep  such  mortgaged  premises  in 
good  repair,  pay  all  taxes  and  assessments  thereon  as  the  same  become 
due,  and  keep  the  improvements  thereon  insured  to  the  satisfaction  of 

the  Board  of  Directors  of  said  Association  in  the  sum  of  $ for 

the  benefit  of  said  Association,  and  transfer  and  deliver  such  insurance 
to --aid  Association,  to  be  held  as  collateral  security  until  the  loan  is 
fully  paid. 

The  mortgagor,  .further  agree.  ..  That  upon  default  in  any  of  the  con- 
ditions of  this  mortgage  or  of  said  bond,  said  bond  shall,  without 
notice  (notice  being  hereby  expressly  waived),  at  the  option  of  said 
Board  of  Directors,  be  and  become  due  and  collectible,  either  by  suit 
upon  said  bond  or  by  foreclosure  of  this  mortgage  ;  and  upon  such  de- 
fault it  is  agreed  that  the  mortgagee  shall  have  possession  of  said 
premises  during  the  year  of  redemption,  and  a  receiver  may  be  ap- 
pointed to  take  possession  thereof,  which  receivership  shall  continue 
from  date  of  such  d< ■fault  until  said  premises  shall  he  redeemed  accord- 
ing to  law.  or  until  such  \  ear  expires. 

//  is  Further  Agreed,  That  all  payments  herein  mentioned  shall  be 
made  without  relief  from  valuation  and  appraisement  laws  [and 
when  so  required  by  the  Association,  in  the  gold  coin  of  the  United 
8tat< 

This  mortgage  shall  be  binding  upon  the  heirs,  executors,  adminis- 
,i   of  said  mortgagor.,  and  upon  the  successors  of  the 

■  - i ; 1 1  ion. 

In  wit  aeSS  whereof,  said  mortgagor.  .  .  h.  .  .hereunto  set hand  .  . 

....and  H-al....this day  of A.  D.,  189.. 

[Seal. | 

[Seal.] 


FORMS.  663 

State  of ,  |  QC 

County,     Ph< 

Before  me,  a  Notary  Public;  in   and  for  said  county  and  State,  this 

day  of ,  A.  D. ,  189. . ,  personally  came 

and  each  acknowledged  the  execution  of  the  annexed  mortgage. 

Witness  my  hand  and  official  seal. 


Notary  Public. 
[Notary  Public  will  please  see  that  all  names  and  dates  are  correctly 
inserted.] 

MORTGAGE-GENERAL  FORM. 

This  Indenture   Witnesseth,  That of  Marion 

County,  in  the  State  of  Indiana,  in  consideration  of  the  sum  of 

dollars,  to in  hand  paid,  the  receipt  whereof  is  hereby  acknowl- 
edged, mortgage  and  warrant  to  the — Savings  and  Loan  Association 

of County  and  State  of ,  the  following  described 

real  estate,  situate  in County,  and  in  said   State,   to 

wit  : 

and  the  rents,  issues  and  profits  thereof. 

This  mortgage  is  made  to  secure  the  performance  of  the  agreements 
and  stipulations  of  a  certain  bond  of  even  date  herewith,  executed 

by to  said  Association,  in  the  penalty  of 

dollars,  conditioned  for  the  payment .  on  or  before  the. ...    day  of 

,  of  a  loan  of dollai's,  together  with  dues 

on share.  .  of  stock  at   cents,  and  premium 

thereon  at cents  per  share  per  week,  together  with  inter- 
est at  five  per  cent.  (~)°!0)  per  annum,  payable  each  month  :  all  said 
sums  being  payable  in  advance  at  the  office  of  said  Association  in  the 

city  of ,  and  such  fines,  assessments  or  other  charges,  as 

therein  and  in  the  By-Laws  of  said  Association  specified. 

And  the  mortgagor.  .  further  agree.  .  that  if  any  instalments  of  in- 
terest, premium  or  weekly  dues  are  not  paid  when  due.  as  stipulated 

in  said  bond, will  pay  to  said  Association  on  said 

share.  .  of  stock,  during  the  continuance  of  said  default,  fines  as  fol- 
lows:  On  monthly  instalments  of  interest,  twenty-five  cents;  on 
weekly  instalments  of  premium,  five  cents  ;  on  weekly  dues,  five  cents  ; 
which  sums  are  part  of  the  debts  hereby  secured. 

The  mortgagor. .  further  agree. .  that  said  Association  shall  have  the 
right  to  keep  the  buildings  now  standing,  or  hereafter  to  be  erected  on 
said  real  estate,  insured  during  the  existence  of  the  mortgage,  against 
loss  by  fire,  in  an  insurance  company  to  be  approved  by  said  Associa- 
tion, to  an  amount  not  less  than dollars,  payable 

to  said  Association  as  its  interest  may  appear ;  and  the  mortgagor., 
further  agree.,  that  ..he.,  will  pay  all  taxes,  assessments,  insurance, 
liens,  or  charges  of  whatever  nature,  which  may  accrue  on  said  real 
estate,  before  the  same  shall  become  delinquent;  and  if  at  any  time 
lie  shall  fail  to  pay  taxes,  assessments,  insurance,  liens  or  charges  as 
aforesaid,  said  Association  may  pay  the  same,  and  the  moneys  advanced 
for  such  purposes  shall  be  deemed  apart  of  the  debt  hereby  secured, 
and  shall  be  a  lien  upon  the  shares  of  stock  assigned  to  said  Association 
as  security  therefor. 

And  it  is  further  agreed  that  upon  default  in  any  of  the  conditions 
of  this  mortgage  or  of  the  said  bond,  as  respects  the  payment  of  said 
principal  sum,  interest,  premiums,  dues,  fines,  taxes  or  insurance 
money,  or  in  any  other  respect,  and  the  continuation  of  such  default 
for  the  period  of  three  months,  the  principal  sum,  interest,  and  all  other 
moneys  secured  by  this  mortgage,  shall,  at  the  election  of  said  Associa- 


664  APPENDIX   III. 

tion  (notice  of  such  election  being  hereby  expressly  waived) ,  be  and 
become  immediately  due  and  collectible,  either  by  a  suit  on  said  bond 
or  by  the  foreclosure  of  this  mortgage  ;  and  upon  such  default  occur- 
ring" the  said  Association  shall  have  the  right  to  take  possession  of  said 
real  estate  as  mortgagee,  or  to  have  a  receiver  appointed,  for  the  pur- 
pose of  applying  the  rents  and  profits  thereof  to  the  payment  of  the 
mortgage  debt,  interest,  premiums,  dues,  fines,  taxes,  insurance  and 
other  charges,  which  possession  or  receivership  shall  continue  until 
said  real  estate  is  redeemed  or  the  expiration  of  said  redemption  year. 
The  failure  by  the  mortgagee  to  exercise  its  option  to  declare  the 
said  bond  and  this  mortgage  due,  upon  the  occurrence  of  any  sucli 
default,  shall  not  prevent  the  future  exercise  thereof  as  to  the  same  or 
any  subsequent  default. 

And  it  is  further  agreed  that  upon  the  happening  of  any  such  de- 
fault, and  the  election  of  said  Association  to  consider  the  loan  due  and 
payable,  said shares  of  stock  shall  be  cancelled. 

And  the  mortgagors  agree  to  perform  all  the  stipulations  of  this 
mortgage,  and  of  said  bond,  the  terms  of  which  are  hereby  made  part 
of  this  contract,  and  to  pay  all  moneys  payable  under  the  terms  there- 
of, without  relief  from  valuation  or  appraisement  laws,  with  ten  per 
cent,  attorney's  fees. 

In  witness  whereof,  said  mortgagors 

ha. .  hereunto  set hand. .  and  seal.  . .  this day 

of 189.. 

[Seal.] 

[Seal.J 

[Seal.J 


State  op ,  County,  ss.  : 

Be  it  remembered,  that  on  this  day  of A.  D. 

189.  . ,  before  the  undersigned, ,  a  Notary 

Public  in  and  for  the  County  and  State  aforesaid,  duly  commissioned 
and  qualified,  personally  came 

who  are  personally  known  to  me  to  be  the  same  persons  who  executed 
the  foregoing  instrument  of  writing  as  grantors,  and  such  persons  duly 
and  severally  acknowledged  the  execution  of  the  same. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  affixed  my  of- 
ficial seal  the  day  and  year  last  written. 

Notary  Public. 


APPENDIX  IV. 

GENERAL  LEGISLATION  RELATING  ESPECIALLY 
TO  BUILDING  ANI>  LOAN  ASSOCIATIONS. 

The  laws  of  the  various  states  and  territories,  as  reproduced 
in  this  appendix,  are  only  such  general  laws  as  relate  espe- 
cially to,  or  govern  the  organization  and  conduct  of  building 
and  loan  and  similar  associations,  the  general  laws  concern- 
ing corporations  being  <>n>i tied  •  but  it  is  to  be  borne  in  mind 
tin  it  such  general  laivs,  when  not  in  conflict  with  the  statutes 
here pxd>lished,  have  the  same  bearing  upon  building  and  loan 
associations  as  upon  other  corporations,'  and  they  should, 
therefore,  be  consulted  in  rase  information  concerning  the 
laws  governing  corporations  generally  is  desired. 

ALABAMA. 

CODE  OF  1886.— Volume  I. 

Section'  455. — Building  and  loan  associations  doing  business  in  this  state  are 
not  required  to  return,  as  part  of  their  taxable  property,  notes  and  mortgages 
made  and  executed  to  them  by  their  stockholders  or  members  for  purchases, 
loans,  or  advances  on  stock  made  at  the  distribution  of  the  funds  thereof,  if 
the  stockholders  or  members  obtaining  such  purchases,  loans,  or  advances  pan- 
tile taxes  levied  and  assessed  on  the  whole  value  of  the  property  so  mort- 
gaged ;  otherwise,  such  associations  must  return  for  taxation  the  amount  of 
their  capital  held  by  the  stockholders  or  members  on  such  purchases,  loans, 
or  advances,  and  also  the  average  amount  of  money  held  by  them  during  the 
year  preceding  that  for  which  their  assessment  returns  are  made. 

Sec.  1553. — Three  or  more  persons,  associating  as  a  building  and  loan  as- 
sociation, may  become  a  body  politic  and  corporate  in  the  mode,  and  with  the 
powers  and  capacity  in  this  chapter  expressed;  and  such  corporation  may 
continue  for  twenty  vears. 

Sec.  1554. — Such  persons  must  file  in  the  office  of  the  judge  of  probate  of 
the  count  •  in  which  it  is  proposed  the  association  shall  have  its  principal  place 
of  business,  a  declaration  in  writing,  signed  by  each  of  them,  stating — 

[.  The  name  and  style  under  which  it  is  proposed  to  incorporate  such  as- 
sociation. 

2.  The  amount  of  the  capital  stock,  and  the  number  of  shares  into  which  it 
is  divided. 

3.  The  names  and  residences  of  the  associates  or  subscribers  to  the  declara- 
tion, and  the  principal  place  of  business  of  the  corporation. 

4.  The  purposes  of  the  corporation  and  the  nature  of  its  business,  and  such 
other  matters  as  they  may  deem  desirable. 

Sec.  1555. — The  judge  of  probate  must  record  such  declaration,  and  must 
issue  to  the  subscribers,  their  associates  and  successors  a  certificate  of  incor- 

GG5 


QQQ  APPENDIX   IV. 

poration,  under  the  seal  of  his  office,  stating  therein  the  filing  and  record  of 
such  declaration,  the  name  and  style  of  such  corporation,  the  location  or  prin- 
cipal place  of  business  thereof,  and  that  the  subscribers,  their  associates  and 
successors  are  a  body  politic  and  corporate  ;  and  thereafter  such  corporation 
must  be  deemed  duly  organized. 

Sec.  1556. — Such  corporation  has  power — 

1.  To  have  -accession  by  its  corporate  name  for  the  period  expressed  in  the 
declaration,  not  exceeding  twenty  years. 

2.  To  sue  and  be  sued  ;  and,  if  deemed  necessary,  to  have  a  common  seal, 
and  the  same  at  pleasure  to  alter  or  change. 

3.  To  hold,  purchase,  dispose  of,  and  convey  such  real  or  personal  property 
as  may  be  necessary  for  the  uses  and  business  of  the  corporation. 

4.  To  appoint  and  remove,  at  pleasure,  such  officers  and  agents  as  the  busi- 
ness of  the  corporation  may  require,  prescribing  their  duties  and  fixing  their 
compensation  ;  and  to  make  all  needful  rules  and  regulations  and  by-laws  for 
the  transaction  of  its  business,  and  the  management  and  control  of  its  affairs. 

5.  To  levy  monthly  contributions  from  the  shareholders,  not  to  exceed  one 
dollar  per  share  in  any  one  month. 

6.  To  compel  payment,  and  compliance  with  all  lawful  orders  by  fines  and 
forfeitures. 

7.  To  acquire  real  estate,  to  erect  buildings,  and  the  same  to  let  to  any  share- 
holder of  the  corporation,  or  to  sell  to  such  shareholder  on  such  terms"  as  may 
be  fixed  by  its  by-laws. 

8.  To  aid  shareholders  in  the  erection  or  improvement  of  houses  by  loans  of 
the  funds  of  the  association,  on  such  security  as  may  be  fixed  by  the  by-laws. 

9.  When  funds  are  on  hand,  to  lend  the  same  to  any  shareholder  of  the  cor- 
poration, on  such  security,  and  on  such  terms  and  conditions  as  may  be  pre- 
scribed by  the  by-laws  ;  but  the  security  shall  be  a  mortgage  on  real  estate 
sufficient  to  protect  the  association. 

10.  When  deemed  advisable,  or  when  two  or  more  shareholders  desire  to 
borrow  fundson  hand,,  the  association  may  lend  such  funds  to  the  highest 
bidder  ;  and  all  shareholders  shall  have  equal  opportunities  to  bid  under  such 
regulations  as  may  be  prescribed  by  the  by-laws  ;  but  no  shareholder  shall 
borrow  or  purchase  the  loan  of  more  than  two  hundred  dollars  for  each  share 
held  by  him. 

1 1.  To  prescribe  uniform  sales  of  monthly  instalments,  in  which  the  loans 
made  are  to  be  repaid  according  to  the  terms  agreed  on  ;  and  if  loaned  to  the 
highest  bidder,  according  to  the  terms  of  the  purchase. 

12.  To  secure  the  payment  of  instalments  and  loans,  and  a  compliance  with 
all  the  terms  on  which  loans  are  purchased,  by  mortgages  with  power  of  sale 
on  real  estate,  and  the  same  to  foreclose,  in  case  of  default,  by  a  public  sale  to 
the  highest  bidder,  and  by  conveyance  to  the  purchaser  ;  and  such  purchaser 
need  not  be  a  shareholder. 

[3.  In  determining  the  amount  of  the  capital  stock  of  the  association,  each 
share  shall  be  valued  at  fifty  dollars. 

ACTS  OF  r888-'8o,  p.  31. 

SECTION  i. — The    capital    stock    of  building  and   loan    associations,    incor- 

porated  under  the  genera!  laws  of    this  state,  may  be  increased   to   a    sum  not 

ig  two  million  dollars  by  the  vote  ol  the  persons  holding  the  larger 

■  mt  in  value  of    the  capital    stock  at   a  meeting  of  the   stockholders    called 

for  tl  ,  ol  which  meeting  and  the  purpose  for  which  it  is  called, 

thirty  days'  notice  must  be  given  by  publication  for  lour  consecutive  weeks  in 

1   er  published   in   the  town  or  city  in  which  the  corporation  is 

located,  an  hi  meeting  the  persons  holding  the  larger  amount  in  value 

of  the  stock  vote  for  such  increase,  the  proceedings  of  the  meeting  musl  be 

to  writing,  signed  by  the  president  or  other  head  of  the  corporation, 

and  filed  and  recorded  in  the  office  of  the  judge  of  probate  of  the  county  in 

which  the  corporation   has  its  principal  place  of  business.     In  determining 

the  amount  oi  the  im  n  ised  1  ipital    :">  k  ol  all  building  and  loan  associations 

ited  prioi    to   the  code  Oi   [876,   each    share  shall  be  valued  at  not  less 

1 1  v  nor  more  than  fifty  dollars. 

ACTS  OF    [892  '93,  p.  065. 

No  building  and  loan  : ation  shall  pledge,  hypothecate  or 

»nd,  moil  curities  which  said  association  may 


GENERAL    LEGISLATION.  6G7 

obtain  for  money  loaned  or  otherwise.  But  this  section  shall  not  apply  to 
building  and  loan  associations  heretofore  organized  under  the  laws  of  this 
state. 

Sec.  2. — No  building  and  loan  association  organized  under  the  laws  of  any 
other  state,  territory  or  foreign  government,  shall  do  business  in  tins  stale, 
unless  said  association  shall  deposit  and  continually  thereafter  keep  deposited 
in  trust  for  all  of  its  members  and  creditors,  with  some  responsible  trust  com- 
pany or  the  state  treasurer,  mortgages  or  other  securities  received  by  it  in  the 
usual  course  of  its  business  amounting  in  actual  value  to  the  sum  of  fifty 
thousand  (so.oooi  dollars  ;  Provided,  thai  any  such  association  as  may  desire 
may  rile  with  the  state  treasurer  the  certificate  of  the  proper  state  officer  of 
another  state,  or  the  president  and  treasurer  of  some  responsible  trust  com- 
pany or  trustee,  certifying  that  it  has  on  deposit  securities  as  herein  required. 
All  of  the  personal  obligations  of  its  members  taken  in  the  ordinary  course  of 
its  business  and  secured  by  first  mortgage  on  real  estate,  all  dividends,  interest 
and  premiums  which  may  accrue  on  securities  held  in  trust  as  aforesaid,  and 
all  dues  or  monthly  payments  which  may  become  payable  on  stock  pledged 
as  security  for  loans,  the  mortgage  [s]  for  which  are  on  deposit  as  herein 
required,  may  be  collected  and  retained  by  the  association  so  depositing  such 
securities  or  mortgages  so  long  as  such  association  remains  solvent  and  faith- 
fully performs  all  of  its  contracts  with  its  members.  Any  securities  on  depi  >-it 
as  herein  provided  may  from  time  to  time  be  withdrawn  if  others  of  equal 
value  be  substituted  therefor,  but  if  such  company  is  at  the  time  of  withdraw- 
ing such  securities  winding  up  its  business  in  this  slate,  then  such  company 
need  only  substitute  for  such  securities  so  withdrawn  other  securities  equal  in 
value  to  the  amount  of  such  company's  liabilities  in  the  state  at  the  time  of 
such  withdrawal.  Every  building  and  loan  association  organized  in  this  state 
or  any  other  state,  territory  or  foreign  government,  shall  pay  as  a  license  for 
doing  business  in  this  state  the  sum  of  two  hundred  (200)  dollars  per  annum 
in  lieu  of  all  other  licenses  and  taxation,  except  as  hereinafter  provided,  into 
the  office  of  the  state  auditor,  who  shall  deposit  the  same  in  the  state  treasury, 
for  the  use  of  the  state. 

Sec.  3. — When  by  the  laws  of  any  other  state,  territory  or  foreign  govern- 
ment, any  taxes,  fines,  penalties,  license  fees,  deposits  of  money  or  securities, 
or  other  obligations,  requirements  or  prohibitions,  are  imposed  upon  building 
and  loan  associations  of  this  state,  doing  business  in  such  other  slate,  territi  11  v 
or  foreign  government,  or  upon  their  agents  therein,  so  long  as  such  laws 
shall  continue  in  force,  the  same  obligations,  requirements  and  prohibitions 
of  whatever  kind  shall  be  imposed  upon  all  building  and  loan  association 
such  other  state-,  territories  or  foreign  governments  doing  business  in  this 
state,  and  upon  their  agents  here  ;  Provided,  that  this  section  shall  not  apply 
to  building  and  loan  associations  which  have  heretofore  established  branches 
or  agencies  in  this  state. 

Sec.  4. — Building  and  loan  associations,  as  used  in  this  act,  shall  include  all 
corporations,  societies  or  loan  and  investment  companies,  or  all  organizations 
or  associations  doing  a  saving  and  loan  business  upon  the  building  and  loan 
plan. 

Sec.  5. — Any  premiums,  fines  or  stock  heretofore  taken  and  hereafter  taken 
to  represent  premiums  for  loans  made  by  any  building  and  loan  association 
doing  business  in  this  state,  shall  not  be  treated  as  interest,  nor  render  such 
association  amenable  to  the  laws  relating  thereto  ;  but  the  said  premiums, 
fines  and  stock  taken  to  represent  premiums,  shall  be  collected  as  debts  ol 
like  amount  are  now  collected  by  law,  and  according  to  the  terms  and  stipula- 
tions of  the  agreements  or  contract  between  the  association  and  its  members, 
and  in  case  of  any  building  and  loan  association  which  does  not,  under  its 
methods,  charge  premiums  of  the  borrower,  it  shall  not  be  deemed  usury  that 
the  payments  shall  be  required  monthly,  when  the  contract  on  its  face  charges 
only  6  per  cent,  interest. 

Sec.  6. — Every  building  and  loan  association  doing  business  in  this  slate 
shall  be  assessed  for  and  pay  taxes  upon  its  office  fixtures  and  furniture,  and 
all  real  estate  acquired  in  the  usual  course  of  its  business. 

Sec.  7. — All  the  officers  at  the  home  office  of  any  building  and  loan  associa- 
tion governed  by  this  act,  and  doing  business  in  this  state,  who  handle  any  of 
the  funds  of  such  associations,  shall  give  sufficient  bonds  for  the  faithful  per- 
formance of  their  duties  as  the  board  of  directors  may  require,  and  no  such 
officer  shall  be  deemed  qualified  to  enter  upon  the  discharge  of  the  duties  ,  f 
his  office  until  his  bond  is  approved  by  the  hoard  of  directors. 

Sec.  8. — This  act  shall  not  apply  to  any  building  and  loan  association  organ- 


668  APPENDIX    IV. 

ized   under  the  laws  of  this  state  which  confines  its  loaning  and   business 
operations  wholly  to  its  county. 

Sec.  9.— Any  building  and  loan  association  doing  business  in  this  state  with- 
out having  first  complied  with  the  provisions  of  this  act,  shall  be  lined  not  less 
than  one  hundred  (100)  dollars,  and  not  more  than  five  hundred  (-00)  dollars, 
to  be  recovered  by  an  action  in  the  name  of  the  state,  and  on  collection  paid 
into  the  state  treasury  for  the  use  of  the  state;  Provided,  that  building  and 
loan  associations  organized  in  other  states  and  territories  having  heretofore 
transacted  business  in  this  state,  and  not  desiring  to  comply  with  the  provi- 
sions of  this  act,  shall  have  the  right  to  wind  up  their  business  and  fulfil  their 
contracts  with  citizens  of  this  state  through  their  authorized  agents,  without 
being  subject  to  the  penalties  herein  provided. 

Sec.  10.— All  building  and  loan  associations  organized  in  other  states  and 
territories  and  doing  business  in  this  state  before  the  passage  and  approval  of 
this  act,  shall  have  until  the  1st  day  of  June,  1^93,  to  comply  with  the  provi- 
sions of  this  act 

ACTS  1896-7,  p.  S45. 

Section  i. — The  name  "  Building  and  Loan  Association  "  as  used  in  this 
act  shall  include  all  corporations,  societies,  organizations  or  associations  doing 
business  in  this  state,  under  a  building  and  loan  charter  or  engaged  in  a 
building  and  loan  business. 

Sec.  2.— On  or  before  the  first  day  of  March  in  each  year,  every  building 
and  loan  association  doing  business  in  this  state,  and  governed  by  this  act, 
shall  hie  with  the  auditor  of  the  state,  a  detailed  report  of  the  affairs  and 
operations  for  the  vear  ending  the  thirtv-first  of  December,  immediately  j  re- 
ceding, and  such  report  shall  be  verified  under  oath  by  the  president  and 
secretary,  or  by  three  directors  of  the  association,  and  shall  contain  answers 
to  the  following  questions  : 

1.  The  date  when  the  association  was  incorporated  and  the  par  value  of 
each  share  of  stock. 

2.  Number  of  shares  sold  during  the  vear. 

s.   Number  of  shares  cancelled  or  withdrawn  during  the  year. 

4.  Number  of  shares  in  force  at  the  end  of  the  vear. 

5.  A  detailed  statement  of  total  receipts  and  disbursements,  showing  from 
whal  source  received,  and  to  what  source  applied. 

I     A  statement  of  the  assets  and  liabilities  at  the  end  of  the  year. 
The  following  items  shall  also  constitute  the  assets  of  a  building  and  loan 
association. 

1.  Money  actually  loaned. 

2.  Accrued  interest  and  premiums,  fines  and  forfeitures. 

3.  Furniture  and  fixtures. 

4.  Real  estate. 

5.  T.ixes  and  insurance  advanced. 

6.  Solvent  credits. 

7.  Such  other  legitimate  assets  as  the  association  may  acquire  in  the  course 
of  the  business. 

S.  Cash  on  hand,  as  shown  by  books  and  official  certificate  of  designated 
depositories. 

(,.   File  a  copy  of  its  by-laws  and   published   literature,  which   shall   be  free 

;ml  noi  misleading  in  it--  nature. 
SEC.   3.— Each  association  -hall  pay  to  the  auditor  ol  the  -late  ten  dollars  on 
the  filing  of  each  report.     It  an  association  shall  wilfully  fail  to  furnish  to 
a  iditor  of  the  state  anv  report  required  by  tin-  act,  at  the  lime  so  re- 
ted,  11  -hall,  in  the  dis<  retion  of  the  auditor,  forfeit  the  sum  ol  twenty-five 
per  da    foi  every  day  such  reporl  shall  be  delayed  or  withheld,  and 

theaudil f  tl  nay  maintain  an  action  in  his  name  as  such  aui 

h  1  enalty,  and   the  same  shall  be  paid   into  the  treasury  of  the 
r  tin   benefit  oi  the  state. 

1  henon  residenl  building  and  loan  associations  having  not  less  than 

undn  -:  thou  and  dollars  in  assets  shall,  before  doing  any  busines     in 

this  state,  obtain  a  lii  n  the  auditor.  In-  complying  with  (he  following. 

01    ition     hall  file  with  the  auditor  a  certified  copy  of  the  charter 

ii,  and  by-laws,  showing  its  mode  of  business. 

...  I-,:  d  report  of  its  actual  condition  as  provided  for  in  section  2  of 

a  iditor  twenty-five  dollars  as  a  tee  lor  filing  the  papers  men- 

■  1  ii  .ii. 


GENERAL    LEGISLATION.  669 

Sec.  5. — Such  associations  may,  by  their  by-laws,  impose  fines  and  penalties 
upon  their  members  for  default  or  delay  in  payment,  when  same  arc  due,  of 
instalments  upon  their  loans,  the  interest,  premium  and  charges  thereon,  and 
upon  its  shares  of  stock  of  such  members,  and  the  same  maybe  secured  and 
collected  by  mortgage,  in  addition  to  the  amounf  ol  interest,  premium  or  other 
charges  allowed  by  law,  but  such  lines  shall  not  exceed  two  percent,  per 
1111  mill  1  »i  Mich  arrearages. 

Sec.  6.— Upon  foreclosure  or  sale  under  power  given  in  any  mortgage  of 
land  by  a  member  to  such  associations  it  shall  credit,  as  to  the  dale  made, 
upon  the  entire  debt  claimed  by  the  association  all  payments  made  upon  Mich 
debt,  whether  of  principal,  premiums  or  interest,  and  the  stock  pledged  for 
such  loan  shall  be  credited  on  the  said  loan  at  the  actual  value,  and  such  stock 
thereby  cancelled  ;  and  upon  forfeiture  of  sto  '.  oi  a  member  borrowing  from 
such  association,  upon  security  of  his  stock  only,  such  loan  shall  be  credited 
with  the  actual  value  ol  such  stock. 

Sec.  7. — All  shares  of  stock  in  said  associations,  upon  which  all  dues  and 
charges  for  one  year  or  more  have  been  paid,  shall  have  a  definite  withdrawal 
value,  which  shall  be  set  out  in  the  by-laws  of  said  association  and  shall  not 
be  less  than  the  whole  amount  paid  in  upon  such  share,  with  not  less  than 
eight  per  cent,  per  annum  thereon  for  the  average  time  such  dues  have  been 
paid,  less  fines  and  penalties  and  a  proportionate  share  of  expenses  and  losses 
sustained. 

Sec.  8. — The  premium  to  be  charged  upon  any  loan  must  be  fixed  by  t  he- 
by-law,  but  such  premium  and  the  interest  on  the  loan  taken  together  shall 
not  exceed  one  per  cent,  per  month  on  the  amount  actually  loaned  or  advanced. 

SEC.  9. — No  officer,  director  or  agent  of  any  foreign  building  and  loan 
association,  shall  in  this  state  solicit  subscription  of  stock  to  such  association, 
or  sell,  or  knowingly  cause  to  be  sold,  or  issued  to  a  resident  of  this  state,  any 
stock  of  an  association,  until  the  said  association  has  complied  with  the  provi- 
sions of  the  preceding  sections.  Any  violation  hereof  shall  be  deemed  a 
misdemeanor,  and  upon  conviction  shall  be  punished  by  a  fine  of  not  less  than 
ten  dollars  nor  more  than  fifty  dollars. 

Sec  10. — Building  and  loan  associations  doing  business  in  this  state  are  not 
required  to  return  as  part  of  their  taxable  property,  notes  and  mortgages  made 
and  executed  to  them  by  their  stockholders  or  members,  for  purchases,  1 
or  advances  on  stock  made  at  the  distribution  of  the  funds  thereof,  if  the  stock- 
holders or  members  obtaining  such  purchases,  loans  or  advances  pay  the  tax 
levied  and  assessed  on  the  whole  value  of  the  property  so  mortgaged  ; 
otherwise  such  associations  must  return  for  taxation  the  amount  of  their 
capital  held  by  stockholders  or  members  on  such  purchases,  loans  or 
advances  and  also  the  average  amount  of  money  held  by  them  during  the 
year  preceding  that  for  which  their  assessment  returns  are  made. 

Approved  February  I2th,  [897. 

ARIZONA. 

ACTS  1897,  p.  35. 

Section  i.— Hereafter  no  building  and  loan  corporation,  company  or  asso- 
ciation organized  under  the  laws  of  this  or  any  other  state,  territory  or  foreign 
country  shall  be  permitted  to  do  or  transact  any  kind  of  building  and  loan 
business  in  this  territory,  until  such  corporation,  company  or  association,  in 
addition  to  other  requirements  of  law,  shall  have  made,  executed  and  de- 
posited with  the  territorial  treasurer  a  good  and  sufficient  bond,  with  two 
or  more  sureties,  in  the  sum  of  fifteen  thousand  dollars,  for  the  benefit  and 
security  of  its  stockholders  residing  in  this  Territory. 

Sec.  2. — The  bond  mentioned  in  section  1  of  this  act  must  be  in  form  joint 
and  several,  payable  to  the  Territory  of  Arizona  and  signed  by  the  president, 
secretary,  Ire  isureror  managing  agent  of  such  corporation,  company  or  asso- 
ciation, and  at  least  two  sureties  ;  conditioned  that  in  cases  wherein  judgment 
has  been  rendered  against  such  corporation,  company  or  association,  and  a 
supersedeas  bond  on  appeal  has  not  been  given  by  the  principal,  as  required 
by  law.  or  in  case  the  supersedeas  bond  should  for  any  cause  tail  or  be< 
insufficient,  that  the  principal,  within  thirty  davs  after  such  failure  or  rendition 
of  any  judgment  against  it.  or  them,  as  the  case  may  be.  pay  or  cause  to  be 
paid,  all  such  judgments  (not  exceeding  fifteen  thousand  dollars)  recovered 
against  it,  or  them,  as  the  case  may  be,  in  any  court  of  competent  jurisdiction 
in   this  territory,  or  any  liability  incurred  by  virtue  of  any  oi  its  stock. 

Sec.  3. — Every  such  bond  shall  be  in  force  ami  binding  on  the  principal  and 
sureties',  for  the  faithful  compliance  of  the  principal  with  the  requirements  of 
this  act,  and  for  the  use  and  benefit  of  any  and  all  persons,  corporations, 


670  APPENDIX   IV. 

companies,  and  associations,  who  may  have  any  judgment  against  the  prin- 
cipal ;  and  in  cases  where  a  supersedeas  bond  on  appeal  has  not  been  given, 
as  required  by  law,  and  any  person,  corporation, company  or  association,  who 
may  have  any  such  judgment  against  the  principal  recovered  on  a  certificate 
oi  stock  and  a  supersedeas  bond  has  not  been  given,  may,  thirty  days  after  the 
entry  of  such  judgment,  bring  suit  on  such  bond  in  his  or  its  name,  as  the 
case  may  be,  without  an  assignment  thereof,  in  any  court  of  competent  juris- 
diction in  this  territory. 

Sec.  4.— No  bond  mentioned  in  this  act  shall  be  void  on  account  of  the  hi  it 
recovery  thereon  ;  but  suits  may  afterwards  be  brought  on  said  bond  from 
time  to  time  by  any  person,  corporation,  company  or  association  aggrieved, 
and  who  come  under  the  provisions  of  this  act,  and  recover  judgment  there- 
on, until  the  whole  penalty  of  the  bond  shall  be  exhausted. 

Sec.  5 — The  sureties  on  the  bond  must  severally  justify  before  an  officer 
authorized  to  administer  oaths,  as  follows:     That   he"  is   a  resident   and 
holder   or  householder  within   this  territory    and  is  worth  the  am 
which  he  becomes  surety,  over  and  above  all  just  debts  and  liabilities,  111 
property  situated   within  "this  territory,  exclusive  of  property  exempt    from 
execution  and  forced  sale. 

Sec.  6. — The  sureties  may  become  severally  liable  for  portions  of  not  i 
than  one  thousand  dollars,  "making  in  the  aggregate  at  least  two  sureties  for 
the  whole  amount  of  the  bond. 

Sec.  7.— It  shall  be  the  dutv  of  the  territorial  treasurer  to  approve  all  such 
bonds  and  when  in  his  judgment  any  bond  made  under  the  provisions  of  this 
act,  or  the  sureties  thereon,  for  any  cause  becomes  insufficient,  to  require  the 
principal  to  furnish  a  new  bond. 

Sec.  8.— Such  building  and  loan  corporation,  company  or  association  may 
in  lieu  of  the  bond  mentioned  in  section  I  of  this  act,  deposit  with  the 
ritorial  treasurer,  territorial  funding   bonds,  or  some   other  int 
valid  bonds,  of  the  territory  of  Arizona,  or  any  of  the  counties  ther 
of  their  first  mortgages — or  give  security  through  any  reliable  security 
pany — to  the  amount  of  fifteen  thousand  dollars,  to  beheld  in  trust  for  the 
benefit  of  local  stockholders  of  said  building  and  loan  corporation,  com]  any 
or  association. 

The  territorial  treasurer  must,  upon  receipt  of  such  securities,  forth 
deposit  the  same   in  the  territorial  treasury,  in  a  package  marked  with  the 
name  of  the  corporation,  company  or  association  from  whom  received,  \. 
said  securities  must  remain  as  security  for  stockholders  of  tl  it  ion, 

association  to  which  they  respectively  belong;  but  so  long  as 
the  corpi  nation,  company  or  association  remains  solvent,  he  must  permit  such 

m,  company  or  association  to  collect  the  interests   or  dividen 
the  securities  so  d,  and  may  from  time  to  time  withdraw  any  of  said 

securities,  on  depositing  the  value  thereof  in  money  or  other  securities  of  the 
same    kind   and   value   as    those    mentioned    in    this   act,  instead    of   tl 
withdrawn. 

Sec.  9. — If  for  any  cause  the  securities  should  at  anytime,  in   the  judgment 

of   the    territorial   'treasurer,   become  insufficient,  he  may  require  such  cor- 

inyoi  association  to  deposit  additional  securities  to  make  up 

1  ij  fifteen  thousand  dollars. 

Sec.  [O. — Any  corporation,  company   or  association  mentioned  in   this  act, 

iness  and  withdraw  the  securities  so  deposited,  must 

furnish    il,  1  1.1I  treasurer  with  satisfactory  proof  that  all  certificates  of 

'.  have  been  called  in    and    satisfactorily  settled  and  adjusted,  and  that 

nits  pendir  n,  and  that  there  are  no  unsatis- 

i,  nl     igainst  it  or  them,  as  the  case  may  be. 

11       \i,\    |udgmen1  creditor  who  may  have  any  unsatisfied  judgment 

i  on  a   certificate  ol     tock   against   such   corporation,  company  or 

on,  ai  deas  bond  on  appeal  has  not  been  given  as  required 

.  thin  thirty  days  from  the  dat<  oi    aid  judgment  have  execution 

m  sufficienl  >  to  satisfy  said  judgment. 

\  ,    pei  on  or  agent  01  otherwi  e  who  shall  solicit  investments  or 

in  this  territ  u  v  f<  r  or  1  »n  a<  1  ounl  1  if 

any  fori  ign  building  and  loan  •  01  poration,  <  ompany  or  association,  which  has 

not  com    lied  with  the  pro      i    n    0   Lhi    act,  shall  be  guilty  ol   a  misdemeanor, 

ction  thereol     h  >:|  bi    1 hed  by  a  fine  not  exceeding  Two 

Hundred  Dolla  than  Fifty  Dollars  or  by  imprisonment  in  a  County 

[ail  no  month 

App 1.  the  fourth  day  ol    Mai  1  h,  V  I  >.,  1897. 


GENERAL   LEGISLATION.  671 

ARKANSAS. 

DIGEST  OF  1894. 

Section  6461. — The  shares  of  stocks  of  mutual  loan  and  building  associa- 
tions shall  be  assessed  at  their  cash  value,  but  only  the  unredeemed  shares  of 
SUCh  stock,  or  those  not  transferred  to  the  association,  shall  be  taxed,  and  such 
unredeemed  shares  shall  be  listed  in  the  name  of  the  individual  owners 
thereof. 

Sec.  6462  (as  amended  by  section  17  of  act  02,  acts  of  1887) — .  .  .  . 
Mutual  loan  [and]  building'.  .  .  companies,  corporations  or  associations, 
incorporated  under  the  laws  of  this  state,  or  under  the  laws  ol  any 
other  state,  and  doing  business  in  this  state,  ...  in  addition  to  the 
other  property  required  by  this  act  to  be  listed,  shall,  through  their  president, 
secretary,  principal  accounting  officer  or  agent,  annually,  during  the  month 
of  July,  make  out  and  deliver  to  the  assessor  of  the  county  where  said  com- 
pany or  corporation  is  located  or  doing  business  a  sworn  statement  of  the 
capital  stock,  setting  forth  particularly  : 

1.  The  name  and  the  location  of  the  company  or  association. 

2.  The  amount  of  capital  stock  authorized,  and  the  number  of  shares  into 
which  such  capital  stock  is  divided. 

3.  The  amount  of  capital  stock  paid  up,  its  market  value,  and,  if  no  market 
value,  then  the  actual  value  of  the  shares  of  stock. 

4.  The  total  amount  of  all  the  indebtedness,  except  indebtedness  for  current 
expenses,  excluding  from  such  indebtedness  the  amount  paid  for  the  ]  ur<  hase 
or  improvement  of  the  property. 

5.  True  valuation  of  all  tangible  property  belonging  to  such  company  or 
corporation  ;  such  schedule  shall  he  made  in  conformity  to  such  instructions 
and  tonus  as  may  be  prescribed  by  the  auditor  of  public  accounts. 

SEC.  6462.  1  as  amended  by  section  :,N  of  act  92,  acts  of  1887).— The  assessor 
shall,  annually,  at  least  ten  days  before  the  thirtieth  day  of  June,  deliver  to  the 
president,  secretary,  accounting  officer  or  agent  of  any  such  c<  nip, my,  cor- 
poration or  association  located  in  or  doing  business  in  such  county  a  notice  in 
writing  to  return  such  schedule  by  the  thirty-first  day  of  July  next  ensuing. 
Any  president,  secretary,  principal  accounting  officer  or  agent,  of  any  such 
companies  or  corporations,  upon  whom  such  notice  shall  have  been  served, 
wilfully  neglecting  or  refusing  to  make  such  return  by  the  thirty-first  day  of 
July  next  ensuing,  after  the  delivery  of  said  notice,  shall  be  guilty  of  a  mis- 
demeanor, and,  upon  conviction,  shall  be  fined  in  any  sum  not  exceeding 
cue  hundred  dollars,  or  imprisoned  not  exceeding  three  months,  or  both,  and 
the  assess,,t-  shall,  from  the  best  information  he  can  obtain,  make  out  and 
enter  upon  the  proper  assessment  roll  a  list,  with  the  valuation,  of  all 
tangible  and  intangible  property  belonging  to  such  defaulting  company  or 
corporation  subject  to  taxation  by  the  provisions  of  this  act,  with  fiftyper  cent. 
penalty. 

CALIFORNIA. 

DEERING'S  CODES  AND  STATUTES  OF  1885. 

Volume  II. — Civil  Code. 

[Note. — Sections  639  to  647  inclusive,  following,  have  been  repealed  by 
chapter  174  of  the  acts  of  1891  except  so  far  as  the  said  sections  relate  to  and 
govern  building  and  loan  associations  existing  prior  to  the  passage  ol  said 
chapter.] 

Section.  639. — Corporations  organized  for  the  erection  of  buildings  and 
making  other  improvements  on  real  property  may  raise  funds  in  shares  not 
exceeding  two  hundred  dollars  each,  payable  in  periodical  instalments.  Such 
bodies  are  known  as  land  and  building  corporations,  and  may  be  organized 
with  or  without  a  capital  stock. 

Sec.  640.— Any  such  corporation  may  borrow  money  for  the  purpose  of 
carrying  out  its  objects,  and  may  give  as  security  therefor  its  shares  or  mort- 
gage upon  its  real  estate. 

Sec  641. — Any  such  corporation  may  purchase  real  estate  and  erect  build- 
ings for  its  members,  and  make  loans  to  its  members  for  the  1  1 
them  in  acquiring  and  improving  real  estate.     Such  loan  musl  in  a 
secured  on  such  real  estate. 

Sec.  642. — Such  corporation  may  insure  in  some  lite  insurance  company 
incorporated  under  the  laws  of  the  state,  the  lives  of  its  members  and  debtors. 


672  APPENDIX   IV. 

In  case  of  the  death  of  a  debtor  or  member  so  insured,  the  amount  recovered 
on  his  policy  must  be  applied  to  extinguish  the  indebtedness,  including  the 
premium  paid,  and  the  residue,  if  any,  must  be  paid  to  the  legal  representa- 
tives of  the  decedent. 

Sec.  643. — Any  such  corporation  may  purchase,  hold,  and  convey  real  estate 
as  follows  : 

1.  The  lot  and  building  in  which  the  business  of  the  corporation  is  carried 
on,  the  cost  of  which  must  not  exceed  twenty  thousand  dollars  ; 

2.  Such  as  may  from  time  to  time  be  necessary  to  supply  the  wants  of  its 
members,  the  cost  of  which,  held  unallotted  to  the  members  thereof  at  any 
one  time,  must  not  exceed  the  sum  of  one  hundred  thousand  dollars  ; 

3.  Such  as  shall  have  been  mortgaged,  pledged,  or  conveyed  to  it  in  trust,  to 
secure  money  loaned  or  to  secure  the  purchase  price  thereof  in  pursuance  of 
the  regular  business  of  the  corporation. 

Sec.  644. — The  by-laws  of  such  corporations  must  specify  the  amount  of  the 
periodical  subscriptions  or  payments  to  be  made  by  each  member,  the  time 
and  manner  in  which  such  payments  are  to  be  made  ;  the  lines  and  forfeitures 
for  default ;  the  time  and  manner  of  election  of  director-,  and  other  officers, 
and  their  terms  of  office  ;  the  manner  in  which  the  real  estate  may  be  distrib- 
uted, allotted,  or  sold  to  its  members  ;  the  terms  and  conditions  upon  which 
loans  may  be  made  to  its  members  and  by  them  repaid  to  the  corporation  ; 
the  manner  in  which  a  person  may  become  and  cease  to  be  a  member  ;  the 
conditions  on  which  members  may  withdraw  from  the  corporation,  and  the 
provisions  for  the  payment  to  withdrawing  members  of  the  sums  of  money 
due  to  them  arising  from  subscriptions  or  payments,  and  the  proportion  of  the 
profits  such  withdrawing  members  may  receive  on  withdrawal. 

Sec.  645. — The  secretary  of  any  such  corporation  must,  once  in  each  year 
during  the  existence  of  the  corporation,  prepare  a  full  and  explicit  statement 
of  the  financial  affairs  thereof,  comprising  a  balance  sheet,  statements  of 
receipts  and  expenditures,  profit  and  loss,  and  assets  and  liabilities,  which 
must  be  audited  and  verified  by  two  competent  persons  (not  directors),  elected 
by  the  general  body  of  shareholders,  and  be  countersigned  by  the  president 
and  secretary.  A  copy  of  such  statement  must  be  printed  and  circulated 
among  the  members,  and  appear  immediately  after  the  annual  meeting  of  the 
corporation  daily  at  least  one  week,  or  weekly  at  least  four  weeks,  in  one  or 
ni'  ire  newspapers  published  at  the  place  of  the  principal  business  of  the 
corporatii  in. 

Sec.  647. — Any  two  or  more  such  corporations  may  unite  and  become  incor- 
porated in  one  body,  with  or  without  any  dissolution  or  division  of  the  funds 
h  a  irpi  >ration,<  >r  either  of  them  ;  or  any  such  corporation  may  transfer  its 
igements,  funds,  and  property  to  any  other  such  corporation,  upon  such 
terms  as  may  be  agreed  upon  by  two-thirds  of  the  members  of  each  ol  such 
bodies  present  at  general  meetings  of  the  members,  convened  for  the  purpose 
by  notice,  stating  the  object  of  the  meeting,  sent  through  the  postoffice  to 
every  member,  and  by  general  notice,  appearing  daily  at  least  one  week,  or 
weekly  at  least  two  weeks,  in  some  newspaper  published  at  the  place  of  the 
principal  business  of  the  corporation  ;  but  no  such  transfer  can  prejudice  any 
right  oi  .in-;  creditor  of  either  corporation. 

Si  led  bv  chapter   [74,  acts  of  iSoi  1.— Corporations  may  be  formed 

subjei  !  to  the  provisions  of  this  title,  and  with  all  the  rights,  duties,  and 
ipecified.  Such  corporations  shall  be  known  as  mutual  build- 
ing and  l  iations,  and  the  words  "mutual  building  and  loan  asso- 
ciation" shall  form  part  of  the  name  of  every  such  corporation.  The  articles 
of  incorporation,  in  setting  forth  the  purposes  for  which  the  corporation  is 
formed,  shall  slate  that  it  is  formed  to  encourage  industry,  frugality,  home 
ivings  among  the  stockholders ;  the  accumulation  ol  savings; 
of  the  funds  so  accumulated,  with  the  profits 
earnings;  and  the  repa  to  each  itockholder  of  bis  savings  and 
■  ,  when  they  have  a<  >  umulated  to  a  certain  sum,  or  at  any  time  when  he 
shall  1  is  pro  ided  in  the  by-laws,  or  when  the  corporation 
ime  ;  and  shall  also  state  that  it  is  formed  for  all  the 

pei   ■  ■  1  in  1  in    title. 

1  Ided  by  <  hapter  171.  a<  ts  of  t8oi).— The  capital  stock  ol  sui  h  cor- 

fiall  be  paid  in  by  the  stockholders  in  regular,  equal,  periodical 

I    timi     and  in    uch  amounts  as  shall  be   provided    in  the 

Such  hall  be  called  dues.     And  al  or  before  a 

ntheb  -laws,  each  stockholder  shall  pay  to  the  corporation 

heldb    liim,  such  an  amount  of  dues  as  the  by-laws, 


GENERAL   LEGISLATION.  673 

shall  provide  ;  and  the  payment  of  dues  shall  so  continue  on  each  share  of 
stock  issued  till  it  reaches  its  matured  value,  or  is  withdrawn,  cancelled,  or 
forfeited.  The  capital  stock  shall  consist  of  such  accumulated  dues,  together 
with  the  earnings  and  profits  oi  the  corporation,  and  shall  in  no  case  exceed 
two  million  dollars,  except  as  to  corporations  now  existing.  It  shall  be 
divided  into  shares  of  matured  or  par  value  oi  one  hundred  dollars,  or  two 
hundred  dollars  each,  as  shall  be  provided  in  the  articles  of  incorporation  and 
fixed  by  the  by-laws.  Certificates  of  stock  shall  be  issued  to  each  stockholder 
on  the  first  payment  of  dues  by  him.  The  shares  shall  be  issued  in  yearly, 
half-yearly,  or  quarterly  series,  except  in  corporations  now  existing,  in  such 
amounts  iii  each  series,  and  at  such  times,  as  shall  be  determined  by  the  board 
of  directors.  No  share  of  a  prior  series  shall  be  issued  alter  the  issuing 
of  shares  in  a  new  series.  Shares  which  have  not  been  pledged  as  a  security 
for  the  repayments  of  a  loan  shall  be  called  free  shares.  Shares  that  have 
been  so  pledged  shall  be  called  pledged  shares.  All  stock  matured  and  sur- 
renderee! or  cancelled  in  any  series  shall  become  the  property  of  the  corpora- 
tion, and  may  be  issued  in  any  subsequent  series.  Payment  of  dues  on 
shares  of  stock  in  each  series  shall  commence  from  the  time  that  shares 
began  to  be  issued  in  such  series.  Any  such  corporation  shall  have  power  by 
its  by-laws  to  impose  and  collect  a  fine  from  each  stockholder  not  exceeding 
ten  per  cent,  of  the  defaulted  amount,  for  every  neglect  or  refusal  to  make  his 
payments  of  dues,  or  premium,  or  interest,  when  due,  and  to  impose  and 
collect  a  like  fine  successively  on  every  regular  pay-day  during  such  default. 
Every  such  corporation  hereafter  formed  shall  also  have  power  to  charge  an 
entrance  fee  upon  each  share  of  stock  issued,  not  exceeding  ten  cents  on  each 
share  and  may  also  charge  a  transfer  fee  not  exceeding  ten  cents  on  each  share, 
all  of  which  shall  be  paid  into  the  treasury  and  accounted  for  as  all  other  funds 
of  the  association;  Provided,  that  building  and  loan  associations  heretofore- 
incorporated  may  continue  to  charge  and  dispose  of  such  entrance  and  trans- 
fer fees  as  are  prescribed  by  the  by-laws  of  such  corporation.  Payment  of 
dues  or  interest  may  be  made  in  advance,  but  no  association  shall  allow 
interest  on  such  advance  payments  at  a  greater  rate  than  six  per  cent,  per 
annum,  nor  for  a  longer  period  than  one  year. 

Sec.  635  (added  by  chapter  174,  acts  of  1891). — The  directors  may,  at  their 
discretion,  under  the  regulations  prescribed  in  their  by-laws,  retire  the  free 
shares  of  any  series  of  stock,  at  any  time  after  four  years  from  the  date  of  their 
issue,  by  enforcing  the  withdrawal  of  the  same  ;  but  whenever  there  shall 
remain  in  any  series,  at  the  expiration  of  five  years  after  the  date  of  its  issue, 
an  excess  above  one  hundred  free  shares  of  the  par  value  of  two  hundred  dol- 
lars each,  or  two  hundred  free  shares  of  the  par  value  of  one  hundred  dollars 
each,  then  it  shall  be  the  duty  of  the  directors  to  retire  annually  twenty-five 
per  centum  of  such  excess  existing  at  said  expiration  of  five  years  after  the 
date  of  its  issue,  so  that  no  more  than  one  hundred  free  shares  shall  remain  in 
such  series  at  the  expiration  of  nine  years  fromthedate  of  its  issue  ;  Provided, 
that  no  more  than  one-half  of  the  monthly  receipts  be  used  for  that  purpose  ; 
and  thereafter  the  directors  may,  in  their  discretion,  retire  such  other  free 
shares  as  they  consider  to  the  best  interest  of  the  association  to  retire  ;  Pro- 
vided, that  whenever,  under  the  provisions  of  this  section,  the  withdrawal  of 
shares  is  to  be  enforced,  the  shares  to  be  retired  shall  be  determined  by  lot, 
drawn  from  all  free  shares  in  the  series,  as  shall  be  regulated  by  the  by-laws, 
and  the  holders  thereof  shall  be  paid  the  amount  actually  paid  in,  and  the  full 
amount  of  earnings  at  the  date  of  last  apportionment  of  profits. 

Sec.  636  (added  by  chapter  174,  acts  of  1891). — When  the  stock  in  any  series 
shall  have  reached  its  matured  value,  payment  of  dues  thereon  shall  cease, 
and  all  of  the  stockholders  in  such  series  who  have  borrowed  from  the 
association  shall  be  entitled  to  have  their  securities  returned  to  them,  and  a 
satisfaction  of  the  mortgages  made  by  them  to  the  association  ;  and  the 
holders  of  free  shares  of  stock  in  such  series  shall  be  paid  out  of  the  funds  of 
the  association  the  matured  value  thereof,  with  such  rate  of  interest  as  shall 
be  determined  by  the  by-laws,  from  the  time  the  board  of  directors  shall 
declare  such  share  to  have  matured  until  paid  ;  but  at  no  time  shall  more  than 
one-third  of  the  receipts  of  the  association  be  applicable  to  the  payment  of 
matured  shares,  without  the  consent  of  the  board  of  directors.  The  order  of 
the  payment  of  the  matured  shares  shall  be  determined  by  the  by-laws. 

Sec.  637  (added  by  chapter  174,  acts  of  1801). — The  moneys  in  the  hands  of 
the  treasurer,  and  such  sums  as  may  be  borrowed  by  the  corporation  for  the 
purpose,  shall  be  loaned  out  in  open  meeting  to  the  member  who  shall  bid  the 
highest  premium,  or  may  be  loaned  at  such  premium  as  may  be  fixed,  from 


074  APPENDIX   IV. 

time  to  time,  by  the  board  of  directors  ;  and  the  premium  may  be  deducted 
from  the  amount  of  the  loan,  or  such  proportion  may  be  deducted  as  the 
by-laws  shall  provide,  and  in  that  case  the  balance  of  said  premium  shall  be 
pavable  in  such  instalments  as  the  by-laws  shall  determine  ;  Provided,  how- 
.  that  where  the  premium  is  payable  in  instalments,  the  number  of  instal- 
ments into  which  the  same  is  divided  shall  be  uniformly  applicable  to  all  loans 
made  by  the  corporation,  and  shall  be  payable  at  the  times  and  in  the  manner 
as  provided  in  the  by-laws  ;  And  provided  further,  that  in  no  case  shall  the 
amount  loaned  exceed  the  matured  value  of  the  shares  pledged  to  secure  the 
loan. 

Sec.  638  (as  amended  acts  1897,  p.  30). — The  rate  of  interest  on  all  loans 
may  be  fixed  by  the  by-laws,  but  in  case  the  by-laws  fail  to  fix  the  rate,  then  it 
shall  be  fixed  from  time  to  time  by  the  board  of  directors.  For  every  loan 
made,  a  note  or  obligation  secured  by  a  first  mortgage  or  deed  of  trust  upon 
unencumbered  real  estate  shall  be  given,  accompanied  by  a  transfer  and  pledge 
to  the  association  of  the  shares  borrowed  upon,  as  collateral  security  for  the 
repavment  of  the  loan  ;  or,  in  lieu  of  the  mortgage  or  deed  of  trust  there  may 
be  pledged  and  transferred  to  the  association  tor  the  payment  of  the  loan  free 
shares,  the  withdrawal  value  of  which,  under  the  by-laws,  at  the  time  of  such 
borrowing,  shall  exceed  the  amount  borrowed  and  interest  thereon  for  six 
months.  At  the  discretion  of  the  board  of  directors,  a  borrower  may  repay 
a  loan,  and  all  arrears  of  interest  and  fines  thereon,  at  any  time,  upon  the  sur- 
render of  the  shares  pledged  for  the  loan. 

Sec.  639  (added  by  chapter  174,  acts  of  1891).— Whenever  any  member  shall 
be  six  months  in  arrears  in  the  payment  of  his  dues  upon  'free  shares,  the 
secretary  shall  give  him  notice  thereof,  in  writing,  and  a  statement  of  his 
arrearage-,  by  mailing  the  same  to  him  at  the  last  post  office  address  given  by 
him  to  the  association,  and  if  he  shall  not  pay  the  same  within  two  months 
thereafter,  the  board  of  directors  may,  at  their  option,  declare  his  share  for- 
feited ;  and  at  the  time  of  such  forfeiture  the  withdrawal  value  thereof  shall 
be  determined  and  stated,  and  the  defaulting  member  shall  be  entitled  to  with- 
draw the  same  without  interest,  upon  such  notice  as  shall  be  required  of  a 
withdrawing  shareholder.  Whenever  a  borrowing  member  shall  he  six 
months  in  arrears  in  the  payment  of  his  dues,  or  interest,  or  premium,  the 
win  ile  loan  shall  become  due,"at  the  option  of  the  board  of  directors  ;  and  they 
may  proceed  to  enforce  collection  upon  the  securities  held  by  the  assc  ciation. 
The  withdrawal  value,  at  the  time  of  the  commencement  of  "the  action,  of  all 
shares  pledged  as  collateral  security  for  the  loan,  shall  be  applied  to  the  pay- 
ment of  the  loan,  and  said  shares,  from  that  time,  shall  be  deemed  surrendered 
to  the  association. 

Six.  640  f added  bv  chapter  174,  acts  of  1891).— Any  such  association  may 
purchase  at  any  sale,  public  or  private,  any  real  estate  upon  which  it  may  have 
a  mortgage,  judgment,  lien,  or  other  incumbrance,  or  in  which  it  may  have  an 
interest;  and  may  sell,  convey,  lease,  or  mortgage  the  same  at  pleasure  to 
any  person  or  persons. 

SEC  ''41  1  added  bv  chapter  174,  acts  of  1891).— Any  association  organized  in 
pursuance  of  the  provisions  of  this  act  may  borrow  money  for  the  purpose  of 
making  loans  or  paving  withdrawals. 

SEC.  642  (added  by  chapter  174.  acts  of  [8qi). — Profits  and  losses  shall  be 
apportioned  at  least  annually,  and  shall  be  apportioned  to  all  the  shares  in 
each  series  outstanding  at  the  time  of  such  apportionment,  according  to  the 
:  value  of  such  shares  as  distinguished  from  their  withdrawal  value. 

Sec.  643,  (added  by  chapter  174,  acts  oi  18911.  Any  person  of  Full  age  and 
sound  mind  mav  become  a  member  of  Hie  association,  by  taking  one  or  more 
share-  ih,  rein,  and  subscribing  to  the  by-laws,  and  annexing  to  his  signature 
iddn  .  A  minor  mav  hold  shares  in  the  name  ol  the  parent, 
guardian,  or  next  friend  as  trustee.  The  shares  of  stock  in  any  such  corpora- 
tion held  I  ■  on,  to  the  value  of  one  thousand  dollars,  shall  be  exempt 
from  exe<  ution, 

Sec.  644  (added  by  chapter  174,  a.  ts  of  [891). — Every  association  organized 

under  the  provi  lions  oi  tin    a<  t,  and  every  other  association  doing  a  like  busi- 

hall  annually  make  a  lull  report,  in'  writing,  of  the  affairs  and  condition 

ition  within  thirty  days  after  its  annual  meeting,  to  the  bank 

of  thi     tate.    Such   reporl  shall  be  verified  by  the  oath  of  the 

;,  and  a  copy  of  the  same  shall  be  delivered  to  every 

holder,  from  the  office  oi  the  corporation,  who  may  call  for  such  report 

iciation  shall  make  any  furthei    reports  which  the  said  commis- 

lay  require,  and  in  such  form  and  as  to  such  matters  relating  to  the 


GENERAL  LEGISLATION.  G75 

condition  and  conducting  of  the  business  of  the  association  as  such  commis- 
sioners may  designate;  and  said  bank  commissioners  may  at  any  tune  ex- 
amine into  the  affairs  of  any  and  every  of  said  associations.  Any  wilful  false 
swearing  in  making  and  verifying  said  reports  shall  be  deemed  perjury  Any 
such  association  which  shall  fail  to  furnish  the  bank  commissioners  any  such 
report  required,  within  thirty  days  after  demand,  shall  forfeit  the  sum  ol  ten 
dollars  per  day  for  every  day  such  report  shall  be  delayed  or  withheld  ;  which 
may  be  recovered  in  an  action  brought  by  the  attorney  general  in  the  name 
of  the  people  of  this  state  ;  and  all  moneys  SO  recovered  shall  be  paid  to  the 
treasurer  of  the  slate,  who  shall  pay  the  same  into  the  "  hank  commissioners' 
fund."  The  state  bank  commissioners  shall  annually  publish  a  full  report  of 
the  condition  of  all  associations  formed  under  the  provisions  of  this  title,  and 
every  other  association  doing  a  like  business  in  this  state,  in  the  same  manner 
as  they  are  now  required  to  do  in  reference  to  savings  banks. 

Sec.  045  (added  by  chapter  174,  acts  of  1891). — No  mutual  building  and  loan 
association,  or  company,  association,  or  corporation,  organized  under  the  laws 
of  any  other  state  or  territory,  to  carry  on  a  business  of  a  like  character  to  that 
authorized  by  this  title,  shall  be  allowed  to  do  business,  or  to  sell  their  stock 
in  this  state,  without  first  having  deposited  with  the  state  controller,  or  secre- 
tary of  state,  the  sum  of  fifty  thousand  dollars  in  money,  or  United  States  or 
municipal  bonds  of  this  state,  or  in  mortgages  upon  real  estate  located  within 
this  state,  as  a  guarantee  fund  for  the  protection  and  indemnity  of  residents  of 
the  state  of  California,  with  whom  such  companies,  associations,  or  corpora- 
tions shall  do  business  ;  the  fund  so  deposited  to  be  paid  by  the  custodian 
thereof  to  the  residents  of  California  only,  and  not  then  until  proof  of  claim  by 
final  judgment  has  been  filed  with  the  custodian  of  said  fund  against  such 
foreign  company,  association,  or  corporation.  Any  of  the  securities  so 
deposited  may  be  withdrawn  at  any  time  upon  others,  herein  provided  tor.  of 
like  amount,  being  substituted  in  lieu  thereof!  Any  person  or  persons  who  shall 
be  found  in  this  state  as  agent,  or  in  any  other  capacity,  representing  such 
foreign  company,  association,  or  corporation,  which  has  not  complied  with  the 
provisions  of  this  section,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon 
conviction  shall  be  punished  by  a  fine  not  exceeding  one  thousand  dollars,  or 
by  imprisonment  in  the  county  jail  not  exceeding  twelve  months,  or  by  both 
such  fine  and  imprisonment. 

Sec.  646  (added  by  chapter  174,  acts  of  1801). — Any  building  and  loan  asso- 
ciation, now  existing  and  heretofore  incorporated,  desiring  to  continue  its 
existence  under  the  provisions  of  this  title,  may  do  so  if  the  holders  of  a  major- 
ity of  the  stock,  at  their  regular  annual  meeting,  or  at  a  special  meeting  of  the 
stockholders  called  for  that  purpose,  shall  so  elect.  The  notice  of  the  meeting, 
whether  regular  or  special,  shall  state  as  one  of  the  objects  of  the  meeting,  to 
vote  on  the  question  whether  the  corporation  shall  continue  its  existence 
under  the  provisions  of  this  title  ;  and  the  notice  of  meeting  shall  be  published 
as  required  by  section  three  hundred  and  one  ;  and,  in  addition  thereto,  a 
similar  notice  shall  be  mailed  to  each  stockholder  at  his  post-office  address. 
Within  thirty  days  after  the  holders  of  a  majority  of  the  stock  at  any  such 
meeting  have  voted  to  continue  the  existence  of  the  corporation  under  the 
provisions  of  this  title,  the  secretary  of  the  corporation  shall,  under  oath,  make 
and  subscribe,  as  such  secretary,  a  certificate,  in  writing,  stating  the  calling  of 
such  meeting,  the  fact  that  the  holders  of  a  majority  of'the  stock  voted  to  con- 
tinue the  existence  of  the  corporation  under  this  title,  which  shall  be  filed  in 
the  office  of  the  county  clerk  in  which  its  original  articles  of  incorporation 
have  been  filed,  and  shall  file  in  the  office  of  the  secretary  of  state  a  certified 
copy  thereof,  according  to  the  provisions  of  section  two  hundred  and  ninety- 
six;  and  the  secretary  of  state  shall  issue  his  usual  certificate,  as  provided  in 
said  section.  Thereupon,  such  corporation  shall  be  subject  to  all  the  provi- 
sions of  this  title,  as  though  originally  incorporated  under  the  provisions 
hereof,  except  that  no  change  in  its  name  or  amount  of  capital  stock  shall  be 
made  ;  but  the  name  shall  be  the  same  as  contained  in  the  original  articles. 

Sec.  647  (added  by  chapter  174,  acts  of  1891). — All  corporations  doing  the 
business  of  building  and  loan  associations  in  this  state  shall  be  subject  to  the 
provisions  of  this  title  relating  to  the  bank  commissioners. 

Sec.  648  (added  by  chapter  174,  acts  of  1891). — The  name  "  building  and 
loan  association,"  as  used  in  this  act,  shall  include  all  corporations,  socie- 
ties, or  organizations,  or  associations  doing  a  savings  and  loan  or  investment 
business  on  the  building  society  plan,  viz.:  loaning  its  funds  to  its  members  or 
its  shareholders,  and  whether  issuing  certificates  of  stock  which  mature  at  a 
time  fixed  in  advance  or  not. 


676  APPENDIX   IV. 

Sec.  648  %  (added  by  chapter  174,  acts  of  1891). — The  provision  of  an  act 
entitled '"An  act  imposing  a  tax  on  the  issue  of  certificates  of  stock  corpora- 
tions," approved  April  first,  eighteen  hundred  and  seventy-eight,  shall  not  be 
deemed  and  held  to  be  applicable  to  any  certificates  issued  to  and  transferred 
by  the  members  or  stockholders  of  any  association  organized  under  or 
governed  by  this  act. 

STATUTES  OF  1893.— Chapter  188. 

Sectiox  1. — All  building  and  loan  associations  heretofore  or  hereafter  incor- 
porated under  the  laws  of  this  state,  or  any  other  state  or  territory,  or  those  of 
any  foreign  country,  and  doing  business  in  this  state,  shall  be  subject  to  the 
examination  and  supervision  of  a  board  of  commissioners  of  loan  associations, 
which  board  shall  consist  of  two  commissioners,  each  of  whom  shall  be  an 
expert  of  accounts,  and  shall  be  appointed  by  the  governor,  within  thirty  days 
after  the  passage  of  this  act,  to  hold  office  for  the  period  of  four  years,  and 
until  their  successors  are  appointed  and  qualified. 

Sec.  2  (as  amended  acts,  1895,  p.  103).— The  commissioners  shall  each  re- 
ceive a  salary  of  twenty-four  hundred  dollars  per  annum  and  necessary  travel- 
ling expenses,  not  to  exceed  for  the  two  commissioners  and  their  secretary 
the  sum  of  seven  hundred  dollars  per  annum.  Said  commissioners  are  hereby 
authorized  to  appoint  a  secretary  at  a  salary  not  to  exceed  twelve  hundred 
dollars  per  annum,  who  shall  have  power  to  examine  the  books  and  affairs  of 
the  associations,  the  same  as  the  commissioners.  All  said  salaries  and  travel- 
ling expenses  shall  be  audited  by  the  state  controller,  and  paid  in  the  same 
manner  as  the  salaries  of  other  state  officers. 

Sec.  3  (as  amended  acts,  1895,  p.  103). — The  commissioners  shall  have  their 
office  in  San  Francisco,  which  office  shall  be  kept  open  for  business  every  day 
and  during  such  hours  as  are  commonly  observed  by  the  banks  of  that  city  as 
banking  hours.  They  shall  procure  rooms  for  their  office  at  a  monthly  rental 
not  to  exceed  forty  dollars.  They  may  also  provide  fuel,  printing,  stationery, 
and  other  necessary  conveniences  connected  with  their  office,  not  to  exceed 
an  aggregate  cost  of  four  hundred  dollars  per  annum.  All  expenses  author- 
ized in  this  section  shall  be  audited  and  paid  in  the  same  manner  as  the  salary 
of  the  commissioners. 

Sec.  4  (as  amended  acts,  1895,  p.  103). — The  commissioners,  before  entering 
upon  the  duties  of  their  office,  must  each  execute  an  official  bond  in  the  sum  of 
five  thousand  dollars,  and  take  the  oath  of  office  as  prescribed  by  the  political 
code  for  state  officers  in  general.  The  secretary  appointed  by  commissioners 
shall  execute  a  bond  in  the  sum  of  two  thousand  dollars,  and  take  the  oath 
of  office  as  prescribed  by  said  political  code. 

Sec.  5  (as  amended  acts,  1895,  p.  103). — The  duties  of  the  commissioners  of 
building  and  loan  associations  shall  be  to  furnish  all  corporations  legally  au- 
thorized to  transact  the  business  of  a  building  and  loan  association  within  this 
state  a  license  authorizing  them  to  transact  the  business  of  a  building  and 
loan  association  for  one  year  from  the  date  of  said  license  ;  to  receive  and 
place  on  file  in  their  office  the  annual  reports  required  to  be  made  by  build- 
ing and  loan  associations  by  this  act;  to  supply  each  association  with  blank 
forms  and  such  statements  as  the  commissioners  may  require  ;  to  be  made  on 
or  before  the  first  day  of  October  of  each  year,  a  tabulated  report  to  the  gov- 
ernor of  this  slate,  showing  the  condition  of  all  institutions  examined  by 
them,  with  such  recommendations  as  they  may  deem  proper,  accompanied 
:  it<  ment,  verified  by  oath,  of  all  moneys  received  and  expended 
by  them  since  their  last  report. 

Si       (). — The  commissioners  shall  visit,  once  in  every   year,  and  as  much 

oftener  as  they  may  deem  expedient,  every  building  and  loan  association  doing 

ness  in  this  state.     At  such  visits  they  shall   have  tree  access  to  the  vaults, 

booh   ,  and  papers,  and  shall  thoroughly  inspect  and  examine  all  the  affairs  of 

Hun  ,  and  in. ike  such  inquiries  as  maybe  necessary  to 

1  tain  its  condition  and  ability  to  fulfil  all  its  engagements,  and  whether  it 

has  complied  with  the  provisions  of  law  governing  such  associations  ;  they 

in   1  1 "  rmanenl  form  a  mil  record  of  their  proceedings,  includ- 

i    tatement  of  tin:  condition  of   each  of  said  corporations,  which  shall  be 

open  to  th  -     ion  ol  the  public  during  their  office  hours. 

imended,  acts,  [895,  p.  10;). — To  facilitate  the  examination  of  the 

ified  in  the  foregoing  section,  every  association  shall 

1  book  "i  record  .written  in  ink,  showing  the  appraised  value  of  the 

real  1   tate    tj  held  in  1  onnei  tion  with  ea<  h  loan,  and  signed  in  each  case 

byt:  er  oi  officei  or  committee  of  the  association  making  such  esti- 


GENERAL   LEGISLATION.  G77 

mate  value.  The  commissioner  shall  have  power  to  order  a  revocation  of  the 
security  of  any  building  and  loan  association  when  they  deem  it  necessary, 
and  may,  for  that  purpose,  appoint  local  appraisers  at  the  expense  of  such 
association,  the  total  expense  of  such  appointment  nol  to  exceed  two  dollars 
and  fifty  cents  for  each  property  examined  and  appraised.  Each  appraiser 
shall  make  a  sworn  report  to  the  commissioner  of  the  appraised  value  of  all 
property  examined. 

Sec.  8. — Either  of  the  commissioners  may  summon  all  trustees,  officers,  or 
agents  of  any  such  corporation,  and  such  other  witnesses  as  he  thinks  proper, 
ii'i  relation  to  the  affairs,  transactions,  and  conditions  of  the  corporation,  and 
for  that  purpose  may  administer  oaths  ;  and  whoever  refuses,  without  justifi- 
able cause,  to  appear  and  testily,  when  thereto  required,  or  obstructs  ;i  com- 
missioner in  the  discharge  of  his  duty,  shall  be  punished  by  a  true  nol  exceeding 
one  thousand  dollars,  or  imprisonment  not  exceeding  one  year,  or  by  both 
such  fine  and  imprisonment. 

Sec.  9. — If  the  commissioners,  upon  examination  of  any  corporation  under 
their  supervision,  find  that  such  corporation  lias  been'  violating  I  he  pro- 
visions ol  law  governing  such  associations,  or  is  conducting  its  business  in 
an  unsafe  manner,  such  as  to  render  its  further  proceeding  hazardous  to  the 
public,  or  to  those  having  funds  in  its  custody,  they  shall  notify  the  attorney 
general  of  such  facts,  and  the  attorney  general,  in  his  discretion,  may  apply  to 
the,  judge  of  the  superior  court  of  the  county  in  which  such  tori  oration  is 
doing  business,  to  issue  an  injunction  restraining  such  corporation,  in  whole 
or  in  part,  from  further  proceeding  with  its  business  until  a  hearing  can  be 
had.  Such  judge  may,  in  such  application,  issue  such  injunction,  and,  after  a 
full  hearing,  may  dissolve  or  modify  it,  or  make  it  perpetual,  and  may  make 
such  orders  and  decrees,  according  to  the  course  of  proceedings  in  equity,  to 
restrain  or  prohibit  the  further  prosecution  of  the  business  of  the  corporation, 
as  may  be  needful  in  the  premises  ;  and  may  appoint  one  or  more  receivers  to 
take  possession  of  its  property  and  effects,  subject  to  such  directions  as  may 
from  time  to  time  be  prescribed  by  the  court. 

Sec  10. — And  if  either  of  the  commissioners,  having  knowledge  of  the 
insolvent  condition,  or  any  violation  or  law,  or  unsafe  practice  of  an  associa- 
tion under  their  supervision,  such  as  renders,  in  their  opinion,  the  conduct  of 
its  business  hazardous  to  its  shareholders  or  depositors,  and  shall  fail  to  report 
the  same  in  writing  to  the  attorney  general,  as  required  by  this  act,  then  such 
commissioner,  on  conviction  thereof,  shall  be  punished  by  a  line  of  not  less 
than  live  thousand  dollars  nor  more  than  ten  thousand  dollars,  or  by  imprison- 
ment in  the  county  jail  not  less  than  one  year  nor  more  than  two  years,  or  by 
both  such  fine  or  imprisonment ;  and  his  office  shall  be  declared  vacant  by  the 
governor,  and  a  successor  appointed  to  fill  his  unexpired  term. 

Sec.  11. — When  receivers  are  so  appointed,  the  secretary  of  the  corporation 
shall  make  a  schedule  of  all  its  property,  and  its  secretary,  board  of  invest- 
ment, and  other  officers  transferring  its  property  to  the  receivers,  shall  make 
oath  that  said  schedule  sets  forth  all  the  property  which  the  corporation  owns, 
or  is  entitled  to.  The  secretary  shall  deliver  said  schedule  to  the  receivers, 
and  a  copy  thereof  to  the  commissioners,  who  may  at  any  time  examine, 
under  oath,  such  secretary,  board  of  investment,  or  other  officers,  in  order  to 
determine  whether  or  not  all  the  property  which  the  corporation  owns,  or  is 
entitled  to,  has  been  transferred  to  the  receivers. 

Sec.  12. — The  commissioners,  or  one  of  them,  shall  at  least  once  in  each 
year,  and  as  much  oftener  as  they  may  deem  expedient,  examine  the  accounts 
and  doings  of  all  such  receivers,  and  shall  carefully  examine  and  report  upon 
all  accounts  and  reports  of  receivers  made  to  the  proper  court  and  referred  to 
the  commissioners  by  the  court,  and,  for  the  purposes  of  this  section,  shall 
have  free  access  to  the  books  and  papers  relating  to  the  transactions  of  such 
receivers,  and  may  examine  them  under  oath  relative  to  such  transactions. 

Sec.  13. — Upon  the  certificate,  under  oath,  of  any  five  or  more  officers, 
trustees,  creditors,  shareholders,  or  depositors  of  any  such  corporation,  setting 
forth  their  interest  and  the  reasons  for  making  such  examination,  directed  to 
the  commissioners,  and  requesting  them  to  examine  such  corporation,  they 
shall  forthwith  make  a  full  investigation  of  its  affairs,  and  in  the  manner 
provided. 

Sec.  14. — The  commissioners,  if  in  their  opinion  any  such  corporation,  or 
its  officers  or  trustees,  have  violated  any  law  in  relation  to  such  corporations, 
shall  forthwith  report  the  same,  with  such  remarks  as  they  deem  expedient, 
to  the  attorney  general,  who  shall  forthwith  institute  a  prosecution  for  such 
violation,  in  behalf  of  the  people  of  the  state. 


678  APPENDIX   IV. 

Sec.  15  fas  amended  acts  1895,  p.  103). — To  meet  the  expenses  provided 
by  this  act,  every  building  and  loan  association,  or  corporation,  or  association 
doing  business  on  the  building  and  loan  plan,  shall  pay,  in  advance,  to  the 
commissioners,  its  pro  rata  amount  of  such  expenses,  to  be  determined  by  an 
assessment  levied  upon  the  shares  of  each  of  such  associations  in  force  on  the 
thirty-first  day  of  December,  eighteen  hundred  and  ninety-two,  p  0  rata 
according  to  the  par  value  of  such  shares  ;  and  annually  thereafter  the  said 
commissioners  shall  levy,  in  like  manner,  and  collect  in  advance,  a  like 
assessment  on  the  shares  of  all  such  associations  in  force  as  per  report,  herein 
provided  for,  to  be  made  to  said  commissioners  of  the  condition  at  the  close 
of  business,  on  December  thirty-first  of  each  year. 

Provided,  however,  that  no  association  shall  pay  less  than  ten  dollars  per 
annum;  and  all  associations  hereafter  organized  shall  each  pay  to  the  com- 
missioners for  their  license  not  less  than  one  dollar  per  month  for  the  term 
expiring  December  thirty-first  succeeding,  dating  from  the  time  of  application 
for  license. 

Sec.  16. — The  collection  of  all  moneys  assessed,  as  herein  provided,  for  the 
annual  expenses,  or  forfeitable  as  fines  for  failure  to  make  reports  as  herein 
specified,  and  due  from  any  corporation  or  association  coming  within  the 
provisions  of  this  act,  may  be  enforced  by  action  instituted  in  any  court  of 
competent  jurisdiction,  and  all  moneys  collected  or  received  by  said  commis- 
sioners under  this  act  shall  be  deposited  with  the  state  treasurer,  to  the  credit 
of  a  fund  to  be  known  and  designated  as  the  "  building  and  loan  association 
inspection  fund." 

Sec.  17  (as  amended  acts  1895,  p.  103). — No  association  shall  transact  business 
in  this  state  without  first  procuring  from  the  commissioners  of  building  and 
loan  associations  a  certificate  of  authority  or  license  to  do  so.  To  procure  such 
authority  it  must  file  with  the  said  commissioners  a  certified  copy  of  the 
articles  of  incorporation,  constitution  and  by-laws,  and  all  other  printed  rules 
and  regulations  relating  to  its  methods  of  conducting  business,  and  of  all 
subsequent  amendments  or  changes  thereto,  and  otherwise  comply  with  all 
requirements  of  law. 

No  association,  after  the  expiration  of  the  term  for  which  a  license  has  been 
granted  to  it  by  the  commissioners  of  building  and  loan  associations,  shall 
continue  to  transact  the  business  of  a  building  and  loan  association  without 
first  procuring  from  said  commissioners  a  renewal  of  such  license,  on  the 
terms  provided  for  in  this  act  ;  and  any  corporation  violating  this  provision 
shall  forfeit  the  sum  of  ten  dollars  per  day  during  the  continuance  of  the 
offence  ;  and  any  violation  of  this  section  by  any  officer  of  such  association 
shall  be  a  misdemeanor. 

The  commissioners  areauthorized  and  empowered  to  revoke  the  license  of 
any  association  under  their  supervision,  the  solvency  whereof  is  imperilled  by 
losses  or  irregularities  ;  and  the  commissioners,  immediately  upon  revoking 
such  license,  shall  report  the  facts  to  the-  attorney  general,  who  shall  thereupon 
take  am  h  pn  iceedings  as  is  pr<  ivided  by  section  nine  of  this  act. 

Sec.  [8  as  amended  acts  [893,  p.  [03). — Everj  building  and  loan  associa- 
tion doing  business  in  this  state  shall,  once  in  every  year,  to  wit  :  within  thirty 
days  alter  the  expiration  of  its  annual  fiscal  term,  make  a  report,  in  writing,  to 
the  1  ommissioners  of  building  and  loan  associations,  verified  by  the  oath  01  its 
president  and  secretary,  showing  accurately  the  financial  condition  of  such 
ition  at  the  close  of  said  term.  The  report  shall  be  in  such  form  as  the 
commissioners  shall  prescribe,  upon  blanks  by  them  furnished  for  that  pur- 
po  e,  and  shall  specify  the  following  particulars,  namely  :  Name  of  the  cor- 
poration, place  where  located,  authorized  capital  stock,  amount  of  stock  paid 
in,  1  in- 11, inie  of  the  directors,  the  amount  of  capital  stock  held  by  each,  the 
amot  hareholders,  the  amount  and  character  of  all  other  liabilities, 

<  .1   h  on  hand,  and  the  number  and  value  of  shares  in  each  and   every  series  of 

the ation,     All  money  received  or  disbursed  by  such 

duly  accounted  for.  Any  association  failing  to  file  the_ 
annual  report  within  the  time  specified  herein  shall  be  subject  to  a  penalty  of 
t(  n  dollars  per  day  foi  each  and  every  d.w  such  report  shall  be  delayed  or 
withheld. 

'■'>.—  stoi  kholders  desiring  to  withdraw  from  any  association,  or  to  sur- 
render a  part  or  all  ol  their  stuck,  shall  have  power  to  do  so  by  giving  thirty 
in  writing,  ol    uch   intention  to  withdraw.    On  the  expiration  of 
Ruch  notice,  the    tockholder  so  withdrawing  shall  be  entitled  to  receive  the 
full  amounl  paid  in  by  him  or  her,  together  with  such  proportion  of  the  earh- 
the  by-law     may  provide,  or  as  may  have  been  fixed  by  the 


GENERAL    LEGISLATION.  G79 

board  of  directors  ;  Provided,  that  not  more  than  one-half  of  the  monthly 
receipts  in  any  one  month  shall  be  applied  to  withdrawals  for  that  month,  with- 
out the  consent  of  the  board  of  directors,  and  no  shareholder  shall  be  per- 
mitted to  withdraw,  whose  stock  is  pledged  as  security  to  the  association  for  a 
loan,  until  such  loan  is  fully  paid.  Such  withdrawals  shall  be  paid  in  succes- 
sion, in  order  that  the  notices  arc  given. 

Sec.  20  (as  amended,  acts  1895,  p.  103). — The  name  "Building  and  Loan  As- 
sociate >n,"  and  all  reference  to  the  same  as  "association"  or  "associations," 
as  used  in  this  act,  shall  include  all  corporations,  societies  or  organizations  in- 
investment  companies  or  associations,  whether  organized  in  this  state  or  re- 
presented by  agents,  doing  a  savings  and  loan  or  investment  business,  and 
which  are  not  under  the  direct  supervision  of  the  hank  commissioners  or  the 
insurance  commissioner,  and  whether  issuing  certificates  of  stock  which 
mature  at  a  time  fixed  in  advance  or  not,  and  shall  also  include  any  association 
or  company  which  is  based  on  the  plan  of  building  and  loan  associations,  and 
which  contains  features  similar  to  such  associations  ;  and  said  commissioners 
are  hereby  vested  with  the  power  of  determining  whether  such  association 
or  associations  contain  such  features  as  are  based  on  plans  similar  to  those  of 
building  and  loan  associations,  and  whether  they  properly  come  within  the 
provisions  of  this  act. 

COL.OIIAOO. 
ACTS  iSQ7,p.  121. 

Section*  i. — Any  association  of  not  less  than  three  persons  hereafter  incorpo- 
rated under  the  laws  of  this  state,  which  shall  he  organized  within  the  state  for 
the  purpose  of  raising  a  fund  by  the  collection  of  dues  or  stated  payments 
its  members  to  be  loaned  among  its  members,  shall,  in  the  furtherance  of  such 
purpose,  and  after  having  complied  with  the  requirements  of  this  act,  be  iu- 
thorized  and  empowered  to  levy,  assess  and  collect  from  its  members  such 
sums  of  money,  by  rates  or  stated  dues,  fines,  interest  on  loans  advanced,  and 
premiums  bid  by  members  for  the  right  of  precedence  in  taking  loans,  as  the 
corporation  may  provide  for  in  i's  constitution  or  by-laws.  Also,  to  acquire, 
hold  and  convey  all  such  real  estate  and  personal  propertyasmay  legitimately 
be  pledged  to  it  upon  said  loans,  or  may  otherwise  be  transferred  to  it  in  the  due 
course  of  its  business. 

Sec.  2. — The  words  "Loan  and  Building  Association,"  "  Building  Associa- 
tion," or  "  Building  and  Loan  Association,"  shall  form  part  of  the  corpi 
name  of  every  such  corporation. 

Sec.  3. — Every  such  association  now  or  hereafter  incorporated  under  the 
laws  of  this  state  complying  with  the  provisions  of  this  act,  may  issue  and 
sell  its  shares  of  stock  in  one  or  more  successive  series,  or  upon  the  permanent 
or  Dayton  plans  in  the  denomination  and  to  the  extent  as  limited  in  the  articles 
of  incorporation  of  such  associations,  either  fully  or  partially  paid  up  in  period- 
ical or  other  instalments,  or  upon  all,  either,  or  any  of  these  plans  and  with 
or  without  full  participation  in  the  earnings  of  such  association,  or  partially  in 
limited  dividend  bearing  stocks  as  may  be  provided  by  the  by-laws  of  such 
association,  for  the  purpose  of  raising  a  fund  to  make  advances  to  members 
upon  first  mortgage,  .or  trust  deed,  liens,  upon  real  estate  and  upon  the  shares 
of  stock  issued  by  such  association,  or  upon  both  such  security.  Borrowing 
members  of  such  associations  shall  be  required  to  carry  such  periodical  assess- 
ment stock  with  the  association  as  shall  have  a  par  value  equal  to  the  loan,  and 
every  share  issued  shall  be  subject  to  a  lien  for  any  advance  made  thereon,  or 
other  claim  against  the  holder.  Every  such  association  may  redeem  its  shares, 
and  repay  the  funds  acquired  thereby  with  such  earnings  as  the  same  may  be 
entitled  according  to  the  terms  of  the  issue  thereof  whenever  the  same  shall 
be  no  longer  required  for  the  purposes  of  the  association.  Any  stockholder 
wishing  to  withdraw  may  do  so  at  such  time  and  on  such  notice  and  terms  as 
provided  by  the  by-laws:  Provided,  that  no  association,  either  foreign  or 
domestic,  doing  business  in  this  state,  shall,  on  such  business  in  paying  the 
withdrawal  of  any  certificate  or  any  number  of  certificates  1  iriginaliy  issued  to 
the  same  person,  deduct  an  amount  to  exceed  two  dollars  per  share  as  a 
withdrawal  fee,  which  shall  be  further  limited  so  that  such  fee  shall  not 
exceedten  dollars  in  any  (one)  transaction,  irrespective  of  the  number  of 
shares  in  such  certificates  included  in  such  transaction,  when  he  or  she  shall 
be  entitled  to  receive  the  amount  provided  by  the  by-laws,  or  determined  by 
the  board  of  directors,  less  all  fines  or  other  charges  :  Provided,  that  at  no  time 
shall  more  than  one  half  of  the  monthly  receiptsof  the  association  be  applica- 
ble to  the  demands  of  withdrawing  shareholders  without  the  consent  of  the 


680  APPENDIX  IV. 

board  of  directors,  and  that  no  shareholder  in  debt  to  the  association  shall  he 
entitled  to  withdraw  or  transfer  his  shares  held  without  the  consent  of  the 
directors  of  the  association  until  such  debt  shall  be  paid. 

Sec.  4. — The  number,  titles,  functions  and  compensation  of  the  officers  of 
any  such  association,  their  terms  of  office,  the  time  of  their  election,  as  well  as 
the  qualifications  of  electors,  and  the  votes  and  manner  of  voting,  and  the 
periodical  readings  of  such  corporation,  and  the  manner  and  terms  upon 
which  loans  shall  be  made  and  repaid,  shall  be  determined  by  the  by-laws. 
All  such  by-laws  shall  be  made  by  the  stockholders  at  their  annual  meeting, 
or  by  the  board  of  directors  of  such  corporation  at  any  regular  meeting  of  the 
board  of  directors.  Every  such  corporation,  before  commencing  business 
under  this  act,  shall  file  a  copy  of  its  by-laws  with  the  clerk  and  recorder  of 
the  county  in  which  the  principal  business  of  such  corporation  is  carried  on  ; 
and  shall  likewise  so  file  copies  of  all  subsequent  changes  and  amendments 
of  such  by-lawTs  ;  and  all  such  corporations  now  doing  business  in  this  state 
shall  immediately  file  copies  of  their  by-laws  with  the  clerk  and  reporter  of 
the  proper  county ;  and  also  file  all  subsequent  changes  and  amendments 
thereto  ;  Provided,  that  no  such  subsequent  change  or  amendment  to  such  by- 
laws shall  in  any  manner  change  or  effect  1  affect)  the  terms  and  conditions  of 
any  loan  made  prior  to  such  change  or  amendment  in  said  by-laws. 

Sec.  5. — No  officer  or  director  of  any  association  shall  negotiate  for  or  re- 
ceive a  loan  from  such  association  ;  neither  shall  any  loan  be  granted  by  such 
association  to  other  parties  upon  security  in  which  any  officer  or  director  of  such 
association  has  an  interest  of  any  kind,  except  that  any  officer  may  be  permit- 
ted to  receive  a  stock  loan  to  an  extent  and  not  to  exceed  ninety  per  cent,  of 
the  book  value  of  the  collateral  shares  ;  Provided,  that  the  foregoing  provis- 
ions of  this  section  shall  not  apply  to  domestic  associations  doing  business 
only  in  one  county  of  the  state.  Any  association  may  from  time  to  time,  as 
its  by-laws  may  provide,  invest  any  portion  of  its  funds  not  immediately  re- 
quired by  its  members  in  loans  upon  real  estate  or  other  securities,  or  invest 
in  bonds,  warrants,  or  other  securities,  or  may  loan  such  surplus  to  any  other 
association  complying  with  this  act.  Real  estate  may  be  purchased  by  such 
association  under  its  own  foreclosure  proceedings,  judgment  or  lien,  or  when- 
ever it  may  be  necessary  to  protect  itself  from  loss  ;  and  the  same  shall  be 
ci inverted  into  money  by  sale  as  speedily  as  may  be  without  detriment  to  the 
interests  of  the  association.  Any  association  under  the  laws  of  this  state  may 
purchase,  build,  hire,  or  take  upon  lease  any  building  for  conducting  its  busi- 
ness, and  may  adopt  and  furnish  the  same,  and  may  purchase,  or  hold  upon 
lease,  any  land  for  the  purpose  of  erecting  thereon  a  building  for  conducting 
the  business  of  the  society  ;  and  may  sell,  exchange  or  let  such  building,  or 
any  part  thereof.  Any  association  incorporated  under  the  laws  of  this  state, 
and  complying  with  the  terms  of  this  act,  may,  in  such  manner  and  to  such 
extent  within  the  limits  hereinafter  stated  as  may  be  provided  in  its  by-laws, 
negotiate  for  and  receive  such  longtime,  or  short  time,  loans  on  note  or  bond, 
as  may  be  found  necessary  to  advance  the  purposes  of  the  association  ;  Pro- 
vided,  that  no  association' shall  borrow  money  at  any  time  to  exceed  one- 
fourth  of  its  accumulated  assets  ;  Provided,  further,  that  no  note,  bond  or 
oi  her  form  of  evidence  of  such  debt  shall  be  secured  by  the  pledge  of  notes, 
bonds  or  other  securities  held  by  the  association,  in  such  manner  as  to  permit 
a  sale  of  such  collateral,  but  only  to  the  extent  of  giving  to  the  pledgee  a  prior 
lien  for  repayment  on  the  proceeds  of  such  collaterals  when  collected  in  the 
n  u. il  way  according  to  their  respective  terms,  except  that  this  section  shall 
ni  il  1"'  held  to  abridge  the  right  of  any  association  to  secure  any  loan  obtained 
by  mortgage  or  trust  deed  upon  its  real  estate  holdings,  to  the  same  extent 
and  manner  as  might  be  d<  >ne  by  any  1  ither  O  irporation  under  the  laws  of  this 

state. 

SEC.  6.— Every  iuch   corporation  organized  under  the  laws  of  the  state  of 
<        1  ido  may  loan  its  accumulations  to  members  upon  such  plan  of  repay- 
ment as  provided  by  its  by-laws.    They  may  <  harge,  contract  for  and  recover  a 
nium  upon  su<  h  a  plan  as  may  I"-  pi ovided  for  in  the  by-laws,  or  note,  or 
■  ■I  indebtedness  taken  by  such  association,  all  oi  which  notes 
1  hall  be  in  i  iable 

Sec.  7     No  premiums,  fines  or  interest  on  such  premium  thai  may  accrue 

to  the  said  a    ociation,  acci  »rding  to  the  provisions  of  tins  act,  shall  be  deemed 

ous  ;  and  the    ame  may  be  <  olle<  ted  as  debts  ol    ike  amount  are  now  by 

law  collected  in  this     ate ;  but  no  fei     foi    non-payment  of  dues  shall  exceed 

month  for  the  first  sixty  days,  and  two  per  cent,  per  month 

I 


GENERAL   LEGISLATION.  681 

Sec.  8. — No  corporation  organized  under  this  act  shall  cease  or  expire,  from 
neglect  on  the  part  of  the  corporation,  to  elect  officers  at  the  time  mentioned 
in  their  charters  or  by-laws, and  all  officers  elected  by  such  corporations  shall 
hold  their  office  until  their  successors  are  duly  elected  and  qualified. 

Sec.  9. — Any  building  or  loan  association  incorporated  by  or  under  the 
provisions  of  this  act,  or  any  one  heretofore  or  hereafter  incorporated,  is 
hereby  authorized  and  empowered  to  purchase  at  any  sheriff's  or  other  judi- 
cial sale,  or  at  any  other  sale,  public  or  private,  any  real  estate  upon  which  said 
association  may  have,  or  hold,  any  mortgage,  trust  dui.-d,  judgment,  lien,  or 
other  incumbrance,  or  in  which  saitl  association  may  have  an  interest,  and  the 
real  estate  so  purchased,  or  any  other  that  such  association  may  hold,  or  be 
entitled  to  at  the  passage  of  this  act,  to  sell,  convey  or  lease  at  pleasure  to  any 
person  or  persons  whatever,  and  all  sales  of  real  estate  heretofore  made  by 
such  association,  to  any  person  or  persons  not  members  of  the  association  so 
selling,  are  hereby  confirmed  and  made  valid. 

Sec  to. — The  business  oi  every  building  and  loan  association  created  or 
incorporated  under  this  act,  shall  be  managed  and  controlled  by  a  president, 
a  board  of  directors  or  trustees,  a  secretary  and  treasurer,  and  such  other  offi- 
cers or  agents  as  the  by-laws  may  provide.  The  directors  or  trustees  shall  be 
elected  annually  by  the  stockholders,  or  members,  at  the  time  fixed  by  the  by- 
laws, and  shall  hold  their  office  until  others  are  chosen  and  qualified  in  their 
stead;  the  manner  of  such  choice,  and  of  the  choice  or  appointment  of  all 
other  agents  or  officers,  shall  be  prescribed  by  the  by-laws.  The  number  of 
directors  or  trustees  shall  be  not  less  than  three  nor  more  than  thirteen,  one 
of  whom  shall  be  chosen  president  by  the  directors  or  by  the  members  of  the 
corporation,  as  the  by-laws  may  direct.  The  stockholders  of  said  corporation 
may,  at  a  meeting  called  for  that  purpose,  determine,  fix  or  change  the  num- 
ber of  directors  or  trustees — not  less  than  three— that  shall  thereafter  govern 
its  officers  ;  and  a  majority  of  the  whole  number  of  such  directors  or  trustees 
shall  be  necessary  to  constitute  a  quorum.  The  treasurer  shall  give  bond  in 
such  sum  and  with  such  surety  as  shall  be  required  by  the  by-Taws,  for  the 
faithful  discharge  of  his  duties  ;  and  he  shall  keep  the  moneys  of  the  corpora- 
tion in  a  separate  bank  account  to  his  credit  as  treasurer  ;  and  if  he  shall 
neglect  or  refuse  so  to  do,  he  shall  be  liable  to  a  penalty  of  fifty  dollars  for 
every  clay  he  shall  neglect  so  to  do,  to  be  recovered  for  the  benefit  of  such 
association,  at  the  suit  of  any  stockholder,  and  shall  be  subject  to  removal 
from  office  ;  Provided,  that  such  building  and  loan  association  may  designate 
as  its  treasurer  some  responsible  bank  or  trust  company. 

Sec.  11. — In  case  of  the  death,  removal  or  resignation  of  the  president,  or 
any  of  the  directors,  secretary,  treasurer  or  other  officer  of  such  corporation, 
the  remaining  directors  may  fill  the  vacancy  thus  created  until  the  next 
general  election. 

Sec.  12. — On  or  before  the  first  day  of  August  and  the  first  day  of  February 
in  each  year,  every  such  building  and  loan  association  heretofore  or  hereafter 
organized  under  the  laws  of  this  state  shall  file  with  the  clerk  and  recorder  of 
the  county  in  which  the  principal  business  of  such  corporation  is  carried  on, 
a  report  of  its  affairs  and  operations  for  the  six  months  ending  on  the  30th  day 
of  June  and  the  31st  day  of  December.  Such  reports  shall  be  verified,  under 
oath,  by  the  president  and  secretary,  or  by  three  directors  of  the  association, 
and  contain  answers  to  the  following  questions  : 

First,  the  amount  of  authorized  capital  and  the  par  value  of  each  share  of 
stock  ;  second,  the  number  of  shares  sold  during  the  preceding  six  months  ; 
third,  the  number  of  shares  cancelled  and  withdrawn  during  the  preceding  six 
months  ;  fourth,  the  number  of  shares  in  force  at  the  end  of  the  preceding  six 
months;  fifth,  a  detailed  statement  of  receipts  and  disbursements,  including  an 
itemized  statement  of  the  expense  of  conducting  and  operatine;  said  building 
and  loan  association  during  the  preceding  six  months  ;  sixth,  a  detailed  state- 
ment of  assets  and  liabilities  at  the  end  of  the  preceding  six  months,  and  pay 
to  the  clerk  and  recorder  of  the  proper  county  a  fee  of  fifty  cents,  on  filing  said 
report.  If  any  officer  of  such  association  shall  fail  to  file  such  report  as  required 
by  this  act,  or  if  any  such  report  shall  be  delayed  or  withheld  beyond  the  day 
when  the  same  should  be  so  filed,  such  officer  of  such  association  shall  forfeit 
and  pay  the  sum  of  ten  dollars  for  every  day  such  report  is  withheld  or  de- 
layed ;  and  any  such  stockholder  of  such  association,  or  any  party  in  interest, 
may  maintain  an  action  in  his  name  to  recover  such  penalty,  and  the  same 
shall  be  paid  into  the  county  treasury  and  applied  to  the  benefit  of  the  school 
fund.  After  receiving  such  report,  the  clerk  and  recorder  of  the  proper 
county  shall  issue  his  certificate,  stating  the  compliance  with  such  provisions, 


682 


APPENDIX   IV. 


and  that  the  corporation  is  entitled  to  do  business,  which  such  certificate  shall 
be  in  force  for  the  period  of  six  months  next  ensuing. 

Sec.  13. — Every  person  who  shall  wilfully  or  knowingly  subscribe  or  cause 
to  be  made  any  false  report,  false  statement  or  false  entry  in  any  book  of  any  as- 
sociation organized  for  the  purposes  set  forth  in  section  one  of  this  act,or  exhibit 
false  papers  with  the  intent  to  deceive  any  person,  or  shall  make,  state  or  pub- 
lish any  false  report  or  false  statement  of  the  financial  condition  of  such  as- 
sociation, shall  be  deemed  guilty  of  felony  and,  upon  conviction  thereof,  shall 
be  fined  in  any  sum  not  exceeding  five  thousand  dollars,  and  be  imprisoned  in 
the  state  penitentiary  not  less  than  one  nor  more  than  five  years. 

Sec.  14. — Whenever  it  shall  appear  to  any  party  in  interest,  or  to  any  creditor 
of  any  such  association  heretofore  organized,  or  which  may  hereafter  be 
organized,  that  such  association  is  conducting  its  business  in  an  unsafe  or 
unauthorized  manner,  or  is  jeopardizing  the  interest  of  its  members,  or  that 
it  is  unsafe  for  such  association  to  transact  business,  he  or  they  shall  com- 
municate such  fact  to  the  attorney  general  of  this  state,  whose  duty  it  shall 
then  become  to  investigate  the  affairs  and  conditions  of  such  association,  and 
if,  upon  such  investigation  he  shall  be  satisfied  that  such  association  is  con- 
ducting its  business  in  an  unsafe  or  an  unauthorized  manner,  he  shall  apply 
to  the  district  court  of  the  county  where  such  association  is  located  or  the 
appointment  of  a  receiver  to  take  charge  of  said  association,  and  if  such  fact 
or  facts  be  made  to  appear  to  such  district  court,  it  shall  be  sufficient  to 
authorize  the  appointment  of  such  receiver,  and  the  making  of  such  orders, 
and  decrees  in  such  cases  as  equity  may  require. 

Sec.  15. — Every  corporation,  company  or  association  contemplating  doing 
business  in  this  state  and  having  for  a  part  of  its  title  or  name  the  words 
"  Loan  and  Building  Association,"  "  Building  Association,"  "  Building  and  Loan 
Association,"  "  Saving  and  Loan  Association,"  or  "  Co-operative  Bank."  "  Sav- 
ing and  Investment  Company," and  every  corporation,  company  or  association 
whose  stock  is  payable  by  an  accumulating  fund  in  regular  or  stated  period- 
ical instalments  ;  and  every  corporation,  company  or  association  doing  a 
business  in  a  form  and  character  similar  to  that  authorized  to  be  done  by  sec. 
1  of  this  act,  shall,  if  organized  or  incorporated  in  any  state  or  territory  other 
than  the  Slate  of  Colorado,  be  known  in  this  act,  as  a  foreign  building  and 
loan  association. 

Sec.  [6. — It  shall  not  be  lawful  for  any  foreign  building  and  loan  associa- 
tion, directly  or  indirectly,  to  transact  any  business  in  this  state  without  first 
filing  in  the  office  of  the'secretary  of  state  a  statement  sworn  to  by   the  presi- 
dent andsecretary  of  the  association,  which  statement  should  show  the  name 
and  locality  <  >f  the  association  and  an  itemized  account  of  its  actual  financial 
condition,  showing  assets  and  liabilities,  and  receipts  and  disbursements  for 
the  past  twelve  months,  including  also  therein  an  itemized  statement  of  its 
expense  account.     Said  statement  shall,  further,  show  the  amount  and  number 
of  shares  subscribed,  the  number   cancelled  and  withdrawn  during  the  past 
year,  the  number  of  shares  actually  in  force  at  the  date  of  the  statement  and 
all  such  other  information  touching  its  affairs  as  the  secretary  of  the  state  may 
require.     Such  foreign  building  and  loan  association  shall  also  tile  with  the 
secretary  of  state  a  certified  copy  of  the  laws  of  the  state,  territory  or  govern- 
ment under  which  it  is  incorporated,  relating  to  or  authorizing  the  incorpora- 
ii  h  association,  and  also  of  the  law  of  such  state,  territory  or  govern- 
ment pertaining  to  the  regulation,  government  or  control  of  building  and  loan 
iis,  both   foreign  and  dome-tic,   and  of  its  charter,   or  articles  of  in- 
oration,  and  of  its  constitution  and  by  laws  and  all  amendments  thereto, 
and  shall,  further,  appoinl  Hi-  se<  retary  of  the  stale   as  its  at  Ion  lev.  which  ap- 
m<  nl    hall  be  in  the  form  <  if  a  resolution  of  the  directors  ol  board  of  con- 
trol 1  ion,  and  shall  be  duly  certified  under  the  seal  oftheas- 
.  by  its  president  and  secretary,  and  which  shall  authorize  its  said 
ary  of  state,  to  acknowledge  services  of  process  in  behali 
on,  con  onting  that  serviced  process,   mean  or   final,  upon 
n,  shall  be  taken  and  held  as  valid  as  if  served  upon  the  associa- 
rding  to  the  laws  ol  this  or  any  other  slate,  and  waiving  all  claim  or 
ri^lr  1  on  ,.1      inli   acknowledgment  of   service.     Such    foreign 
,    hall  pay  a  fee  for  filing  the  papers  referred  to  in  this  section  as 
follows:  Any  a   lociation  having  a  capital  stock  of  not  to  exceed  one  million 
dollai  ,  shall  paj  afeeol  fifty  dollars, and  an  additional  fee  ol  one  fourth  of 
authorized  carital  stock  in  excess,  if  any,  of  one  million 
dollai  ,  and    hall  hereaftei    pay  to  the  secretary  of  state  a  fee  of  twenty-five 

dollars  upon  filir  enl   annual  statement. 


GENERAL   LEGISLATION.  683 

Sec.  17.— The  statements  required  of  foreign  building  and  loan  associations 
shall  be  renewed  annually  in  January,  in  the  manner  as  required  by  this  act, 
and  shall  be  made  at  such  other  time's  as  the  secretary  of  state  may  require. 
When,  however,  the  laws  of  any  other  stale,  territory  or  nation,  and  under 
which  such  association  maybe  incorporated,  require  any  taxes,  fines,  penalties, 
licenses,  fees,  deposits  of  money  or  securities,  or  other  obligations  or  prohibi- 
tions of  any  association  that  might  be  organized  under  the  laws  of  this  stale 
and  doing  business  in  such  other  state,  territory  or  nation,  or  imposes  the 
same  upon  its  agents  doing  business  therein,  then,  so  long  as  such  laws  con- 
tinue in  force,  the  same  obligations  and  prohibitions,  ol  whatever  kind,  shall 
be  imposed  upon  all  such  foreign  building  and  loan  associations  of  such  state, 
territory  or  nation  doing  business  in  this  state  and  upon  their  agents  here,  to 
the  extent  that  the  same  maybe  in  excess  of  the  requirements  imposed  upon 
such  foreign  associations  by  the  provisions  of  this  act. 

Sec.  18. — Any  person  doing  business  or  soliciting  or  attempting  to  do  busi- 
ness in  this  state  lor  any  foreign  building  and  loan  association  which  shall  not 
at  the  time  have  fully  complied  with  the  provisions  of  this  act,  shall  be  deemed 
guilty  of  a  misdemeanor,  and  upon  conviction  thereof,  shall  be  fined  in  any 
sum  not  exceeding  one  thousand  dollars,  or  imprisoned  in  the  county  jail  not 
more  than  thirty  days,  or  both  in  the  discretion  of  the  court. 

Sec.  19. — Every  building  and  loan  association  hereafter  formed  shall  be 
organized  under  the  provisions  of  this  act,  and  shall  adopta  constitution  which 
shall  substantially  give  effect  to  the  provisions  of  this  act  ;  and  shall  also  adopt 
such  bylaws  for  the  government  and  management  of  its  business  as  it  shall 
deem  proper;  provided,  that  the  same  shall  not  be  inconsistent  with  this  act, 
and  shall  not  contravene  the  laws  or  constitution  of  this  state,  or  the  United 
States  ;  and  may  alter  and  amend  the  same  from  time  to  time  in  such  manner 
as  may  be  provided  by  its  articles  of  incorporation. 

Sec.  20. — An  act  entitled  "  An  Act  concerning  Building  Associations,"  ap- 
proved April  17th  1880,  the  same  being  sees.  270- 283  inclusive,  Mill's  Annotated 
Statutes,  and  the  provisions  of  all  other  acts  or  parts  of  acts  in  so  far  as  the 
same  contravene  the  provisions  of  this  act  be  and  the  same  are  hereby 
repealed. 

Approved  May  4th,  1897. 

CONNECTICUT. 
PUBLIC  ACTS  of  1895,  p.  580.— Chapter  CCXXXVII. 

Section  i. — A  corporation  for  the  purpose  of  accumulating  the  savings  of 
its  members,  and  loaning  the  same  to  its  members,  shall  be  known  in 
this  act  as  a  building  and  loan  association.  Associations  organized  under  the 
laws  of  this  state  shall  be  known  as  "  domestic "  associations,  and  those 
organized  under  the  laws  of  other  states  or  territories  as  "  foreign  "  associa- 
tions. Such  associations  may  be  organized  and  conducted  under  the  general 
laws  of  Connecticut  relating  to  corporations,  except  as  otherwise  provided  in 
this  act. 

Sec.  2. — Such  corporations  which  may  hereafter  be  organized  shall  have 
power  to  issue  shares  of  stock  of  an  ultimate  paid-up  value  of  two  hundred 
dollars  each,  to  be  accumulated  by  monthly  or  weekly  instalments  aggregat- 
ing one  dollar  per  share  per  month,  on  such  terms  and  conditions  as  their 
constitutions  and  by-laws  may  provide,  but  such  accumulated  capital  shall  not 
exceed  one  million  dollars,  and  no  member  shall  be  entitled  to  vote  on  more 
than  one  share  in  any  such  corporation  ;  to  collect  from  members  such  fees, 
dues,  fines,  interest,  and  premiums  on  loans  made,  as  may  be  provided  for  in 
their  constitution  and  by-laws,  but  such  fees,  dues,  fines,  or  premiums  shall 
not  be  deemed  usury,  although  in  excess  of  the  legal  rate  of  interest,  and  such 
fines  for  default  shall  be  two  cents  for  each  dollar  in  arrears  each  month,  no 
fine  to  be  charged  on  fines,  and  no  fines  to  be  charged  for  more  than  six 
months  in  succession  at  one  time  ;  to  permit  members  to  withdraw  all  or  part 
of  their  stock  deposits  at  such  times  and  upon  such  terms  as  the  constitution 
and  by-laws  may  provide  ;  any  member,  however,  whose  stock  has  matured, 
shall  be  entitled  to  receive  interest  at  the  rate  of  six  per  centum  per  annum 
from  the  date  of  maturity  until  paid  ;  Provided,  that  at  no  time  shall  more  than 
one-half  of  the  funds  in  the  treasury  of  a  corporation  be  applicable  to  the 
payment  of  matured  stock,  without  the  consent  of  the  directors  ;  to  issue  stock 
in  the  name  of  a  minor,  subject  to  the  control  of  the  parent  or  guardian  of 
such  minor  ;  to  acquire,  hold,  encumber,  and  convey  such  real  estate  and 
personal  property  as  may  be  necessary  for  the  transaction  of  its  business  or 


684  APPENDIX   IV. 

necessary  to  enforce  or  protect  its  securities  ;  to  borrow  money,  not  exceeding 
ten  per  centum  of  the  assets,  and  issue  its  evidences  of  indebtedness  therefor, 
but  no  money  shall  be  borrowed  for  a  longer  term  than  one  year  ;  to  loan  a 
surplus  for  which  there  is  no  demand  for  loans  to  members,  withdrawing 
shareholders  or  matured  stock,  to  any  other  building  or  loan  association  incor- 
porated under  the  laws  of  Connecticut ;  to  make  loans  to  members  on  hist 
mortgage  real  estate  security  situated  in  Connecticut,  or  on  its  own  stock,  on 
such  terms  and  conditions  as  may  be  provided  in  the  constitution  and  by-laws  ; 
i  *  cancel  such  loans  and  release  the  securities  on  such  terms  as  may  be 
provided  in  the  constitution  and  by-laws  ;  to  accumulate  from  the  earnings  a 
reserve  fund,  as  hereafter  provided  for,  for  the  payment  of  contingent  losses  ; 
to  make  such  annual  or  more  frequent  distribution  of  the  earnings  as  the 
constitution  and  by-laws  may  provide  ;  to  dissolve  the  corporation  when  its  con- 
tinuance shall  be  deemed  by  a  majority  vote  of  its  members  to  be  no  longer 
desirable,  subject,  however,  to  the  vested  rights  of  members  ;  to  provide  by 
constitution  and  by-laws  adopted  by  its  members,  for  the  proper  exercise  of 
the  powers  herein  granted,  and  the  conduct  and  management  of  its  affairs. 

Sec.  3. — The  treasurer  of  any  such  corporation  shall  deposit  its  funds  in  a 
bank,  or  banks  or  trust  company,  in  the  name  of  such  corporation  ;  such  funds 
shall  then  be  withdrawn  only  by  check,  signed  by  the  president  and  treasurer, 
or  such  other  officers  as  the  board  of  directors  may  designate.  The  treasurer's 
bank  book  shall  be  open  to  the  inspection  of  any  director  at  any  proper  time. 
All  officers  of  such  corporations  who  have  charge  or  possession  of  money, 
securities  or  property,  shall  give  bonds  to  the  satisfaction  of  the  board  of 
directors  before  entering  upon  their  duties,  for  the  faithful  performance  of  the 
same,  and  the  safekeeping  and  proper  application  of  all  moneys  and  property 
coming  into  their  hands.  All  such  officers  of  such  corporations,  on  being 
re-elected  to  office,  shall  renew  their  bonds,  and  the  bonds  may  be  increased, 
or  additional  securities  required  at  any  time  by  the  board  of  directors. 
Directors  shall  not  be  eligible  as  bondsmen  and  shall  be  individually  liable  for 
any  loss  to  members  caused  by  their  neglect  to  require  the  execution  and 
filing  of  the  bonds  required  by  the  provisions  of  this  section. 

Sec.  4. — The  amount  to  be  set  aside  to  the  fund  for  contingent  losses  shall 
be  determined  by  the  board  of  directors,  but  at  least  one  per  centum  of  the 
net  earnings  shall  be  set  aside  each  year  to  such  fund  until  it  reaches  at  least 
five  per  centum  of  the  dues  capital.  All  losses  shall  be  paid  out  of  such  fund 
until  the  same  is  exhausted,  and  whenever  the  amount  in  said  fund  falls  below 
live  per  centum  of  the  dues  capital  as  aforesaid,  it  shall  be  replenished  by 
appropriations  of  at  least  one  per  centum  of  the  annual  net  earnings,  as  here- 
inbefore provided,  until  it  again  reaches  said  amount.  All  balance  of  losses,  after 
the  amount  in  the  reserve  fund  has  been  exhausted,  shall  be  assessed  on  the 
members,  at  the  same  time  and  in  the  same  manner  as  earnings  are  appor- 
tioned. A  balance  in  the  treasury  of  any  such  corporation  or  association,  for 
which  there  is  no  immediate  call  or  demand,  may  be  invested  by  the  directors 
in  anv  of  the  securities  named  in  section  i8ooof  the  general  statutes. 

Sec.  5. — The  directors  may,  at  their  discretion,  retire  the  unpledged  shares 
of  anv  series  at  anv  time  after  four  years  from  date  of  their  issue,  by  enforcing 
the  withdrawal  of  the  same  ;  Provided,  that,  whenever  under  the  provisions  of 
this  section  the  withdrawal  of  shares  is  to  be  enforced,  the  shares  to  be 
d  hall  be  determined  by  lot  ;  and  the  holders  [hereof  shall  be  paid  the 
of  their  shares,  less  a  proportionate  part  of  any  unadjusted  los^  ; 
Provided,  also,  that  sharespledged  for  share  loans  shall  be  treated  as  unpledged 
shares. 

Sec.  6. — The  bank  commissioners  shall  perform,  in  reference  to  every  such 
a  0(  iation  or  corporation  now  existing,  or  hereafter  organized  under  the  laws 
ol  (his  state,  the  same  duties,  and  shall  have  the  same  powers  as  are  required 
Ol  or  given  to  them  in  reference  to  banks,  savings  banks,  and  trust  com- 
putes, and  shall  annually  make  report  lo  the  governor  of  such  facts  and 
tatements  respecting  sui  h  corporations  or  associations,  and  in  such  form  as 
1  thai  the  public  interest  requires.  Every  officer  of  such  cor- 
poration or  association  shall  answer  truly  all  the  inquiries  made,  and  shall 
1 1 1, 1 1.,-  all  1 1  turn  required  by  tin-  haul;  commissioners.  Such  corporations  or 
ball,  Willi  the  several   banks,  savings  banks  and  (rust  companies 

of  the  state,  pay  theii  pro  ><'/<'  share  ol  the  salaries  and  expen  es  of  the  bank 

comn  to  be  apporti :d  among  them  by  the  comptroller,  in  propor- 

■  i .   [ate  amount  ol  the  accumulated  assets  of  each,  as  provided 
ection  [832  ol  the  general    lain:-    ,  and  in  chapter  cxc.  of  the  public  acts 


GENERAL   LEGISLATION.  685 

Sec.  7. — Any  domestic  building  and  loan  association  doing  business  iin  this 
state,  at  the  time  of  the  passage  oi  this  act,  may,  by  a  majority  vote  of  its 
members  present  at  any  meeting  legally  warned  tor  the  purpose,  accept  the 
provisions  of  this  act,  except  the  provisions  contained  in  section  6,  which 
section  shall  apply  to  all  such  associations  heretofore  or  hereafter  organized 

Sec.  8.— This  act  shall  take  effect  from  its  passage. 

Approved,  June  26,  1895. 

PUBLIC  ACTS  OF  1895,  P   535-— Chapter  CLXXIV. 

Section  i. — No  foreign  or  non-resident  building  and  loan  association  shall 
do  business  in  this  slate  until  it  shall  have  complied  with  the  following 
provisions  and  received  a  license  from  the  bank  commissioners,  as  provided 
in  this  act.  1.  It  shall  tile  with  the  bank  commissioners  a  certified  co]  y  of 
its  charter,  together  with  its  constitution  and  by-laws  showing  its  manner  of 
doing  business.  2.  It  shall  file  a  copy  of  a  resolution  of  its  board  of  directors, 
appointing  the  bank  commissioners  its  agents,  upon  whom  writs  may  he- 
served,  stipulating  and  agreeing  that  if  any  legal  process  affecting  such  asso- 
ciation be  served  upon  the  bank  commissioners  and  a  copy  thereof  be  mailed, 
postage  paid,  by  said  commissioners  to  said  association,  addressed  to  the  home 
office,  then  such  service  and  mailing  of  process  shall  have  the  same  effect  as 
a  personal  service  on  such  association  in  this  state.  3.  It  shall  file  with  the 
bank  commissioners,  on  or  before  the  first  day  of  March  in  each  year,  a  state- 
ment of  its  business  standing  and  financial  condition  on  the  preceding 
thirty-first  day  of  December,  signed  and  sworn  to  by  its  president  and  secre- 
tary, or  by  three  directors,  before  some  notary  public.  4.  It  shall  pay  to  the 
bank  commissioners,  for  the  purpose  of  paying  the  expenses  of  filing  papers, 
as  heretofore  provided,  and  for  compensation  for  making  examinations, 
annual  fees  as  follows  :  For  the  first  one  hundred  thousand  dollars  or  less  of 
assets,  a  fee  of  fifty  dollars,  and  for  each  additional  one  hundred  thousand 
dollars  of  assets  or  major  portion  thereof,  an  additional  fee  of  five  dollars  ;  but 
in  no  event  shall  such  compensation  exceed  one  hundred  dollars  per  year  ; 
and  such  association  shall  also  pay  the  actual  expenses  of  the  bank  commis- 
sioners while  making  such  examination. 

Sec.  2. — It  shall  be"  the  duty  of  the  bank  commissioners  to  receive  and  file 
the  papers  herein  required,  and  thoroughly  to  examine  the  annual  reports 
submitted  by  foreign  and  non-resident  building  and  loan  associations.  If  the 
bank  commissioners  become  satisfied,  after  an  examination,  that  an  associa- 
tion desiring  to  do  business  in  this  state  is  solvent  and  conducting  its  business 
according  to  law,  they  shall  issue  a  license  to  such  association  for  a  period  of 
one  year  ;  Provided,  that  such  association  has  complied  with  the  provisions 
of  this  act ,  but,  if  it  be  found  insolvent,  or  [is]  being  illegally  conducted,  the 
commissioners  shall  refuse  to  issue  the  license.  Should  the  bank  commis- 
sioners refuse  to  grant  a  license  to  any  association  applying  therefor  that  has 
complied  with  the  provisions  of  this  act,  such  association  may  appeal  to  the 
superior  court  for  Hartford  County,  which  shall  have  jurisdiction  in  the 
premises. 

Sec.  3. — The  bank  commissioners  shall  make  an  annual  examination  of  the 
securities,  records,  books,  and  accounts  of  every  foreign  or  non-resident 
building  and  loan  association  doing  business  in  this  state,  and  file  a  report  of 
such  examination  in  their  office.  If  it  shall  appear  to  the  bank  commissioners 
that  any  such  association  licensed  to  do  business  in  this  state  has  violated  its 
charter,  or  is  conducting  its  business  in  an  unsafe  and  unauthorized  way,  they 
shall,  by  an  order  under  their  hand  and  official  seal,  addressed  to  such  associa- 
tion, direct  a  discontinuance  of  such  illegal  and  unsafe  practice  ;  and,  when- 
ever it  shall  appear  to  the  bank  commissioners  that  it  is  unsafe  and  inexpe- 
dient for  such  association  to  continue  business  in  this  state,  they  may  apply 
to  any  court  or  judge  having  jurisdiction  for  an  injunction  restraining  such 
association  from  doing  business  in  this  state  ;  and  such  court  or  judge  shall 
have  the  power,  according  to  the  usual  course  of  proceedings  in  equity,  to 
grant  or  refuse  to  grant  said  injunction  ;  Provided,  such  association  is  given 
reasonable  notice  of  such  proceedings. 

Sec.  4. — All  such  foreign  or  non-resident  associations  doing  business  in  this 
state  at  time  of  the  passage  of  this  act  shall  comply  with  its  requirements 
within  sixtv  days  from  the  date  of  its  passage  ;  but  such  associations  may  con- 
tinue to  do  business  in  this  state  without  a  license  until  the  bank  commission- 
ers have  made  the  examination  provided  for  in  this  act. 

Sec.  5. — Every  person  or  corporation  violating  any  provision  of  this  act  shall 
be  fined  not  less  than  one  hundred  dollars  nor  more  than  one  thousand  dollars 


686  APPENDIX   IV. 

Sec.  6.— This  act  shall  take  effect  from  its  passage. 
Approved  June  i,  1895. 

PUBLIC  ACTS  1897,  p.   103— Chapter  CLXXVIII. 

Sec.  1. — The  governor  shall,  every  two  years  after  the  passage  of  this  act, 
commencing  in  1897,  nominate,  and,  with  the  advice  and  consent  of  the  senate, 
appoint  some  suitable  person  who  shall  not  be  a  director,  officer  or  agent  of 
any  building  or  loan  association,  to  be  a  commissioner  on  building  and  loan 
associations,  who  shall,  unless  sooner  removed  by  the  governor  for  cause,  hold 
his  office  for  two  years  from  the  first  day  of  July  following  his  appointment. 
Vacancies  may  be' filled  by  the  governor  until  the  next  regular  session  of  the 
general  assembly,  when  they  shall  be  filled  by  the  governor  with  the  advice 
and  consent  of  the  senate. 

Sec.  2. — It  shall  be  the  duty  of  said  commissioner  to  visit  and  examine  an- 
nually or  oftener  every  domestic  and  foreign  building  and  loan  association 
and  mortgage  investment  company  transacting  business  in  this  state,  and  the 
powers  and  duties  of  the  commissioner  in  relation  to  such  building  and  loan 
associations  and  mortgage  investment  companies,  foreign  or  domestic,  shall  be 
the  same  as  are  now  granted  and  imposed  by  law  to  and  on  the  bank  commis- 
sioners ;  and  the  statutes  of  this  state  prescribing  the  duties  and  powers  of  the 
bank  commissioners, in  relation  to  building  and  loan  associations  and  mort- 
gage investment  companies,  are  hereby  amended  by  inserting  the  words 
^commissioner  on  building  and  loan  associations  "  in  place  of  the  words 
"  bank  commissioner,"  wherever  they  occur. 

Sec  3. — The  salary  of  said  commissioner  shall  be  twenty-five  hundred 
dollars  annually,  and  he  shall  be  allowed  his  expenses,  not  to  exceed  five  hun- 
dred dollars  annually,  in  addition  thereto.  The  comptroller  shall  apportion 
the  salary  and  expenses  of  said  commissioner  among  the  foreign  and  domestic 
building  and  loan  associations  and  mortgage  investment  companies  doing 
business  in  this  state,  in  proportion  to  the'aggregate  amount  of  the  assets  of 
each  of  the  building  and  loan  associations,  according  to  their  average,  as 
nearly  as  can  be  ascertained,  for  the  year  preceding,  and  in  proportion  to  the 
aggregate  amount  of  the  capital  stock  and  surplus  of  each  mortgage  invest- 
ment company;  but  the  amount  assessed  against  any  domestic  association  or 
company  shall  not  exceed  an  amount  equalto  one-eightieth  of  one  per  centum 
of  the  said  assets,  and  he  shall  notify  each  by  mail  of  the  amount  apportioned 
to  it,  and  it  shall  pay  the  same  to  the  state  within  twenty  days  from  the  time  of 
mailing  such  notice;  and  any  institution  which  shall  not  pay  the  same  within 
said  time  shall  forfeit  two  hundred  dollars,  together  with  the  amount  so  appor- 
tioned, to  the  state. 

Sec.  4. — Each  foreign  association  or  company  shall  also  pay  the  actual  ex- 
penses of  said  commissioner  while  making  such  examination. 

SEC.5. — All  acts  or  parts  of  acts  inconsistent  herewith  are  hereby  repealed. 

Sec.  "0.— This  act  shall  take  effect  from  its  passage. 

Approved,  May  25, 1897. 

DELAWARE. 

REVISED  CODE  OF  1893. 

(Page  573.) 

Section  6  (of  chapter  147,  volume  17,  Laws  of  Delaware).— Any  building  or 

building  and  loan  association  created  under  this  act  shall,  in  addition  to  the  other 

rsnerein  granted,  have  power  to  sell  its  accumulated  funds  to  and  among 

at  any  premium  which  may  be  obtained  for  the  same,  and  when 

10I  be  loaned  toany  stockholder  at  par  they  maybe  loaned  to 

any  pel   on  not  a  stockholder  at  any  rate  of  interest  not  exceeding  six  per  cent 

(Page  583.) 

Sec.  1  (of  chapter  702,  volume  10,  Laws  of  Delaware). — The  certificate  of  in- 

iration  of  building,  or  building  and  loan  associations  to  be  created  under 

ntitled  "An  ad  concerning  private  corporations,"  passed  at  Dover, 

March  14,   [883  [chapter  [47,  volume  [7,  Laws  of  Delaware],  shall  not  be  re- 

dto  tate  an  amount  of  the  capital    tockto  be  paid  in  before  commencing 

in     no    ;  1  •  entage  of  said  stock-  shall  !><■  ioi111"''1  '"  '"'  lui<1  ni  before 

,:  ii  m  shall  b  11     ed  and  commence  business 

Ol  chaplci  702,  voh Ki,  Lawsol  [  )clawan).— Whenever  an v  one  of 

the  <  01  poratora  named  in  the  certificate  of  incorporation,  to  be  tiled  under  the 


GENERAL   LEGISLATION.  087 

act  of  which  this  is  a  supplement,  or  any  corporator  named  in  any  act  of  incor- 
poration heretofore  or  hereafter  passed  in  this  state,  or  any  commissioner  ap- 
pointed in  any  such  act  of  incorporation  to  take  subscriptions  for  capital  sink, 
shall  have  died  before  the  organization  of  such  corporation,  then,  and  in  such 
case,  the  powers  vested  in  such  corporators  or  commissioners  shall  thereafter 
be  vested  in  the  survivor  or  survivors  of  such  corporator  or  commissioner. 

DISTRICT   OF   COLUMBIA. 

UNITED   STATES  STATUTES  AT  LARGE. 
Volume  XXVII,  Chapter  cccxxi. 

Section  i. — Any  .  .  .  building  association  or  company  .  .  .  ad- 
vertising for  or  receiving  premiums,  deposits  or  dues  for  membership,  incor- 
porated under  the  laws  of  any  other  state,  territory  or  foreign  government,  and 
transacting  business  within  the  District  of  Columbia,  shall  publish  in  at  least 
two  daily  papers  printed  in  the  I  hstrict  of  Columbia  semi-annually,  during  the 
months  of March  and  September  of  each  year,  a  full  statement,  under  oath, 
showing  their  capital  stock  and  the  amount  paid  in  on  account  of  the  same, 
assets,  liabilities,  debts,  deposits,  dividends  and  clues,  as  well  as  their  current 
expenses  during  six  months  ending  January  and  July  preceding. 

Sec.  2. — Any  such  company,  association  or  institution  failing  to  publish  state- 
ments as  required  by  the  first  section  of  this  act  shall  forfeit  its  right  to  do 
business  in  said  district,  and  thereupon  it  shall  be  the  duty  of  said  commis- 
sioners to  revoke  its  license  or  permit  to  do  business  in  said  district :    .    .    . 

FLORIDA. 

REVISED  STATUTES  OF  1892. 

Section  2205.— The  capital  stock  of  a  building  and  loan  association  shall  at 
no  time  consist  in  the  aggregate  of  more  than  one  million  dollars,  to  be  divided 
into  shares  of  such  denomination,  not  exceeding  five  hundred  dollars  each, 
payable  in  lawful  money  of  the  United  States,  and  in  such  number  as  the  charter 
mav  specify.  The  capital  stock  may  be  issued  in  series,  but  no  such  series 
shall  at  any  issue  exceed  in  the  aggregate  five  hundred  thousand  dollars,  the 
instalments  on  which  stock  are  to  be  paid  at  such  time  and  place  as  the  by- 
laws shall  appoint.  No  periodical  payment  of  such  instalments  shall  be  made 
exceeding  two  dollars  on  each  share,  and  such  stock  may  be  paid  off  and  re- 
tired as  the  by-laws  shall  direct.  Every  share  of  stock  shall  be  subject  to  a 
lien  for  the  payment  of  unpaid  instalments  and  other  charges  incurred  thereon 
under  the  provisions  of  the  charter  and  by-laws,  and  the  by-laws  may  prescribe 
the  form  and  manner  of  enforcing  such  liens  ;  new  shares  of  stock  may  be 
issued  in  lieu  of  shares  withdrawn  or  forfeited.  The  stock  may  be  issued  in 
one  or  in  successive  series  in  such  amount  as  the  board  of  directors  and  stock- 
holders may  determine,  and  any  stockholder  wishing  to  withdraw  from  the 
association  shall  have  power  to  do  so  by  giving  thirty  days'  notice  of  his  in- 
tention to  withdraw,  when  he  may  be  entitledlo  receive  the  amount  paid  in 
by  him  less  all  fines  and  other  charges,  but  after  the  expiration  of  one  year 
from  the  issuing  of  the  series  such  stockholder  shall  be  entitled.dn  addition 
thereto,  to  such  interest  thereon  as  the  by-laws  shall  prescribe  at  the  time  of 
the  issuing  of  such  stock,  not  exceeding  the  legal  rate  of  interest.  At  no  time 
shall  more  than  one-half  of  the  funds  in  the  treasury  of  the  corporation  be  ap- 
plicable to  the  demands  of  withdrawing  stockholders  without  the  consent  of  the 
board  of  directors,  and  no  stockholder  shall  be  entitled  to  withdraw  whose 
stock  is  held  in  pledge  for  securitv.  Upon  the  death  of  a  stockh<  >lder  his  legal 
representatives  shall  be  entitled  to  receive  the  full  amount  paid  in  by  him,  and 
such  rate  of  interest  thereon  as  the  by-laws  of  the  association  shall  prescribe 
at  the  time  of  issuing  such  stock,  first  deducting  all  charges  that  may  be  due  on 
the  stock.  No  fine  shall  be  charged  to  a  deceased  member's  account  from  and 
after  his  decease  unless  the  legal  representatives  of  such  decedent  assume  the 
further  payment  on  the  stock. 

Sec.  2200. — Building  and  loan  associations  incorporated  under  this  chapter 
shall  have  the  powers,  and  from  the  date  of  incorporation,  when  not  other- 
wise provided  herein,  shall  be  governed,  managed  and  controlled  as  follows  : 
They  shall  have  thepower  and  franchise  of  loaning  or  advancing  to  the  stock- 
holders thereof  the  monevs  accumulated  from  time  to  time,  and  the  power 
and  right  to  secure  the  repayment  of  such  money,  and  the  performance  of  the 


(388  APPENDIX   IV. 

other  conditions  upon  which  the  loans  are  to  be  made  by  note  or  bond,  secured 
by  mortgage  or  other  security,  as  well  as  the  power  and  right  to  purchase  or 
erect  houses  and  to  convey,  lease  or  mortgage  the  same  at  pleasure  to  their 
stockholders  or  others  for  the  benefit  of  their  stockholders  in  such  manner ; 
also,  in  case  of  non-payment  of  instalments,  premiums  or  interest  by  any  stock- 
holder for  three  months,  payment  of  principal,  interest  and  fines,  without  de- 
ducting the  premiums  paid  or  interest  thereon,  may  be  enforced  by  sale  of  the 
shares"  at  a  meeting  of  the  stockholders,  and  the  net  proceeds,  after  deduct- 
ing all  tines  and  arrearages  with  a  proportionate  part  of  any  losses,  shall  be 
paid  over  to  him,  and  thereafter  lie  shall  cease  to  be  a  member  of  the 
corporation. 

Sec.  2207.— The  officers  shall  hold  stated  meetings  at  which  the  money  in 
the  treasury,  if  over  the  amount  fixed  by  charter  as  the  full  value  of  a  share, 
shall  be  offered  for  loan  in  open  meeting,  and  the  stockholder  who  shall  bid 
the  highest  premium  for  the  preference  of  priority  of  loan  shall  be  entitled  to 
receive  a  loan  of  not  more  than  the  amount  fixed  by  charter  or  constitution  as 
the  full  value  of  a  share,  for  each  share  of  stock  held  by  such  stockholder,  but 
a  stockholder  may  borrow  such  fractional  part  of  the  amount  fixed  by  charter 
as  the  full  value  of  a  share,  as  the  constitution  and  by-laws  may  provide.  Good 
and  ample  security,  as  prescribed  by  the  by-laws,  shall  be  given  by  the 
borrower  to  secure"  the  repayment  of  the  loan.  In  case  the  borrower  shall 
neglect  to  offer  security,  or  shall  offer  security  that  is  not  approved  by  the 
board  of  directors  by  such  time  as  the  by-laws  may  prescribe,  he  shall  be 
charged  with  legal  interest  together  with  any  expenses  incurred  and  the  loss 
of  premium,  if  any,  on  a  sale  and  the  money  may  be  resold  at  the  next  stated 
meeting.  In  case  of  non-payment  of  instalment  or  interest  by  borrowing 
stockholders  for  the  space  of  three  months,  payment  of  principal  and  interest 
and  all  fines  prescribed  by  the  constitution  and  by-laws  without  deducting 
the  premium  paid  and  interest  thereon,  may  be  enforced  by  proceeding  on 
their  securities  according  to  law. 

Sec.  2208. — Any  married  woman  of  full  age  may  hold  stock,  and  as  such  stock- 
holder she  shall  have  all  the  rights  and  privileges  of  other  members,  including 
the  right  to  borrow  money  from  the  association  and  bid  premiums  therefor, 
and  shall  also  have  the  right  and  power  to  secure  such  loans  by  transferring 
her  said  stock  or  securities  to  the  association  from  which  the  same  was 
borrowed,  or  by  executing  a  note  or  bond,  secured  by  mortgage  upon  her 
separate  real  estate,  but  the  husband  of  such  married  woman  must  join  in  the 
execution  of  such  note  or  bond  and  mortgage  to  give  it  validity.  Such  married 
woman  shall  also  have  the  right  to  sell,  assign  and  transfer  her  stock  by  joining 
her  husband  in  such  transfer  or  withdrawal.  The  associations  may  collect 
loans  made  to  such  married  woman,  including  the  dues,  interests,  premiums 
and  fines,  as  loans  made  by  the  association  to  other  members  as  are  now  by 
law  collected.  Such  stock  and  interest  in  such  stock  shall  not  be  liable  for 
the  debts  of  the  husband  of  such  married  woman. 

Six.  2209. — Should  any  stockholder  who  has  given  a  mortgage  to  the  asso- 
ciation be  desirous  of  selling  the  mortgaged  property  and  having  the  same  re- 
leased from  the  mortgage,  he  shall  be  at  liberty  to  do  so,  with  the  consent  of 
the  directors,  upon  first  transferring  the  shares  entitled  to  him  in  advance  to 
the  intended  purchaser  (if  such  transfer  shall  be  necessary),  and  then  obtain- 
ing from  him  a  note  or  bond,  secured  by  mortgage  of  the  same  premises  and 
on  the  same  terms  for  the  amount  due  to  be  given  to  the  association,  and  such 
mortgagor  shall  then  be  liable  to  pay  all  the  dues  and  interest  respecting  the 
said  advani  •.  and  the  direct*  »rs  shall  then  grant  to  the  original  mortgagor  a  re- 
from  all  further  liability  in  respect  thereto  at  his  costs  or  charges,  he 
having  paid  all  the  dues  and  lines  that  niav  be  due  the  association. 

si  22 10. — Should  arrj  tockholder  desire  to  have  his  property  discharged 
11    I     ise  and    surrender  of  Other   securities  before  the 

his  stock  belongs  or  the  association  shall  have  terminated,  he 

shall  be  allow  1  upon  paving  into  the  hands  of  the  secretary  and 

n    of  mon       as    will,  at  the  rate  of    premium  at  which  said 

mom  ii   produce  the  ame  monthly  payments  of  interests  as  such 

mg  on  his  advance,  bul  such  sum  shall  be 
in  no  1  .it-   net  amount  actually  received  by  him.  and  no  release 

l>e    givei nl    the   mioii.\  paid    shall  actually  be  sold   and  the    security 

ed   for  the       trn     hall   b    approved  by  the  board  oi   directors.     All  the 
-    nni    ti         th  the    tid  redemption  of  the  mortgaged 
1 1  hi  1  be  paid  by  the  said  stockholder  or  purchaser  of  the  money. 
Sec.  2211. — Any    tockholdei  shall  be  entitled  to  an  immediate  release  of  his 


GENERAL   LEGISLATION.  689 

mortgage  or  other  securities,  who  shall  deposit  in  the  hands -of  the  treasurer 
the  full  amount  due  on  his  note  or  bond  and  mortgage,  and  he  shall  also  be 
entitled  to  a  return  of  the  premium  advanced  on  the  sale  and  reinvestmenl  ■  I 
the  said  money,  or  Ins  stock  may  rein. tin  unincumbered. 

SEC.  2212. — Any  building  and  loan  association  may  purchase  at  any  sheriff's 
or  other  judicial  sale,  or  at  any  other  sale,  pub  In  01  |  rivate,  any  real  estate  upon 
which  the  association  may  have  or  hold  any  mortgage,  judgment,  lien  01  other 
incumbrance,  or  in  winch  it  may  have  any  interest,  ana  may  sell,  convey,  lease 
or  mortgage  at  pleasure  the  real  estate  so  purchased,  or  any  other  that  the 
association  may  hold  or  to  which  it  mav  be  entitled,  to  any  \  erson  whatsoever, 
and  all  sales  of  real  estate  heretofore  made  by  such  association,  to  any  persons 
not  members  thereof  are  hereby   confirmed  and  made  valid. 

Sec.  2213. — Building  and  loan  associations  shall  have  full  powerto  1  ur  chase 
lands  and  to  sell  and  convey  the  same,  or  pari  thereof,  to  their  stockholdei  -  or 
others  in  fee  simple.  In  all  cases  the  lands  shall  be  disposed  of  within  ten 
years  from  the  date  of  the  incorporation  ol  such  associations  respectively. 

SEC.2214. — Nothing  in  this  chapter  shall  be  held  to  interfere  with  or  to  re- 
quire any  change  in  the  rules,  constitution,  by-laws  or  management  of  any 
building  "and  loan  association  heretofore  organized  and  now  existing  in  the 
state  in  accordance  with  any  law  therei  >t. 

Sec.  2215. — All  building  and  loan  associations  which  have  attempted  to  incor- 
porate prior  to  the  thirty-first  day  of  May,  1887,  under  the  provisions  of  any 
law,  shall  be  entitled  to  all  the  privileges,  immunities,  franchises  and  powers 
conferred  by  this  chapter,  upon  filing  with  the  secretary  of  state  a  certificate  of 
their  acceptance  of  the  same  in  writing  under  the  duly  authenticated  seal  of 
said  association  signed  by  its  present  officers,  which  certificate  shall  be  accom- 
panied by  a  copy  of  the  constitution  and  by-laws  of  such  association,  and  upon 
such  acceptance  and  approval  thereof  by  the  governor  he  shall  issue  letters 
patent  to  said  corporation  reciting  the  same. 

ACTS  OF  1893,    p.  80. 

Section,  i. — No  building  and  loan  association  organized  under  the  laws  of 
any  other  state,  territory  or  foreign  government  shall  do  business  in  this  state 
unless  said  association  shall  deposit,  and  continually  thereafter  keep  deposited 
in  trust  for  all  its  members  and  creditors,  with  some  responsible  trust  company, 
or  with  the  state  treasurer  of  this  state,  or  some  state  officer  of  some  other 
state  of  the  United  States,  mortgages  (or  other  securities)  received  by  it  in  the 
usual  course  of  its  business,  amounting  to  not  less  than  twenty-five  thou- 
sand dollars  ($25,000).  All  dividends  and  interest  which  may  accrue  on  securi- 
ties held  in  trust  as  aforesaid  by  the  trust  company  or  the  state  officer,  as  pro- 
vided in  this  section,  and  all  dues  or  monthly  payments  which  may  bec<  ime  pay- 
able on  stock  pledged  as  security  for  loans,  the  mortgages  for  which  are  on 
deposit  in  accordance  with  the  provisions  of  this  act,  may  be  collected  and 
retained  by  the  association  depositing  such  securities  or  mortgages.  Any 
securities  on  deposit,  as  provided  herein,  may  from  time  to  time  be  withdrawn, 
if  others  of  equal  value  are  substituted  therefor. 

Sec.  2. — Every  building  and  loan  association  organized  under  the  laws  of  any 
other  state,  territory  or  foreign  government,  shall,  before  commencing  to  do 
business  in  this  state,  pay  the  treasurer  of  this  state  twenty-five  dollars  ($25)  as 
fees  for  filing  the  papers  mentioned  in  this  section,  and  file  with  the  treasurer 
of  this  state  : 

1.  A  duly  authenticated  copy  of  its  charter  or  articles  of  incorporation. 

2.  The  certificate  of  the  proper  officer  of  some  state,  or  the  president  and 
treasurer  or  secretary  of  some  responsible  trust  company,  certifying  that  it  has 
no  deposit  securities  not  less  than  twenty-five  thousand  dollars  ($25,000),  taken 
in  the  regular  course  of  business,  as  mentioned  in  this  act,  in  trust  for  all  the 
members  and  creditors  of  such  building  ami  loan  association. 

3.  A  duly  authenticated  copy  of  a  resolution  adopted  by  the  board  of  direc- 
tors of  such  association,  stipulating  and  agreeing  that,  if  any  legal  process 
affecting  such  association  be  served  on  the  treasurer  of  this  state  and  a  copy 
thereof  be  mailed,  postage  prepaid,  by  the  party  procuring  the  issuing  of 
the  same,  or  his  attorney,  to  said  association,  addressed  to  its  home  office,  then 
such  service  on  said  state  treasurer  and  mailing  of  such  process  shall  have  the 
same  effect  as  personal  service  on  said  association. 

Sec.  3. — When  process  against  or  effecting  any  foreign  building  and  loan 
association  is  served  on  the  state  treasurer,  the"  same  shall  be  by  duplicate 
copies,  one  of  which  shall  be  filed  in  the  office  of  the  said  state  treasurer,  and 
the  other  by  him  immediately  mailed,  postage  prepaid,  to  the  home  office  of 


690  APPENDIX   IV. 

said  association.  The  word  "  process  "  in  this  act  shall  include  any  writ, 
summons,  petition  or  order  whereby  an  action,  suit  or  proceeding  shall  be 
commenced,  or  which  shall  be  issued  in  or  upon  any  action,  suitor  proceeding 
at  law  or  in  equity  authorized  by  law  in  this  state. 

Sec.  4. — The  name  "  building  and  loan  association,"  as  used  in  this  act,  shall 
include  all  corporations,  societies,  organizations  or  associations  doing  a  saving 
and  loan  investment  business  on  the  building  society  plan,  viz.,  loaning  its 
funds  to  its  members  only,  whether  issuing  certificates  of  stock  which  matures 
at  a  fixed  time  or  not. 

Sec.  5. — Xo  officer,  director  or  agent  of  any  building  and  loan  association  in- 
corporated under  the  laws  of  any  state  other  than  this,  or  of  any  territory  or 
foreign  nation,  shall  solicit  subscriptions  to  the  stock  of  such  association,  or 
sell,  issue  or  knowingly  cause  to  be  sold  or  issued,  to  any  person  in  this  state, 
any  stock  of  such  association,  unless  said  association  has  fully  complied  with 
all  the  provisions  of  this  act.  Any  violation  hereof  shall  be  deemed  a  mis- 
demeanor, and,  upon  conviction,  the  offender  shall  be  punished  by  a  fine  of 
not  less  than  one  hundred  dollars,  nor  more  than  five  hundred  dollars  ;  or  by 
imprisonment  not  less  than  ten  days,  nor  more  than  six  months,  or  by  both 
such  fine  and  inprisonment,  in  the  discretion  of  the  court. 

Sec.  6. — Within  four  months  from  the  close  of  its  fiscal  year,  every  building 
and  loan  association  doing  business  in  this  state  governed  by  this'act,  shall, 
each  year,  deposit  with  the  treasurer  of  this  state  a  report  of  its  affairs  and 
operations  for  the  fiscal  year  immediately  preceding  ;  such  report  shall  be 
verified  under  oath  by  the  president  and  secretary,  or  by  three  directors  of  the 
association,  and  shall  contain  answers  to  the  following  questions  : 

1.  The  date  when  association  was  incorporated,  and  the  par  value  of  each 
share  of  stock. 

2.  The  number  of  shares  sold  during  the  year. 

3.  The  number  of  shares  cancelled  and  withdrawn  during  the  year. 

4.  The  number  of  shares  in  force  at  the  end  of  the  year. 

5.  A  statement  of  the  receipts  and  disbursements  of  the  loan  fund  during  the 
year. 

6.  A  statement  of  the  assets  and  liabilities  at  the  end  of  the  year. 

Each  association  shall  pay  to  the  treasurer  of  this  state  twenty-five  dollars 
on  filing  such  report. 

If  any  such  association  shall  wilfully  fail  to  furnish  to  the  treasurer  of  this 
state  any  report  required  by  this  act  at  the  time  so  required,  it  shall,  in  the  dis- 
cretion of  the  state  treasurer,  forfeit  the  sum  of  twenty-five  dollars  ($25)  per 
day  lor  every  day  such  report  shall  be  delayed  or  withheld,  and  the  treasurer 
of  the  state  may  maintain  an  action  to  recover  such  penalty,  and  the  same 
shall  be  paid  into  the  treasury  of  the  state  for  the  benefit  of  the  state. 

Skc.  7. — Every  association  depositing  securities  with  the  treasurer  of  this 
state,  as  provided  for  in  this  act,  shall  annually  pay  to  said  treasurer  of  state  a 
fee  of  twenty-five  dollars  (S25J. 

Skc.  8. — No  fines,  interest  or  premiums  paid  on  loans  made  by  any  building 
and  loan  association  shall  be  deemed  usurious,  and  the  same  may  be  collected, 
as  debts  of  like-  amount  are  now  collected,  by  law  in  this  state,  and  according 
to  the  terms  and  stipulations  of  the  agreement  between  the  association  and  the 
borrower. 

GEORGIA. 

2  REVISED  CODE,  1895 

Section  2388. — All  building  and  loan  associations,  and  other  like  associa- 
tions, now  organized  and  doing  business  in  this  state,  and  that  may  thereafter 
Organize  and  do  business  in  this  state  be,  and  they  are   hereby  authorized  and 

lowered  to  lend  money  to  persons  not  members  thereof,  nor  shareholders 
therein,  at  eight  per  cent,  or  less,  and  to  aggregate  the  principal  and  inter- 

1!  the  date  of  the  loan  for  the  entire  period    of  the  loan,  and  to  divide 

the  sum  of  the  principal  and  the  interest   for  the  entire  period  of  the  loan 

into  monthly  or  other  instalments  and  to  fake  security  by  mortgage  with  the 

waivei    ol  onortitle,  or  both,  upon  and  to  red  estate  situated  in  the 

or  towng   and  their  suburbs  in  which  said  building  and  loan  association 

may  be  lo<  ated. 

I      AM  .  ontra<  1     made  and  securities  taken  in  accordance  with  this 

hall  be  valid  for  the  full  amount  ol  principal  and  interest  charged,  and  shall 

not  be  held  usurious. 

Sec.  2390,     Nothing  in  this  act  shall  beheld  toapplytoany  building  and  loan 

iatiorj  heretofore  incorporated,  unless  said  association  shall  by  vote  of  a 


GENERAL   LEGISLATION.  691 

majority  of  its  stock-holders,  adopt  the  provisions  of  this  act  as  an  amendment 
to  its  charter. 

Sec.  2391.  All  the  provisions  of  this  ait  arc  hereby  made  to  apply  to  all 
saving  institutions  which  pay   interest  to  depositors, and  whose  deposits  are 

not  subject  to  check. 

SEC.  2393  (as  amended  acts  iNub,  p.  52}.— Every  building  and  loan  association 
heretofore  or  hereafter  incorporated  under  the  laws  ol  this  stale,  which  1 
business  in  or  outside  of  this  stale,  shall  deposit  and  keep  on  deposit   with  the 
treasurer  ol  this  state,  or  with  a  legally  incorporated  and  duly  organ 
company,  to  be  selected  bv  the  !>•  iard  1  1  dire<  tors  oi  sue  h  ass<  iciation,  in  1 
for  all  its  members  and  creditors,  seventy-tive  per  cent,  of   the  amount  1 
mortgages  (or  other  securities)  received  by  it  in  the  usual  course  oi   its    busi- 
ness.    When  such  mortgages  (or  other  securities^  are  deposited  with  the 
trust  company  or  state  depository,  such  company  01    ,tate  depo  itory    shall 
certify  to  the  treasurer  of  this  slate  thai   the  said  securities  have  been  and  are 
deposited  with  it  under  this   act,  and  the  same  shall  not    be  surrendered 
returned  to  the  said  building  and  lo.m  association   without  the   authori 
sanction  of  the  said  treasurer  of  this  state  ;  Provided,  that  every  such  cor]  ora- 
tion heretofore  or  hereafter  organized,  whose  m  or  other  secunlii 
deposited  do  not  amount  to  twenty-five  thousand  dollars  ($25,000^,  shall  have 
fifteen   months  alter  organization,  as  to  those  not    yet  organized,  and   as  to 
those  already  organized,  fifteen  months  within  three  months  fromth 
of  this  act,  deposit  with  said  state  treasurer  or  trust  company  such  additional 
securities  as  with  securities  so  deposited  shall  equal  in  value  the  sum  of  twenty- 
five  thousand  dollars  ($25,000)  ;  and  every  such  corporation  hereafter  organized, 
within  fifteen  months  after  commencing  to  do  business,  shall  deposit  with  the 
said  state  treasurer  or  trust  company,  in  trust  as  aforesaid,  securities  ol  the  \ 
of  twenty-five   thousand  dollars  ($25,000;.      The  securities  mentioned    in   this 
provisoshall  consist  of  bonds  or  treasury  notes  of  the  United  States,  national 
or  state   bank    notes,  or  bonds    of  this  state  or  any  other    state   of  the    United 
States,  or  of  any  solvent  city,  town  or  county  of  this  state  having  legal  author- 
ity to  issue  the  same,  or  first  mortgages  on  real  estate,  or  other  legal  securities 
aggregating  in  value  twenty-five  thousand  dollars   $25,000),  and  such  securities 
may  be  withdrawn,  from   time  to  time,  when  mortgage  securities  ol    corre- 
sponding value  shall  be  deposited  in  lieu  and  place  thereof,  as  provided  in  this 
act,  or   when  other   securities  of  equal   character  and  value  are  substituted 
therefor  ;  and  it  shall  be  the  duty  of  the  treasurer  of  this  state  to  examine  the 
affairs  of  said  associations,  from  time  to  time,  to  ascertain   whether  said  asso- 
ciations have  deposited  seventy-five  per  cent,  of  all  their  securities  and  other- 
wise complied  with  the  requirements  of  this  act  ;  Provided,  that  any  association 
which     has    deposited    all  of  its   securities   on    hand    at  the  time   tins    act 
takes  effect  shall  be  required   to  make  quarterly   deposits   only  of   securities 
taken  by  it  in  the  future,  that  is,  at  the  end  of  periods  of  three  months  there- 
after.    Whenever  any  association  incorporated  under  the  laws  of  this  state  is 
required  by  the  laws  of  any  other  state,  territory  or  nation  to  make  a  deposit 
of    securities    in  such   state,    territory   or    nation,  as  a  condition    of    doing 
business  therein,  such  association  may  deposit  a  portion  of  its  securities  with 
the  properly  authorized  officer  of  such  other  state,  territory  or  nation  ;  Provided 
however,   that    the  amount  of  securities   kept  on  deposit    in  this   state  shall  at 
all  times  equal  seventy-five  per  cent,  of  the  amount  ol  the  loans  made  and  then 
outstanding  in  this  state  ;  And  provided  farther,  that  the  securities  so  deposited 
in  this  state  shall  not  thereby  be  reduced  below  the  sum  of  twenty-live  thousand 
dollars  $25,000). 

Sec.  2394. — All  interest  and  dividends  and  premiums  which  may  accrue  on 
securities  held  by  said  state  treasurer  or  by  such  trust  company,  as  provided 
herein,  and  till  dues  or  monthly  payments  which  may  become  payable  on 
stock  pledged  as  security  for  loans,  the  mortgages  for  which  art-  so  deposited 
in  accordance  with  the  provisions  of  this  act,  may  be  collected  and  retained  by 
the  association  depositing  such  securities  or  mortgages.  Any  mortgage(or 
other  security)  which  shall  have  been  fully  paid  to  said  association  or  which 
the  borrower  desires  to  pay  off  and  discharge,  and  any  mortgage  (or  other 
security)  upon  which  default  in  the  payment  due  has  been  made  and  of  which 
said  association  shall  desire  possession  for  the  purpose  of  collection  or  fore- 
closure, and  all  securities  needed  by  it  for  deposit  in  any  other  state,  terri- 
tory or  nation  according  to  the  provisions  of  section  l  of  this  act,  shall  be 
surrendered  by  said  state  treasurer,  or  on  his  order,  to  the  association  deposit- 
ing same,  upon  riling  with  him  the  affidavit  of  the  president  and  secretary 
thereof,  stating  the  reason  or  reasons  for  desiring  to  withdraw  such  security 


692  APPENDIX   IV. 

or  securities,  and  such  securitiy  or  securities  shall  not  be  used  for  any 
purpose  other  than  that  stated  in  the  affidavit  ;  Provided,  that  when  said  asso- 
ciation is  dissolved,  according  to  the  provision  of  its  charter,  and  ceases  to  do 
business,  all  securities  deposited  by  it  shall  be  returned  to  it  upon  furnishing 
said  state  treasurer  with  satisfactory  evidence  of  the  fact  of  its  dissolution  as 
aforesaid.  Bonds  or  stocks  deposited  with  said  state  treasurer,  or  trust  com- 
pany,  as  aforesaid,  shall,  if  deemed  advisable  by  the  association,  be  surrender- 
ed to  the  association  depositing  same  for  the  purpose  of  being  converted  into 
cashand  loaned  on  real  estate. 

Sec.  2395. — No  building  and  loan  association  organized  under  the  laws 
of  any  other  state,  territory,  or  foreign  government  shall  do  business  in  this 
state  "unless  said  association  shall  deposit,  and  continually  thereafter  keep  de- 
posited, in  trust  for  all  its  members  and  creditors,  with  some  responsible  trust 
company,  or  with  the  state  treasurer  of  this  or  some  other  state  of  the  United 
States,  seventy-five  per  cent,  of  ail  its  securities  ;  all  the  personal  obligations 
of  its  members  taken  in  the  ordinary  course  of  business  of  such  association 
and  secured  on  first  mortgages  on  real  estate  ;  seventy-rive  per  cent,  of  all 
dividends  and  interest  which  may  accrue  on  securities  held  in  trust,  as  afore- 
said, by  the  trust  company  or  the  state,  as  provided  for  herein  ;  and  all  dues  or 
monthly  payments,  which  may  become  payable  on  stock  pledged  as  security 
for  loans,  the  mortgages  for  which,  all  on  deposit  in  accordance  with  the  pro- 
visions of  this  act,  may  be  collected  and  retained  by  the  association  depos- 
iting such  securities  or  mortgages.  Any  securities  on  deposit,  as  provided 
herein,  of  said  building  and  loan  association  in  this  state,  if  the  amount  of  said 
securities  so  deposited  is  less  than  all  of  its  securities,  may,  from  time  to  time, 
be  drawn,  if  others  of  equal  value  are  substituted  therefor.  Every  building 
and  loan  association,  organized  under  the  laws  of  any  state,  territory,  or  for- 
eign government,  shall,  before  commencing  to  do  business  in  this  state, 

1.  File  with  the  secretary  of  this  state,  a  duly  authenticated  copy  of  its 
charter  or  articles  of  incorporation. 

2.  File  with  the  secretary  of  this  state  the  certificate  of  the  proper  state  offi- 
cer of  another  state  or  the  president  or  secretary  of  some  responsible  trust 
company  certifying  that  it  has  on  deposit  seventy-five  per  cent,  of  all  the 
securities,  not  less  than  twenty-five  thousand  dollars  of  the  kind  and  amount 
required  by  the  laws  of  such  other  state,  taken  in  the  regular  course  of  busi- 
ness, as  mentioned  in  this  act,  in  trust  for  all  the  members  and  creditors  of 
such  building  and  loan  association. 

3.  File  with  the  secretary  of  this  state  a  duly  authenticated  copy  of  a  resolu- 
tion adopted  by  the  board  of  directors  of  such  association  stipulating  and 
agreeing,  that  if  any  legal  process  affecting  such  association  be  served  on 
said  secretary  of  state,  and  a  copy  thereof  be  mailed,  postage  prepaid  by  the 
party  procuring  the  issuing  of  the  same,  or  his  attorney,  to  said  association, 
addressed  to  its  home  office,  then  such  service  and  mailing  of  such  process 
shall  have  the  same  effect  as  personal  service  on  said  association  in  this  state. 

4.  Pay  the  secretary  of  this  state  fifty  dollars  ($50)  as  fees  for  filing  the  paper 
mentioned  in  this  section. 

Sec.  23c/). — When   process  against  or  affecting  any  foreign  building  and 
loan  a--1  iciatii  m  is  served  on  the  secretary  of  state,  the  same  shall  be  by  dupli- 
cate copies,  one  of  which  shall  be  filed  in  the  office  of  said  secretary  of  state, 
and  the  other  by  him  immediately  mailed, postage  prepaid,  to  the  home  office 
ation.     The  word  "  process  "  in  this  act  shall  include  any  writ, 
summon  ,  complaint,  declaration,  or  order,  whereby  an  action,  suit,  or   pro- 
ceeding shall  be  commenced,  or  which   shall  be  issued  in  or  upon  any  action, 
suit,  or   proceeding  at  law,  or  in  equity,  authorized   by  law  in   this  state. 
Thirty  daj    '  time  shall  be  allowed  to  answer  in  any  action,  suit,  or  proceeding. 
Sec.  2397.     When,  by  the  laws  of  any  other  state,  territory,  or  nation,  any 
I10  n      fees,  deposits  of  money  or  securities,  or  other 
prohibitions,  are   imposed  on   building  and  loan  associations 
ol  1!  doing  business  in  such  olher  state,  territory,  or  nation,  or  upon 

their  agenl    th  >  lor  ch  la       continue  of  force,  the  same  obliga- 

tion 1  or  prohibitions  oi  whatever  kind  shall  be  imposed  upon  all  building  and 
loan  .1    io(  iation    ol    m  h  othei    tate, territory,  or  nation,  doing  business  in  this 
nd  upon  th  here. 

[896,  p.  52). — The  name  "  building  and  loan  asso- 
ciation "  a     11  '<lnillii.nl    .hall   mi  I  ml <■  all  corporations,  societies,  or  organ  i- 

zatio  [  a  sayings  and  loan  or  investment  business,  on 

the  building  id  iety  plan,  viz.,  loaning  its  fund    to  its  members,  whether  issu- 
ing 1  ol    tock  which  mature  at  a  given  time  fixed  in  advance  or  not, 


GENERAL   LEGISLATION.  693 

except  those  which  restrict  their  business  to  the  county  of  their  domicile,  and 
not  more  than  two  other  adjacent  counties. 

Sec.  2399. — No  officer,  director  or  agent  of  any  foreign  building  and  loan 
association  shall,  in  this  state,  solicit  subscriptions  to  the  stock  of  such  associ- 
ation, or  sell  or  issue,  or  knowingly  cause  to  be  sold  or  issued, to  a  resident  of 
this  state,  an v  stock  of  an  association  while  said  association  ha^  not  on  deposit, 
as  required  by  section  2395,  seventy-live  per  cent,  of  all  its  securities, or  before 
said  association  has  complied  with  all  the  provisions  ol  this  act.  Any  viola- 
tion thereof  shall  be  deemed  a  misdemeanor. 

Sec.  2400.— No  officer,  director,  or  agent  of  any  building  and  loan  asso- 
ciation incorporated  under  the  laws  of  this  state  shall  sell,  issue,  or  knowingly 
cause  to  be  sold  or  issued,  to  any  person  not  a  resident  of  the  state  in  which 
the  home  office  of  said  company  is  located,  any  stock  of  said  association  while 
said  association  does  not  have  on  deposit,as  required  by  section  2393,  seventy- 
five  per  cent,  of  all  of  the  securities  of  said  association  taken  in  the  regular 
course  of  business.     Any  violation   thereof  shall  be  deemed  a  misdemeanor. 

Sec.  240:. — No  tines,  interest,  or  premiums  paid  on  loans  111  any  building 
and  loan  association  shall  be  deemed  usurious,  and  the  same  may  be  collected 
as  debts  of  like  amount  are  now  collected  by  law  in  this  state  and  according 
to  the  terms  and  stipulations  of  the  agreement  between  the  assO(  i  ition  and 
the  borrower. 

Sec  2402. — Every  building  and  loan  association  governed  by  this  act  shall 
file  with  the  treasurer  of  this  state  annually,  within  sixty  days  alter  the  expira- 
tion of  its  fiscal  year,  a  statement  of  its  assets  and  liabilities  at  the  end  of  said 
fiscal  year  ;  such  report  shall  be  riled,  under  oath,  by  the  president  and  secre- 
tary, or  by  three  of  the  directors  of  the  association.  Such  association  shall 
pay  to  the  state  treasurer  ten  dollars  (SiO)  on  filing  such  report.  If  any  such 
association  shall  wilfully  fail  to  furnish  to  the  state  treasurer  any  report  re- 
quired by  this  act,  at  the  time  so  required,  it  shall,  in  the  discretion  of  a  court 
of  competent  jurisdiction,  forfeit  the  sum  of  twenty-five  dollars  ($25)  per  day 
for  every  day  such  report  shall  be  delayed  or  withheld,  and  the  state  treasurer 
may  maintain  an  action  in  his  name  of  office  to  recover  such  penalty,  and  the 
same  shall  be  paid  into  the  treasury  of  the  state. 

Sec.  2403. — Every  association  depositing  securities  with  the  state  treasurer 
as  provided  for  in  this  act  shall  annually  pay  to  said  treasurer  a  fee  of  fifty 
dollars  (S50).  Wherever  in  this  act  it  is  provided  for  a  deposit  with  the  state 
treasurer  or  trust  company,  such  deposit  may  likewise  be  made  with  any  one 
of  the  legally  authorized  state  depositories. 

Sec  2404. — All  officers  of  any  building  and  loan  association  governed  by 
this  act  and  doing  business  in  this  state,  who  handle  or  have  the  custody  of 
any  of  the  funds  of  such  association,  shall  give  sufficient  bonds  for  the  faithful 
performance  of  their  duties  as  the  board  of  directors  may  require,  and  no 
such  officer  shall  be  deemed  qualified  to  enter  upon  the  duties  of  his  office 
until  his  bond  is  approved  by  the  board  of  directors  with  whom  such  bonds 
shall  be  filed.  The  penalty  for  a  failure  of  any  association  to  file  and  main- 
tain the  bonds  or  policy  as  required  by  the  provisions  of  this  section,  shall  be 
a  fine  of  one  hundred  dollars  ($  100 )  for  each  day  such  association  transacts 
business  after  such  bond  has  become  due  under  the  provisions  of  this  act. 
Said  bond  or  policy  shall  be  held  in  trust  for  the  benefit  and  protects  m  of  the 
members  of  such  association,  and  shall  be  enforceable  by  any  member,  when- 
ever cause  of  action  shall  accrue  thereon. 

Sec  2405. — The  provisions  of  this  Article  (sees.  2393  to  2406)  shall  not  apply 
to  building  and  loan  associations,  or  other  associations  of  like  character,  which 
cease  to  do  interstate  business,  and,  upon  satisfactory  evidence  being  produced 
to  the  state  treasurer  that  such  building  and  loan  associations  have  ceased 
to  do  business  outside  of  the  state,  he  shall  not  demand  the  special  tax  on  said 
associations  so  long  as  they  cease  to  do  business  out  of  the  state  ;  but  this  shall 
not  be  construed  as  relieving  said  association  from  payingthe  same  license  or 
tax  requested  of  other  associations  doing  business  in  this  state. 

Sec  2406. — The  fees  required  by  this  article  (sees.  2393  to  2406)  to  be  paid 
by  building  and  loan  associations,  when  paid,  shall  operate  as  a  license  to 
such  associations  to  carry  on  business  in  the  state  of  Georgia,  and  shall  not 
be  in  lieu  of  any  and  all  licenses  or  fees,  whether  state,  county,  or  municipal, 
to  be  exacted  of  such  associations  for  doing  business  in  this  state,  except  a 
business  license  by  the  town  or  city  in  which  the  principal  office  of  any  such 
association  is  located  ;  Provided,  that  this  shall  not  be  construed  to  exempt 
such  associations  from  liability  for  such  ad  valorem  tax  on  their  capital  stock 
as  may  now  be  required  by  law  to  be  paid  to  the  state  and  county  of  their 

45 


694:  APPENDIX   IV. 

domicile,  or  on  any  real  and  personal  property  other  than  their  capital  stock 
held  and  owned  by  such  associations. 

3  REVISED  STATUTES,  1895. 

Sec.  595 — If  any  officer,  director  or  agent  of  any  foreign  building  and  loan 
association  shall,  in  this  state,  solicit  subscriptions  to  the  stock  of  such  associa- 
tions, or  sell  or  issue,  or  knowingly  cause  to  be  sold  or  issued  to  a  resident  of 
this  state,  any  stock  of  an  association,  while  said  association,  has  not  on  de- 
posit, as  required  by  law,  seventy-five  per  cent,  of  all  its  securities  or  before 
said  association  has  complied  with  all  the  provisions  of  law,  he  shall  be  guilty 
of  a  misdemeanor. 

Sec.  596— If  any  officer,  director  or  agent  of  any  building  and  loan  asso- 
ciation incorporated  under  the  laws  of  this  state  shall  sell,  issue  or  knowingly 
cause  to  be  sold  or  issued,  to  any  persons  not  a  resident  of  the  state  in  which 
the  home  office  of  said  company  is  located,  any  stock  of  said  association  while 
said  association  does  not  have  on  deposit,  as  required  by  law,  seventy-five  per 
cent,  of  all  of  the  securities  of  said  association  taken  in  the  regular  course  of 
business,  he  shall  be  guilty  of  a  misdemeanor. 

ACTS  1897,  p.  62. 

Sec.  1. —All  building  and  loan  associations  incorporated  under  the  laws  of 
this  state  which  do  business  within  and  without  the  state,  and  all  such  ass<  »- 
ciations  organized  under  the  laws  of  other  states  and  doing  business  in  this 
state,  and  which  are  required  by  law  to  make  deposit  of  securities,  be,  and 
they  are,  hereby  required  to  deposit  and  to  keep  on  deposit  with  some  one  of 
the  legally  authorized  state  depositories  of  this  state,  or  with  a  legally  incor- 
porated and  duly  authorized  trust  company,  to  be  selected  by  the  board  of 
directors  of  such  association,  in  trust  for  all  its  members  and  creditors,  seventy 
five  per  cent,  of  the  amount  of  all  mortgages  or  securities  received  by  it  in  the 
usual  course  of  its  business  ;  such  securities  to  be  held  and  kept  by  such  de- 
pository as  now  required  by  law. 

Sec.  2. — The  treasurer  of  the  state  shall  not  be  permitted  to  accept  and 
hold  the  deposit  of  securities  as  herein  provided  for,  nor  shall  he  be  required 
to  make  any  examination  of  the  affairs  of  said  association,  to  ascertain  whether 
said  associations  have  deposited  seventy-five  per  cent,  of  all  their  securities 
and  otherwise  complied  with  the  requirements  of  law ;  but  the  certificate  of 
the  particular  depository  or  trust  company  that  such  deposit  has  been  made 
by  the  particular  association  shall  be  sufficient  evidence  of  that  fact  to  the 
treasurer.  The  certificate  issued  by  such  depository  or  trust  company  shall 
state  on  its  face  that  the  securities  so  deposited  have  not  been  examined  by 
tate  authority  in  order  to  ascertain  whether  or  not  seventy-five  per  cent. 
of  the  apse's  of  such  association  have  been  deposited. 

Sec.  3. — Every  association  depositing  securities  with  a  state  depository  or 
trust  company,  as  provided  by  law,  shall  annually  pay  to  said  depository  or 
trust  company  a  fee  of  fifty  dollars. 

Sec.  4. — Nothing  herein  ci  intained  shall  lie  c<  mstrued  to  relieve  any  building 
or  loan  association  from  making  reports  of  its  condition  to  the  stale  treasurer 
and  paving  the  lees  now  required  by  law  to  be  paid  upon  the  filing  of  such 
reports. 

SEC.  5. — All  building  and  loan  associations  having  deposits  of  securities  with 
the  state  treasurer  shall  be  required  to  remove  same  within  thirty  days  after 
of  this  act  and  deposit  them  as  herein  directed. 

Sei  6.  An\'  mortgage  (or  other  se<  urity)  which  shall  have  been  fully  paid 
to  on,  or  which  the  borrower  desires  to  pay  ofl   and  discharge, 

and  any  m  1  oth  1    ecurity)  upon  which  default  in  the  payment  due 

has  been  made  and  of  which  said  association  shall  desire  possession  forthe 
n  01  foreclosure  and  all  securities  needed  by  it  for  deposit 
in   any   Other   State,   territory  or   nation,   shall    be    surrendered    by  said  state 
01    tru  i   company  to  the  association   depositing  the  same,  upon 

filing  with  tory  01  trust  1 pany  the  affidavit  of  the  president 

eoi     tatingrea  onorrea  ons  for  desiring  to  withdraw  such 

and  such  securit)  01     ecurities  shall  not  be  used  for 

any  purpo  e  other  than    thai  slated  in  the  amdavil  ;    Provided,  that    when 

mi  0    ed,  according  to  the  provisions  of  its  charter,  and 

mm     ..ill    ecurities  deposited  by  it  shall  be  returned  to  it  upon 

fm  in  nine  0  itory  or  trusl  company  with  satisfactory  evidence 

of  the  fact  of  the  di    olution  as  aforesaid.     Bonds  or  slocks  deposited  with 

.said  oi  11 11  t  company,  as  aforesaid,  shall,  if  deemed  advisable 


GENERAL   LEGISLATION.  695 

by  the  association,  be  surrendered  to  the  association  depositing  the  same  for 
the  purpose  Of  being  converted  into  cash  and  loaned  on  real  estate. 

IDAHO. 

REVISED  STATUTES  OF  1887. 

Section  2796. — Corporations  organized  for  the  erection  of  buildings  and 
making  other  improvements  on  real   property,  may  raise  funds  in  shares  not 

exceeding  two  hundred  dollars  each,  payable  in  periodical  instalments.  Such 
bodies  are  known  as  land  and  building  corporations,  and  may  be  organized 
with  or  without  a  capital  stock. 

Skc.  2707. — Any  such  corporation  may  borrow  money  foi  the  purpose  of 
carrying  out  its  objects,  and  may  ,^ive  as  security  therefor  its  shares  or  mort- 
gages upon  its  real  estate. 

SEC.  2798.— Any  such  corporation  may  purchase  real  estate  and  erect  build- 
ings for  its  members,  and  make  loans  to  its  members  for  the  purpose  of  aiding 
them  in  acquiring  and  improving  real  estate.  Such  loan  must  in  all  cases  be 
secured  on  such  real  estate. 

Sec.  279;;. — Such  corporation  may  insure,  in  some  life  insurance  company, 
the  lives  of  its  members  and  debtors.  In  case  of  the  death  of  a  debtor  or  mem- 
ber so  insured,  the  amount  recovered  on  the  policy,  must  be  applied  to  ex- 
tinguish the  indebtedness,  including  the  premium  paid,  and  the  residue,  if 
any.  must  be  paid  to  the  legal  representative  of  the  decendent  [deced< 

Sec.  2800. — Any  such  corporation  may  purchase,  hold  and  convey  real 
estate  as  follows  : 

1.  The  lot  and  building  in  which  the  business  of  the  corporation  is  carried 
on,  the  cost  of  which  must  not  exceed  twenty  thousand  dollars  ; 

2.  Such  as  may,  from  time  to  time,  be  necessary  to  supply  the  wants  of 
members,  the  cost  of  which  held  unallotted  to  the  members  thereof  at  anyone 
time,  must  not  exceed  the  sum  of  fifty  thousand  dollars  ; 

3.  Such  as  have  been  mortgaged,  pledged  or  conveyed  to  it  in  bust,  to 
secure  money  loaned  or  to  secure  the  purchase  price  thereof  in  pursuance  of 
the  regular  business  of  the  corporation. 

Sec.  2801. — The  by-laws  of  such  corporations  must  specify  the  amount  of 
the  periodical  subscriptions  or  payments  to  be  made  by  each  member,  the 
time  and  manner  in  which  such  payments  are  to  lie  made  ;  the  lines  and 
feitures for  default ;  the  time  and  manner  of  election  of  directors  and  other 
officers,  and  their  terms  of  office  ;  the  manner  in  which  the  real  estate  may  be 
distributed,  allotted  or  sold  to  its  members  ;  the  terms  and  conditions  upon 
which  loans  may  be  made  to  its  members,  and  by  them  repaid  to  the  cor;  ora- 
tion ;  the  manner  in  which  a  person  may  become,  and  cease  to  be  a  member  ; 
the  conditions  on  which  members  may  withdraw  from  the  corporation,  and 
the  provisions  for  the  payment  to  withdrawing  members  of  the  sums  of  money 
due  them,  arising  from  subscriptions  or  payments,  and  the  proportion  of  the 
profits  such  withdrawing  members  may  receive  on  withdrawal. 

Sec  2802. — The  secretary  of  any  such  corporation  must,  once  in  each  year 
during  the  existence  of  the  corporation,  prepare  a  full  and  explicit  tement 
of  the  financial  affairs  thereof,  comprising  a  balance  sheet,  statements  of 
receipts  and  expenditures,  profit  and  loss,  and  assets  and  liabilities,  which 
must  be  audited  and  verified  by  two  competent  persons  |  not  directors)  elected 
by  the  general  body  of  shareholders,  and  be  countersigned  by  the  pre;  < 
and  secretary.  A  copy  of  such  statement  must  be  j  anted  and  circulated 
among  the  members,  and  appear  immediately  after  the  annual  meeting  of 
the  corporation,  daily  at  least  one  week,  or  weekly  at  leasl  r  iur  weeks,  in  one 
or  more  newspapers  published  at  the  place  of  business  of  the  0  irporation. 

SEC.  2803. — Every  present  and  past  member  of  such  corporation  is  per- 
sonally liable  for  such  proportion  of  all  its  debts  and  liabilities,  incurred  dur- 
ing his  membership,  as  the  number  of  shares  subscribed  by  him  bears  to  the 
whole  number  of  subscribed  shares;  but  no  past  member  is  liable  for  Mich 
contribution  if  more  than  one  year  elapsed  since  he  ceased  to  be  a  member 
before  suit  is  commenced,  nor  for  any  debtor  liability  contracted  after  the 
time  at  which  he  ceased  to  be  a  member,  nor  unless  it  appears  to  the  court 
that  that  corporation  is  unable  to  satisfy  such  debts  and  liabilities  ;  nor  musl 
any  contribution  be  required  from  any  member  or  past  member  exceeding 
the  amount  unpaid  on  the  shares  in  respect  to  which  it  is  liable. 

Sec  2804. — Any  two  or  more  such  corporations  may  unite  and  become  in- 
corporated in  one  body,  with  or  without  any  dissolution  or  division  of  the 


696  APPENDIX   IV. 

funds  of  such  corporation,  or  either  of  them  ;  or  any  such  corporation  may 
transfer  its  engagements,  funds  and  property  to  any  other  such  corporation 
upon  such  terms  as  mav  be  agreed  upon  by  two-thirds  of  the  members  of  each 
of  such  bodies  present  at  general  meetings  of  the  members,  convened  for  the 
purpose,  by  notice,  stating  the  object  of  the  meeting,  sent  through  the  post- 
office  to  every  member,  and  by  general  notice  appearing  daily,  at  least  one 
week,  or  weekly,  at  least  two  weeks,  in  some  newspaper  published  at  the 
placeof  the  principal  business  of  the  corporation  ;  but  no  such  transfer  can 
prejudice  any  right  of  any  creditor  of  either  corporation. 

Sec.  2805— Married  women  and  minors  may  be  admitted  as  members,  and 
may  take  and  hold  shares  in  such  corporations,  and  may  execute  all  neces- 
sary  instruments,  and  give  all  necessary  acquittances,  and  sell  and  transfer 
their  shares  in  like  manner  as  other  members. 

ILLIiVOBS. 

1  STARR  &  CURTIS  REVISED  STATUTES,  1896,  pp.  1046  to  1054. 

Section7  i. — Whenever  any  number  of  persons,  not  less  than  five,  may  de- 
sire to  become  incorporated  as  a  mutual  building,  loan  and  homestead  asso- 
ciation, for  the  purpose  of  building  and  improving  homesteads  and  loaning 
monev  to  the  members  thereof  only,  they  shall  make  a  statement  to  that  effect, 
under  their  hands  and  seals,  duly  acknowledged  before  some  officer  in  the 
manner  provided  for  in  the  acknowledgment  of  deeds.  Such  statement  shall 
set  forth  the  name  of  the  proposed  corporation,  its  capital  stock,  its  location, 
and  the  duration  of  the  corporation  ;  which  statement  shall  be  filed  in  the 
office  of  thesecretary  of  state.  The  secretary  of  state  shall  thereupon  issue  to 
such  persons  a  license  as  commissioners,  to  open  books  for  subscription  to  the 
capital  stock  of  said  corporation,  at  such  time  and  place  as  they  mav  deter- 
mine ;  but  no  license  shall  be  issued  to  two  associations  having  the  same 
name. 

Sec.  2. — As  soon  as  one  hundred  shares  or  more  of  the  capital  stock  shall 
be  subscribed,  the  commissioners  shall  convene  a  meeting  of  the  subscribers 
for  the  purpose  of  electing  directors,  adopting  a  charter  and  by-laws,  and  the 
transaction  of  such  other  business  as  shall  come  before  them.  Notice  thereof 
shall  be  given  by  depositing  in  the  postoffice,  properly  addressed  to  each  sub- 
scriber, at  least  ten  days  before  the  time  fixed,  a  written  or  printed  notice,  stat- 
ing the  object,  time  and  place  of  such  meeting.  Directors  of  such  corpora- 
tions organized  under  this  act  shall  be  elected,  classified  and  hold  their  office 
for  such  period  of  lime  as  is  provided  by  general  law  governing  the  election 
1  id  1  l.issincation  of  directors,  trustees  or  managers  of  corporations. 

Sec.  3. — The  commissioners  shall  make  a  full  report  of  their  proceedings, 
including  therein  a  copy  of  the  notice  provided  for  in  the  foregoing  section,  a 
copy  of  the  subscription  list,  a  copy  of  the  charter  and  by-laws  ado;  ted  bythe 
assoi  i  ition,  and  the  names  of  the  directors  elected  and  their  respective  terms 
ol  office,  which  report  shall  be  sworn  to  by  at  least  a  majority  of  the  com- 
missioners,  and  shall  be  filed  in  the  office  of  the  secretary  of  state,  and  the 
secretary  of  state  shall  submit  said  by-laws  to  the  attorney  general,  who 
shall  report  whether  such  by-laws  conform  to  the  requirements  ol  this  act, 
andi!  d  by  the  attorney  general,  the  secretary  ofstate  shall  thereupon 

issue  ate  ol  the  complete  organization  of  the  corporation,  making  a 

I  irt  thereof  a  copy  of  all  papers  filed  in  his  office  in  and  about  the  organization 
of  the  corporation  and  duly  authenticated  under  his  hand  and  sea!  ol  state; 
and  the  same  shall  he  recorded  in  the  office  of  the  recorder  of  deeds  in  the 
county  in  which  the  principal  office  of  such  company  is  located.  Upon  the 
recording  of  said  copy  the  corporation  shall  he  deemed  fully  organized  and  may 
1  no.  dii  to  business  ;  unless  such  company  shall  be  organized  and  shall  proceed 
to  Pi], mess  as  provided   in   this  acl    within   two  years  alter  the  date  of  such 

[j  en  e,  thelicen  e  shall  he  deemed  revoked  and  all  proceedings  thereunder 

^nd  any  sub  equenl  amendment  or  alterations  of  said  by-laws  shall  be 

11     ol     tate  and  approved  by  the  attorney  general  and 

I  in  HI      manner  as  the  original  by-laws,  before  the  same  shall  be- 

comi  ;  and  only  such  by-laws  as  shall  have  been  submitted,  approved 

and  erein  provided  shall  be  deemed  operative.     And  a  true  copy 

ol  all    uch  by-laws  and  amendments  thereto  shall  be  filed  with  the  auditor  of 

publii  x    amended  by  actai    roved  fune  i<>,  1893.] 

,     Corporations  formed  lin  tel  shall  be  bodies  corporate  and 

politii  i"!  the  period  for  which  they  are  organized  ;  mav  sue  and  be  sued  ;  may 
have: nmon  ieal,  whi<  h  they  may  alter  and  renew  at  pleasure. 


GENERAL  LEGISLATION.  697 

Sec.  5A.— The  corporate  powers  shall  be  exercised  by  a  board  of  din 
of  not  less  than  seven  in  number,  all  of  whom  shall  be  bona  fide  resident-  ol 

the  stale  of  Illinois 

The  officers  shall  consistof  a  president,  vjo  nt,  secretary  and  treas- 

urer, to  be  elected  at  the  annual  meeting  of  the  dire<  ti 

Theduties  of  the  officers,  their  term  of  office,  the  time  and  manner  of  their 
election,  the  manner  of  filling  vacancies,  the  time  ol  ,  eriodical  m 

ings  of  the  officers  and  shareholders,  the  manner  ol  call 
ings  not  provided  for  in  this  act,  and  manner  of  voting,  -hail  be  determined  by 
the  by-laws,  when  not  provided  in  this  act,  and  unle  the 

secretaryand  treasurer  shall  he  provided  form  the  by-laws,  the  directors  shall 
annually  fix  and  determine  the  same.  [As  amended  by  act  approved  Jun<  •<, 
l807,  i'1  force  July  1,  [897.] 

SEC  5B.— Every  person  appointed  or  elected  to  any  position  requiring  the 
receipt,  payment,  management  or  use  of  money  belonging  tosuch  a 
shall  become  bounden  with  two  or  more  l  i  ficient  -luetics,  or  in  some 

good  and  responsible  fidelity  insurance  company,  insuchsum  as  the  dire, 
shall  require  and  approve.     Such  bonds  shall  be  executed  annually  and  shall 
be  recorded  on  the  secretary's  record,  and  such  bond  or  insura  hall 

be  filed  with  the  auditor  of  public  accounts  of  this  state  idaysnext 

after  the  approval  thereof  by  the  board  of  directors,  and  1  1  [01  filing  the 
same  shall  be  one  dollar.  Such  bond  shall  be  sufficient  in  amount  to  pro 
the  association  from  loss  by  reason  of  malfeasance  in  office  or  failure  to  faith- 
fully perform  and  discharge  the  duties  of  his  position.  No  officer  or  employe 
who  is  required  to  give  bond  shall  be  deemed  qualified  to  enter  upou  the  dis- 
charge of  his  duties  until  his  bond  shall  have  bei  n  ap]  roved  1  a  n  aji  1 
the  board  of  directors  by  a  written  indorsement  thereon  and  filed  with  the 
auditor  of  public  accounts  as  herein  required.  [As  amended  by  act  approved 
June  16,  [897,  m  force  July  1.  1897.] 

Sec.  5C. — The  directors  shall  have  power  to  borrow  money  for  such  tem- 
porary uses  and  pur;-  ses  of  the  association  as  the  exigencies  of  the 
may  demand  and  as  are  not  inconsistent  with   the  objects  of  the  association  ; 
but  no  monev  shall  be  borrowed  for  the  purpose  of   making  advances.     To 
secure  such  loans  the  directors  may  cause  the  obligation  or  obligations  of  the 
association  to  be  issued  therefor,  bearing  interest  at   not   to  exceed  the  l< 
rate.     No  such  loan  or  loans  shall  have  a  longer  duration  than  one  year,  u<  .r 
shall  the  aggregate  amount  of  such  outstanding  indebtedness  at  any  one  time 
exceed  five  per  centum  of  the  assets  of  the  associati   ;i.     Before  any  mo 
shall  be  borrowed  the  board  of  directors  shall  first,  by  a  majority  vote  ol  all 
members,  pass  and  record  a  resolution  to  that  effect.     [As  amended  by  act 
approved  June  16,  1897,  in  force  July  1,  1897.] 

Sec.  5D. — When  the  directors  shall  have  declared  any  share-  b  »  have  reached 
maturity,  the  owners  thereof  shall  be  entitled  to  receive  such  maturity  value, 
with  such  interest,  not  exceeding  the  legal  rate,  as  the  directors  may  deter- 
mine, from  the  time  of  maturity  until  paid  ;  Provided, that  at  no  time  shall  the 
aggregate  amount  of  such  shares  outstanding  exceed  ten  per  centum  of  the 
assets  "of  the  association.  [As  amended  by  act  approved  June  16,  [897,  in  force 
July  1,  1807. 

Sec.  6A.— The  capital  to  be  accumulated  shall  be  divided  into  shares  having 
a  maturity  value  of  one  hundred  dollars  each.     The  share-  shall  he  deem 
be  personal  property  in  the  hands  of  the  members,  transferable  upon  the  bi 
of  the  association  in  the  manner  provided  in  the  by-laws.     The  shares  may 
be  issued  in  such  periodical  series  and  at  such   time  or  times  as  the  by-laws 
shall  designate  ;  and  the  shares  in  each  series  may,  if  the  by-laws  shall  so 
provide,  be  subdivided  into  classes,  each  class  having  a  different  fixed  period- 
ical payment  of  dues,  of  not  to  exceed  the  sum  of  two  dollars  per  share  ] 
month.     Every  share   shall   be   subject  to  a  lien   for  the  payment  ol  111: 
instalments  and  such  other  charges  as  maybe  lawfully  incurred 
the  provisions  of  this  act, and  the  by-laws  may  prescribe  the  manner  of  enforc- 
ing such  lien.     The  payment  of  such  dues  shall  continue  on   each   share  until 
the  same  shall  have  reached  maturity  value  or  is  withdrawn  or  retired.    All 
shares  which  shall   have  matured,  or  shall   have  been  withdrawn  or  retired, 
may  be  reissued   in  any  subsequent  series.     [As  amended  by  act  approved 
June  id.  1807,  in  force  [uly  1,  1897.] 

Sec.  6B. — Any  member  desiring  to  withdraw  instalment  shares  from  any 
association  doing  business  in   this  state  shad  have  power  to  do  so  by  giving 
thirty  days'  notice  of  such  intention  to  withdraw,  when  such  member  sha 
entitled  to  receive  the  full  amount  of  dues  paid  in  on  the  shares  sought  to  be 


698  APPENDIX   IV. 

withdrawn  and  such  interest  thereon  as  fixed  in  the  by-laws,  and  in  addition 
thereto  such  proportion  of  the  profits  apportioned  thereto  as  the  board  of 
directors  may,  from  time  to  time,  by  resolution  determine,  less  such  charges 
of  the  character  enumerated  in  this  act  as  may  be  due  thereon  ;  Provided, 
that  the  amount  of  such  interest  or  profits  paid  on  withdrawals  shall  not  exceed 
the  actual  rate  of  earnings  of  the  association  :  Provided,  further,  that  at  no 
time  shall  more  than  one-half  of  the  funds  in  the  treasury  of  the  association 
be  applicable  to  the  demands  of  withdrawing  members  or  the  payment  of 
matured  shares  without  the  consent  of  the  board  of  directors:  Provided, 
her,  that  any  member  having  pledged  ins  or  her  shares  as  security  for  an 
advance  without  other  security  may  withdraw  the  same  and  receive  the  evi- 
dence of  indebtedness  given  for  such  advance  and  such  balance  in  cash,  if 
anv,  as  may  be  to  the  credit  of  such  shares,  but  such  withdrawal  shall  be  sub- 
ject to  the  same  regulations  in  all  other  respects  as  is  in  the  case  of  shares  not 
pledged.     [As  amended  by  act  approved  June  16,  1897,  in  force  July  I,  1897.] 

Sec.  6C. — Any  member  who  shall  have  obtained  an  advance  on  his  shares 
and  shall  have  given  real  estate  as  security,  may,  at  any  time,  repay  the  same. 
On  settlement  such  member  shall  be  charged  with  the  full  amount  of  such 
advance,  together  with  any  or  all  arrearages  due  thereon,  or  on  the  shares 
pledged  or  appertaining  to  the  security  given,  and  shall,  thereupon,  be  allowed 
as  a  credit  the  withdrawal  value  of  the  "shares  pledged  as  security,  together 
with  such  other  credits  as  may  be  returnable  on  account  thereof,  and  the  bal- 
ance shall  be  received  by  the  'association  in  full  settlement  and  discharge  of 
such  advance  ;  Provided,  that  all  settlements  made  in  periods  intervening 
between  stated  monthly  meetings  of  the  directors  shall  be  made  as  of  the  date 
of  the  stated  monthly  meeting  next  succeeding  any  such  settlement.  [As 
amended  by  act  approved  June  16,  [897,  in  force  July  1,  1897.] 

Sec.  6D. — The  directors  may,  in  their  discretion,  under  rules  made  by  them 
in  conformity  with  the  by-laws,  retire  the  unpledged  shares  of  any  series,  in 
the  order  of  "the  issue  of  such  series,  by  enforcing  withdrawals  of  the  same, 
and  the  owners  shall  be  paid  the  fnll  value  of  their  shares  as  determined  at  the 
last  preceding  distribution  of  profits,  together  with  all  dues  paid  since  such 
distribution  less  any  unpaid  fines  ;  Provided,  that  all  shares  which  have 
reached  matured  value,  and  that  may  be  outstanding,  shall  be  first  retired 
under  the  provisions  of  this  act.  [As  amended  by  act  approved  June  16,  1897, 
■  e  July  1.  1897.] 
SEC.  6E..— Upon  the  death  of  a  shareholder,  his  legal,  representatives  shall 
be  entitled  to  receive  the  voluntary  withdrawal  value  of  the  unpledged  shares 
of  the  deceased.  No  fines  shall  be  charged  or  profits  credited  to  a  deceased 
member's  shares  from  and  after  his  decease,  unless  his  legal  representatives 
assume  the  future  payments  of  such  shares.  [As  amended  by  act  approved 
fune  i",  \><:~,  in  force  July  r,  1897.] 

SEC.  6F. — A  membership  fee  and  a  transfer  fee,  neither  of  which  shall 
exceed  twenty-five  cents  per  share,  may  be  charged,  and  all  fees  shall  be 
inted  for  as  a  part  of  the  receipts  of  the  association.  Any  association 
may  impose  a  penalty  lor  the  non-payment  of  dues,  interest  and  premium  at 
tin-  1  Mm-  they  shall  fall  due,  which  penalties  shall  in  nocase  exceed  the  sum  of 
ten  cents  per  share  per  month,  and  it  shall  not  be  permissible  to  either 
compound  or  cumulate  such  penalties.  [As  amended  by  act  approved 
fune  id,  [897,  in  force  July  1.  1S07.] 

SEC.  7. — Married  women  may  become  subscribers  to  the  capital  stock  1  I 
such  n,  and  hold,  control  and  transfer  their  stock  in  all  respects  as 

females  sole,  and  their  stock  shall  not  be  subject  to  the  control  of,  or  liable  fi  r 
of,  their  husbands.     .Minors  may  become  subscribers  to  and  owners 
il    neli  associations  by  guardian  or  trustee,  and  such  guardian  or 
tay  withdraw  the  stock  of  such  minor  as  provided  in  section  six  ol 
cr,  that  such  guardian  or  trustee  shall  give  bonds  to 
irl  in  double  the  amount  ol  the  withdrawal  value  of  such  stock, 
1  1    uch  minor  on  his  or  her  becoming  of  age ;  but  it  isherebypro- 
l  that  no  pei  on  as  owner  or  legal  representative  ol  the  stock  of  such  asso- 
hall,  by  himself  or  by  proxy,  vote  at  any  election,  when  the  stock- 
called  upon  to  vote,  on  more  than  forty  share's  of  stock. 
5 ec.  8     The  board  0!  directors  shall  hold  such  stated  meetings,  nol   less 
uently  than  once  a  month,  as  may  be  provided  by  the  by-laws,  at  which 
mi  ie  treasury,  ii  one  hundred  dollars,  or  more,  shall  be  offered 
ii  open  meeting,  and  the  stockholders  who  shall  bid  the  highest 

I      mum,  for  the  preference  01  priority  ol   loan,  shall  be  entitled  to  receive  a 
oan  oi  one  hundred  dollai  \  f oi  each  shareof  stock  held  by  said  stockholders  ; 


GENERAL  LEGISLATION.  699 

the  said  premium  hid  may  be  deducted  from  the  loan  in  one  amount,  or  may 
be  paid  in  such  proportionate  amounts  or  instalments,  and  at  such  times  during 
the  existence  of  the  shares  of  stock  borrowed  upon,  as  may  be  designated 
the  by-laws  of  the  respective  associations;  Provided,  that  any  such  associa- 
tion may,  by  its  by-laws,  dispense  with  the  offering  of  its  money  lor  bids  in 
open  meeting,  and   in   lieu  thereof   loan   its  money  at  a  rate  of  interest  and 
premium  fixed  by  its  by-laws  and  either  with  or  without  premium,  decid 
the  preference  or  priority  of  loans  by  the  i  riority  of  the  ap]  lications  for  loans 
of  its  stockholders  :  Ana,  provided,  that  no  loan  shall  be  made  by  said  coi 
ration  except  to  its  own  members,  nor  in   any  sum  in  excess  of  the  amount  of 
stock  held  by  such  members  borrowing,  bul  such  stockholders  may  borrow 
such  fractional    part   of  one  hundred   dollars  as  the  by-laws  may  provide. 
Good  and  ample  real  estate  security,  unincumbered,  excepl  by  prior  loan 
such  associations,  shall  be  given  by  the  borrower  to  secure  the  payment  of  the 
loan  ;  Provided,  however,  thai  the  stock  of  such  association  maybe  received 
as  security,  to  the  amount  of  the  withdrawal  value  of  such  stock.     Any  mutual 
building,  loan  and  homestead  association,  which  may  have  heretofore  been 
incorporated  under  the  laws  of  the  stale  of  Illinois,  may  avail  itself  of  all  the 
powers  conferred  by  this  act.     [As  amended  by  act  approved  fune  16,  [891.] 

Sec.  9. — In  case  borrowers  shall  neglecl  to  offi  1  security,  or  shall  offer 
security  that  is  not  approved  by  the  board  of  directors,  by  such  time  as  the  by- 
laws may  prescribe,  he  or  she  shall  be  charged  with  one  month's  intei 
together  with  any  expenses  incurred,  and  the  money  be  resold  at  the  next 
stated  meeting.  In  case  of  non-payment  of  instalments  of  interest  and  lines 
by  borrowing  stockholders  for  the  space  of  six  months,  payment  of  principal 
and  interest  and  lines  without  deducting  the  premium  paid  or  the  interest 
thereon,  may  be  enforced  by  proceedings  against  their  securities  according  to 
law,  upon  the  order  of  the  board  of  directors. 

Sec.  10. — A  borrower  may  repay  a  loan  at  any  lime,  and  in  the  event  of  the 
repayment  thereof  before  the  expiration  of  the  eighth  year  alter  the  organiza- 
tion of  the  association,  or  the  date  of  issues  of  the  series  of  stock  in  such  asso- 
ciation on  which  the  loan  may  have  been  made,  there  shall  be  refunded  to 
such  borrower  one-eighth  of  the  premium  paid  for  every  year  of  the  said 
eight  years  then  unexpired  ;  Provided,  that  where  the  said  premium  has 
been  deducted  from  the  loan,  but  paid  in  instalments,  there  shall  be  no 
premium  refunded;  and  any  mutual  building,  loan  and  homestead  assi 
tion  which  may  have  heretofore  been  incorporated  under  the  laws  of  the 
state  of  Illinois,  may  avail  itself  of  all  the  powers  conferred  by  this  act.  [  As 
amended  June  17,  1SS7,  in  force  July  1,  [887.] 

Sec.  11. — Corporations  organized  under  this  act  being  of  the  nature  of  co- 
operative associations,  therefore  no  interest,  premiums,  tines,  nor  interest  on 
such  premiums  that  may  accrue  to  said  corporations,  according  to  the  pi 
sions  of  this  act,  shall  be  deemed  usurious,  and  the  same  may  be  collected  as 
other  debts  of  like  amount  may  be  collected  by  laws  in  this  state,  and  all 
money  paid  to  such  corporation  being  at  once  loaned  out  and  placed  into 
taxable  property,  and  the  shares  of  stock  and  notes  provided  for  in  this  act 
being  simply  evidence  as  to  where  such  money  has  been  placed,  therefore  such 
stock  and  notes  shall  not  be  subject  to  taxation.  [As  amended  by  act  approved 
June  16,  1891.] 

Sec  12. — No  corporation  or  association  created  under  this  act  shall  cease  or 
expire  from  neglect  on  the  part  of  the  corporation  to  elect  officers  at  the  time 
mentioned  in  their  charter  and  by-laws,  and  all  officers  elected  by  such  cor- 
poration shall  hold  their  offices  until  their  successors  are  duly  elected. 

Sec.  13. — Any  loan  or  building  association  incorporated  by  or  under  this  act 
is  hereby  authorized  and  empowered  to  purchase  at  any  sheriff's  or  other 
judicial  sale,  or  at  any  other  sale,  public  or  private,  anyreal  estate  upon  which 
such  association  may  have  or  hold  any  mortgage,  lien  or  other  incumbrance, 
or  in  which  said  association  may  have  an  interest,  and  the  real  estate  so  pur- 
chased, to  sell,  convey,  lease  or  mortgage  at  pleasure  to  any  person  or  per- 
sons whatsoever. 

Sec  14. — Any  loan  or  building  association  incorporated  under  this  act  or 
any  prior  act,  may  extend  the  duration  of  lime  for  which  such  association  was 
organized  by  a  vote  of  two-thirds  of  1  he  capital  stock  of  such  association  at 
any  annual  meeting  of  the  stockholders  of  such  associations;  thereupon  the 
board  of  directors  shall  transmit  a  copy  of  the  proceedings  of  such  annual 
meeting,  duly  attested,  to  the  secretary  of  stale,  who  shall  issue  his  certificate 
as  provided  in  section  three  of  this  act.  certifying  to  the  extension  of  tin 
duration  of  such  association,  and  the  same  shall  be  recorded  as  provided  in 


700  APPENDIX   IV. 

said  section  three  of  this  act.  And  any  association  incorporated  under  any 
prior  act,  and  extending  the  duration  of  the  time  for  which  it  was  incorporated 
in  the  manner  herein  provided,  shall  be  deemed  as  incorporated  under,  and 
vested  with  all  of  the  powers  given  in  this  act,  the  same  as  if  such  association 
had  been  originally  incorporated  under  it. 

Sec.  15. — The  secretary  of  every  association  doing  business  within  this  state 
shall,  within  sixty  days  next  after  the  close  of  each  fiscal  year  of  such  associa- 
tion, file  with  the  auditor  of  public  accounts  of  the  state  of  Illinois,  with  a  fee 
of  two  dollars,  a  detailed  statement  of  the  receipts  and  expenditures  of  such 
association  for  one  year  next  preceding  the  date  of  such  report,  its  assets  and 
liabilities,  including  in  such  liabilities  all  sums  due  for  gross  premium  unearned, 
the  number  of  shares  issued,  withdrawn,  matured,  retired  and  loaned  on,  dur- 
ing the  year  ;  the  number  of  shares  in  force,  number  of  shares  loaned  upon, 
instalments  per  share,  profits  per  share,  and  the  value  per  share,  in  each  series 
at  the  date  of  such  statement,  which  statement  shall  be  in  such  form  as  shall 
be  prescribed  by  the  auditor.  Such  statement  shall  exhibit  in  full,  each,  all 
and  every,  of  the  receipts  from  whatsoever  source  received,  and  each,  all  and 
ever}',  of  the  expenditures  of  such  association,  including  all  expenses  of 
management.  All  of  such  statements  shall  be  sworn  to  by  the  secretary  be- 
fore some  officer  authorized  to  take  acknowledgments  of  conveyances  in  this 
state,  and  certified  to  by  three  members  of  such  association  not  officers  there- 
of. Such  statement,  and  also  any  other  periodical  statement,  shall  be  either 
mailed  to  each  shareholder  or  published  in  some  paper  regularly  issued  in  the 
county  in  which  such  association  is  located  within  sixty  days  next  after  the 
same  shall  be  compiled.  Any  secretary  who  shall  wilfully  neglect  or  refuse 
to  file  such  statement,  shall  be  subject  to  a  fine  of  not  less  than  twenty-five 
dollars  nor  more  than  two  hundred  dollars  for  each  neglect  or  refusal  to  furnish 
such  statement.  The  same  may  be  recovered  in  any  court  having  competent 
jurisdiction  in  the  name  of  the  People  of  the  State  of  Illinois,  on  the  relation 
of  the  said  auditor,  for  the  benefit  of  the  county  wherein  said  association  is 
located  or  in  which  such  secretary  may  reside  :  Provided,  that  when  any  as- 
sociation  shall  at  any  time,  by  reason  of  its  insolvency,  be  unable  to  pay  the 
full  face  value  of  the  withdrawals  other  than  matured  shares  within  ninety 
davs  after  notice  thereof  is  given,  it  shall  be  unlawful  for  said  association  to 
sell  any  new  shares,  and  the  secretary  thereof  shall  forthwith  report  the  same 
to  the  auditor  of  public  accounts,  and  a  failure  to  comply  with  this  provision 
shall  be  a  misdemeanor  on  the  part  of  the  officer  or  officers  whose  duty  it  is 
made  to  sell  such  shares  and  collect  such  money.  Such  offence  shall  be  pun- 
ishable by  a  fine  of  not  less  than  one  hundred  dollars  nor  more  than  one  thou- 
sand dollars,  or  imprisonment  in  the  county  jail  not  to  exceed  sixty  days.  [As 
amended  by  act  approved  June  16,  r8o7,  in  force  July  1.  1897.] 

SEC.  16.— It  shall  be  the  duly  of  the  auditor  of  public  accounts  in  person,  or 
by  one  or  more  persons,  to  be  by  him  appointed  for  that  purpose,  not  officers 
or  agents  of,  or  in  any  manner  interested  in  such  association,  except  as  stock- 
holders, at  k-ast  once  in  each  year,  to  examine  into  the  affairs  of  every  such 
association  incorporated  in  this  state  or  doing  business  by  its  agents  in  this 
state,  and  it  shall  be  the  duty  of  the  officers  or  any  agents  of  any  such  associa- 
tions to  cause  their  books  to  be  opened  for  inspection  of  the  auditor  or  person 

ersons  so  by  him  appointed,  and  otherwise  facilitate  such  examination  so 
far  as  it  may  be  in  their  power  to  do  so,  ami  for  that  purpose  the  auditor  or 
person  or  persons  so  appointed  by  him  shall  have  power  to  examine  under 
oath,  the  officers  and  agents  of  such  associations,  relative  to  the  business  of 
01  iations,  and  whenever  the  auditor  of  public  accounts  shall  deem  it 
P. 1  the  be  1  interests  of  the  public  so  to  do  he  shall  publish  the  result  of  any 
investigation  in  one  or  more  newspapers  of  general  circulation,  published  in 
the  county  in  which  the  principal  office  of  such  association  is  located,  and 
annually,  on  or  before  the  first  day  of  December  of  each  year,  the  auditqi   of 

lii   accounts  shall  re]  ort  in  writing  to  the  governor  the  financial  condition 

ol  .1  I    ■>  ch  a    ociations  doing  business  in  this  state.    The  auditor  shall  receive, 

foi  nation  made  by  him   in  person  or  by  deputy,  his  reasonable 

1   ill  1    ■  1  ii  e  .  and  said  compensation  and  expenses  shall  be 

0  examined    [As  amended  by  act  approved  June  19, 

17.  V    Whenever  it  shall  appear  to  (he  auditor  of  public  accounts  that 

the  as  iets  of  any  asso<  iations  doing  business  in  this  state  are  impaired  to  the 

;   thai    uch  a    ets  do  not  exceed  the  dues  paid  in  on  the  shares,  with  in- 

tere  1  then  on  al  the  rate  ol  three  1  er  centum  per  annum  for  the  average  time 

inve  t'  d,  or  thai  il  is  conducting  its  business  in  a  fraudulent,  illegal  or  unsafe 


GENERAL   LEGISLATION.  70] 

manner,  he  may  at  once  in  either  case,  appoint  a  custodian  for  such  associa- 
tion, and  shall  require  of  such  custodian  a  good  and  sufficient  bond  with  sure- 
ties to  be  approved  by  such  auditor.  [As  amended  by  act  approved  June  10, 
l897,in  force  July  i.  1897.  j 

Sec.  17B.— The  auditor  of  public  accounts,  at  the  time  of  the  appointment  of 
a  custodian  for  any  association  as  herein  provided,  shall,  within  ten  days  next 
after  having  appointed  such  custodian,  convene  a  special  meeting  of  the  si 
holders  for  the  purpose  of  considering  and  acting  upon  such  matters  a 
such  special  meeting  shall  seem  best.     Notice  oi  such  special  meeting  shall 
be  given  in  the  manner  and  form  provided  in  section   jo  of  this  act  for  the 
calling  of  special  meetings  of  shareholders.     At  such  meeting  said  auditor 
shall  present  a  full  report  of  the  affairs  and  condition   oi  such  association,  as 
found  by  him  from  his  examination  thereof,  or  as  made  to  him  by  thi 
dian.     [As  amended  by  act  approved  June  10,  [897,  in  forcejuly  r,  18C7.J 

Sec,  17C. — Such  custodian,  under  the  direction  of  the  auditor,  shall  take 
possession  of  the  books,  records  and  assess  of  every  description  of  such  \  ■  - 
ciation,  and,  pending  the  further  proceedings  specified  in  this  act,  shall  pre- 
pare, or  have  prepared,  a  lull  and  true  exhibit  of  the  affairs,  property  and 
condition  of  such  association,  including  an  itemized  statement  oi  all  its  assets 
and  liabilities  ;  and  shall  receive  and  collect  all  debts,  dues  and  claims  bel< 
ing  to  it  ;  and  may,  if  necessary,  by  and  with  the  consenl  and  aj  proval  of  the 
auditor,  pay  the  immediate  and  reasonable  expenses  of  his  trust,  including  his 
own  compensation  at  not  to  exceed  the  sum  of  ten  dollars  per  diem.  Such 
custodian  shall  receive,  and  receipt  for  all  monthly  payments  becoming  due 
after  the  date  of  his  appointment,  and  shall  keep  the  same  separate  and  apart 
from  the  other  moneys  and  effects  of  such  association.  [As  amended  by  act 
approved  June  16,  1897,  in  force  July  1,  1897.] 

Sec.  17D.  If,  at  the  special  meeting  of  the  shareholders,  to  be  called  as 
herein  provided,  the  shareholders  of  such  associations  shall  vote  to  reorganize 
said  association,  then  and  in  that  case,  the  said  custodian  shall,  upon  the  con- 
summation of  the  reorganization  thereof,  and  when  the  said  auditor  shall  so 
order  and  direct,  turn  over  to  the  new  management  all  the  books,  )  aj  ersand 
effects  of  every  description  in  his  hands  belonging  to  such  association.  As 
amended  by  act  approved  June  16,  1897,  in  force  July  1,  1897. J 

Sec.  17E.  If,  at  the  special  meeting  of  the  shareholders,  to  be  called  and 
held  as  herein  provided,  such  shareholders  shall  vote  to  go  into  voluntary 
liquidation,  or  to  otherwise  close  up  or  discontinue  the  business  of  such  asso- 
ciation, such  custodian  shall,  when  the  said  auditor  shall  so  order  and  direct, 
return  to  the  shareholders  all  monthly  payments  received  and  receipted  for 
by  him,  and  which  became  due  and  payable  after  the  date  of  his  appointment; 
and  all  books,  papers  and  effects  of  every  description  in  his  hands  belonging  to 
such  association  not  so  returnable,  shall,  when  the  auditor  shall  so  order  and 
direct,  be  turned  over  and  delivered  to  the  person  or  persons  entitled  thereto. 
[As  amended  bv  act  approved  June  16,  1897,  ni  force  Julv  r,  1897.] 

Sec.  17F. — If  the  auditor  of  public  accounts,  after  having  called  a  meeting 
of  the  shareholders  as  in  this  act  provided,  shall  find  that  the  association  can 
not  be  reorganized,  or  that  voluntary  liquidation  by  the  shareholders  cannot 
be  had  or  consummated,  he  shall  report  the  same  to  the  attorney  general, 
whose  duty  it  shall  then  become  to  at  once  applv  to  the  circuit  court  of  the 
county  in  which  the  principal  office  of  such  association  may  be  located,  or  to 
any  of  the  judges  of  said  court  in  vacation,  in  the  name  of  the  (  c<  pie  of  this 
state,  on  the  relation  of  said  auditor,  for  an  injunction  restraining  such  asso- 
ciation from  doing  further  business,  and  for  the  appointment  of  a  receiver  of 
such  association,  and  for  the  dissolution  of  such  association,  which  applica- 
tion mav  be  made  and  granted  either  in  term  time  or  in  vacation  <  it  said  court 
in  the  manner  now  provided  for  obtaining  injunctions,  and  said  cause  shall 
thereupon  proceed  as  other  cases  in  chancery.  [As  amended  by  act  approved 
June  16,  1897,  hi  force  July  1,  1897.J 

Sec  18. — Any  such  association  mav  allow  reasonable   compensation  to 
auditing  committees  for  their  services  as  such,  not  exceeding  the  sum  of    fi  ur 
dollars  per  diem,  nor  for  more  than  three  days  during  each  quarter  year, such 
committee  ti  1  Ci  insist  of  three  shareholders,  not  officers  thereof.     [As  amended 
bv  act  approved  June  10.  i8ot.J 

Sec.  19. — Any  ass<  ciation  mav  reorganize  or  go  into  voluntary  liquidation  by 
the  votes  of  its  shareholders  owning  at  least  two-thirds  of  the   shares   in  I 
at  the  time  such  vote  is  taken.     Whenever  such  shareholders  shall  de- 
reorganize  or  to  go  into  voluntary  liquidation,  it  shall  be  the  dut\  of  the  1 
of  directors  of  such  association,  or  of  a  committee  of  shareholders  appointed 


702  APPENDIX   IV. 

for  the  purpose,  to  submit  the  question  of  such  reorganization  or  voluntary 
liquidation  to  a  vote  of  the  shareholders  at  a  special  meeting  of  such  share- 
holders to  be  called  and  held  as  herein  provided.  [As  amended  by  act  ap- 
proved June  16,  1897,  in  force  July  1,  1897.] 

Sec.  20. — Whenever  a  meeting  of  the  shareholders  is  to  be  called  for  the 
puroose  aforesaid,  it  shall  be  the  duty  of  the  board  of  directors,  or  of  said 
committee,  to  convene  a  special  meeting  of  the  shareholders  at  the  principal 
office  of  the  association  at  such  time  as  such  directors  or  committee  shall  fix 
and  determine.  Notice  of  such  meeting  shall  be  given  to  every  member  of 
the  association  by  depositing  in  the  postoffice,  at  least  ten  clays  before  the 
time  fixed  for  such  meeting,  a  notice  properly  addressed  to  each  shareholders 
at  the  last  recorded  address  of  such  shareholder.  The  directors  or  committee 
shall  also  cause  a  notice  of  such  meeting  to  be  certified  to  the  auditor  of 
Public  Accounts  at  the  same  time  that  notice  is  given  to  the  shareholders. 
[As  amended  by  act  approved  June  16,  1897,  in  force  July  I,  1897.] 

S:-:c.  2i. — Such  directors  or  committee  shall  prepare,  or  have  prepared,  a  full 
and  true  exhibit  of  the  affairs,  property  and  condition  of  such  association,  in- 
cluding an  itemized  statement  of  its  assets  and  liabilities,  which  exhibit  shall 
be  sworn  to  by  a  majority  of  said  directors,  or  of  said  committee,  before  some 
officer  authorized  to  take  acknowledgments  of  conveyances  in  this  state,  such 
exhibit  and  report  to  be  printed  and  a  copy  thereof  mailed  along  with  the 
notice  conveying  such  special  meeting.  Such  original  exhibit,  sworn  to  as 
herein  provided,  shall  be  filed  with  the  auditor  of  public  accounts  of  this  state, 
along  with  a  notice  of  such  meeting  at  the  same  time  that  they  are  mailed  to 
the  shareholders.     [As  amended  by  act  approved  June   16,1897,111  force  July 

I,  I897-] 

Sec.  22. — At  such  special  meeting  all  votes  taken  shall  be  by  ballot,  and 
votes  of  its  shareholders  owning  at  least  two-thirds  of  its  shares  in  force  at 
the  time  such  vote  is  taken  shall  be  necessary  to  carry  any  resolution  for  the 
reorganization  or  liquidation  of  such  association  ;  and  if,  at  such  meeting,  said 
shareholders  shall,  in  the  manner  herein  provided,  pass  a  resolution  for  the 
reorganization  or  liquidation  of  such  association,  a  copy  of  such  resolution, 
duly  certified  by  the  presiding  officer  and  secretary  of  such  meeting,  shall  be 
given  to,  and  shall  continue  [contain]  full  instructions,  and  define  the  author- 
ity and  compensation  of  the  party  or  parties  to  be  named  therein,  to  answer 
and  discharge  the  duties  entrusted  to  them  by  such  resolution  ;  and  a  like 
duly  certified  copy  of  such  resolution,  instructions  and  authority  shall  imme- 
ly  be  filed  with  the  auditor  of  public  accounts  by  the  party  or  parties 
named  in  such  resolution,  before  they  shall  enter  upon  the  discharge  of  their 
trust.  Before  the  party  or  parties  named  in  any  such  resolution  shall  assume 
the  duties  of  their  trust,  they  shall  become  bounden  with  two  or  more  good 
and  sufficient  sureties,  or  in  some  good  and  responsible  fidelity  insurance 
company,  in  such  sum  as  the  auditor  of  public  accounts  of  this  state  shall 
require  and  approve.  [As  amended  by  act  approved  June  16,  1897,  in  force 
July  1,  1897.] 

SEC.  23. — At  such  special  meeting  the  shareholders,  by  a  majority  vote  of 
the  shares  in  force  at  the  time  such  vote  is  taken  (cast  by  ballot  1  may  declare 
va<  ant  the  office  of  the  entire  board  of  directors,  and  of  all  officers  of  such 
association,  and  may  at  the  same  time  proceed  to  the  election  of  a  new  board 
of  directors,  who,  in  the  absence  of  a  special  committee  being  named  in  the 
resolution  lobe  adopted  by  the  shareholders  as  hereinbefore  in  section  22 

f>rovided,  shall  have  the  charge  and  direction  of  the  reorganization  or   the 
lation  oi  theaffairsof  such  association.     [As  amended  by  act  approved 
June  10,  [897,  in  force  |ulv  I.  [897.] 

SEC.    •)      Upon   the  completion,  by  the  person  or  persons  named  in   the 

a  million,  parsed  at   such   special    meeting   of   shareholders,  of   the 

duties  cut  re  ted  to  them  in  such  resolution,  they  shall  cau$e  a  complete  record 

ol  all  proceedings  to  l><-  made,  rei  iting,  therein  the  adoption  of  the  resolution 

fo  that  effect,  which  Shall  also  show  that  all  claims,  demands  and  debts  for  or 

ociation  have  been  fully  settled,  the  corporate  liabilities  com- 
pleted di  charged,  and  the  corporate  a  sets  and  properly  distributed  among 
all  the  pei  on  entitled  thereto.  Said  reporl  ana  record  shall  be  filed  in  the 
office  of  the  auditor  of  publi<  accounts,  and  a  notice  of  such  dissolution  pub- 
h  hed  for  three  successive  weeks  in  any  newspaper  published  in  the  county 
wherein  tin-  prin<  ipal  om<  e  oi  in  h  1  1 »  iation  is  located,  and  upon  the  filing 
port,  and  making  publication  as  aforesaid,  such  association  shall  be 
deemed  di  ol1  ed,  [  As  amended  by  act  approved  June  16,  1897,  in  force  July 
97-] 


GENERAL    LEGISLATION.  703 

Sec.  25. — Receivers  may  also  be  appointed  whenever  nine  or  more  share- 
holders of  any  association  shall  file  a  petition  in  the  circuit  cOurl  ol  the  county 
in  which  the  principal  office  of  such  association  is  located,  setting  forth  the 
facts  relied  upon  for  the  appointment  of  a  receiver.  Such  petition  shall  be 
subscribed  and  sworn  to  by  such  petitioners,  and  shall  be  accompanied  by  a 
good  and  sufficient  bond,  conditioned  for  the  payment  of  all  tees,  ex]  enses 
and  attorney's  lees  incident  to  such  proceeding  or  proceedings,  in  event  the 
allegations  setforth  in  the  petition  snail  not  be  sustained,  the  amount  of  such 
bond,  and  the  sureties  thereof,  shall  be  approved  by  the  court,  and  the  cause 
shall  thereupon  proceed  as  other  causes  in  equity.  [As  amended  by  act  ap- 
proved June  16,  1807,  in  force  |ulv  1,  1807.] 

SEC.  20. — The  protilsand  losses  of  associations  doing  business  in  this  state 
shall  be  apportioned  at  least  annually,  and  as  much  opener  as  the  by-laws 
shall  provide.  [As  amended  by  act  approved  June  [6,  1N17,  in  force  July  1 
[807.] 

Skc.  27. — At  each  periodical  apportionment  of  profits  the  directors  shall 
reserve  as  a  guaranty  or  contingent  fund  a  sum  not  less  than  one  per  centum 
nor  more  than  five  per  centum  of  the  net  profits  accruing  since  the  last  prior 
preceding  apportionment,  until  such  fund  amounts  to  live  pel-  centum  of  the 
dues  capital,  which  fund  shall  at  all  times  thereafter  be  maintained  and  held 
at  not  less  than  said  five  nor  more  than  ten  per  centum  of  the  dues  capital; 
and  said  fund  shall  at  all  times  be  available  to  meet  losses  in  the  business  of 
the  association  from  depreciation  of  its  securities  or  otherwise.  [As  amended 
by  act  approved  June  16,  1897,  in  force  July  1,  1897.] 

ACTS  1893. 

Section  i. — Be  it  enacted  by  the  people  of  the  state  of  Illinois,  represented  in 
the  General  Assembly  :  That  foreign  building,  loan  and  homestead  associate  ms 
doing  business  in  this  state  shall  conduct  the  same  in  accordance  with  the 
laws  of  this  state  governing  domestic  associations,  and  no  such  association 
shall  do  any  business  in  this  state  until  it  procures  from  the  auditor  of  public 
accounts  a  certificate  of  authority  to  do  so.  To  procure  such  authority,  such 
association  shall  comply  with  the  following  provisions  : 

1.  It  shall  deposit  with  the  said  auditor  one  hundred  thousand  (100,000)  dol- 
lars, either  in  cash  or  bonds  of  the  United  States  or  of  the  state  of  Illinois,  or 
of  any  county  or  municipal  corporation  in  the  state  of  Illinois,  satisfactory  to 
the  said  auditor. 

2.  It  shall  file  with  the  auditor  a  certified  copy  of  its  charter,  constitution 
and  by-laws,  and  other  rules  and  regulations  showing  its  manner  of  conduct- 
ing business,  together  with  a  statement  such  as  is  required  annually  from  all 
associations,  and  certified  copies  of  all  subsequent  amendment  to  such  by- 
laws. 

Sec.  2. — Whenever  such  association  has  complied  with  the  provisions  of 
this  act,  and  the  auditor  is  satisfied  that  such  association  is  doing  business  ac- 
cording to  the  laws  of  this  state  and  is  in  sound  financial  condition,  he  shall 
issue  his  certificate  of  authority  to  such  association  to  do  business  in  this  state. 
Annually  thereafter,  upon  the  filing  of  the  annual  statement  herein  provided 
for,  if  the  auditor  shall  be  satisfied  as  aforesaid,  he  shall  issue  a  renewal  of 
such  certificate  of  authority. 

Sec  3. — Such  foreign  association  may  collect  aud  use  the  interest  on  any 
securities  so  deposited,  so  long  as  it  fulfills  its  obligations  and  complies  with 
the  provisions  of  this  act.  It  may  also  exchange  them  for  other  securities  of 
equal  value  and  satisfactory  to  the  auditor. 

Sec.  4. — The  deposit  made  with  the  auditor  shall  be  held  as  a  security  for 
all  claims  of  residents  of  this  state  against  said  association,  and  shall  be  liable 
for  all  judgments  or  decrees  thereon,  and  subjected  to  the  payment  of  the 
same  in  the  same  manner  as  the  property  of  other  non-residents.  Should  any 
association  cease  to  do  business  in  this  state  the  auditor  may  release  securities 
in  his  discretion,  retaining  sufficient  to  satisfy  all  outstanding  liabilities. 

Sec  5. — Should  the  auditor  find,  upon  examination,  that  any  foreign  asso- 
ciation does  not  conduct  its  business  in  accordance  with  the  law,  or  that  the 
affairs  of  any  such  association  are  in  an  unsound  condition,  or  if  such  asso- 
ciation refuses  to  permit  examination  to  be  made,  he  may  cancel  the  author- 
ity of  such  association  to  do  business  in  this  slate,  and  cause  a  ni  it  ice  thereof 
to  be  sent  to  the  home  office  of  the  association,  and  to  be  published  in  at  least 
one  newspaper  in  the  city  of  Snringfield.  After  the  publication  of  such  notice, 
it  shall  be  unlawful  for  any  agent  of  said  association  to  receive  any  further 


704  APPENDIX   IV. 

stock  deposits  from  members  residing  in  this  state,  except  payments  on  stock 
on  which  a  loan  has  been  taken. 

Sec.  6. — Foreign  building  and  loan  associations  shall  pay  to  the  auditor  the 
following  fees,  which  shall  be  paid  into  the  state  treasury,  to-wit  :  For  filing 
each  application  for  admission  to  do  business  in  this  state,  fifty  dollars  ($50)  for 
each  certificate  of  authority,  and  annual  renewal  of  the  same  twenty-five  dol- 
lar-   S25). 

Sec.  7. — It  shall  be  unlawful  for  any  building  and  loan  association  to  do 
business  in  this  state  without  having  first  complied  with  the  provisions  of  this 
act,  or  for  any  person  to  sell,  dispose  of  or  offer  to  sell  or  dispose  of,  any  shares 
of  stock  of  any  such  association  which  has  not  complied  with  the  provisions 
of  this  act,  and  any  association  violating  any  of  the  provisions  of  this  act,  or 
failing  to  comply  with  any  of  its  provisions,  or  any  person  so  selling  or  offer- 
ing to  sell  or  dispose  of  stock  in  any  such  association  which  has  not  complied 
with  the  provisions  of  this  act,  shall  be  fined  not  less  than  fifty  dollars  nor 
more  than  one  thousand  dollars,  to  be  recovered  by  an  action  in  the  name  of 
the  state,  and  on  collection  to  be  paid  into  the  state  treasury  ;  Provided,  that 
building  and  loan  associations  organized  in  other  states,  having  heretofore 
transacted  business  in  this  state  which  shall  not  have  complied  with  the  provi- 
sions of  this  act,  shall  have  the  right  to  close  up  their  business  and  fulfill  their 
contracts  heretofore  entered  into  with  citizens  of  this  state,  through  their  duly 
authorized  agents,  without  being  subject  to  the  penalties  prescribed  by  this 
act ;  but  all  contracts  made  after  the  passage  of  this  act  by  such  associations 
not  authorized  to  do  business  in  this  state  at  the  time  of  making  such  contracts 
shall  be  null  and  void. 

Approved  June  20,  1893. 

THORNTON'S  REVISED  STATUTES,  1897,  §  §  4551,  to  4598. 

Section  4551. — Any  number  of  persons,  not  fewer  than  ten,  after  at  least  one 
hundred  shares  of  stock  have  been  subscribed  for,  may  associate  themselves 
together  for  the  purpose  of  organizing  building,  loan-fund  and  savings  asso- 
ciations, and  for  that  purpose  they  shall  make,  sign  and  acknowledge  in 
duplicate  before  some  officer,  capable  of  taking  acknowledgments  of  deeds 
conveying  real  estate,  a  certificate  of  incorporation  in  writing  which  shall 
state  the  corporation  name  adopted  by  the  company,  the  object  of  its  forma- 
tion, the  amount  of  its  capital  stock,  the  amount  of  capital  stock  already  sub- 
scribed for,  the  number  of  its  directors  and  their  names,  who  shall  manage 
the  affairs  of  the  company  for  the  first  year,  and  the  name  of  the  town  or 
county  in  which  its  operations  are  to  be  carried  on  ;  and  shall  cause  one  of 
said  certificates  to  be  filed  and  recorded  in  the  recorder's  office  of  the  county 
where  the  business  is  to  he  carried  on,  and  shall  file  the  other  of  said  certifi- 
ates  in  the  office  of  the  secretary  of  state. 

SEC.  4552. — When  the  certificate  of  incorporation  shall  have  been  filed  as 
aforesaid,  a  certified  copy  thereof  shall  be  evidence  of  the  contents  thereof  ; 
and  the  persons  who  shall  have  signed  and  acknowledged  such  certificate,  and 
their  successors,  shall  he  a  body  politic  and  corporate,  and  in  their  corporate 
name  may  contract,  sue  and  be  sued,  and  may  hold  and  convey  real  estate 
and  personal  property  as  hereinafter  provided.  The  business  of  the  associa- 
tion shall  be  managed  by  a  board  of  direcb  >rs,  who  shall  be  st(  ickholdersof  the 
.1  1 1  iation,  and  whi  1  shall  be  selected  1>\  Hie  stockholders  as  the  by-laws  of  the 
iatii  hi  may  provide. 

Sec.  4553. — The  corporation  shall  have  the  power  and  franchise  of  loaning 

or  advancing  to  the  stockholders  thereof,  al  interest  not  exceeding  the  legal 

id  rate  al    the  time,  the  moneys  of  the  association  accumulated  from 

time  to  liri  er  and  right  to  senile  the  repayment  of  such  money 

and  the  performance  of  other  conditions  upon  which  the  loans  are  made,  by 

nd  and  moi  tgage,  or  upon  note  or  bond  secured  by  stock  of  the  as- 

ition  or  per  on,  1 1    ei  ui  it  v,  as  well  as  the  power  and  right  to  purchase  real 

ime  and  to  sell,  convey,  lease  or  mortgage  the  same, 

iri  ,  to  iti  1  -  or  others  for  the  benefit  of  the  stockholders, 

or  to  loan  the  moneys  of  the  association  to  others  than  its  stockholders,  at  a 

rate  ol  int<  re  1  nol  1  cceedingthe  le  ;al  contracl  rate  ol  interest,  upon  good  and 

ample  real  estate  01  |  lal    ecurity,  foi  the  benefit  of  its  stockholders,  when 

there  i    no  demand  for  loans  on  the  part  of  the  stockholdei  >.    The  premiums 

n  by  such  a  1   on  foi    tin-  preference  or  priority  in  procuring  loans 

made  to   tockholders  shall  not  be  deemed  ui  urious,  and  in  case  ol  non-payment 


GENERAL   LEGISLATION.  705 

of  instalments  upon  stock,  or  interest  or  premium  by  borrowing  stockholders, 
for  three  months'  payment  of  principal,  premium,  and  interest  (without  deduct- 
ing the  premium  or  interest  paid)  may  be  enforced  by  proceedings  on  their 
securities  according  to  law. 

SEC.  4554.  — The  capital  stock  of  any  corporation  created  by  virtue  of  this  act 
shall  at  ho  time  consist  in  the  aggregated  more  than  one  million  dollars,  to 
be  divided  into  shares  of  such  denomination,  not  exceeding  five  hundred  dol- 
lars each,  as  the  by-laws  of  the  association  may  prescribe  ;  Provided,  That 
the  capital  stock  may  be  issued  111  series;  but  the  stock  in  any  such  series 
shall  not  at  any  time  "exceed  in  the  aggregate  one  hundred  thousand  dollars  ; 
the  instruments  in  which  the  stock  is  to  be  paid,  the  times  and  place  ol  payment 
shall  be  as  the  by-laws  may  provide  ;  but  no  periodical  payment  oi  such  instal- 
ment shall  be  required  exceeding  fifty  cents  per  week  on  each  one  hundred 
dollars  of  stock  ;  the  stock  may  be  paid  off  and  retired  as  the  by-laws  may  pro- 
vide. Every  share  of  stock  shall  be  subject  to  a  lien  for  the  payment  of  un- 
paid instalments  and  other  charges  incurred  thereon  under  the  provision  ol 
the  constitution  and  by-laws  ;  and  the  by-laws  may  prescribe  "'c  form  and 
manner  of  enforcing  such  lien.  In  lieu  of  the  shares  withdrawn,  forfeited,  re- 
tired or  expired,  new  stock  may  be  issued  in  one  or  in  successive  series,  and 
in  such  amounts  as  the  board  of  directors  conformably  to  the  by-laws  may 
determine  ;  but  at  no  time  shall  the  outstanding  stock  in'any  series  exceed  1  me 
hundred  thousand  dollars,  nor  cf  the  association  exceed  one  million  dollars, 
or  its  capital  as  fixed  by  the  certificate  of  incorporation.  Any  stockholder 
wishing  to  withdraw  from  such  corporation  may  do  so  upon  three  months 
notice  given  to  the  board  of  directors,  when  such  withdrawing  stockholder 
shall  be  entitled  to  receive  the  amount  paid  in  upon  the  stock  to  be  with- 
drawn, less  all  fines  and  other  charges  thereon  :  Provided,  That  when  the 
withdrawal  occurs  after  the  expiration  of  one  year  from  the  beginning  of  the 
series  in  which  the  stock  to  be  withdrawn  was  issued,  he  shall  receive  in  ad- 
dition to  the  amount  paid  in,  less  fines  and  other  charges  as  aforesaid,  at  least 
legal  interest  on  each  instalment  paid  from  the  date  at  which  the  same  was 
payable  :  Provided,  That  at  no  time  shall  more  than  one-hall  of  the  funds  in 
the  treasury  be  applicable  to  demands  of  withdrawing  stockholders,  unless  the 
board  of  directors  in  its  discretion  shall  order  otherwise,  and  the  board  may, 
in  its  discretion,  waive  the  notice  hereinbefore  required  as  to  any  withdrawal  ; 
no  stock  shall  be  withdrawn  which  is  at  the  time  held  in  pledge  for  se- 
curity. The  legal  representatives  of  any  deceased  shall  be  entitled  t<  1  receive  the 
fwll  amount  paid  in  bv  his  decedent  with  legal  interest  thereon  from  the  d.i 
which  the  same  was  pavable,  after  deducting  all  fines  and  charges  thei 
No  fine  shall  be  charged' to  a  deceased  member's  account  for  any  default  oc- 
curring after  his  death,  unless  the  regal  representative  of  the  decedent  shall 
assume  the  future  payments  on  the  stock. 

Sec.  455s. — The  number,  function,  qualifications,  and  compensation  of  the 
officers  of  any  such  corporation,  their  terms  of  office,  the  times  of  their  election, 
as  well  as  the"  qualifications  of  the  electors,  and  the  votes  and  manner  ol  voting, 
and  the  periodical  meetings  of  such  corporation,  shall  be  determined  by  the 
by-laws  of  such  association  when  not  provided  bv  this  act. 

SEC.  4556.— The  directors  shall  hold  stated  meetings  at  which  the  money  in 
the  treasury,  if  over  the  amount  fixed  in  the  constitution  or  bv  the  by-laws  as 
the  full  value  of  a  share,  shall  be  offered  for  loan  in  open  meeting.  The  In- 
laws of  the  association  shall  prescribe  the  manner  of  awarding  loans  to  its 
members,  the  time  or  times  when  the  premium,  if  any,  shall  be  paid,  the  rate 
of  interest  to  be  charged  not  exceeding  the  then  legal  contract  rate,  and  the 
time  when  the  interest  shall  be  paid,  whether  monthly  or  quarterly  in  advance 
or  semi-annually  in  advance  or  at  the  end  of  the  period,  as  the  by-laws  may 
prescribe  ;  or  such  association  may  provide  in  its  by-laws  that  the  loans  shall 
be  made  to  the  members  of  the  association  who  shall  bid  the  highest 
miums  for  the  preference  or  priority  in  procuring  loans  (the  premium  to  be 
payable  at  onetime  or  instalments  1,  which  member  so  bidding  shall  be  en- 
titled to  receive  a  loan  of  not  more  than  the  amount  fixed  bv  the  constitution 
and  by-laws  as  the  full  value  of  a  share  for  each  share  of  stock  held  bv  him  and 
then  and  there  bid  off.  The  premium  shall  be  bid  as  of  so  much  per  share  ; 
Pro, vided,  That  a  stockholder  may  borrow  such  fractional  part  ol  the  amount 
fixed  by  the  constitution  and  by-laws  as  the  full  value  of  a  share  as  the  by-laws 
may  provide.  Good  and  ample  real  est  ite  1  >i  |  ei  -  mal  security  as  prescribed 
by  the  by-laws  of  the  corporation,  shall  be  given  by  the  borrower,  or  in  his  be- 
half, to  secure  the  repayment  of  the  loan  with  interest,  and  also  foi  the  paymenl 
of  the  dues,  unpaid  premiums,  if  any,  fines  and  charges,  that  may  be  assessed 


706  APPENDIX    IV. 

upon  the  stock  upon  which  the  loan  is  made.  In  case  the  borrower  shall  ne- 
glect to  offer  security,  or  shall  offer  security  that  is  not  approved  by  the  board 
of  directors,  by  such  time  as  the  by-laws  shall  prescribe,  he  or  she  shall  be 
charged  with  legal  interest,  as  prescribed  in  the  by-laws,  together  with  any 
expense  incurred,  and  the  loss,  if  any,  on  a  resale,  and  the  money  may  be  re- 
sold at  the  next  stated  meeting.  In  case  of  non-payment  of  instalments,  or  in- 
terest, or  unpaid  premiums,  if  any,  by  borrowing  stockholders,  for  the  space 
of  three  months,  payments  of  principal,  interest,  unpaid  premiums  if  any,  fines, 
without  deducting  premiums  of  interest  paid,  may  be  enforced  by  proceedings 
on  their  securities  according  to  law. 

Sec.  4557. — A  borrower,  who  is  not  arrears  for  dues,  interest,  premiums,  fines, 
<>r  assessments,  may  repay  his  loan  at  any  time,  and  may  at  the  same  tune 
withdraw  from  the  association,  and  for  that  purpose  he  shall  pay  to  the  asso- 
ciation, or  to  the  officer  authorized  to  receive  the  same,  the  full  face  amount  of 
the  principal  of  his  loan,  less  the  amount  by  him  paid  to  said  association  as 
dues  on  his  stock,  with  interest  on  such  payments  from  the  time  they  were 
made,  at  not  less  than  the  same  rate  per  cent,  per  annum  that  he  has  paid  to 
the  association  as  interest  upon  his  loan,  and  less  so  much  of  the  premium 
or  discount  paid  by  him  on  his  loan  for  the  priority  thereof  as  shall 
bear  the  same  proportion  to  the  whole  premium  by  him  paid,  which  the 
unexpired  time  for  which  the  loan  was  made  bears  to  the  whole  time  for  which 
the  loan  was  made  ;  and  on  such  payment  being  made,  the  stock  held  by  such 
person  upon  which  his  loan  was  made,  shall  be  surrendered  to  the  association 
and  shall  be  cancelled  ;  and  thereupon  the  proper  officer  of  such  association 
shall  immediately  deliver  to  such  borrower  his  note,  or  bond  and  mortgage, 
or  other  evidence  of  such  loan,  and  shall  also  enter  of  record  a  full  satisfaction 
of  such  mortgage  which  entry  shall  be  a  complete  extinguishment  of  such 
mortgage  and  the  debt  thereby  secured. 

Sec.  4558. — No  premiums,  fines,  or  interest  on  such  premiums  that  may 
accrue  to  said  corporation,  in  addition  to  interest  on  any  loan  made  by  it, 
according  to  the  provisions  of  this  act,  shall  be  deemed  usurious,  and  the  same 
may  be  collected  as  debts  of  like  amount  are  now,  by  law,  collected  in  this 
state. 

Sec.  4559. — No  corporation  or  association  created  under  this  act  shall  cease 
or  expire  from  neglect  on  the  part  of  the  corporation  to  elect  directors  or 
officers  at  the  time  mentioned  in  its  by-laws,  and  all  directors  and  officers 
elected  by  such  corporation  shall  continue  in  office  until  their  successors  are 
duly  elected. 

sic.  4560. — Any  corporation  organized  under  this  act  and  those  incorporated 
prior  thereto,  are  hereby  authorized  and  empowered  to  purchase,  at  any 
sheriff's  or  other  judicial  sale,  or  at  any  other  sale,  public  or  private,  any  real 
estate  upon  which  such  corporation  may  have  or  hold  any  mortgage,  judgment 
lien,  or  other  incumbrance,  or  in  which  such  corporation  may  have  an  interest  ; 
and  the  real  estate  so  purchased,  and  any  other  that  such  corporation  may  hold 
or  be  entitled  to  at  the  passage  of  this  act,  it  may  sell,  convey,  lease  or  mortgage 
at  pleasure  to  any  person  or  persons  whatever  ;  and  all  sale  of  real  estate 
heretofore  made  byanysuch  corporation  to  any  person  or  persons,  are  hereby 
confirmed  and  made  valid. 

1561. — All  such  corporations  shall  have  full  power  to  purchase  real 
estate  and  to  sell  and  convey  the  same,  or  any  part  thereof,  lot  heir  stockholders 
'.]  others  in  full  fee-simple,  but  the  quantity  of   land  purchased  by  any  one  of 
such  corporation  shall  not,  in   the  whole,  at  any  one  time,  exceed  fifty  acres  ; 
and  in  all  cases  such  real  estate  shall  be  disposed  of  within  ten  years  from  the 
the  same. 
1562. — All  such  corporations  shall  have  power  to  charge,  in  addition  to 
\\\<-  amounl  -  heretofore  provided  by  this  act,  a  sum  not  exceeding  twenty-five 
month  upon    each   share  of  Stock,  lor  the   purpose  of  defraying  the 
1  1     ol  the  association,  which  sum  shall  be  payable  with  the  regular  in- 
stalment ;  to  make  assessments  upon  the  capital  stock  to  cover  losses;  and 
also  have  power  to  provide  in  their  by  laws  for  the  charge  and  collection 
•  if  fines  and  penalties  from  delinquent  stockholders  for  non-payment  of  in- 
stalment of  dues,  intere  t,  premiqms  and  charges;  also,  to  provide  in  their  by- 
laws for  the  forfeiture  oi  all  the  rights  and  immunities  in  the  association   of 
h  deliquent  members  after  a  default  of  three  months  to  pay  instalments  of  due 
intere  '.  premiums,  <  harges  or  inn    .  and  also  to  provide,  in  cast'  1  >i  a  borrower 
ofmoneyfrom   uch  a    lociation  ball  fail  and  neglect  to  pay  his  instalments  of 
interest  or  premiums,  t  <  >  1  .1  period  of  three  months  from  the 
nail b<    1  ime  due  and  payable,  that  such  failure  and  neglect  shall 


GENERAL   LEGISLATION.  707 

work  a  forfeiture  of  all  his  rights  and  immunities,  and  the  whole  sum  loaned 
to  him  by  such  association  shall,  at  its  option,  become  immediately  due  and 
payable,  and  may  be  collected,  together  with  all  lines,  instalments  of  dues, 
interest  and  premium,  if  any,  then  unpaid. 

SEC  4503.— Infants  may  become  stockholders  in  any  corporation  organized 
under  this  act  the  same  as  adults,  and  such  infant  stockholder  shall  be  subject 
to  the  same  duties  and  liabilities  as  respects  their  stock  as  adult  members  Any 
receipt,  release,  acquittance  or  discharge  given  to  the  corporation  by  an  infant 
stockholder  shall  be  binding  upon  the  infant  to  the  same  extent  as  if  such  in- 
fant were  of  full  age. 

Sec.  4564. — Where,  in  case  of  any  loan  made  by  any  such  corporation,  the 
borrower,  or  any  other  person  furnishing  security  in  behalf  of  the  borrower, 
shall,  as  an  inducement  to  the  corporation  to  make  the  loan,  represent  to  ii  in 
writing  that  he  or  she  is  over  the  age  of  twenty-one  years,  whereas  in  fact 
such  person  so  representing  is  under  lawful  age  and  the  association  is  there- 
by deceived,  and  the  loan  is  upon  such  representation  made,  neither  such  per- 
son so  representing  nor  any  one  in  Ins  or  her  behalf  shall  afterwards  be  al- 
lowed as  against  said  corporation  to  take  advantage  of  the  fact  that  he  or  she- 
was  not  of  full  age,  but  such  person  shall  be  estopped  by  such  representation. 

Sec.  4565. — Any  such  corporation  organized  prior  to  the  taking  ehect  of  this 
act,  under  any  pre-existing  statute  of  this  tate,  may  except  the  provisions  of 
this  act  by  filing  in  the  office  of  the  recorder  of  the  county  in  which  the  as- 
sociation is  located,  a  written  acceptance  of  the  provisions  of  this  act,  which 
acceptance  shall  be  signed  by  the  president  of  such  corporation  and  attested 
by  its  secretary,  and  shall,  on  behalf  of  the  corporation,  be  acknowledged  by  the 
same  officers,  before  some  officer  authorized  to  take  .acknowledgments  of 
deeds  conveying  real  estate  ;  and  a  duplicate  of  such  written  acceptance,  ex- 
ecuted and  acknowledged  as  aforesaid,  shall  be  filed  in  the  office  of  the 
secretary  of  state,  and  from  and  after  such  tiling,  such  corporation  shall  have- 
all  the  powers  hereby  granted  and  shall  be  subject  to  the  provisions  of  this 
act. 

Sec.  4566. — Any  building,  loan-fund  and  saving  association  organized,  or 
which  may  hereafter  be  organized  under  the  laws  of  this  state,  may  im  1 1 
its  capital  stock  to  any  sum  not  exceeding  two  million  dollars  ($2,000,000)  u]  on 
the  passage  of  a  resolution  for  such  increase  by  the  stockholders  of  such  cor- 
poration at  any  regular  meeting  of  stockholders,  or  at  any  special  meeting 
called  for  that  purpose.  Upon  a  certified  copy  of  such  resolution,  under  the 
hand  of  the  chairman  of  such  stockholders' meeting  and  of  the  secretary  oi 
such  meeting  being  filed  in  the  office  of  the  recorder  of  the  county  where  the 
corporation  is  located,  and  a  like  copy  in  the  office  of  the  secretary  of  state,  and 
the  payment  of  fees  required  by  law  for  such  increase,  the  authority  to  issue  the 
stock  as  thus  increased  shall  be  deemed  complete. 

Sec.  4567. — All  building,  loan-fund  and  savings  associations,  legally  organ- 
ized or  attempted  to  be  organized  under  any  statute  of  this  state,  shall  not  be 
deemed  or  held  invalid  by  reason  of  the  failure  to  have  recorded  in  the  re- 
corder's office  of  the  county  wherein  such  association  is  located  the  articles 
of  association  before  commencing  business  ;  but  where  the  articles  of  associa- 
tion shall  have  been  properly  filed  in  the  office  of  the  secretary  of  state  before 
commencing  business,  it  shall  be  deemed  and  held  to  have  been  a  sufficient 
compliance  with  the  law  ;  or  where  either  of  said  acts  have  been  done  and 
not  the  other,  the  same  shall  be  taken  and  held  as  a  substantial  and  valid  com- 
pliance with  the  law  on  the  subject  of  organizing  such  association  ;  and  when 
the  articles  of  such  association  have,  since  the  commencement  of  business 
thereof,  been  recorded  in  the  recorder's  office  of  the  county  wherein  the  asso- 
ciation is  located,  or  the  same  has  been  filed  in  the  office  of  the  secretai  v  <  >l 
state,  or  where  such  omitted  act  shall  hereafter  be  done  as  directed  by  law, 
the  same  shall  be  held  and  taken  as  a  substantial  compliance  w  ith  the  law  or- 
ganizing building,  loan-fund  and  savings  associations  ;  and  all  acts  of  the 
original  directors,  and  their  successors,  and  of  the  officers  of  such  association, 
and  all  business  done,  loans  made,  mortgages  taken,  moneys  collected  and  dis- 
bursed in  pursuance  of  the  law  in  such  cases,  and  in  compliance  with  the  con- 
stitution and  by-laws  of  such  association,  are  hereby  legalized  and  made  valid, 
and  all  members  and  contracting  parties  shall  be  deemed  and  held  to  be  fully 
bound   by  their  contracts  with  such  association. 

Sec.  4S68.— All  acts  in  conflict  with  the  provisions  ( ,f  this  act  are  repealed  ; 
Provided,  however,  Thatall  rights  acquired  and  all  acts  performed  in  pursuance 
of  the  provisions  of  any  act  so  repealed  are  saved  from  the  effects  of  such  re- 
peal, and  all  building,  loan-fund  and  saving  associations  or  corporations,  which 


708  APPENDIX   IV. 

have  commenced  proceedings  under  said  acts,  or  any  of  them,  may  proceed 
according  to  the  provisions  of  this  act. 

Sec.  4569.— Everv  association  heretofore  or  hereafter  incorporated  under 
any  law  of  this  state  providing  for  the  incorporation  of  building  and  loan- 
fund  and  savings  associations,  and  every  association  heretofore  or  hereafter 
incorporated  for  the  purpose  of  raising  money  to  be  loaned  or  advanced 
am  mg  its  members,  shall  be  known  in  this  act  as  a  building  and  loan  asso- 
ciation. The  secretary  of  state  shall  charge  and  collect  for  the  benefit  of  the 
state,  for  filing  articles  of  incorporation  of  any  such  association,  the  sum  of 
five  (5)  dollars  for  each  fifty  thousand  dollars  of  capital  stock  of  fractional  part 
thereof. 

Sec.  4570. — It  shall  be  unlawful  for  any  building  and  loan  association 
doing  business  in  the  state  of  Indiana  to  charge  or  collect  from  any  of  the 
members  thereof,  on  any  stock  or  shares  of  stock  therein,  any  money  or 
moneys  other  than  membership  tees,  loan  fees  dues.on  stocks,  premium,  interest, 
and  forfeitures.  All  membership  fees,  fines,  premium  and  interest  shall  be 
credited  to  the  earnings,  and  all  expenses  shall  be  paid  out  of  the  earnings  of 
such  building  and  loan  association,  and  no  association  shall  charge  or  collect 
a  membership  fee  of  more  than  fifty  cents  on  each  share  of  stock  of  one 
hundred  dollars  issued.  Such  associations  shall  have  the  right  to  set  aside 
from  the  profits  a  reserve  fund  to  provide  against  contingent  losses  ;  Provided, 
That  the  total  amount  of  such  fund  so  set  aside  shall  not  at  any  time  exceed 
five  per  centum  of  the  assets  of  such  association. 

Sec.  4571. — It  shall  be  the  duty  of  every  such  association  to  furnish  within 
thirty  days  after  the  annual  statement  to  the  auditor  of  state  an  annual  written 
or  printed  statement  of  the  condition  of  such  association  to  each  of  the  stock- 
holders thereof,  which  said  statement  shall  be  delivered  personally  or  mailed 
to  the  stockholder.  Such  statement  shall  show  separately  amount  of  member- 
ship fees,  loan  fees,  dues,  interest,  fines  and  forfeitures  together  with  all  moneys 
received  bv  it  from  any  source  whatever  and  a  full  showing  of  all  payments 
on  loans,  dividends,  salaries  and  all  expenditures  of  every  character,  being  a 
full  and  complete  financial  statement  of  such  association  during  the  preced- 
ing vear.  The  statement  shall  be  sworn  to  by  the  secretary,  and  certified  by 
the  directors  or  a  majority  thereof.  And  each  association  shall  annually  cause 
to  be  credited  on  the  pass-book  of  each  stockholder  the  amount  of  earnings 
due  each  stockholder  except  associations  doing  business  on  the  "  terminating  " 
or  "serial  plan." 

Sec.  4^72. — For  the  purpose  of  this  act,  paid-up  stock  shall  be  such  stock  as 
the  owner  shall  have  paid  the  full  face  value  thereof  at  the  time  of  the  sub- 
scription therefor.  Prepaid  stock  shall  be  stock  upon  which  the  owner  shalL 
paid  any  specific  sum  in  advance  at  the  time  of  subscription,  leaving  the 
balance  necessary  to  mature  the  same  to  be  paid  bv  the  dividends  to  be  de- 
clared thereon  by  the  association,  or  stock  on  which  more  than  six  months' 
dues  have  been  paid  in  advance.  All  building  and  loan  associations,  as  such, 
shall  be  exempt  from  taxation.  Shares  of  stock  on  which  loans  have  not  been 
111  ide  or  advanced  bv  the  association,  which  stock  is  paid  up  or  prepaid,  shall 
be  considered  and  held  as  credits  of  the  members,  individually,  and  listed  by 
them,  and  assessed  against  them  for  taxation  as  oilier  property. 

Sec.  4573. — Any  stockholder  whose  stock  is  unpledged  for  a  loan,  wishing 

to  withdraw  fin  1    issociation  within  one  year  from  time  of  issuing  his 

0  upon  three  months'  notice,  in  writing,  given  to  the  bi  >ard  of 

re  [when]  such  withdrawing  stockholder  shall  be  entitled  to 

receive  the  full  amount   of  dues  paid  in  iron  the  sloe!;  to  be  withdrawn,  less 

ii'l  pro  rata  share  of  losses  sustained  during  such  stockholder's  terms 

of  pa  ior  to  the  time  ol  notice  ol  withdrawal.    If  such  withdrawal  is 

year  from   the  time   of   issuing  such  stock',  such  withdrawing 

1  be  entitled  to  the  amount  paid  in  on  dues  and  all  declared 

on,  and  such  part  ol  the  profits  as  shall  not  have  been  carried 

to  th  01  igent  fund,  less  all  fines  and  forfeitures ;  Provided,  That 

not  more  than  one  hali  oi   the  funds  in  the  treasury  shall  be  applied  to  the 

md  ol  withdrawing  stockholders  unless  otherwise  ordered  bv  the  board 

iu  ha    ociation  shall  have  the  power  to  provide  for  the  assess- 

1   1  non-paymenl  ol  due  .  premium  or  interest;  but  such  fines 

eed  twenty  per  centum  ol  the  amounl  of  the  delinquent  instal- 

iii' -  and  shall  be  charged  only  once  on  such  instalment.     Such 

.1    ociation    hall  have  the  1  ower  to  provide  for  the  forfeiture  of  stock  for  the 

,  premiums  of  [or]  interesl  for  three  months.    After  the 

fxn<  -  ■>]!('.  other  amounts  due  the  association,  the  remainder,  if 


GENERAL   LEGISLATION.  709 

any,  shall  be  credited  to  such  stockholder,  and  he  shall  he  notified  ol  the 
amount  due  him,  or,in  case  he  is  a  borrower,  such  remainder  shall  be  credited 
on  his  loan  and  the  balance  of  said  loan  shall  be  due  and  payable  and  may  be 
collected  at  once  mi  foreclosure.    The  bunds,  notes  or  mortgages  belonging 

to  any  association  shall  not  be  negotiable  except  upon  an  order  of  the  circuit 
court  or  the  judge  thereof,  in  vacation,  of  the  county  in  which  the  principal 
office  of  said  association  is  situated. 

Sec.  4574. — The  capital  stock  of  any  association  may  be  fixed  originally  in 
any  sum,  or  upon  the  order  of  the  board  oi  directors  thereof  be  increased  to 
any  amount  the  directors  shall  deem  advisable.     No  director  shall   become  a 
surety  on    the    bond  of  any  secretary  or  treasurer    or  any  officer  of 
association. 

Sec.  4575. — Any  two  or  more  associations  of  this  state  may  consolidate  into 
a  single  corporation  by  a  majority  vote  of  all  the  stockholders  of  each  ol 
different  associations  at  a  special  meeting  of  each  association  called  for  that 
purpose,  of  which  at  least  thirty  days' notice  shall  have  been  given   to 
member,  the  consolidation  to  be  upon  such  terms  as  shall  be  mutually  agreed 
upon  by  the  directors  of  such  associations,  and  such  terms  shall  be  | 
forth  to  each  member  in  the  notices  of  such  special  meetings.     Any  member 
not  consenting  to  such  consolidation  shall  be  entitled  to  receive  the  withdrawal 
value  of  his  slock  in  settlement  or  to  have  such  value  applied  in  part  settlement 
of  his  loan  if  he  be  a  borrower. 

Sec.  4576.— Any  building  and  loan  association  organized  under  the  laws  of 
this  state,  and  doing  business  within  the  state,  may,  within  one  year  after  the 
passage  of  this  act,  if  its  board  of  directors  deem  it  advisable,  to  go  into  liquid- 
ation ;  and  for  the  purpose  of  so  doing,  may  at  any  regular  or  called  meeting 
of  the  board  of  directors,  adopt  a  resolution  declaring  that  said   association 
intends  to  go  into  liquidation  and  discontinue  business  as  a  building  and 
association.     A  copy  of  such  resolution,  duly  certified  to  by  the  president   and 
secretary  of  such  association,  under  the  seal  thereof,  shall  be  transmitted  tothe 
auditor  of  state,  within  ten  days  after  the  passage  thereof,  together  with  a  lee 
of  one  dollar  for  the  filing  of  the  same  in  his  office  ;  and  thereupon  the  an 
of  state  shall  issue  his  certificate,  reciting  that  such  resolution  has  been 
in  his  office,  and  that  such  association  is  in  liquidation.    Afterthe  filing  ol  such 
notice  it  shall   not  be  lawful  for  such  association  to  issue  stock,  or  to  loan  or 
advance  its  moneys  to  its  members,  or  any  other  persons,  but  all  of  its  in 
and  receipts  of  said  association,  in  excess  of  the  actual  expenses  of  managing 
the  same,  shall  be  applied  to  pay  off  the  stock  in  said  association  upon  w 
no  loans  have  been  made.     The  board  of  directors  of  such  association  in 
liquidation,  may  adopt  such  rules  and  make  such  orders  as  shall  be  just  and 
equitable  for  the  sale  and  disposition  of  all  property  held  by  such  association, 
the  assessment  of  losses,  and  for  the  division  of  the  profits  of  such  associa 
Any  such  association  which  may  go  into  liquidation  under  the  provisions  of 
this  section,  shall  not  be  subject  to  any  of  the  foregoing  sections  of  this  act,  but 
its  affairs  shall  be  controlled  and  regulated  by  the  laws  in  force  before  the 
passage  of  this  act,  until  its  affairs  are  wound  up. 

Sec.  4577.— It  shall  be  competent  and  lawful  for  the  borrower  from  such 
association  to  agree,  in  writing,  upon  a  given  rate  of  premium  in  addition  to 
the  interest  to  be  paid  upon  each  loan,  without  bidding.  All  contracts  hereto- 
fore made  between  any  borrower  and  any  such  association  for  the  payment 
of  any  premiums,  with  or  without  any  bidding,  are  hereby  legalized.  No 
premiums  heretofore  contracted  for  without  bidding  are  to  be  contracted  for 
under  this  section  shall  be  deemed  usurious. 

Sec.  4578.— That  where  a  foreign  building  and  loan  association  doing 
business  within  this  state  has  become  insolvent,  and  its  affairs  are  being 
wound  up  by  a  receiver,  the  failure  of  such  association  to  have  complied  with 
the  laws  of  the  slate  representing  [respecting]  its  admission  to  do  business 
therein,  shall  not  affect  the  right  of  such  receiver  to  bring  any  suit  necessary 
to  wind  up  the  affairs  of  such  association. 

Sec  4570.— It  shall  be  unlawful  for  anv  corporation,  association  or  society, 
organized  under  the  laws  of  anv  state  1  other  than  the  state  ol  Indiana  1,  or  -I 
any  government  foreign  to  the  government  of  the  United  Slates,  to  conduct 
or  engage  in  the  business  of  a  building,  loan  fund,  savings  or  investment  as- 
sociation, and  of  issuing  stock  or  bonds  to  members,  payable  in  weekly, 
monthly  or  yearly  instalments  or  assessments,  agreeing  to  pay  thereon 
dividends  or  profits,  or  interest,  or  to  pay  off  bonds  by  number  consecutively 
or  otherwise,  without  having  first  tiled  in  the  office  of  the  auditor 
statement,  under  the  oath  of  the  president,  secretary,  and  at  least  three  of  the 

4G 


710  APPENDIX   IV. 

directors,  showing  the  name  and  location  of  such  corporation,  association  or 
society,  date  of  incorporation,  the  names  of  its  officers,  the  amount  of  its 
capital  stock,  the  amount  of  its  capital  stock  paid  in,  the  amount  of  the  assets 
of  said  corporation,  association  or  society,  the  character  of  such  assets  and  the 
fair  cash  value  thereof,  together  with  the  fair  cash  value  of  all  the  securities 
held  by  such  corporation,  association  or  society  ;  the  liabilities  of  such  corpo- 
ration, association  or  society,  and  the  character  of  such  liabilities  ;  the  par 
value  and  the  amount  of  dues  or  assessments  chargeable  on  each  share  of 
stock  issued  by  such  corporation,  association  or  society  ;  the  proportion  of 
such  dues  or  assessments  credited  to  the  loan  fund,  expense  fund,  or  other 
fund  ;  when  such  assessments  or  dues  are  payable  ;  the  amount  of  premium 
and  interest  charged  on  loans  made  by  such  corporation,  association  or 
society  ;  the  amount  of  interest  paid  on  debenture,  paid  up  or  other  stock 
issued  by  said  corporation,  association  or  society  ;  and  such  other  information 
concerning  the  business  of  said  corporation,  association  or  society  as  may  from 
time  to  time  be  required  by  said  auditor  of  state. 

Sec.  45^0. — In  addition  to  the  statement  required  by  section  one  (§  4579)  of 
this  act,  said  foreign  corporation,  association  or  society  shall  rile  with  the 
auditor  of  the  state  a  copy  of  its  act  of  incorporation,  properly  authenticated 
by  the  officer  of  the  state  in  which  said  foreign  corporation,  association  or 
society  is  incorporated,  a  copy  of  the  by-laws  and  rules  governing  it  and  of 
each  of  the  several  kinds  of  the  certificates  issued  to  its  shareholders  or  stock- 
holders. 

Sec.  4581. — Every  such  foreign  corporation,  association  or  society  doing  busi- 
ness in  this  state  shall  conduct  the  same  in  accordance  with  the  laws  of  this 
state  governing  domestic  associations.  It  shall  also  deposit  with  the  auditor 
of  state  one  hundred  thousand  dollars,  either  in  cash  or  bonds  of  the  United 
States,  or  of  any  state  of  the  United  States,  or  any  county  or  municipal  cor- 
poration in  the  state  of  Indiana,  satisfactory  to  the  auditor,  or  in  lieu  of  any 
such  deposit,  any  such  foreign  corporation,  association  or  society  shall  file 
with  the  auditor  of  state  a  written  contract  or  bond,  executed  by  a  responsible 
surety  and  guaranty  corporation  or  company  to  the  approval  of  the  auditor 
of  state,  by  which  contract  or  bond  said  surety  and  guaranty  corporation  or 
company  shall  agree  that  upon  notice  by  mail  from  said  auditor  that  any  such 
foreign  corporation,  association  or  society  is  indebted  to  any  citizen  of  the 
state  of  Indiana  in  any  sum  or  sums,  which  indebtedness  it  refuses  to  promptly 
pay,  that  it  will  at  once  pay  such  sum  or  sums  to  said  auditor  and  continue  so 
to  do  from  time  to  time,  until  such  payments  shall  equal  one  hundred  thousand 
dollars  ;  and  upon  failure  to  make  such  payment  or  payments,  then  such 
auditor  shall  at  once  revoke  the  license  of  any  such  foreign  corporation,  asso- 
ciation or  society  under  section  4  of  this  act,  and  suit  against  such  surety  and 
guaranty  corporation  or  company  shall  be  brought  by  the  state  of  Indiana  on 
relation  ot  the  attornev-general  of  said  state,  and  any  judgment  recovered 
against  any  such  surety  and  guaranty  corporation  or  company  shall  include 
one  hundred  dollars  damages  and  costs  of  suit,  exclusive  of  such  sum  or  sums 
of  indebtedness  in  favor  of  such  citizen  or  citizens,  which  damages  shall  be 
the  compensation  of  said  attorney  general  for  recovering  such  judgments. 
Sin  h  surety  and  guaranty  corporation  or  company  shall  agree  in  writing,  filed 
with  the  auditor,  before  acceptance  by  the  auditor  of  its  contract  or  bond,  to 
of  process  of  court  by  service  thereof  on  the  auditor,  who  shall 
mail  a  1  py  thereof  to  the  office  oi  such  corporation  or  company.  And  such 
auditor  may,  whenever  in  his  judgmenl  he  thinks  any  such  contract  or  bond 
1  fi  office  to  be  insufficient,  request  any  such  foreign  corporation, 
.1  .1  ion  or  • »  <  ty  to  file  a  new  bond,  satisfactory  to  such  auditor,  and  upon 
failui  ply  with  such  requirement,  said  auditor  shall  revoke  the  license 

o  ir|  oration,  associate  in  or  si  cii  ty,  as  provided  in  said  section 
4,  to  1  this  state,  and  such   foi    ign   corporation,  association  or 

ill  nol  beentitle  orce  by  legal  proceedings  any  evidence  of 

indebtedm  1  ;ain  I  any  citizen  or  citizens  of  this  stale  or  any  mortgage 
iperty  in  this  slate  until  such  requirement  has  been  so  com- 
plied with.  Any  such  foreign  corporation,  association  or  society  shall  also 
file  with  Ihe  auditor  a  written  instrumenl  properly  executed,  agreeing  that  a 
nons  may  issue  againsl  il  from  any  county  in  the  slate,  and  when  served 
upon  the  auditor  of  state  shall  I  upon  such  foreign  corporation,  asso- 

ty.    The  auditor  shall,  however,  mail  a  copy  of  any  papers 

ed  upon  him,  postage  prepaid,  to  the  h e  office  of  such  foreign  corpo- 

1      ;  ii  .11  01  society. 

1  pon  compliance  with  the  preceding  sections  of  this  act  by  any 


GENERAL   LEGISLATION".  711 

such  foreign  corporation,  association  or  society,  and  the  auditor  of  state  is 
satisfied  that  it  is  doing  a  lawful  and  safe  business,  he  may  issue  to  said  foreign 
corporation,  association  or  society  a  license  authorizing  il  to  conducl  its  busi- 
ness in  this  state  and  to  solicit  subscriptions  from  the  residents  ol    thi 
to  its  capital  stuck.    The  auditoi  ol  state  shall  have  the  power,  at  any  time,  to 
revoke  said  license  when  said  foreign  corporation,  association  <>r  society  fails 
or  refuses  to  comply  with  any  ol   the  provisions  ol  this  act,  or  when  any  such 
foreign  corporation,  association  or  society  shall  refuse  to  permit  to  be  made 
the  examination  ol   the  affairs  of  such  foreign  corporation,  association  or  so- 
ciety herein. :ttei    provided  for,  or  when,  upon  examination,  the  auditor  "I 
stale  shall  find  that  such  foreign  corporation,  association  or  society  is  nol  con- 
ducting its  business  in  accordance  with  the  law.  or  that  the  affairs  o 
foreign  corporation,  association  or  society  are  in  an  unsound  condition  ;  Pro- 
vided, That,  upon  the  revocation  of  said  I  i  auditor  shall  i 
notice  thereol  to  be  mailed  to  the  home  office  of  such  foreign  corporati 
sociation  or  society,  and  to  be  published  in  at  least  one  newspaper  i  ublished 
in  the  city  of  Indianapolis  :    And  provided  further,  That  after  the  publication 
of  such  notice  it  shall  be  unlawful  for  any  agent  ol    such  foreign  corporation, 
association  or  society  to  receive  further  stock  deposits  from  members  residing 
in  this  state,  except  payments  on  stock  on  winch  a  loan  has  been  made. 

SEC.  4583. — The  deposit  made  with  the  auditor  shall  be  held  as  security  for 
all  claims  of  residents  of  this  state  against  said  foreign  corporation,  association 
or  society,  and  shall  be  liable  for  all  judgments  or  decrees  thereon.  Su  h 
foreign  corporation,  association  or  society  may  collect  and  use  the  interest  on 
any  security  so  deposited,  as  required  by  section  three  .1  of  this  act,  so  long 
as  it  fulfils  its  obligations  and  complies  with  the  provisions  ol  this  act.  It 
may  also  exchange  them  tor  other  securities  of  equal  value  and  satisfactory 
to  the  auditor.  All  securities  of  cash  deposited  with  the  auditor  shall  be  im- 
mediately deposited  by  him  with  the  treasurer  of  state,  who,  with  his  sure- 
ties, shall  be  responsible  for  the  safekeeping  thereof.  The  treasurer  shall 
deliver  such  securities  only  upon  written  order  ol  the  auditor. 

Sec.  4584. — Kvery  agent  or  person  engaged,  directly  or  indirectly,  in  solii  - 
iting  subscriptions  to  the  capital  stock  of  any  such  foreign  corporation,  associ- 
ation or  society  shall  first  procure  from  the  auditor  ol  state  a  certificate  show- 
ing the  appointment  of  such  person  as  such  agent  ol  said  foreign  corpora- 
tion, association  or  society,  to  which  certificate  the  auditor  ol  state  shall  attach 
a  certified  copy  of  the  statement  of  condition  of  such  foreign  corporation,  as- 
sociation, or  society.  It  shall  be  unlawful  for  such  auditor  to  issui 
certificate  except  upon  the  tiling  in  his  office  of  a  written  appointment 
under  the  hand  of  the  president  and  secretary  ol  said  foreign  corporation,  as- 
sociation or  society,  attested  by  its  corporate  seal.  Such  certificate  shall  be 
renewed  annually  in  the  month  of  Julv  of  each  year. 

Sec.  4585. — The  auditor  of  state  shall  examine,  or  cause  to  be  examined, 
under  the  provisions  of  this  act,  whenever  in  his  judgment  it  may  be  neces- 
sary for  the  interest  of  the  shareholders  or  stockho  ders  of  said  foreign  corpo- 
ration, association  or  society  residing  in  this  state,  ever}  detail  of  the  business 
of  any  said  foreign  corporation,  association  or  society  transacting  business  in 
this  state.  Said  examination  shall  be  made  at  the  expense  of  the  foreign  cor- 
poration, association  or  society  examined,  and  consent  to  make  such  examina- 
tion shall  be  tiled  before  any  certificate  authorizing  such  foreign  corporation, 
association  or  society  shall  be  granted  by  said  auditor  ol  state 

Sec.  4586. — Every  such  foreign  corporation,  association  or  si  iciety,  authorized 
to  transact  business  in  this  state,  shall  on  the  first  day  of  Julv  in  each  year  file 
a  report  under  the  oath  of  its  president  or  secretary,  "and  which  shall  be 
certified  to  by  at  least  three  directors,  showing  the  gross  amount  of 
ments,  dues,  tines,  membership  fees  and  all  moneys  collected  by  said  fi 
corporation,  association  or  society  from  shareholders  or  stockholders  residing 
in  this  state  during  the  previous  year.  Such  statement  shall  also  show  the 
amount  of  money  loaned  by  said  foreign  corporation,  association  or  society 
to  any  of  its  shareholders  or  stockholders,  residing  in  this  state  during  the  pre- 
vious year.  And  such  foreign  corporation,  association  or  society  shall  pay 
to  the  auditor  of  state,  to  be  by  him  paid  into  the  treasury  of  the  state,  the 
sum  of  three  dollars  ($3.00)  on  every  one  hundred  dollars  ($100  received  by 
such  foreign  corporation,  association  or  society  from  the  shareholders  or  stock- 
holders residing  in  this  state,  less  the  amount  actually  loaned  to  the  shareholders 
or  stockholders  of  such  foreign  corporation,  association  or  so<  iety  residing  in 
this  state. 

Sec.  4587. — Every  such  foreign  corporation,  association  or  society  shall,  in 


712  APPENDIX    IV. 

addition  to  the  report  required  by  section  eight  (8)  of  this  act,  on  the  first  day 
of  July  of  each  year  file  with  the  auditor  of  the  state  a  detailed  statement, 
showing  separately  the  amount  of  membership  fees,  dues,  interest,  premium, 
fines,  forfeitures,  assessments,  expense  fund,  receipts,  and  all  other  moneys  re- 
ceived by  it,  together  with  a  full  showing  of  amounts  paid  on  loans,  withdraw- 
als; losses,  salaries  and  all  other  expenses,  dividends,  interest  or  any  other  ex- 
penditures ;  and  it  shall  further  show  the  amount  of  the  assets,  of  said  foreign 
corporation,  association  or  society,  the  character  of  such  assets,  the  fair  cash 
value  thereof,  together  with  the  nature  and  fair  cash  value  of  all  securities  of 
such  foreign  corporation,  association  or  society;  and  it  shall  also  show  the  liabil- 
ities of  such  foreign  corporation,  association  or  society,  and  the  character  of 
such  liabilities  ;  the  par  value  and  the  amount  of  dues  or  assessments  chargeable 
on  each  share  of  stock  issued  by  such  foreign  corporation,  association  or 
societv  ;  the  proportion  of  such  dues  or  assessments  credited  to  the  loan  fund, 
expense  fund  or  other  fund  ;  when  such  assessments  or  dues  are  payable  ;  the 
amount  of  premium  and  interest  charged  on  loans  made  by  such  foreign  cor- 
poration, association  or  society  ;  the  rate  and  amount  of  interest  paid  on  deben- 
ture, paid  up  or  other  stock  issued  by  such  foreign  corporation,  association  or 
society  and  such  other  information  concerning  the  business  of  such  foreign  cor- 
poration, association  or  society  as  may  from  time  to  time  be  required  by  the 
auditor  of  state. 

Sec.  4588. — The  auditor  of  state  shall  charge  and  collect  from  such  foreign 
corporation,  association  or  society,  for  riling  the  statements  and  other  papers 
and  issuing  the  certificates  required  to  be  filed  and  issued  by  this  act  the  same 
ices  as  are  charged  and  collected  from  insurance  companies  doing  business 
in  this  State,  and  are  chartered  and  incorporated  under  the  laws  of  the  state 
in  which  such  foreign  corporation,  association  or  society  is  incorporated. 

Sec.  4589. — The  auditor  of  state  shall  cause  to  be  printed  once  in  the  two 
papers  having  the  largest  general  circulation  published  in  the  city  of  India- 
napolis the  annual  statement  of  such  foreign  corporation,  association  or  society 
required  to  be  filed  in  his  office  by  section  nine  (9)  of  this  act.  The  cost  of 
such  publication  shall  be  paid  by  such  foreign  corporation,  association  or 
societv. 

Sec'  4590. — Any  person  or  persons,  who,  either  directly  or  indirectly,  shall 
solicit  subscriptions  to  the  capital  stock  of  any  such  foreign  corporation,  asso- 
ciation or  society,  or  act  as  agent  for  any  such  foreign  corporation,  association 
or  society,  without  first  procuring  the  certificate  required  in  section  six  (6)  of 
tin-  act,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof 
shall  be  fined  in  any  sum  nut  exceeding  five  hundred  dollars  ($500),  to  which 
may  be  added  imprisonment  in  the  county  jail  not  exceeding  thirty  (30)  days. 

Sic.  4591. — Immediately  upon  taking  effect  of  this  act  every  corporation, 
association  or  society  organized  under  the  laws  of  the  state  of  Indiana,  and 
conducting  the  business  of  a  building,  loan  fund,  savings  or  investment  asso- 
ciation, shall  tile  with  the  auditor  of  state  a  statement  of  the  condition  at  the 
close  of  its  last  fiscal  year,  which  statement  shall  contain  the  same  matter 
required  in  the  statement  provided  for  by  section  one  (l)of  this  act  ;  and  there- 
alter  Mich  corporation,  association  or  societv  shall  in  the  month  of  July  of  each 
year  file  in  the  office  of  the  auditor  of  state  a  statement  of  its  condition  at  the 
close  of  business  on  the  30th  of  June  preceding.  Such  statement  shall  be 
under  the  oath  of  the  president  and  secretary  and  at  least  three  directors  of 
such  corporation,  association  or  society,  and  such  statement  shall  contain  the 
information  prescribed  in  section  nine  (9)  of  this  act,  and  such  other  matter  as 
may  be  prescribed  by  the  auditor  of  stale.  And  every  such  corporation,  asso- 
(  iation  or  society  shall  file  in  the  office  of  the  auditor  of  state  copies  of  its  by- 
laws and  rules,  and  copies  of  each  oi  the  several  kinds  oi  certificates,  issued  to 
its  shareholders  or  stockholders.  For  filing  each  of  such  statements  and  the 
services  pertaining  to  the  examination  thereof  1  he  auditor  of  slate  shall  charge 
colled  from  each  of  said  corporations,  associations  or  societies  a  fee  of 

five  dollars  ($5).     And    out    of  Hie   fees    so  derived  he  shall  pay  all  additional 

clerk  hire  which  may  be  nece    itated  by  the  passage  of  this  act,  and,  except 
foi     in  h  1  lerk  hire,  the  disposition  of  lees  paid  into  ihe  office  of  the  auditor  of 
1   under  tin.  act    hall  begoverned  by  the  provisions  of  section  18  of  the  fee 
t]  n  .  ai  I  -I  Man  h  0,  [891. 

,  ■     li  ii  appears  from  any  such  statement  that  any  such  corporation, 
.1     ociation   01    society,  organized   under  the  laws   of   this  slate,    is  doing   an 
illegal  or  un  afe  bu  im     ,  the  auditor  of  state  may  make  or  cause  lobe  made 
11   |.io, of  this  act,  an  examination  into  Ihe  affairs  of  such  cor- 
poration, a    I0<  iation  01   society  ;  or  When  upon  petition  of  any  shareholder  or 


GENERAL   LEGISLATION.  713 

shareholders,  setting  forth  that  such  petitioner  or  petitioners,  believe  said  cor- 
poration, association  or  society  to  be  conducting  its  business  contrary  to  law, 
or  that  its  affairs  are  in  an  unsound  condition,  or  that  they  believe  any  oi  its 
statements  are  not  correct,  then  said  auditor  of  state  shall  make,  or  cause  to  be 
made,  an  examination  into  the  affairs  of  such  corporation,  association  or 
society  ;  Provided,  Thai  any  such  shareholder  or  shareholders,  before  such 
auditor  shall  make  such  examination,  shall  file  with  such  auditor  a  bond  to 
his  approval,  conditioned  if  such  examination  shall  disclose  that  such  corpora- 
tion, association  or  society  so  examined  is  doing  a  lawful  busim  uch 
shareholder  or  shareholders  will  pay  all  costs  ot  such  examination  as  are  here- 
after provided  lor  in  this  section.  Such  examination  shall  be  lull  and  com- 
plete, and  in  making  the  same  the  examiner  may  put  any  officer  "i  any  such 
corporation,  association  or  society,  or  any  other  person,  under  oath  to  answer 
truthfully  any  questions  that  may  be  asked  them  ;  and  all  the  book  .  \  apers 
and  records  of  such  corporation,  association  or  society,  and  all  securities  I 
by  it,  shall  be  subject  to  his  inspection.  Said  auditor,  or  the  deputy  inspector, 
shall  be  entitled  to  five  dollars  (§5.00)  per  day  for  each  day  occupied  in  making 
such  examination,  and  necessary  expenses,  to  be  paid  by  such  corporation, 
association  or  society,  which  sum  or  sums  so  paid  snail  be  used  by  him  in  1  ay- 
ing  the  salary  of  the  deputy  building  association  inspector,  as  provided  for 
in  section  20  of  this  act,  and  before  such  deputy  inspector  shall  receive  any 
pay  for  such  examination  he  shall  file  with  the  auditor  of  slate  an  itemized 
statement  of  his  expenses,  which  statement  shall  be  sworn  to  by  such  deputy 
inspector. 

Sec.  4593. — Should  the  auditor  of  state  or  the  inspector  appointed  by  him, 
find  any  such  corporation,  association  or  society  conducting  its  business,  in 
wdiole  or  in  part,  contrary  to  law,  or  failing  to  comply  with  the  law,  he  shall 
so  notify  the  board  of  directors  of  such  corporation,  association  or  society  in 
writing,  and  if,  after  thirty  days,  such  illegal  practice  or  failure  continue,  he 
shall  report  the  facts  to  the  attorney  general,  who  shall  cause  proceeding 
be  begun  in  the  proper  court  to  revoke  the  charter  of  such  corporation,  assi  »c  ia- 
tion  or  society. 

Sec.  4594. — Should  the  auditor  of  state,  or  the  inspector  appointed  by  him, 
find,  upon  examination,  that  the  affairs  of  any  such  corporation,  association  or 
society  are  in  an  unsound  condition,  and  that  the  interests  of  the  public  demand 
the  dissolution  of  such  corporation,  association  or  society  and  the  winding  up 
of  its  business,  he  shall  so  report  to  the  attorney  general,  who  shall  insh 
the  proper  proceedings  for  that  purpose. 

Sec.  4595. — The  president  and  secretary  of  any  such  corporation,  ass.  >< 
or  society  failing  to  make  and  file  the  reports  required  by  this  act  within  thirty 
days  after  the  same  are  due  shall  be  deemed  guilty  of  a  misdemeanor,  and, 
upon  conviction  thereof,  shall  be  fined  in  any  sum  not  exceeding  one  hundred 
dollars  1 S 100).  Upon  failure  to  file  such  report.it  shall  be  the  duty  of  the 
auditor  of  state  to  notify  the  president  and  secretary  of  such  corporation,  as- 
sociation or  society  of  such  failure,  and  if  such  report  is  not  filed  within  thirty 
days  from  the  date  of  such  notice,  then  it  shall  be  the  duty  of  the  auditor  to 
examine  such  corporation,  association  or  society,  .is  provided  in  section  four- 
teen ( 14)  of  this  act. 

Sec.  4596. — The  refusal  of  any  such  corporation,  association  or  soi 
permit  the  examination  of  its  affairs  authorized   by  this  act  shall   be  sufficient 
cause  for  institution  of  proceedings  to  wind  up  its  affairs,  as  \  r<  »vided  in  section 
sixteen  (16)  of  this  act. 

Sec.  4597. — The  auditor  of  state  shall  annually  compile  the  reports  of  such 
corporations,  associations  or  societies  required  to  be  filed  in  his  office,  and 
publish  the  same  in  his  annual  report  to  the  governor  and  general  assem- 

Sec.  459S. — To  enable  the  auditor  of  state  to  fullv  carry  into  effect  the  pro- 
visions of  this  act,  there  is  hereby  created  in  the  office  oi  the  auditor  of  state 
a  building  and  loan  association  department,  and  the  auditor  of  state  shall 
be  ex  officio  building  association  inspector,  and  charged  with  the  execution 
•of  the  laws  of  this  state  relating  to  building,  loan  fund,  savings  or  investment 
associations.  He  is  hereby  authorized  to  employ  an  additional  clerk  in  his 
office,  to  be  known  as  the  deputy  building  association  inspector. 

IOWA. 

REVISED  STATUTES,  1897. 
Section'  1890. — Corporations  organized  for  the  purpose  of  furnishing  money 
to  their  members  upon  sufficient  security  shall  be  known  as  building  and  loan 


714  APPENDIX   IV. 

or  savings  and  loan  associations.  Domestic  local  building  and  loan  or  sav- 
ings and  loan  associations  shall  include  corporations,  societies,  organizations 
or  associations  incorporated  under  the  laws  of  this  state  for  the  purpose  of  and 
doing  business  only  within  the  county  in  which  is  situated  the  town  or  city 
named  in  its  articles  of  incorporation  as  its  principal  place  of  business.  Pro- 
vided, that  where  the  town  or  city  named  in  its  articles  of  incorporation  as 
the  principal  place  of  business  is  situated  in  more  than  one  county  and  the 
business  of  the  association  is  restricted  to  the  town  or  city  and  to  the  county 
within  which  is  located  its  principal  office,  said  association  shall  be  deemed  a 
domestic  local  building  and  loan  or  savings  and  loan  association  within  the 
meaning  of  this  act.  Domestic  building  and  loan  or  savings  and  loan  asso- 
ciations shall  include  corporations,  societies,  organizations  or  associations  in- 
corporated under  the  laws  of  this  state  for  the  purposes  herein  provided,  the 
business  of  which  is  not  restricted  to  the  county  in  which  is  situated  the  town 
or  city  named  in  its  articles  of  incorporation  as  its  principal  place  of  business. 
Foreign  building  and  loan  or  savings  and  loan  associations  shall  include  cor- 
porations, societies,  organizations  or  associations  incorporated  under  the  laws 
of  another  state,  territory,  country,  or  nation  for  the  purposes  specified  herein. 

Sec.  1891. — Any  number  of  persons  not  less  than  five,  residents  of  the  state 
of  Iowa,  may  become  incorporated  as  building  and  loan  or  savings  and  loan 
associations"  under  the  general  incorporation  laws  of  this  state,  except  as 
otherwise  herein  provided  and  upon  complying  with  the  provisions  of  this 
act. 

Sec.  1892. — The  capital  named  in  the  articles  of  incorporation  shall  betaken 
to  mean  the  authorized  capital,  and  the  association  may  commence  business 
when  one  hundred  shares  thereof  have  been  subscribed  and  the  other  pro- 
visions of  this  act  in  relation  thereto  have  been  complied  with.  Such  asso- 
ciations shall  be  governed  by  a  board  of  directors  who  shall  be  elected  an- 
nually by  the  stockholders,  and  who  shall  hold  their  office  for  not  less  than 
one  nor  more  than  five  years,  and  if  for  a  longer  period  than  one  year  it  shall 
be  so  arranged  that  the  terms  of  an  equal  number  thereof,  as  nearly  as  may 
be.  shall  expire  each  year. 

Sec.  1893. — The  articles  of  incorporation  shall  show  : 

1.  The  names  and  residences  of  the  incorporators. 

2.  The  name  of  the  association  and  its  principal  place  of  business. 

3.  The  purpose  for  which  such  association  is  formed. 

4    T  le  terms  and  plan  of  becoming  and  continuing  a  member. 

5.  The  plan  of  making  loans. 

6.  The  plan  of  distributing  profits. 

7.  ;  Ian  1  »f  equalizing  losses. 

0.  The  plan  and  terms  of  withdrawal  of  members. 

9.  Theplan  of  providing  for  payment  of  expenses. 

10.  The  number  of  shares  into  which  capital  stock  is  to  be  divided. 

11.  The  classes  into  which  its  capital  stock  is  to  be  divided  and  the  terms 

forthe  same  by  subscribers, 
rhe  term  of  corporate  existen<  e. 
13.  Tin-  manner  of  electing  officers  and  filling  vacancies. 

94. — Such  articles  of  incorporation,  with  the  by-laws  of  the  associa- 
tion, shall  be  presented  to  the  executive  council,  and   if  it   tmds  that  they  are 

in  ormity  with  the  law,  ii  shall  attach  thereto  its  certificate  of  approval, 

and  tpon  such  articles  and   by-laws  shall   be  filed  in  the  office  of  the 

and, toi-  of  state,  who  shall  issue  a  certificate  authorizing  the  association   to 

msiness.     Amendments   to  such  articles  of  incorporation   may  be 

i :  to  time  at  any  regular  or  special  meeting  of  the  sb  ickholders, 

hall  in  like  manner  be  submitted  to  the  executive  council  and  approved 

incil  shall  keep  a  record   of   its  proceedings  with   reference  to 

itions. 

,:,    officers  of  any  domestic  building  and  loan  or  savings  and 

loan  a    iociation  who  sign  or  indorse  checks  or  handle  any  funds  or  securities 

ition  shall  give  such  bonds  or  fidelity  insurance  fot  the  faithful 

pei  1  on  11.11  ii     ol  their  duties  in  such  sum  as  the  board  of  directors  may  require, 

and  n       i      officei    hall  be  deemed  qualified  to  entet  upon  the  duties  ol  his 

1        bond       '      roved  by  tin- board  of  directors  and  by  the  state 

1  lid  bond  shall  be  de|  0  ited  and  filed  with  the  auditor  of  state.     All 

II 1  or  add nal  sei  urities  required  by  the  board 

of  dii  tate  when  it  becomes  necessary  to  protect  the 

inten  1     iciation  or  its  members,  and  no  director  shall  be  accepted 

ich  bonds,  and  no  person  shall  be  accepted  as  surety  on  the 


GENERAL    LEGISLATION.  715 

bonds  of  more  than  one  officer  of  said  association.  The  directors  shall  be  in- 
dividually liable  for  loss  lo  the  association  or  its  members  caused  by  their 
failure  in  require  a  compliance  with  the  provisions  oi  this  section. 

Sec.  [896.  — The  officers  of  any  domestic  local  building  and  loan  or  savings 
and  loan  association  who  sign  Or  indorse  checks  or  handle  any  funds  or 
securities  of  said  association  snail  give  such  bonds  or  fidelity  in  01  the 

faithful  performance  of  their  duties  in  Mich  sum  as  the  board  of  directors  may 
require,  and  no  such  officer  shall  be  deemed  qualified  to  enter  u]  on  the  duties 
of  his  office  until  his  bond  is  ap  the  board  of  directors  and  the  clerk 

of  the  district  court  of  the  county  of  the  principal  place  of  business  of  said 
association.  Said  bonds  shall  be  deposited  with  the  said  clerk,  ami  it  is  here- 
by made  the  duty  of  the  said  clerk  to  approve  said  bonds  and  to  receive  the 
same  as  herein  provided.  No  person  shall  be  accepted  as  surety  on  the  bond 
of  more  than  one  officer  of  said  association.  All  such  bonds  shall  be  increased 
or  additional  securities  required  by  the  board  of  directors  or  by  the  clerk  of 
said  district  court  when  it  shall  be  deemed  necessary  to  protect  the  interests 
of  the  association  or  its  members.  The  directors  shall  be  individually  liable 
for  loss  to  the  association  or  to  its  members  caused  by  their  failure  to  require 
a  compliance  with  the  provisions  of  this  section. 

Sec.  1897. — It  shall  be  unlawful  for  any  building  and  loan  or  savings  and 
loan  association  to  receive  deposits  of  money  without  issuing  shares  of  stock 
for  the  same,  or  to  transact  a  banking  business. 

Sec.  1898. — All  building  and  loan  or  savings  and  loan  associations  upon 
receiving  the  certificate  from  the  auditor  shall  have  power,  subject  to  the 
terms  and  conditions  contained  in  their  articles  of  incorporation  and  by-laws, 
to  issue  stock  to  members  to  be  paid  for  in  single,  stated  or  monthly  payments, 
but  not  more  than  $10,000  of  stock  computed  at  par  value  of  any  kind  shall  be 
issued  to  one  person  ;  to  assess  and  collect  from  members  such  dues,  member- 
ship fees,  fines,  premiums,  and  interest  on  loans  as  may  in  the  articles  of  in- 
corporation and  by-laws  have  been  provided,  and  the  same  shall  not  be  held 
to  be  usurious  ;  to  permit  members,  other  than  holders  of  guaranty  stock,  to 
withdraw  all  or  a  part  of  their  stock  deposits  upon  such  terms  and  at  such 
times  as  the  articles  of  incorporation  and  by-laws  may  provide ;  to  acquire, 
hold,  encumber,  and  convey  such  real  estate  and  personal  pro)  erty  as  may  be 
necessary  for  the  transaction  of  their  business  ;  to  make  loans  to  members  on 
such  terms,  conditions  and  securities  as  the  articles  of  incorporation  and  by- 
laws provide  ;  said  loans  to  be  made  only  on  real  estate  security  or  on  the 
security  of  their  own  shares  of  stock  not  to  exceed  90  per  cent,  of  the  with- 
drawal value  thereof.  In  case  of  foreclosure  the  borrower  shall  be  charged 
with  the  full  amount  of  the  loan  made  to  him,  together  with  the  dues,  interest, 
premium,  and  tines  for  which  he  is  delinquent,  and  he  shall  be  credited  with  the 
same  value  of  his  pledged  shares  as  if  he  had  voluntarily  withdrawn  the  same. 

Sec.  1899.— All  funds  except  those  necessary  to  defray  the  expenses  ol  the 
association  shall  be  invested  for  the  benefit  of  the  shareholders.  For  every 
loan  made  a  non-negotiable  note  or  bond  secured  by  first  mortgage  on  real 
estate  shall  be  given,  unless  the  prior  mortgage  is  to  the  same  association  ; 
then  a  second  mortgage  may  be  taken  to  secure  said  note,  except  when  such 
loan  is  on  the  withdrawal  value  of  stock  only.  Said  note  or  bond  shall  be 
accompanied  by  the  transfer  of  the  shares  of  stock  of  the  borrower  to  the  asso- 
ciation to  be  held  as  collateral  security. 

Sec.  1900. — Each  member  shall  have  one  vote  for  each  Sioo  of  stock  par 
value  owned  and  held  by  him  at  any  election,  and  may  vote  the  same  by 
proxy,  but  no  person  shall  vote  more  than  10  per  cent,  of  the  outstanding 
shares  at  the  time  of  said  election.  Any  one  depositing  or  transferring  stock 
to  the  association  as  collateral  security  shall  be  deemed  the  owner  of  such 
stock  within  the  meaning  of  this  section. 

Sec  iqoi. — Any  guardian,  executor,  administrator  or  trustee  shall  have  the 
right  to  vote,  manage  and  control  the  shares  held  by  him  in  his  representative 
capacity. 

SEC  1902. — The  expenses  of  every  such  association  shall  be  paid  from  the 
earnings,  or  from  a  fixed  charge  pr<  rvided  for  in  the  by-laws,  and  said  expenses 
shall  not  exceed  S8  for  the  maturing  of  every  $100  of  instalment  stock,  said 
sum  to  be  equitably  distributed  over  the  maturity  period  ;  and  $2  per  year  for 
every  Sioo  for  full  paid  or  prepaid  stock.  The  net  earnings  oi  such  associa- 
tion shall  be  apportioned  as  a  dividend,  annually,  semi-annually,  or  quarterly 
to  members,  in  such  manner  as  the  articles  of  incor]  oration  and  by-laws  may 
provide.  Membership  fees  and  expenses  incurred  in  making  loans  shall  not 
be  deemed  a  part  of  the  expenses  of  the  association. 


71(3  APPENDIX    IV. 

Sec.  1903. — Dues,  fines,  premiums  and  interest,  less  current  expenses,  shall 
accrue  to  the  shareholders,  and  any  net  loss  shall  be  deducted  before  declaring 
any  dividend. 

Sec.  igo_L. — At  least  once  in  each  year  the  auditor  of  state  shall,  by  himself 
or  some  competent  person  appointed  by  him,  make  an  examination  of  all 
domestic  and  foreign  building  and  loan  or  savings  and  loan  associations  doing 
business  in  this  state,  and  may  examine  under  oath  any  officer,  agent  or 
employe  of  the  association  or  other  person,  and  may  compel  the  production 
of  its  books  and  papers,  and  for  this  purpose  such  examiner  shall  have  the 
same  power  as  the  district  court  to  secure  the  attendance  of  witnesses  and  the 
production  of  such  hooks  and  papers,  and  to  punish  as  for  contempt.  If  the 
examination  is  made  by  the  auditor  in  person  he  shad  receive  his  actual 
expenses.  If  by  another,  his  actual  expenses  and  $5  per  day,  which  in  either 
case  shall  be  paid  by  the  association  examined  ;  provided,  the  expense  charged 
fi  ir  such  examination  to  any  one  association  shall  not  exceed  $200  for  any  one 
year.  A  record  of  such  examination  shall  be  kept  in  the  auditor's  office 
showing  in  detail  as  to  each  association  all  matters  connected  with  the 
conduct  of  the  business,  its  financial  standing,  and  everything  touching  its 
solvency,  plan  of  business,  and  integrity.  If  the  report  is  made  by  another  than 
the  auditor  it  shall  be  under  oath.  Examinations  may  be  made  at  such  other 
times  as  the  auditor  may  order.  If  any  such  association  refuse  to  submit  to 
such  an  examination  the  auditor  shall  revoke  its  certificate  of  authority. 

Sec.  1905. — When  twenty  shareholders  of  any  domestic  local  building  and 
loan  or  savings  and  loan  association  shall  in  writing  request  the  auditor  oi 
state,  he  shall  have  the  same  authority  and  shall  proceed  to  make  an  examina- 
tion of  the  affairs  of  such  association  in  the  manner  provided  in  this  act  for  the 
examination  of  domestic  associations,  and  the  costs  and  penalties  shall  be  the 
same 

Skc.  1006. — The  auditor  shall,  in  his  biennial  report  to  the  governor,  state 
the  general  conduct  and  condition  of  the  building  and  loan  or  savings  and 
loan  associations  doing  business  in  the  state  with  such  suggestions  as  he  may 
deem  expedient.  Such  report  shall  also  include  the  information  contained  in 
the  statements  of  the  associations  arranged  in  tabulated  form,  with  the  names 
and  compensations  of  the  clerks  employed  by  him,  the  entire  income,  the 
source  whence  derived,  and  the  expense  during  the  year  ending  on  the  thirty- 
first  clay  of  December,  in  detail. 

SEC.  1907. — When  any  building  and  loan  or  savings  and  loan  association  is 
conducting  its  business  "illegally  or  in  violation  of  its  articles  of  incorporation 
or  by-laws,  or  is  practicing  deception  upon  its  members  or  the  public,  or  is 
pursuing  a  plan  of  business  that  is  injurious  to  the  interests  of  its  members, 
or  its  affairs  are  in  an  unsafe  condition,  the  auditor  of  state  shall  notify  the 
directors  thereof,  and  if  they  shall  fail  to  put  its  affairs  upon  a  safe  basis,  he 
shall  advise  the  attorney-general  thereof,  who  shall  take  the  necessary  steps 
to  wind  up  its  affairs  in  the  manner  provided  by  law. 

Sec.  1908. — If  any  foreign  building  and  loan  or  savings  and  loan  association 
as  herein  defined,  desires  to  transact  business  within  this  state,  it  shall  furnish 
to  the  executive  council  a  certified  copy  of  its  articles  of  incorporation,  or 
charter  and  by-law's,  and  a  certified  copy  of  the  state  laws  under  which  it  is 
tnized,  together  with  a  report  for  the"  year  next  preceding,  verified  by  its 
president,  vice-president,  secretary  and  at  least  three  directors,  which  re- 
port shall  show  : 

1.  The  amount  of  its  authorized  capital  slock  and  the  par  value  of  each 
share. 

J.  The  number  of  shares  sold  during  (lie  war. 

3.  The  number  of  shares  cancelled  or  withdrawn  during  the  year. 

4.  The  number  oi    hares  in  force  at  the  end  of  the  >ear. 

5.  A  di  itement  of  all   funds  received  (luring  the  year  and  all  dis- 

nents. 

6.  i         ilaries  paid  each  of  its  officers. 

7.  A  detailed  tatemenl  of  its  assets  and  liabilities  at  the  end  of  such  year 
and  tii'-  11. it  hi  e  therei  if. 

x.  Any  other  matter  iol  I a<  <  which  the  council  may  require.     Upon  receipt 

!i  i'-i"  .1 1  tin-  1 cil,  it  il  finds  therefrom  that  the  association  is  properly 

managed,  thai   il-  lin.nni.il  condition  i     ati  factory,  and  thai    its  business  is 
:  upon  .1     ife  and  reliable  1  Ian,  shall  so  certify  upon  such  copy  a\h\ 
mi -lit,  and,  tin-    Mm"  l '  M-  '  (ill  d  with  the  auditor,  he  shall  issue  a  like  certi- 
fy .it.  m    in  tin-  1 .1  se  "i  domestic  associations. 

1     -,      I.    >iv  such  foreign   building  and    loan  or  savings  and   loan  as- 


GENERAL   LEGISLATION.  717 

sociation  before  the  state  auditor  shall  issue  to  it  a  certificate  shall  comply 
with  the  following  provisions  : 

[.  It  shall  deposit  with  the  auditor  of  state  $100,000  either  in  cash  or  bunds 
of  the  United  States  or  of  the  state  of  Iowa,  or  oi  any  county  or  municipal 
corporation  of  the  state  of  Iowa,  or  notes  secured  by  first  mortgage  on  real 
estate,  or  a  like  amount  in  such  other  security  as  shall  be  satisfactory  to  said 
auditor. 

2.  Such  foreign  association  may  collect  and  use  the  interest  on  any  se- 
curities so  deposited  as  long  as  it  fulfills  its  obligations  and  complies  with  the 
provisions  of  this  act.  It  may  also  exchange  them  for  other  securities  of 
equal  value  and  satisfactory  to  said  auditor. 

SEC.  [910. — The  deposit  made  with  the  auditor  shall  be  held  as  security  for 
all  claims  of  resident  shareholders  of  the  state  of  Iowaagainst  said  association, 
and  shall  be  liable  for  all  judgments  or  decrees  thereon  and  subject  to  the 
payment  of  the  same. 

Sec  ion.— Such  foreign  association  shall  also  file  with  the  auditor  of  this 
state  a  duly  authenticated  copy  of  a  resolution  adopted  by  the  board  of  di- 
rectors of  such  association,  stipulating  and  agreeing  that  if  any  legal  process 
of  notice  affecting  such  association  be  served  on  the  said  state  auditor  and  a 
copy  thereof  be  mailed,  postage  prepaid,  by  the  party  procuring  and  issuing 
the  same,  or  his  attorney,  to  said  association,  addressed  to  its  home  office,  then 
such  service  and  mailing  of  such  process  or  notice  shall  have  the  same  effect 
as  personal  service  on  said  association  within  this  state.  When  proceedings 
have  been  commenced  against  or  affecting  any  foreign  building  and  loan  or 
savings  and  loan  association,  as  contemplated  herein,  and  notice  has  been 
served  upon  the  auditor  of  the  state,  the  same  shall  be  by  duplicate  copies,  one 
of  which  shall  be  filed  in  his  office  and  the  other  mailed  by  him,  postage  pre- 
paid, to  the  home  office  of  such  association. 

Sec.  1912. — All  foreign  building  and  loan  or  savings  and  loan  associations 
shall  file  with  the  auditor  of  state  within  ten  days  after  their  adoption  a  duly 
certified  copy  of  any  amendment  oramendments  to  their  articles  of  incorpora- 
tion or  by-laws  that  may  have  been  adopted. 

Sec.  1913. — Foreign  building  and  loan  or  savings  and  loan  associations  shall 
pay  to  the  auditor  of  state  the  following  fees,  which  shall  be  paid  by  him  in- 
to the  state  treasury:  For  each  application  to  do  business  in  this  state,  $100  ; 
for  each  certificate  of  authority  and  each  annual  renewal  thereof.  Si 50  ;  for 
filing  each  annual  statement  of  the  assets  of  the  association,  as  shown  by  the 
statement  filed,  amounts  to  Sso.oooor  less,  $3  ;  if  more  than  $50,000  and  less 
than  $100,000,  $5  :  if  more  than  $100,000  and  less  than  $250,000.  $10;  if  more 
than  $250,000  and  less  than  .$500,000,  $20  ;  if  more  than  $500,000  and  less  than 
$1,000,000,  $30;  and  if  more  than  $1,000,000,  $50.  Domestic  building  and  loan 
or  savings  and  loan  associations  shall  pay  to  the  auditor  of  state  tiie  sum  of 
$25  for  each  certificate  of  authority  and  each  renewal  thereof,  and  for  tiling 
each  annual  statement,  $10.  Domestic  local  building  and  loan  or  savings  and 
loan  associations  shall  pay  to  the  auditor  of  the  state  for  filing  each  annual 
statement  the  sum  of  $5. 

Sec.  1914. — All  building  and  loan  or  savings  and  loan  associations  doing 
business  in  this  state  shall  on  or  before  the  first  day  of  February  of  each  year 
file  with  the  auditor  of  state  a  detailed  report  and  financial  statement  of  their 
business  for  the  year  ending  the  thirty-first  day  of  December  next  preceding, 
and  such  report  shall  be  verified  by  the  president  and  secretary  or  by  three- 
directors  of  the  association,  and  such  report  shall  show  : 

1.  The  date  when  the  association  was  incorporated  and  the  par  value  of 
each  share  of  stock. 

2.  The  number  of  shares  sold  during  the  year. 

3.  The  numbers  of  shares  cancelled  or  withdrawn  during  the  year. 

4.  The  number  of  shares  in  force  at  the  end  of  the  year. 

5.  A  detailed  statement  of  receipts  and  disbursements,  showing  specifically 
from  what  source  received  and  in  what  manner  applied. 

6.  A  statement  of  the  assets  and  liabilities  at  the  cud  of  the  year. 

7.  The  salaries  paid  to  its  officers  during  the  year. 

8.  All  foreign  building  and  loan  <>r  savin.  shall,  in 
addition  tothe  above,  report  the  names  of  each  shareholdi  1  ition 
residing  within  the  state  of  Iowa,  together  with  the  ;  ach 
andthe  number  of  shares  owned  by  each  of  said  person  firstday  of 
January  preceding,  and  the  cash  value  ol  each  of  said  -hare-  on  said  date. 

SEC.  191 5.— If  an v  association-  shall  fail  1  r  refuse  to  furnish  to  the  auditor  ol 
state  the  report  above  required  it  shall  forfeit  the  sum  ot  $25  for  every  day 


718  APPENDIX    IV. 

such  reports  shall  be  withheld,  and  the  auditor  of  state  may  maintain  an  action 
in  the  name  of  state  to  recover  such  penalty,  and  the  same  shall  be  paid 
into  the  treasury  of  the  state. 

Sec.  iqi6. — When  by  the  laws  of  any  other  state,  territory,  country  or  nation, 
or  bv  the  decision  or  rulings  of  the  appropriate  and  proper  officers  thereof 
any  greater  taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money  or  other  se- 
curities, or  other  obligations  or  prohibitions,  are  demanded  of  building  and  loan 
or  savingsand  loan  associations  of  this  state  as  a  condition  to  be  complied  with 
before  doing  business  in  Mich  other  state,  cerriti  iry,  country,  or  nation,  or  their 
agents  therein,  than  are  imposed  upon  foreign  associations  doing  business  in 
this  state,  so  long  as  such  laws  continue  in  force,  the  same  requirements,  obliga- 
tions, and  prohibitions  of  whatever  kind  shall  be  imposed  on  all  building  and 
loan  or  savings  and  loan  associations  of  such  other  stale,  territory,  country  or 
his  doing  business  in  this  state  and  upon  their  agents.  It  is  hereby  made 
the  duty  of  the  auditor  of  state  to  enforce  the  provisions  of  this  section. 

Sec.  iyij. — If  a  certificate  of  authority  to  do  business  shall  have  been  issued 
to  any  association,  and  it  shall  violate  any  of  the  provisions  of  this  chapter,  the 
auditor  of  state  shall  revoke  the  same. 

Sec.  1918. — If  any  officer,  director  or  agent   of  any  building  and  loan  or 
savings  and  loan  association  shall  knowingly  and  wilfully  swear  falsely  to 
any  statement  in  regard  to  any  matter  in  this  chapter  required  to  be  made  un- 
der oath,  he  shall  be  guilty  of  perjury.     If  any  director  of  any  such  association 
shall  vi  ite  to  declare  a  dividend  greater  than  has  been  earned,  or  if  any  officer 
or  director  or  any  agent  or  employe  of  any  such  association  shall  issue,  utter 
1  er  to  utter  any  warrant,  check,  order  or  promise  to  pay  of  such  associa- 
,  or  shall  sign,  transfer,  cancel  or  surrender  any  note,  bond,  draft,  mort- 
:,  or  other  evidence  of  indebtedness  belonging  to  such  association,  or  shall 
ind,  collect  or  receive  any  money  from  any  member  or  other  person  in 
the  name  of  such  association  without  being  authorized  to  do  so  by  the  board  of 
directors  in  pursuance  of  its  lawful  power,  or  if  any  such  officer,  director,  agent 
or   employe  shall  embezzle  or  convert  to  his  own  use,  or  shall  use  or  pledge 
for  his  own  benefit  or  purpose,  any  moneys,  securities,  credits  or  other  prop- 
erty belonging  to  the  association,  or  shall  knowingly  do  or  attempt  to  do  any 
business  for  such  association  that  has  not  procured  and  does  not  hold  the 
certificate  of  authority  therefor  as  in  this  chapter  provided,  or  shall  knowingly 
make  or  cause  to  be  made  any  false  entries  in  the  books  of  the  association,  or 
shall  with  the  intent  to  deceive  any  person  making  an  examination  in  this 
tef  required  to  be  made,  exhibit  to  the  person  making  the  examination 
any  false  entry,  paper,  or  statement  or   shall  knowingly  do  or  solicit  business 
for  any  building  and  loan  or  savings  and  loan  association  which  has  not  pro- 
cured the  required  certificate  therefor  he  shall  be  lined  in  any  sum  not  exceed- 
ing.? 10,000  or  imprisoned  in  the  penitentiary  not  exceeding  ten  years,  or  pun- 
ished by  both  such  fine  and  imprisonment. 

SEC.  1919. — All  building  and  loan  and  savings  and  loan  associations  having 
heretofore  transacted  business  in  this  state,  which  shall  not  have  complied 
with  the  provisions  of  this  act,  within  the  time  herein  prescribed,  shall  have 
the  right  to  close  up  their  business  and  fulfill  their  contracts  heretofore  en- 
l  into  with  residents  of  this  state  without  being  subject  to  the  penalties 
prescribed  in  this  act. 

[920. — Shares  of  stock  issued  by  building  and  loan  or  savings  and  loan 
asso  ia  ii  ns    hall  be  classified  as  moneys  and  credits  for  the  purposes  of 
taxation. 
Approved,  April  7.  1896. 

1320. — The  share  of  slock  of  mutual  building  and  loan  or  savings  asso- 
icclusively  engaged  in   such    business,    shall  be  assessed  and    taxed 
to  th              1    ial  holders  thereof  at  their  place  of  residence.    When  such  asso- 
1  maintains  a  reserve,  expense  or  other  fund,  or  its  equivalent,  the  total 
h  land  or  1  u  in  Is  shall  be  subject  to  taxation  at  the  principal  place 
ol  the  association,  and  shall  be  subject  to  taxation  at  the  principal 
1  ol  business  oi  the  association,  and  shall  be  assessed  against  the  associa- 
tion as  othei  pei  onal  property,  the  tax  of  the  same  to  be  paid  by  the  associa- 
li    hall  be  the  duty  of  the  a  >o<  ation  to  keep  a  correct  list  oi  the  owners 
of  the  stock  thereof,  with  th    ffice  address  and  on  or  before  the  thirty- 
lay  oi  fanuary  ol  each  year,  the  assessors  of  till  domestic  and  domestic 
local                ons  shall   make  the  same  verified  statement  as  other  corpora- 
tions are  required  I  1  make  and  furni  h  the  assessors,  and  in  addition  thereto 
1  I      ite  Ihe  total  amounl  ol   thi  h    n  terve,  expense  or  other  fund,  or  its 
equivalent,  and  the  actual  value  of  the   han  i  ol    ti  ick,  and  furnish  the  same  to 


GENERAL    LEGISLATION.  719 

the  assessor  of  the  assessment  district  in  which  its  principal  place  of  busil 
is  located.     And  on  or  before  the  fifteenth  day  of  February  of  each  yearthe 
secretary  or  president  of  such  domestic  or  domestic  local  associations  shall 
make,  by  mailing  to  them,  postage  prepaid,  a  verified  statement  to  the  county 
auditors  of  the  name  and  postofhee  address  of  every  stockholder  oi  said  a 
ciations,  residing  in  their  respective  counties,  together  with  the  number  of 
shares  owned  by  each  person,  and  the  actual  value  of  each  share  of  said    I 
on  the  first  day  of  January  preceding.    The  auditor  of  state  shall,  on  or  before 
the  tenth  day  of    'February  of  each   year,  send  to   the  count v  auditor  of  each 
county  a  statement  of  the  name  and  postoffice  address  oi  each  stockholder  oi 
a  foreign  building  and  loan  or  savings  association  residing  in  their  respective 
counties,  together  with  the  number  of  shares  owned  by  each  person  on  th< 
day  of  January  preceding,  and   the  actual  value  of  each  share  ol  slock  on  said 
first  day  of  January,  which  facts  shall  be  as  reported  to  him   by  such  associa- 
tions under  the  law  governing  building  and  loan  or  savings  and  loan  assi 
tions.     It  shall  be  the  duty  of  the  county  auditor  to  immediately  furnish  to 
each  assessor  in  his  county  the  name  of  each  stockholder  in  any  such  associa- 
tion residing  in  such  assessor's  district,  together  with  the  number  of  shares 
held  by  each  person,  and  the  actual  value  of  each  share  on  the  first  day  of 
January  preceding. 

KANSAS. 

I.  GENERAL  STATUTES  OF  1897,  p.  705. 

Paragraph  3  (p.  688). — Private  corporations  may  be  created  by  the  voluntary 
associations  of  hve  or  more  persons  for  the  purposes  and  in  the  manner  men- 
tioned in  the  following  sections  of  this  article  andamendments  thereto.  Every 
member  or  stockholder  in  said  corporation  shall  vote  in  person  or  hv  proxy. 

Par.  4  (p.  6881 — The  purposes  for  which  private  corporations  maybe  formed 
are:  *  *  *  The  accumulation  and  loan  of  funds,  the  erection  of  buildings, 
and  the  purchase  and  sale  of  real  estate  for  the  benefit  of  its  members.    *    *    : 

Par.  63. — Premiums  bid  for  priority  of  loan  in  building  and  saving  or  trust 
associations  organized  under  the  corporation  laws  of  this  state  by  the  members 
of  such  associations,  shall  not  be  deemed  as  usury,  or  subject  to  the  provisions 
of  sections  three  (3)  and  four  (4)  of  an  act  regulating  the  interest  of  moi 
chapter  51  of  General  Statutes  of  1868,  and  all  such  premiums  incorporated  in 
the  notes  given  by  the  members  of  the  associations,  and  all  the  tines  assessed 
against  its  members  in  accordance  with  the  by-laws  of  such  associations,  may 
be  collected  by  civil  action  before  any  court  having  jurisdiction. 

Par.  64 — All  corporations  heretofore  incorporated  under  the  laws  of  the 
state  of  Kansas,  for  the  purpose  of  accumulating  and  loaning  fund-  to  mem- 
bers, or  that  have  been  so  accumulating  and  loaning  funds  to  members,  are 
hereby  recognized  and  confirmed  as  legal  and  valid  corporations  from  the 
date  of  their  incorporations  or  the  time  they  commence  to  accumulate  and  loan 
to  members  ;  and  all  contracts  made  between  them  and  then  members,  all 
loans  made  at  whatsoever  premium,  discount  or  interest,  and  all  securities 
taken  for  such  loans,  are  hereby  declared  legal,  valid  and  1  hiding  on  all  parties 
concerned  or  affected  thereby,  or  having  notice  thereof. 

Par.  65. — All  associations  organized  under  the  general  corporation  laws  of 
this  state  for  the  purpose  of  accumulation  and  loan  of  funds,  the  erection  of 
buildings,  and  the  purchase  and  sale  of  real  estate  for  the  mutual  benefit  of 
their  members,  shall  be  permitted  to  conduct  such  business  with  its  members 
exclusively,  and  may  receive  money  in  payment  for  its  shares  of  stock  in  such 
manner  and  upon  such  terms  as  are  prescribed  by  its  by-laws  ;  may  receive 
money  on  loan  or  on  deposit,  and  may  lend  money  to  its  members  on  the  se- 
curity of  United  States  bonds  or  bonds  of  the  state  of  Kansas,  the  stock  of 
such  association,  or  real  estate,  which  loan  shall  be  repaid  in  such  stated  per- 
iodical instalments  as  are  prescribed  in  the  by-laws,  and  all  contracts  belw  t  e  1 
such  associations  and  their  members  shall  be  deemed  valid  and  binding  in 
law  :  Provided,  that  the  sum  of  all  the  repayments  agreed  to  be  made  by  the 
borrower,  for  the  whole  time  for  which  he  receives  his  1'  an,  shall  not  exceed 
the  actual  amount  of  money  borrowed,  with  interest  thereon  at  twelve  per 
cent,  per  annum  for  the  whole  time  for  which  it  was  so  borrowed. 

Par.  66. — Whenever,  by  reason  of  default  inpayment  of  loans  or  dues  by 
members  of  such  association,  it  becomes  necessary,  according  to  the  by-laws 
to  bring  suit  or  [on]  any  mortgage  for  the  purpose  of  collecting  such  loans 
or  dues,  no  greater  sum  shall  be  recovered  than  that  actually  due  at  the  time  1  f 
judgment,  and  the  amount  so  due  may  be  ascertained  by  adding  to  the  sum  of 
arrears  the  present  value  of  all  future  instalments  discounted  at  the  rates  per 


720  APPENDIX   IV. 

cent.,  and  according  to  the  times  and  periods  of  payments  established  by  the 
by-law,  not  inconsistent  with  section  one  of  this  act.  And  whenever,  by  the 
constitution  or  by-laws  of  any  such  association,  loan  shall  be  made  to  its  mem- 
bers by  the  share,  for  premiums,  the  amount  for  which  judgment  shall  be 
rendered  shall  not  be  greater  than  the  actual  amount  of  money  loaned,  with 
interest  to  time  of  judgement  at  twelve  per  cent,  per  annum,  and  all  unpaid  hues 
lawfully  assessed  "against  the  borrower  for  non-payment  under  Mich  by-laws, 
not  exceeding  two  per  cent,  per  month,  less  the  amount  paid  in  on  such  shares, 
with  like  interest  from  the  time  of  said  payment  or  payments. 

Par.  67. — Every  such  corporation,  before  commencing  business  under  its 
charter,  shall  rile  a  copy  of  its  by-laws  with  the  secretary  of  state,  and  shall 
likewise  so  rile  copies  of  all  subsequent  changes  of  such  by-laws  ;  and  all  such 
.i"  iciations  now  doing  business  shall  immediately  file  copies  of  their  by-laws 
with  the  secretary  of  state,  and  shall  also  hie  all  subsequent  changes  thereof. 
A  majority  of  the  stockholders  present  at  any  organized  meeting  may  adopt,, 
alter  or  change  the  constitution  or  by-laws,  or  transact  any  other  business. 

Par.  68. — Any  building  or  loan  association  organized  under  the  corpora- 
tion laws  of  this  state  for  the  purpose  of  the  accumulation  and  loan  of  funds, 
the  erection  of  buildings,  and  the  purchase  and  sale  of  real  estate  for  the  mutual 
benefit  of  its  members,  is  hereby  authorized  and  empowered  to  reorganize  as 
a  savings  bank,  and  to  do  business  as  such. 

Par.  69. — Before  any  such  association  can  reorganize  under  the  provisions 
of  this  act,  there  shall  be  presented  to  the  board  of  directors  of  such  association 
a  petition  signed  by  two-thirds  of  the  members  thereof,  praying  for  such  reor- 
ganization. Whereupon  it  shall  be  the  duty  of  such  board  of  directors,  with- 
in thirty  days  from  the  ttme  of  presenting  the  petition,  to  file  with  the  secre- 
tarv  of  state  an  additional  charter,  setting  forth  that  they  have  reorganized  un- 
der this  act,  which  shall  be  acknowledged  and  certified  as  provided  by  law 
for  obtaining  charters. 

Par.  70— All  fully  paid-up  permanent  shares  in  such  building  and  loan  as- 
sociation shall  be  exchanged  for  paid-up  stock  to  the  same  amount  in  such 
savings  bank  or  reorganized  corporation,  and  all  accumulating  shares  shall  be 
exchanged  for  investment  certificates,  to  be  issued  by  said  bank,  bearing  the 
same  payments  and  penalties,  the  same  rate  of  interest,  the  same  ratio  of 
participation  in  profits,  and  payment  on  withdrawal  or  at  maturity,  as  attached 
to  the  same  by  the  constitution  and  by-laws  of  such  association  before  its  reor- 
ganization. 

Par.  71. — All  contracts  heretofore  made  with  any  such  building,  loan  or  sav- 
ings association,  may  be  enforced  by  action  in  the  name  of  such  new  or  reor- 
ganized corporation,  and  all  liens,  causes  of  action,  are  hereby  saved  and  pre- 
served to  such  corporation  as  fully  as  ifthis  act  had  not  been  passed. 

KENTUCKY. 

REVISED  STATUTES,  1894. 

SECTION  854. — Any  number  of  persons,  not  less  than  nine,  may  associate  for 
the  purpose  of  forming  a  corporation  to  accumulate  the  savings  of  its  mem- 
.  paid  into  such  corporation  in  fixed  periodical  instalments,  and  lending  to 
its  members  the  funds  so  accumulated. 

Six.  855. — Such  corporation  may  be  organized  in  the  manner  provided  in 
section  two,  article  one,  of  this  chapter,  except  that  the  limit  of  the  capital,  in 
nounl  of  capital,  shall  be  given,  and  when  a  copy  thereof  is 
filed  in  the  office  of  the  secretary  of  state,  and  filed  and  recorded  in  the  county 
clerk's  offii  eol  the  county  where  its  principal  place  of  business  is  located, .the 
incorporatoi  -  shall  thereupon  become  a  body-politic,  and  be  invested,  subject 
to  the  provisions  of  this  article,  with  all  the  powers  and  privileges,  liabilities 
anli  .   [ranted  to  01  imposed  upon  corporations  generally  under  the 

1  hapter. 

Sec.  856.— The  name  assumed  by  such  corporation  shall  not  be  so  nearly 
alike  thai  ol  any  other  similar  corporation  as  in  deceive  the  public,  and  the 
words  "  Building  Associ  tion  "    hall  f<  irm  a  part  of  the  name. 

57. — The  par  value  of  the  shares  shall  not  exceed  live  million  dollars, 
and  shall  be  di  the  ultimate  value  fixed  by  the  by-laws. 

'llr-  hare  maybe  issued  in  monthly,  half-yearly  or  yearly  series,  in  such 
amounts  and  at  such  times  as  the  members  may  determine.  No  person  shall 
hold,  in  .11 iation  having  an  authorized  capital  stock  of  $100,000  or  less, 

hi  a:  in  unit  equal  to  two  and  a  half  {2V2)  percent,  of  the  whole  num- 

in  those  having  an  authorized  capital  exceeding  $100,000,  and 


GENERAL   LEGISLATION.  721 

not  exceeding  $500,000,  two  (2)  per  cent.  ;  in  those  having  an.  authorized  capi- 
tal of  $500,000,  and  not  exceeding  $1,000,000,  one  and  a  naif  per  cent.,  and  in 
those  having  an  authorized  capital  of  $1,000,000,  or  in  excess  thereof,  one  (1) 
per  cent,  of  The  whole  number  of  shares  therein;  and  no  shares  of  a  prior 

series  shall  be  issued  alter  the  issue  of  a  new  series,  and  an  association  may 
issue  lull  paid  stock  to  its  members,  or  issue  to  its  members  stock  restricted  to 
a  less  rate  of  profit  than  that  of  its  regular  slock  ;  hut  certificates  of  such  stock 
shall  state  on  their  face  this  restricted  rate  of  profit,  and  no  association  sha.l 
create  a  debt  exceeding  twenty  1201  per  cent,  of  its  paid-up  capital. 

Six.  858. — The  number,  title,  duties  and  compensation  of  the  officers  of  the 
corporation,  their  term  of  office,  the  times  ol  their  election,  as  well  as  the 
qualifications  of  the  electors,  and  the  lime  of  each  periodical  meeting  of  the 
officers  and  members,  shall  be  determined  by  the  by-laws;  all  officers  shall 
continue  in  office  until  their  successors  are  duly  elected  and  qualified. 

Sec.  S59. — The  officers  shall  hold  stated  meetings  as  prescribed  in  the  by- 
laws. At  such  times  as  may  be  prescribed  bythe  by-laws  every  member  shall 
pay  to  the  corporation,  as  a  contribution  to  its  capital,  such  sum  as  dues  upon 
each  share  of  instalment  stock  held  by  him  as  the  by-laws  may  prescribe, 
until  the  share  reaches  the  ultimate  value  fixed  by  the  by-laws,  or  is  withdrawn, 
cancelled  or  forfeited.  Payment  of  dues  on  each  series  shall  commence  from 
its  issue. 

Sec.  860. — A  member  may  withdraw  his  unpledged  shares  at  any  time  by 
giving  thirty  days'  notice  of  his  desire  to  do  so  in  a  book  to  be  provided  by  the 
corporation  for  the  purpose,  and  shall  thereupon  receive  the  withdrawing 
value  of  his  shares  at  the  date  of  the  notice,  and  this  withdrawing  value  shall 
be  the  amount  of  the  dues  paid  thereon,  together  with  such  proportion  of  the 
profits  as  the  by-laws  may  determine,  less  all  fines,  expensesand  proportionate 
part  of  any  unadjusted  loss  ;  but  at  no  time  shall  more  than  one-half  of  the 
funds  in  the  treasury  be  applicable,  without  the  consent  of  the  directors,  to 
the  demands  of  the  withdrawing  members.  The  directors  may,  in  their  dis- 
cretion and  pursuant  to  the  by-laws,  retire  the  unpledged  shares  of  any  series, 
and  enforce  their  withdrawal  at  any  time  after  three  years  from  the  date  of 
their  issue.  The  shareholders  whose  shares  are  to  be  so  retired  shall  be  de- 
termined by  lot,  under  such  regulations  as  the  directors  may  prescribe.  The 
withdrawing  value  of  such  shares  shall  be  the  amount  of  dues  paid  thereon, 
together  with  the  profits  apportioned  to  such  share,  according  to  the  next 
preceding  adjustment  and  valuation  of  shares,  less  all  fines,  expenses  and 
proportionate  part  of  any  unadjusted  loss. 

Sec.  861. — Whenever  there  shall  remain  in  any  series,  at  the  expiration  of 
five  years  after  the  date  of  its  issue,  an  excess  above  one  hundred  unpledged 
shares,  the  directors  may  retire  annually  twenty-five  per  centum  of  such  excess 
existing  at  said  expiration  of  five  years  after  the  date  of  its  issue  ;  but  when 
the  withdrawal  of  shares  is  to  be  enforced,  the  shares  to  be  retired  shall  be 
determined  by  lot,  and  the  holders  thereof  shall  be  paid  the  full  value  of  their 
shares,  less  fines  and  a  proportionate  part  of  an}'  unadjusted  less  ;  and  shares 
pledged  for  share-loans  shall  be  treated  as  unpledged  shares.  But  this  section 
shall  not  apply  to  associations  maturing  their  shares  in  less  than  six  years. 

Sec.  862. — When  each  unpledged  share  in  a  given  series  reaches  the  value 
fixed  by  the  by-laws,  all  payments  of  dues  thereon  shall  cease  and  the  holder 
thereof  shall  be  paid  out  of  the  funds  of  the  corporation  the  value  fixed  by  the 
by-laws,  with  interest  ot  the  rate  of  six  per  cent,  a  year  from  the  time  of  such 
maturity  to  the  time  of  payment ;  but  at  no  time  shall  more  than  one-half  of 
the  funds  in  the  treasury  be  applicable  to  the  payment  of  such  matured  shares 
without  the  consent  of  the  directors  ;  and  when  any  series  of  shares,  either 
pledged  or  unpledged,  reaches  maturity  between  the  dates  of  adjustment 
of  profits,  or  whenever  shares  are  retired  between  such  dates,  the  holders 
of  such  shares  shall,  in  addition  to  the  value  thereof,  be  entitled  to  interest 
at  the  same  rate  for  all  full  months  from  the  date  of  the  preceding  adjustment. 

Sec.  863. — The  moneys  accumulated,  after  due  allowance  made  for  all 
necessary  and  proper  expenses,  and  for  the  withdrawal  of  shares,  shall,  at 
each  monthly  or  weekly  meeting,  be  offered  to  the  members  according  to 
their  priority  of  right  to  a  loan  as  fixed  by  the  by-laws.  Each  member  whose 
bid  is  accepted  shall  be  entitled,  upon  giving  proper  security  and  complying 
with  the  by-laws,  to  receive  a  loan  equal  to  the  par  value  of  each  share  held  by 
him,  or  such  fractional  part  thereof  as  the  by-laws  allow.  If  a  balance  of 
money  remains  after  the  monthlv  loans,  the  directors  may  invest  the  same  in 
good  and  safe  bonds  or  real  estate  securities. 
Sec  864. — A  borrowing  member,  for  each  share  borrowed  upon  shall,  in  addi- 


722  APPENDIX   IV. 

Hon  to  his  dues  and  monthly  or  weekly  premium,  pay  monthly  or  weekly  in- 
terest on  his  loan  at  the  rate  of  six  per  cent,  per  annum,  and  the  interest  and  pre- 
mium shall  not  exceed  twelve  (12)  per  cent,  per  annum,  until  his  shares  reach 
the  value  fixed  by  the  by-laws,  or  the  loan  has  been  repaid  ;  and  when  said 
ultimate  value  is  reached  said  loan  and  shares  shall  be  declared  cancelled 
and  satisfied,  and  the  balance,  if  any,  due  upon  the  shares  shall  be  paid  to 
the  member. 

Sec.  865. — For  every  loan  made  a  note  secured  by  first  mortgage  on  real 
estate  shall  be  given,  accompanied  by  a  transfer  and  pledge  of  the  shares  of 
the  borrower.  The  shares  so  pledged  shall  be  held  by  the  corporation  as  col- 
lateral security  for  the  performance  of  the  conditions  of  said  note  and  mortgage. 
The  note  and  mortgage  shall  recite  the  number  of  shares  pledged  and  the 
amount  of  money  advanced  thereon,  and  shall  be  conditioned  for  the  payment 
at  the  stated  meetings  of  the  corporation,  or  on  some  day  of  each  month  or 
week,  of  the  monthly  or  weekly  dues  on  said  shares,  and  the  interest  and 
premium  upon  the  loan,  together  with  all  fines  upon  payments  in  arrears, 
until  said  shares  shall  reach  the  value  fixed  by  the  by-laws,  or  said  loan  is 
otherwise  cancelled  and  discharged.  The  shares  without  other  security  may, 
in  the  discretion  of  the  directors,  be  pledged  as  security  for  loans  to  an  amount 
not  exceeding  eighty  per  cent,  of  their  value  as  adjusted  at  the  last  adjustment 
and  valuation  of  shares  before  the  time  of  the  loan.  If  the  borrower'neglects 
to  offer  security  satisfactory  to  the  directors  within  the  time  prescribed  by  the 
by-laws  his  right  to  the  loan  shall  be  forfeited,  and  he  may  be  charged  with 
one  month's  interest  and  one  month's  premium  at  the  rate  bid  by  him,  together 
with  all  expenses,  if  any,  incurred  ;  and  the  money  appropriated  for  such  loan 
may  be  reloaned  at  the  next  or  any  subsequent  meeting. 

Sec.  866. — A  borrower  may  repay  a  loan  at  any  time  upon  application  to  the 
corporation,  in  even  shares,  whereupon,  on  settlement  of  his  account,  he  shall 
be  charged  with  the  full  amount  of  the  original  loan,  together  with  all  instal- 
ments of  interest,  dues,  premiums  and  fines  in  arrears,  and  shall  be  given  credit 
for  the  withdrawing  value  of  his  shares  pledged  and  transferred  as  security, 
and  the  balance  shall  be  received  by  the  corporation  in  full  satisfaction  of  said 
loan.  All  settlements  made  at  periods  intervening  between  stated  meetings  of 
the  directors  shall  be  made  as  of  the  date  of  the  stated  meeting  next  succeed- 
ing such  settlement  ;  and  a  borrower,  desiring  to  retain  his  shares  and  mem- 
bership, may,  at  his  option,  repay  his  loan  without  claiming  credit  for  said 
shares,  whereupon  said  shares  shall  be  transferred  to  him,  and  shall  be  free 
from  any  claim  by  reason  of  said  cancelled  loan. 

Sec.  N17— Members  who  make  default  in  the  payment  of  their  monthly  or 
weekly  dues,  interest  or  premium,  shall  be  charged  a  fine  not  exceeding 
twenty-five  cents  per  share  a  month  on  each  share  in  arrears.  No  fine  shall 
be  charged  after  the  expiration  of  six  months  from  the  first  lapse  in  any  such 
payment,  nor  upon  finesin  arrears.  Thesharesof  a  member  who  continues  in 
arrears  more  than  six  months  shall,  at  the  option  of  the  directors,  if  the  mem- 
ber fails  to  pay  the  arrears  within  thirty  days  after  notice,  be  declared  for- 
feited, and  the  withdrawing  value  of  the  shares  at  the  time  of  the  first  default 
shall  he  ascertained,  and,  after  deducting  all  fines  and  other  legal  charges,  the 
balance  remaining  shall  be  placed  to  an  account  to  be  designated  the  "  For- 
feited Share  Account"  to  the  credit  of  the  defaulting  member  ;  said  member, 
if  nol  a  borrower,  shall  be  entitled,  upon  thirty  days'  notice,  to  receive  the  bal- 
ance so  transferred  without  interest  from  the  lime  of  the  transfer,  in  his  order 
of  the  (urn,  out  of  the  funds  appropriated  to  the  payment  of  withdrawals.  All 
shares  so  forfeited  or  transferred  shall  cease  to  participate  in  any  profits  of  the 
corpoi  ation  accruing  alter  the  last  adjustment  and  valuation  of  shares  before 
said  default 

Sec.  868, — If  a  borrowing  member  has  been  in  default  for  six  months,  the 
nit  lobe  credited  to  his  shares  under  the  preceding  section  shall  be  ap- 
plied a,  a  payment  upon  the  loan,  and  the  balance-,  with  interest  and  premium 
thereon,  from  the  time  of  the  first  default,  shall  be  enforced  against  the  secu- 
rity. 1  lie  ihai  es,  the  value  of  whi<  h  has  been  so  applied  in  payment,  shall  re- 
to  the  c  orporation,  and  be  held  by  it  free  from  all  interest,  claim,  or  de- 
ii'  part  of  the  borrower  or  any  person  claiming  under  him. 

Sic.  869. — Theprofits  and  losses  may  be  distributed  annually,  semi-annually, 
or  quarterly  to  the  hares  then  existing,  but  shall  be  distributed  at  least  once  a 
each  year.    Theprofits  and  losses  shall  be- distributed  to  such  shares  in  por- 

.11  lo  their  value  at   that  time,  and   shall  lie  computed   upon   a  basis  of  a 
-    hai  e  luily  paid  lo  ihe  date  oi  distribution.    Losses  shall  be  apportioned 
Immediately  after  their  occurrence. 


GENERAL   LEGISLATION.  723 

Sec  870.— Any  such  corporation  may  purchase  at  any  sale,  public  or  private, 
any  real  estate  upon  which  it  may  have  a  mortgage,  lien  or  judgment  or  in 
which  it  may  have  an  interest,  and  may  dispose  ofthe  same  at  pleasure,  but 
within  five  years  alter  it  has  acquired  title  thereto. 

Sec  871.— It  shall  be  lawful  for  any  minor  above  the  age  of  fourteen,  or  a  mar- 
ried woman,  to  take  and  hold  shares  in  such  corporation,  and  for  such  corpora- 
tion to  pay  to  any  minor  any  money  that  mav  be  due  him  in  respect  to  any 
Share,  and  his  receipts  therefor  shall  be  valid;  but  no  minor  shall  be  eligible 
to  hold  any  office  in  such  corporation. 

Sec  872.— It  shall  be  the  duty  of  every  corporation  formed  under  this  law  to 
print  and  publish  in  pamphlet  form  the  whole  of  this  law  and  its  artn  I 
incorporation  and  by-laws,  and  any  amendments  thereto  or  alteratii  »i 
of,  and  to  sell  the  same  to  those  who  mav  wish  them  ;  and  it  shall  also  keep 
in  a  book,  subject  to  inspection,  in'its  office,  during  business  hours,  a  co  ol 
this  law,  its  articles  of  incorporation,  by-laws  and  any  amendments  thereto  or 
alterations  thereof. 

SEC.  87}. — All  corporations  formed  under  this  or  any  other  law,  and  transact- 
ing in  this  stale  a  business  similar  to  that  authorized  to  be  done  by  this  law, 
shall  be  under  the  supervision  of  the  secretary  of  slate.  The  president,  man- 
ager or  secretary  thereof  shall,  on  or  before  the  first  day  of  February  in  each 
year,  return  to  said  secretary  of  state  a  report  signed  and  sworn  to  by  the  pres- 
ident or  manager  and  secretary,  and  attested  by  at  least  two  directors,  showing 
the  amount  of  paid-up  capital,  and  amount  of  all  cash  receipts  and  disburse- 
ments for  the  vear  ending  the  thirty-first  of  December  next  previous  th<  1 
and  such  other  facts  as  the  secretary  of  state  may  require  ;  and  each  corpo- 
ration, officer,  agent  or  manager,  failing  or  refusing  to  make  said  report  or  to 
furnish  any  information  called  for  by  the  secretary  of  state,  under  oath  and 
attestationof  its  officers  as  required,  shall  be  severally  guilty  of  a  misdemeanor, 
and  fined  not  less  than  one  hundred  nor  more  than  one  thousand  dollars  for 
each  offence.  And  every  foreign  corporation  shall,  before  it  transacts  or  so- 
licits anv  business  in  this"slate,  obtain  from  the  secretary  of  state  a  certificate 
authorizing  it  to  carry  on  and  solicit  business  in  this  state,  which  certificate 
the  secretary  of  state' shall  grant,  upon  satisfactory  information  furnished  to 
him  under  oath  that  the  corporation  is  solvent  and  properly  managed  ;  and  if 
any  corporation,  bv  its  agents  or  officers,  solicit  or  transact  any  business  in 
this  state  without  first  obtaining  such  certificate,  such  corporation,  and  each 
agent  thereof  who  solicits  or  transacts  for  it  any  business  in  this  state,  shall  be 
liable  to  the  penalty  provided  in  this  section. 

Sec.  874.— Whenever  the  secretary  of  state  shall  have  reason  to  believe  that 
any  corporation  organized  under  the" laws  of  this  state  is  violating  the  provisii  ins 
of  this  law  or  the  law  under  which  it  was  created,  or  is  being  operated  in  a 
manner  prejudicial  to  the  interest  of  the  creditors  or  members  of  such  cor- 
poration, he  shall  lay  such  information  before  the  attorney-general,  and  such 
action  and  proceedings  may  be  taken  as  are  authorized  to  be  taken  in  cases  of 
insurance  companies  that  are  insolvent  or  are  violating  the  law. 

Sec  875. — Whenever  any  foreign  corporation  shall  refuse  or  fail  to  pay  the 
taxes  assessed  against  it,  or  to  pay  the  fees  exacted,  or  to  make  the  required 
report,  or  when,  in  the  judgment  "of  the  secretary  of  state  and  the  attorney- 
general,  its  business  in  this  state  is  conducted  in  violation  of  law,  or  it  is  in- 
solvent, it  shall  be  the  duty  of  the  secretary  of  state  to  cause  notice  of  such 
fact  to  be  published  in  some  newspaper  of  general  circulation  in  this  state, 
and  such  company  shall  cease  to  do  business  in  this  state  ;  and  if,  thereafter, 
any  agent  or  servant  of  such  companv  shall  transact  or  solicit  any  business 
for  such  company  in  this  state,  he  shall  for  each  offence  be  fined  not  less  than 
fifty  nor  more  than  one  hundred  dollars. 

Sec  876. — Each  agent  or  solicitor,  or  person  who  acts  as  such  agent  or  solic- 
itor, for  any  foreign  corporation  or  association  doing  business  in  this  state  sim- 
ilar to  that  authorized  bv  this  law,  shall,  before  transacting  any  business  as  such 
agent  or  solicitor,  obtain  from  the  secretary  of  state  license  to  act  as  such  agent 
or  solicitor,  which  license  shall  be  in  force  for  one  year  from  its  issual,  and 
shall  be  renewed  annually  ;  and  the  secretary  of  state  may,  with  the  advice 
of  the  attornev-general,  decline  to  issue  or  renew  anv  license,  if  he  has  reason 
to  believe  that  the  corporation  or  association  for  which  such  person  is  agent 
or  solicitor  as  insolvent  or  is  conducting  its  business  in  violation  of  law  ;  and 
any  person  who  shall  act  as  agent  or  solicitor  for  any  corporation  without 
having  obtained  license  so  to  do  shall  be  fined  not  less  than  fifty  nor  more  than 
one  hundred  dollars. 

Sec  877. — For  each  license  issued  to  an  agent,  and  for  each  certificate  to  do 


724  APPENDIX   IV. 

business  in  this  state,  there  shall  be  paid  to  the  secretary  of  state  twenty-five 
($25)  dollars.  For  each  annual  report  there  shall  be  paid  to  the  secretary  of 
state,  by  the  corporation  or  association  making  the  same,  ten  ($10)  dollars. 

Sec.  878. — All  fees  collected  by  the  secretary  of  state  under  this  article  shall  be 
covered  by  him  as  soon  as  collected  into  the  state  treasury  ;  and  so  much  thereof 
as  may  be  necessary  to  defray  the  expenses  incurred  in  the  discharge  of  the 
duties  imposed  upon  the  secretary  of  state,  by  virtue  of  any  of  the  provisions 
of  this  act,  shall  be  paid  upon  the  warrant  of  the  auditor  to  the  secretary  of 
state.  The  secretary  of  state  shall  report  to  each  session  of  the  general  as- 
semblv  a  statement  of  the  amount  received  from  license,  fees  or  penalties 
under  this  act,  and  the  amount  expended  by  him,  and  he  shall  be  allowed  for 
his  services  under  this  act  the  sum  of  one  thousand  dollars,  to  be  paid  to  him 
in  monthly  instalments  upon  the  warrant  of  the  auditor. 

Sec.  4093. — The  shares  of  building  associations  or  building  and  loan  asso- 
ciations shall  be  taxed  as  other  individual  personal  property,  and  shall  be 
listed  with  the  assessor  for  that  purpose  by  the  owners  of  said  shares,  the 
amount  so  listed  by  every  owner  or  shareholder  to  correspond  with  the  amount 
paid  in  and  not  withdrawn  by  the  said  shareholder  on  the  fifteenth  of  Septem- 
ber of  every  year  ;  Provided,  That  the  borrowing  members  shall  not  be  re- 
quired to  list  their  shares,  if  the  amounts  borrowed  by  such  members  equal 
or  exceed  the  amount  paid  in  on  their  respective  shares.  The  shares  of  in- 
fants shall  be  listed  by  the  parents  or  guardians  of  such  infants. 

Sec.  4004. — The  president  or  secretary  of  every  such  building  association, 
or  building  and  loan  association,  shall  list  with  the  assessor  the  amount  of  such 
surplus  funds  and  undivided  profits  as  his  association  may  have  on  hand  and 
undistributed  on  the  fifteenth  day  of  September  of  every  year. 

Approved  March  23,  1894. 

Sec.  4228. — Every  foreign  building  and  loan  association  or  company  doing 
business  in  this  state,  on  or  before  the  first  day  of  July  in  each  year,  shall  pay 
into  the  state  treasury  two  dollars  on  every  one  hundred  dollars  of  the  year's 
receipts  of  such  company  or  association  on  business  done  in  this  state  during 
[the]  twelve  months  next  preceding  the  first  day  of  June  of  the  said  year  the 
said  amount  is  required  to  be  paid,  and,  upon  payment,  tile  a  statement  there- 
of with  the  secretary  of  state, 

Sec.  4229. — It  shall  be  the  duty  of  every  foreign  building  and  loan  associa- 
tion doing  business  in  this  state,  or  some  officer,  manager  or,  general  or  state 
agent  of  the  same,  to  return  to  the  auditor  of  public  accounts,  on  or  before  the 
first  day  of  July  of  each  year,  a  correct  statement,  under  oath,  of  all  receipts 
on  business  done  in  this  state  during  the  twelve  months  next  preceding  the 
first  day  of  July  of  the  same  year  the  statement  is  required. 

Sec.  4230. — Any  corporation,  company  or  association  failing  to  comply  with 
sections  4227  and  4228  shall  be  deemed  guilty  of  a  misdemeanor,  and,  on  con- 
viction, be  fined  fifty  dollars  for  each  day  the  amount  therein  required  is  not 
paid  after  the  same  becomes  due. 

LOUISIANA. 

REVISED  LAWS  1897,  p.  82. 

Section  i. — The  capital  stock  of  all  building  or  homestead  associations,  so- 
cieties or  companies,  such  as  are  now  organized  and  carried  on  in  this  state, 
both  those  which  have  been  already  incorporated  and  those  which  may  here- 
after be  incorporated  under  the  laws  of  this  state,  providing  for  the  organization 
of  corporations  for  works  of  public  improvement,  etc.,  may  be  divided  into 
shares  and  may  be  payable  in  instalments  a-  may  be  provided  in  the  respective 
i  ions;  Provided  that  no  such  association  shall  carry 
on  bu  iness  in  I  his  state  until,  at  least,  the  sum  of  twenty  thousand  dollars  shall 
cribed  to  its  capital  stock,  and  thai  the  instalments  upon  such 
ill    amount    to,  at  least,  twenty-live  cents  a  share  a  month  ;  And  iro- 
l  further,  thai  every  such  ;i   tociation  now  carrying  on  business  with  a 
I  stock  oi   le  s  than  twenty  thousand  dollars  shall  be  permitted  to  in- 
ca   ital   itock  to  said  amount,  as  provided  by  existing  laws. 

taryand  treasurer  ot  every  such  association  or  the  officers 

h     hall  each  file  in  the  office  of  the  re<  order  of  mortgages,  in  the 

iation    is  domiciled,  a    bond  with   good   and  solvent 

a    11m  to  be  fixed  by  re  olution,  oi  1  he  board  of  directors, 

no!  less  than  one  thousand  dollars,  such  bonds  to  secure  the 

faithful  di  the  duties  ol    uch    ecretary  and  of  such  treasurer  ;  that 

the   urety  or  sureties  upon  such  bonds  shall  not  be  deemed  sufficient,  unless 


GENERAL   LEGISLATION.  725 

they  shall  be  accepted  and  approved  by  the  board  of  directors  of  such  asso- 
ciations  and  by  the  judge,  or  one  of  the  judges,  of  the  district  court  of  the 

Earish  in  which  such  association  maybe  domiciled,  and  that  said  bonds  shall 
e  made  in  favor  of  the  association  to  which  said  officers  belong,  and  shall 
enure  to  the  benefit  as  well  of  such  association  as  of  any  shareholder  •thereof, 
or  person  interested  therein,  who  may  be  damaged  or  injured,  or  may  suffer 
any  loss  by  reason  of  such  officers  failing  to  perform  the  duties  incumbent 
upon  them,  or  performing  such  duties  improperly. 

Sec.  3. — There  shall  be  held  annually  a  general  meeting  of  the  shareholders 
of  every  such  association,  and,  at  said  meeting,  the  board  of  directors,  through 
the  secretary  or  other  officer  whom  they  may  designate,  shall  make  to  the 
shareholders  a  full  and  complete  statement,  detailing  and  setting  forth  all  the 
assets  and  liabilities  of  such  association,  and  all  its  transactions  during  the 
previous  year. 

Sec.  4.— It  shall  be  lawful  for  such  associations  to  purchase  from  any  share- 
holder, or  other  person,  any  real  estate,  improved  or  unimproved,  and  to  sell 
the  same,  either  in  the  same  condition  or  after  improving,  repairing  or  build- 
ing upon  the  same,  to  any  shareholder  or  other  person*;  Provided,  that  such 
associations  may  make  sales  of  property,  real  and  personal,  either  for  cash  or 
on  terms  of  credit  ;  that  such  associations  shall  have  power  to  improve,  repair 
and  build  upon  real  estate,  and  to  make  all  contracts  and  do  all  acts  and  things 
necessary  and  proper  in  connection  therewith  ;  that  in  case  any  such  associa- 
tion shall  purchase  property  from  any  person,  and  shall  afterwards  sell  the 
same  property  to  the  same  person,  then  such  association  shall  have  the  ven- 
dor's lien  and  privilege  upon  the  property  so  sold,  for  the  security  of  the  pay- 
ment of  the  money  due  by  such  person  ;  that  such  associations  are  authorized 
and  empowered  to  contract  and  agree  with  any  person  to  purchase  from  such 
person  any  property,  and  afterwards  to  sell  the  same  property  to  the  same 
person,  even  though  said  agreement  be  made  at  one  and  the  same  time  ;  and 
such  contract  and  arrangements  shall  not  be  considered  or  dealt  with  as  a 
loan,  but  as  a  sale  to  the  association,  and  then  a  resale  by  the  association,  to 
the  person  from  whom  the  association  acquired  it  ;  and  such  association  to 
secure  a  payment  of  the  amount  due  by  such  person,  shall  have  all  the  rights, 
privileges  and  securities  which  are  now  accorded  by  law  to  the  vendor  of 
property. 

Sec.  5. — It  shall  be  lawful  and  competent  for  any  shareholder  of  such  asso- 
ciations, when  making  a  contract  with  such  association,  to  pledge  the  instal- 
ments upon  his  stock  in  such  association  already  paid  in  at  the  time  of  making 
such  contract,  and  those  to  be  paid  in  after  the  date  of  such  contract,  as  secu- 
rity for  any  debt  due  by  him  to  said  association,  and  a  declaration  of  such 
pledge  in  an  authentic  act  shall  create  and  constitute  a  full,  valid  and  complete 
pledge  ;  and  the  fact  of  such  pledge  shall  be  stamped  on  the  face  of  the  cer- 
tificate of  the  stock  so  pledged. 

REVISED  LAWS  1897,  p.  82. 

Sec.  I. — The  terms  "  public  utility  and  advantage,"  in  the  Revised  Statutes, 
section  (683)  six  hundred  and  eighty-three  [providing  for  the  formation  of 
corporations  of  public  utility  and  advantage],  and  in  all  laws  amendatory 
thereof,  be  held  to  include  in  their  meaning'ihe  objects  and  purposes  of  home- 
stead, or  building  associations,  societies  and  companies  as  now  established  in 
this  state. 

REVISED  LAWS,  1897,  p.  82. 

Section  i. — Whenever  any  stock  of  any  building,  homestead  or  loan  associa- 
tion shall  be  subscribed  for  by,  or  in  the  name  of  a  female  person  who  at  the 
time  be  married  or  may  afterwards  marry,  whether  such  person  be  a  minor, 
or  of  age,  or  whether  any  deposit  or  account  of  stock  shall  be  made  in  any 
such  association  by,  or  in  the  name  of  a  female  person  who  may  at  the  time 
be  married  ;  whether  such  person  be  a  minor  or  of  age,  such  stock  or  money 
subscribed  or  deposited  shall  be  held  by  said  association  for  the  exclusive  right 
and  benefit  of  such  married  woman  ;  and  the  said  married  woman  may  and  is 
hereby  fully  authorized  and  empowered  to  withdraw  such  deposit,  or  stock, 
or  shares,  or  transfer  the  same  without  the  authorization  or  intervention  of  her 
husband  ;  and  that  said  married  woman  as  regards  such  withdrawal  or 
transfer,  shall  be  dealt  with  in  all  respects  as  if  she  were  a  femme  sole  and  as 
in  no  manner  under  the  disabilities  which  attach  to  married  women : 
Provided,  however,  that  nothing  in  this  act  shall  be  taken  or  deemed  as  au- 
thorizing every  married  woman  to  pledge  or  borrow  upon  any  such  stock, 
47 


726  APPENDIX  IV. 

shares  or  deposit,  or  to  buy  or  sell  real  estate  without  the  authentication  of  her 
husband. 

REVISED  STATUTES,  1897,  p.  83. 

Section  i. — Whenever  any  stock  of  any  building,  loan  or  homestead 
association,  society  or  company,  shall  be  subscribed  for  by  any  minor  in 
person  ;  or  whenever  any  deposit  shall  be  made  in  any  such  association, 
society  or  company  by  a  minor  in  person,  such  stock  or  money  subscribed  or 
deposited  on  account  of  stock,  shall  be  held  by  such  association,  society  or 
company  for  the  exclusive  right  and  benefit  of  such  minor  ;  and  that  such 
minor  may  and  is  hereby  authorized  and  empowered  to  withdraw  such 
deposit  or  stock  or  shares,  or  transfer  the  same,  without  the  authorization  or 
intervention  of  any  parent,  tutor  or  guardian  ;  and  that  such  minor,  as  regards 
any  such  withdrawal  or  transfer,  shall  be  considered  and  dealt  with  in  all 
respects  as  if  he  or  she  had  attained  the  age  of  twenty-one  (21)  years,  and  as 
in  no  manner  under  the  disabilities  which  attach  to  minors  :  Provided,  nothing 
in  this  act  shall  be  taken  or  deemed  as  authorizing  any  minor  to  pledge  or 
borrow  upon  any  such  stock,  shares  or  deposit  or  to  buy  or  sell  real  estate 
without  the  authorization  now  requisite  under  existing  laws. 

MAIIVE. 

REVISED  STATUTES,  1883,  p.  426.— Chapter  xlvii. 
Savings  Institution,  and  Trust  and  Loan  Associations. 

Section  84. — All  savings  banks  or  institutions  for  savings,  and  trust  and  loan 
associations,  lawfully  organized,  are  corporations  possessed  of  the  powers  and 
functions  of  corporations  generally,  and  as  such  have  power  : 

I.  To  have  perpetual  succession,  each  by  its  corporate  name. 

II.  To  sue  and  be  sued,  complain  and  defend,  in  any  court  of  law  or  equity. 

III.  To  make  and  use  a  common  seal. 

IV.  To  make  by-laws  not  inconsistent  with  the  laws  of  the  state  or  of  the 
United  States,  for  the  management  of  its  property  and  the  regulation  of  its 
affairs. 

V.  To  receive  money  on  deposit,  to  invest  the  same,  and  further  to  transact 
the  business  of  a  savings  bank  or  trust  and  loan  association,  as  hereinafter 
provided. 

Sec.  85. — Any  number  of  persons  not  less  than  thirteen,  may  associate 
themselves  for  the  purpose  of  organizing  a  savings  bank  or  trust  and  loan  as- 
sociation, in  accordance  with  this  chapter;  three-fourths  of  such  number 
shall  reside  in  the  county  where  the  proposed  bank  or  trust  and  loan  associa- 
tion is  to  be  located,  and  may  till  vacancies  and  add  to  their  number  from  time 
to  time  a-^  they  desire,  all  of  whom  shall  be  residents  of  the  state. 

SEC.  86. — Such  persons  shall  execute  a  certificate,  sworn  to  before  a  justice 
of  the  peace,  in  duplicate,  one  of  which  shall  be  deposited  with  the  secretary 
of  state  for  record,  and  the  other  sen!  to  the  bank  examiner,  in  which  shall  be 
irth:  the  name  of  the  bank  or  trust  and  loan  association  ;  the  names  of 
all  the  1  orporators  and  Hie  places  where  they  reside  ;  their  business  0C<  1:'  a- 
tion  ;  and  the  place  where  its  business  is  to  be  transacted  ;  together  with  the 
.  1-  why  a  bank  or  trust  and  loan  association  is  needed  in  such  place 

Sec.  87.— A  notice  oi    intention  to  organize  such  bank  or  trust  and  loan 

iation,  signed  by  all  the  corporators,  shall  be  published  once  a  week  for 

three  weeks  in  some  newspaper  published  in  said  county  where  said  bank  or 

tin  I  aSSOC  iatii  in  IS  to  be  located,  if  any,  otherwise  in  some  newspaper 

tied  in  an  adjoining  county. 
Sec.  88. — When  the  examiner  receives  the  certificate,  with  the  published 
notice,  if  he  finds  that  the  fori   [oing  provisions  have  been  complied 
with,   it    shall    be   his  duty,   from    the    best   information    at    his   command,   to 
tain  : 

I.  Whether  greater  convenience  of  access  to  a  savings  bank  or  trust  and 
loan  a    ociation,  will  be  afforded  to  any  considerable  number  of  depositors 

Link    or   trust  and    loan   association,   at   die  place  des- 

ifii    i1' 

II.  Whether  the  re  pon  ibility,  character  and  general  fitness  of  the  persons 

named  in  1      for  the  discharge  of  the  duties  appertaining  to  such 

a  tin  •  an     hi  h  a    :"  •  ommand  the  confidence  ol  the  community  in  « hich  it 

1  ink  01   trusl  and  loan  association. 

ii  the  examiner  is  Satisfied,   concerning  the  several   points   named 


GENERAL   LEGISLATION.  727 


in  the  preceding  section,  and  that  the  organization  of  a  savings  hank  or  trust 
and  loan  association  as  proposed  in  such  certificate,  will  be  a  public  benefit, 
he  shall,  within  sixty  days  after  the  same  has  been  received  by  him  for  ex- 
amination, issue  under  his  hand,  a  certificate  of  authorization  to  the  persons 
named  therein,  or  to  a  portion  of  them,  together  with  such  other  persons  as  a 
majority  of  those  named  in  such  certificate  of  association,  in  writing,  approve  ; 
also  a  duplicate  to  the  secretary  of  state  ;  which  certificate,  so  issued  by  him, 
shall  authorize  the  persons  named  therein  to  open  an  office  for  the  deposit  of 
savings,  as  designated  in  the  certificate  of  association,  subject  to  the  live  pre- 
ceding sections. 

PUBLIC  LAWS,  1889— Chapter  312. 

Sec.  1. — No  savings  bank,  mortgage,  loan,  trust  or  banking  company,  asso- 
ciation or  institution,  incorporated  under  the  laws  of  this  state,  or  of  any  other 
state  and  doing  business  in  this  slate,  shall  act  or  do  business  as  administrator 
or  guardian,  anything  in  their  charter  to  the  contrary  notwithstanding. 

REVISED  STATUTES,  1883— Chapter  47,  p.  435. 

Sec.  132. — Loan  and  building  associations  may  be  organized  in  the  manner 
provided  herein,  for  the  organization  of  savings  banks,  and  trust  and  loan  as- 
sociations ;  and  upon  the  filing  of  any  certificate  of  authorization  of  a  loan  and 
building  association  with  the  secretary  of  state,  as  so  provided,  the  persons 
therein  named,  their  associates,  successors  and  assigns,  shall,  thereupon  and 
thereby,  be  constituted  a  body  corporate  and  politic,  and  such  body  may  make 
and  use  a  common  seal,  hold,  manage  and  convey  real  and  personal  prop- 
erty, sue  and  be  sued,  prosecute  and  defend  suits  in  law  or  in  equity,  have 
perpetual  succession  each  by  its  corporate  name,  and  make  and  ordain  by- 
laws for  its  government,  not  repugnant  to  the  constitution  and  laws. 

Sec.  133. — The  certificate  of  authorization  issued  by  the  bank  examiner,  shall 
provide  the  method  of  calling  the  first  meeting  of  the  association.  Each  as- 
sociation shall  pay  said  examiner  five  dollars  for  his  services  in  advance. 

Sec.  134. — The  "capital  to  be  accumulated  shall  not  exceed  one  million  dol- 
lars, and  shall  be  divided  into  shares  of  the  ultimate  value  of  two  hundred 
dollars  each.  The  shares  may  be  issued  in  quarterly,  half  yearly  or  yearly 
series,  in  such  amounts  and  at  such  times  as  the  members  "may  determine. 
No  person  shall  hold  more  than  twenty-five  shares  in  the  capital  of  any  one 
such  association.  No  shares  of  a  prior  series  shall  be  issued  after  the  issue  of 
a  new  series. 

Sec  135. — The  number,  title,  duties  and  compensation  of  the  officers  of 
the  association,  their  terms  of  office,  the  time  of  their  election,  as  well 
as  the  qualifications  of  electors,  and  time  of  each  periodical  meeting  of 
the  officers  and  members  shall  be  determined  by  the  by-laws,  but  no  members 
shall  be  entitled  to  more  than  one  vote.  All  officers  shall  continue  in  office 
until  their  successors  are  duly  elected,  and  no  association  shall  expire  from 
neglect  on  its  part  to  elect  officers  at  the  time  prescribed  by  the  by-laws. 

Sec  136. — The  officers  shall  hold  stated  monthly  meetings.  At  or  before 
each  of  these  meetings,  every  member  shall  pay  to  the  association,  as  a  c<  m- 
tribution  to  its  capital,  one  dollar,  as  dues  upon  "each  share  held  by  him,  until 
the  share  reaches  the  ultimate  value  of  two  hundred  dollars,  or  is  withdrawn, 
cancelled  or  forfeited.  Payment  of  dues  on  each  series  shall  commence  from 
its  issue. 

Sec  137. — Shares  may  be  withdrawn  after  one  month's  notice  of  such  in- 
tention, written  in  a  book  held  and  provided  bv  the  association  for  the  pur- 
pose. Upon  such  withdrawal,  the  shareholder's  account  shall  be  settled  as 
follows  ;  from  the  amount  then  standing  to  the  credit  of  the  shares  to  be  with- 
drawn, there  shall  be  deducted  all  fines,  a  proportionate  part  of  any  unad- 
justed loss,  together  with  such  proportion  of  the  profits  previously  credited  to 
the  shares  as  the  bv-laws  may  provide,  and  such  shareholders  shall  be  paid 
the  balance  ;  provided,  that  at  no  time  shall  more  than  one-half  of  the  funds  in 
the  treasury  be  applicable  to  the  demands  of  withdrawing  members,  without 
the  consent  of  the  directors.  The  directors  mav.  at  (heir  discretion,  under 
rules  made  by  them,  retire  the  unpledged  shares  of  any  series  at  any  time  after 
four  years  from  the  dale  of  their  issue,  bv  enforcing  the  withdrawal  of  the 
same";  provided  that  the  shareholders  whose  shares  are  to  he  retired  shall  be 
determined  by  lot,  and  that  they  shall  be  paid  the  full  value  of  their  shares, 
less  all  fines  and  a  proportionate  part  of  any  unadjusted  loss. 

Sec.  138.— When  each  unpledged  share  of  a  given  series  reaches  the  value 
of  two  hundred  dollars,  all  pa'vments  of  dues  thereon  shall  cease,  and  the 
holder  thereof  shall  be  paid  out  "of  the  funds  of  the  association,  two  hundred 


728 


APPENDIX  IV. 


dollars  therefor,  with  interest  at  the  rate  of  six  per  cent,  a  year,  from  the  time 
of  such  maturity  to  the  time  of  payment  ;  provided,  that  at  no  time  shall  more 
than  one-halt  of  the  funds  in  the  treasury  be  applicable  to  the  payment  of 
such  matured  shares,  without  the  consent  of  the  directors,  and  that  before 
paying  matured  shares,  all  arrears  and  fines  shall  be  deducted.  Every  share 
shall  be  subject  to  a  lien  for  the  payment  of  any  unpaid  dues,  fines,  interest, 
premiums  and  other  charges  received  thereon,  which  may  be  enforced  in  the 
manner  hereinafter  provided. 

Sec.  139  fas  amended,  acts  1897,  p.  363). — The  board  of  directors  shall  see  to 
the  proper  investment  of  the  funds  of  the  association  as  provided  in  this  section. 
Aitcr  due  allowance  for  all  necessary  and  proper  expenses,  and  for  the  with- 
drawal of  shares,  the  moneys  of  the  association  shall  be  loaned  to  the  members 
at  a  rate  of  monthly  premium  to  be  fixed  by  the  directors,  which  shall  in  no 
case  exceed  forty  cents  per  share.  Any  member  may,  upon  giving  security 
satisfactory  to  the  directors,  receive  a  loan  of  two  hundred  dollars  for  each  share 
held  by  him,  or  such  fractional  part  of  two  hundred  dollars  as  the  bj'-laws  may 
allow.  Any  association  may  provide  in  its  by-laws  that  instead  of  the  interest 
and  premium,  a  stated  rate  of  annual  interest  not  to  exceed  eight  per  cent,  may 
be  charged  upon  the  sum  desired,  payable  in  monthly  installments.  Such 
rate  shall  include  the  whole  interest  and  premium  to  be  paid  upon  the  loan. 
Any  balance  remaining  unloaned  to  members  may  be  invested  in  such  securities 
as  are  legal  tor  the  investment  of  deposits  in  saving  banks.  No  loan  shall  be 
made  on  the  gross  premium  plan. 

Sec.  140. — Premiums  for  loans  shall  consist  of  a  percentage  charged  on  the 
amount  lent  in  addition  to  interest,  and  shall  be  deemed  to  be  a  consideration 
paid  by  the  borrower  for  the  present  use  and  possession  of  the  future  or  ulti- 
mate value  of  his  shares,  and  shall,  together  with  interest  and  fines,  be  received 
by  the  association  as  a  profit  on  the  capital  invested  in  the  loan,  and  shall  be 
distributed  to  the  various  shares  and  series  of  said  capital  as  hereinafter  pro- 
vided. 

Sec.  141. — A  borrowing  member,  for  each  share  borrowed  upon,  shall,  in  ad- 
dition to  his  dues  and;monthly  premium,  pay  monthly  interest  on  his  loan  at  the 
rate  of  six  per  cent,  per  annum  until  his  shares  reach  the  ultimate  value  of  two 
hundred  dollars  each,  or  the  loan  has  been  repaid  ;  and  when  said  ultimate 
value  is  reached,  said  shares  and  loan  shall  be  declared  cancelled  and  satisfied, 
and  the  balance,  if  any,  due  upon  the  shares  shall  be  paid  to  the  member. 

Sec.  142. — For  every  loan  made,  a  note  secured  by  first  mortgage  of  real 
estate  shall  be  given,  accompanied  by  a  transfer  and  pledge  of  the  shares  of 
the  borrower.  The  shares  so  pledged  shall  be  held  by  the  association  as  col- 
lateral security  for  the  performance  of  the  conditions  of  the  note  and  mortgage. 
Said  note  and  mortgage  shall  recite  the  number  of  shares  pledged,  and  the 
amount  of  money  advanced  thereon,  and  shall  be  conditioned  for  the  payment, 
at  the  stated  meetings  of  the  corporation,  of  the  monthly  dues  on  said  shares, 
and  the  interest  and  premium  upon  the  loan,  together  with  all  lines  on  pay- 
ments in  arrear,  until  said  shares  reach  the  ultimate  value  of  two  hundred 
dollars  each,  or  said  loan  is  otherwise  cancelled  or  discharged  :  provided,  that 
the  shares,  without  other  security,  may,  in  the  discretion  of  the  directors,  be 
pledged  as  security  for  loans,  to  an  amounl  not  exceeding  their  value  as 
adjusted  at  the  last  adjustment  and  valuation  of  shares  before  the  time  of  the 
loan.  If  the  borrower  neglects  to  offer  security,  satisfactory  to  the  directors, 
ami  bin  the  time  precribed  by  the  by-laws,  his  right  to  the  loan  shall  be  forfeited, 
and  he  shall  be  charged  With  one  month's  interest  and  one  mouth's  premium 
al  the  rate  bid  by  him,  together  with  all  expenses,  if  any,  incurred,  and  the 
money  appropriated  for  such  loan  may  be  re-loaned  at  the  next  or  any  sub- 
sequent meeting. 

Sec.  143. — A  borrower  may  repay  a  loan  at  any  time,  upon  application  to 

the  association,  whereupon,  on  settlemenl  ol  his  account,  he  shall  be  charged 

with  the  full  amounl  of  the  original  loan,  together  with  all  monthly  instalments 

of  interest,  premium  and  lines   in   arrears,  and   shall   be  given   credit  for  the 

withdrawing  value  of  his  shares  pledged  and  transferred  as  security,  and  the 

balance  shall  be  received  by  the  a  :so<  iation  in  full  satisfaction  and  discharge 

d  loan  ;  provided,  that  all  settlements  made  at  periods  intervening  between 

d  meetings  of  the  directors,  shall  be  made  as  of  the  dale  of  the  stated 

meeting  m  d    ucce<  ding  such  settlemenl  :  and  provided,  that  a  borrower  de- 

to  retain  his  share    and  membership  may,  at  his  option,  repay  his  loan 

withoul  claiming  credit  form's  shares,  whereupon  said  shares  shall  be  re- 

i  to  him  .nid   shall  lie  free  from  any  claim   by  reason  of  said  can- 

loan. 


GENERAL    LEGISLATION.  729 

Sec.  144. — Members  who  make  default  in  the  payment,  of  their  monthly 
dues,  interest  and  premiums,  shall  be  charged  a  fine  not  exceeding  two  per  cent. 
a  month  on  each  dollar  in  arrears.  No  tines  shall  be  charged  alter  the  expira- 
tion ol  six  months  from  the  first  lapse  in  any  sueh  payment,  nor  u[  on  a  line  in 
arrears.  The  shares  of  a  member  who  continues  in  arrears  more  than  six 
months  shall,  at  option  of  the  directors,  if  the  member  fails  to  pay  the  arrears 
within  thirty  days  after  notice,  be  declared  forfeited,  and  the  withdrawing 
value  of  the  shares  at  the  time  of  the  first  default  shall  be  ascertained,  and 
alter  deducting  all  tines  and  other  legal  charges,  the  balance  remaining  shall 
be  transferred  to  an  account  to  be  designated  the  forfeited  share  account,  to 
the  credit  of  the  defaulting  member.  Saul  member,  if  not  a  borrower,  shall 
be  entitled,  upon  thirty  days'  notice,  toreceive  the  balance  so  transferred, 
without  interest  from  the  time  of  the  transfer,  in  the  order  of  his  turn,  out  of 
the  funds  appropriated  to  the  payment  of  withdrawal.  All  shares  so  forfeited 
or  transferred  shall  cease  to  participate  in  any  profits  of  the  association  accruing 
after  the  last  adjustment  and  valuation  of  shares  before --aid  default. 

SEC.  145. — If  a  borrowing  member  is  in  arrears  for  dues,  interest,  premiums 
or  fines  for  more  than  six  months,  the  directors  may,  at  their  discretion,  de- 
clare the  shares  forfeited  alter  one  month's  notice,  if  the  arrears  continue  un- 
paid. The  account  of  such  borrowing  member  shall  then  be  debited,  with 
the  arrears  of  interest,  premiums  and  fines  to  date  of  forfeiture,  and  the  shares 
shall  be  credited  upon  the  loan  at  their  withdrawing  value.  The  balance  of 
the  account  may,  and  after  six  months  shall  be  enforced  against  the  security 
by  any  legal  method,  or  by  proceedings  in  equity,  for  sale  and  foreclosure, 
jurisdiction  therefore  being  hereby  specially  given  to  the  supreme  and  su- 
perior courts,  to  be  exercised  upon  bill  or  petition  in  a  summary  manner. 
The  shares,  the  value  whereof  has  been  so  applied  in  payment  shall  revert  to 
the  corporation,  and  he  held  by  it  free  from  all  interest,  claim,  or  demand  on 
the  part  of  the  borrower,  or  any  person  claiming  from  or  under  him. 

Sec.  146.— Upon  the  death  of  a  shareholder,  his  legal  representatives  shall 
be  entitled  to  receive  the  amount  of  unpledged  shares  of  the  deceased,  to  be 
ascertained  as  provided  in  section  one  hundred  and  thirty-seven  for  withdrawal 
of  shares.  No  fines  shall  be  charged,  or  profits  credited  to  a  deceased  mem- 
ber's account  from  and  after  his  decease,  unless  his  legal  representatives  as- 
sume the  future  payments  on  shares,  which  they  may  assume  under  the 
same  rights  and  liabilities  of  the  deceased.  Moneys  received  for  the  shares  of  a 
deceased  shareholder,  or  the  shares  themselves,  as  the  case  may  be,  shall  de- 
scend to  the  same  persons  and  be  distributed  in  the  same  manner  that  money 
received  from  a  policy  of  life  insurance  on  the  life  of  a  deceased  person  now 
does  by  law. 

Sec.  147  (as  amended  acts  T897,  p.  363").— The  general  accounts  of  everv 
such  association  shall  be  kept  by  double  entry.  The  secretary  shall  at  least 
once  each  month  make  and  declare  a  trial  balance  which  shall  be  recorded 
in  a  book,  provided  for  that  purpose,  and  it  shall  at  all  times  be  open  to  the  in- 
spection of  the  directors  and  shareholders  of  the  association. 

All  moneys  received  from  the  member  shall  be  receipted  for  by  persons 
designated  by  the  directors  in  a  pass  book  provided  by  the  association  for  the 
use  of,  and  to  be  held  by,  the  member,  and  said  pass  bonk  shall  be  plainly 
marked  with  the  name  and  residence  of  the  holder  thereof,  the  number  of 
shares  held  by  him,  and  the  number  or  designation  of  the  series  or  issue  to 
which  said  shares  respectivelv  belong,  and  the  date  of  the  issue  of  such  series. 
All  moneys  so  received  shall  be  originally  entered  by  the  proper  officer  in  a 
book  to  be  called  the  cash  book,  and  the  entries  therein  shall  be  si  >  made  as  to 
show  the  name  of  the  payer,  the  number  of  the  shares,  the  number  or  desig- 
nation of  the  series,  or  issues  of  the  particular  share  or  shares  so  entered,  to- 
gether with  the  amount  of  dues,  interest,  premiums  and  hues  paid  thereon,  as 
the  case  may  be.  Each  payment  shall  be  classified  and  entered  in  a  column 
devoted  to  its  kind  Said  cash  book  shall  be  closed  on  the  lasl  day  of  the 
month  in  which  each  stated  meeting  is  held,  and  shall  be  an  exhibit  of  the 
receipt  of  all  moneys  paid  by  shareholders  during  said  month.  All  payments 
made  by  the  association  for  "any  purpose  whatsoever,  shall  be  by  order,  check 
or  draft,  signed  by  the  president  and  secretary,  and  indorsed  by  the  persons 
in  whose  favor  the  same  are  drawn.  The  name  of  the  payee,  the  amount 
paid,  and  the  purpose,  objector  thing  for  which  the  payment  is  made,  together 
with  its  date,  shall  be  entered  on  the  margin  of  said  order,  check  or  draft. 
The  treasurer  shall  dispose  of  and  secure  the  safe  keening  of  all  moneys, 
security  and  property  of  the  corporation,  in  the  manner  designated  by  the  by- 
laws. 


730  APPENDIX    IV. 

Sec.  148  (as  amended  acts  1897,  p.  363). — The  profits  and  losses  may  be  dis- 
tributed annually,  semi-annually  or  quarterly,  to  the  shares  then  existing,  but 
shall  be  distributed  at  least  once  in  each  year,  and  whenever  a  new  series  of 
shares  is  to  be  issued.  Profits  and  losses  shall  be  distributed  to  the  various 
shares  existing  at  the  time  of  such  distribution,  in  proportion  to  their  value  at 
that  time,  and  shall  be  computed  upon  the  basis  of  a  single  share,  fully  paid  to 
the  date  of  distribution.  Losses  shall  be  apportioned  immediately  after  their 
occurrence.  As  each  periodical  distribution  of  profits,  the  directors  shall  re- 
serve as  a  guaranty  fund  a  sum  not  less  than  one  nor  more  than  ten  per  cent, 
of  the  net  profits  accruing  since  the  next  preceding  adjustment,  until  such 
fund  amounts  to  five  percent,  of  the  dues  capital,  which  fund  shall  thereafter 
be  maintained  and  held,  and  said  fund  shall  be  at  all  times  available  to  meet 
losses  in  the  business  of  the  association  from  depreciation  in  its  securities  or 
otherwise. 

Sec.  149. — Any  association  ma}'  purchase,  at  any  sale  public  or  private,  any 
real  estate  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  other  in- 
cumbrance, or  in  which  it  may  have  an  interest,  and  may  sell,  convey,  lease 
or  mortgage  at  pleasure,  the  real  estate  so  purchased,  to  any  person  or  per- 
sons whatsoever.  All  real  estate  so  acquired  shall  be  sold  within  five  years 
fromt  the  acquisition  of  title  thereto. 

Sec  150. — Minors  may  hold  shares  by  trustees,  and  the  shares  of  each  share- 
holder, not  exceeding  two,  shall  be  exempt  from  attachment  and  execution. 

Sec.  151  (as  amended  acts  1897,  p.  363). — The  bank  examiner  shall  perform, 
in  reference  to  all  loan  and  building  associations,  the  same  duties  and  shall 
have  the  same  powers  as  are  required  by  him  or  given  to  him  in  reference  to 
savings  banks  ;  and  shall,  annually,  by  the  fourth  day  of  December,  make  or 
report  to  the  governor  and  council  of  the  general  conduct  and  condition  of  each 
of  the  associations  visited  by  him,  noting  such  suggestions  as  he  deems  expe- 
dient and  that  the  public  interest  require.  The  officers  of  such  associations 
shall  answer  truly  all  inquiries  made,  and  shall  make  all  returns  required  by 
the  bank  examiner. 

Sec.  152  facts  1897,  p.  363). — The  secretary,  treasurer  and  other  persons 
holding  positions  of  trust  in  loan  and  building  associations  shall  give  bonds  to 
the  corporation  for  the  faithful  discharge  of  the  duties  of  their  offices  in 
such  sums  as  the  directors  decide  to  be  necessary  for  the  safety  of  the  fund 
and  such  bonds  shall  continue  to  be  valid  from  year  to  year  so  long  as  they 
are  elected  and  hold  said  offices,  subject  to  renewal  whenever  ordered  by  the 
bank  examiner  or  directors.  The  directors  may,  in  lieu  of  said  bond,  insure  at 
the  expense  of  its  association  with  some  fidelity  or  guaranty  company  which 
shall  be  satisfactory  to  the  examiner,  for  the  faithful  discharge  of  the  duties  of 
the  secretary  and  treasurer  and  such  other  clerks  as  may  be  employed,  in  such 
sums  as  they  may  decide  to  be  necessary  for  the  safety  of  the  funds  in  the 
custody  of  the  corporation.  The  examiner  shall  annually  examine  the  bonds 
given,  as  aforesaid,  and  inquire  into  and  certify  to  the  sufficiency  thereof,  and 
when  he  deems  any  such  bond  insufficient  he  shall  order  a  new  bond  to  be 
given  within  a  time  bv  him  specified. 

SEC.  [53  acN  [897,  p.  3031.  Directors  shall  cause  all  real  estate  of  an  insur- 
able character  held  bv  them  absolutely  or  in  mortgage,  to  be  fully  insured 
againsl  loss  by  fire  or  lighting  and  the  expense  of  such  insurance  in  case  of 
mortgage  shall  be  added  to  the  amount  of  the  mortgage  debt,  to  be  refunded 
in  case  of  payment  or  redemption. 

PUP- LIC  LAWS,  1803— C11  VPTER  -74,  p.  274. 

Si  i  TION  [.—Every  loan  and  building  association  doing  business  in  this  state 
shall   iemi-annually  on  the  last  Saturday  oi  April  and  ( >ctober,  make  a  return 
d  and  sworn  to  bv  its  secretary  oi  its  monthly  capital  dues  paid  in  by  its 
■  han  holders  during  the  six  months  preceding  each  oi  said  days,  exclusive  of 
withdrawal  ,  fines,  interest  and  premiums.     Said  return  shall  be  made  to  the 
oi    tate  on  01    before  the  second  Mondays  of  May  and  November, 
and  tor  wilfully  making  a  false  return,  the  secretary  forfeits  not  less  than  live 
more  than  five  thousand  dollars.     The  treasurer  of  such  associa- 
tion   hall  pay  to  the  treasurer  of  state  a  tax  on  accounl  of  such  dues,  of  one- 
ie  per  cent,  a  year  on  the  amount  so  returned. 

One-half  oi     aid  tax  shall   be  assessed   on    the  amount    so   returned 

month    ending  on  the  las!  Saturday  in  April  and  tin- other  half  on 
O  returned  for  the  six    months  ending  on   the   last    Saturday   in 
ind     uch  ta       hill  be  paid  semi-annually,  within  ten  days  after  the 
Jm  1  Mondaj    in  June  and  I  >e<  ember. 


GENEItAL   LEGISLATION.  731 

Sec.  3. — All  capital  dues  of  such  associations  are  exempt  from  municipal 
taxation  to  the  association  or  to  the  shareholder,  but  real  estate  owned  by  the 
association,  not  held  as  collateral  security,  maybe  taxed  by  the  town  in  which 
in  which  the  same  is  located. 

Public  Laws,  [891— Chapter  123,  p  135. 

The  office  of  secretary  and  treasurer  of  loan  and  building  associations  may 
be  held  by  one  and  the  same  person,  provided  any  association  so  provides  by 
its  by-laws. 

TRUST  ANO  BANKING  COMPANIES. 

Public  Laws,  1893— Chapter  293,  p,  349. 

Section,  i. — Chapter  six  of  the  revised  statutes  is  hereby  amended  by  adding 
the  following:  Every  corporation  organized  under  the  laws  of  this  state  for  the 
purpose  of  doing  a  loan,  trust  or  banking  business  and  having  a  capital  divided 
into  shares  shall  be  subject  to  municipal  taxation,  the  same  as  shares  in 
national  banks.  The  provisions  of  this  act  shall  not  apply  to  building  and 
loan  associations. 

FOREIGN  CORPORATION. 

Public  Laws,  1891. — Chapter  79, 

Section,  i. — Except  as  is  herein  after  provided  no  person,  association  or  cor- 
poration shall  carry  on  the  business  of  accumulating  the  savings  of  its 
members  and  loaning  to  them  such  accumulations  in  the  manner  ol  loan  and 
building  associations  within  this  state,  unless  incorporated  under  the  laws 
thereof  for  such  purpose. 

Sec  2. — The  bank  examiner  may  authorize  any  such  association  or  corpora- 
tion duly  established  under  the  laws  of  another  state  to  carry  on  such  busi- 
ness in  this  state,  but  said  association  or  corporation  shall  not  transact  such 
business  in  this  state  unless  it  shall  first  deposit  with  the  state  treasurer,  the 
sum  of  twenty-five  thousand  dollars  and  thereafter  a  sum  equal  to  fifteen  per- 
cent, of  the  deposits  made  in  such  association  or  corporation  by  citizens  of  the 
state,  the  amount  of  percentage  of  deposits  so  required  to  be  determined  from 
time  to  time  by  the  bank  examiner  ;  or  in  lieu  thereof  the  whole  or  any  part 
of  said  sum  may  consist  of  any  of  the  securities  in  which  savings  banks  may 
invest,  as  regulated  in  section  one  hundred  of  charter  forty-seven,  revised 
statutes,  and  acts  amendatory  thereof,  at  their  par  value,  and  the  said  deposits 
shall  be  held  in  trust  by  said  treasurer  for  the  protection  and  indemnity  of  the 
residents  of  the  state  with  whom  such  associations  or  corporations  respec- 
tively have  done  or  may  transact  business.  Said  moneys  or  property  shall 
be  paid  out  or  disposed  of  only  on  the  order  of  some"  court  of  competent 
jurisdiction,  made  on  due  notice  to  the  attorney-general  of  the  state,  and 
upon  such  notice  to  the  creditors  and  shareholders  of  such  association  or 
corporation  the  court  as  shall  prescribe.  For  the  purpose  of  ascertain- 
ing the  business  and  financial  condition  of  any  such  association  or  corpo- 
ration doing  or  desiring  to  do  such  business,  said  bank  examiner  may  make 
examinations  of  such  associations  or  corporations,  at  such  times  and  at  such 
places  as  said  bank  examiner  may  desire,  the  expense  of  such  examinations 
being  paid  by  the  association  or  corporation  examined,  and  may  also  require 
returns  to  be  made  in  such  form  and  at  such  times  as  he  may  elect.  When- 
ever, upon  examination  or  ortherwise,  it  is  the  opinion  of  the  bank  examiner 
that  any  such  association  or  corporation  is  transacting  business  in  such  man- 
ner as  to  be  hazardous  to  the  public,  or  its  condition  is  such  as  to  render  further 
proceedings  by  it  hazardous  to  the  public,  said  bank  examiner  shall  revoke  or 
suspend  the  authority  given  to  said  association  or  corporation  ;  but  this  section 
shall  not  prevent  such  association,  corporation  or  institution  incorporated 
under  laws  of  another  state,  from  loaning  money  upon  mortgages  of  real 
estate  located  within  the  state. 

Sec.  3. — Every  such  person,  association  or  corporation  transacting  business 
in  the  state  at  the  time  of  the  passage  of  this  act,  shall,  within  sixty  days  alter 
such  passage,  conform  to  the  requirements  of  this  act. 

Sec.  4. — Whoever  violates  any  provision  of  the  preceding  sections,  shall  be 
punished  by  a  fine  not  exceeding  one  thousand  dollars;  and  any  provision 
thereof  may  on  petition,  be  enforced  by  injunction  issued  by  a  justice  of  the 
supreme  judicial  court  or  the  superior  court. 


732  APPENDIX   IV. 

MARYLAND. 

2.  PUBLIC  GENERAL  LAWS  OF  1888,  p.  289. 
Article  23. 

Section  14. — Corporations  may  be  formed  in  this  state,  under  the  provisions 
hereinafter  set  forth,  by  any  five  or  more  persons,  citizens  of  the  United  States, 
and  a  majority  of  them  citizens  of  this  state,  or  if  unnaturalized,  residents  of 
this  state,  making  oath  that  they  bona  fide  intend  to  become  citizens  of  the 
United  States  without  unreasonable  delay,  who  may  desire  to  form  a  body 
corporate  or  politic,  for  any  of  the  following  purposes  :    *    *     * 

For  the  formation  of  homestead  or  building  associations,  or  associations  for 
the  loan  of  money  on  real  or  personal  property.  *  *  *  Provided,  that  the 
property  owned  or  acquired  by  such  corporation  is  located  in  this  state  ; 

Sec.  95. — Any  homestead  or  building  association,  formed  under  the  provi- 
sions of  this  article,  shall  have  power,  in  its  certificate  of  incorporation,  to 
limit  the  number  of  shares  which  each  stockholder  may  be  allowed  to  hold  ; 
to  prescribe  the  entrance  fee  to  be  paid  by  each  stockholder  at  the  time  of 
subscribing  ;  and  to  regulate  the  instalments  to  be  paid  on  each  share — pro- 
vided, the  same  shall  not  exceed  the  sum  of  one  dollar  per  share  per  week — 
and  the  times  at  which  the  same  shall  be  payable. 

Sec.  96. — Any  such  corporation  shall  have  power  to  enforce  the  payment  of 
all  instalments  and  other  dues  due  to  the  corporation  from  the  members  or 
stockholders,  by  such  fines  and  forfeitures  as  the  corporation  may  from  time 
to  time,  provide  in  the  by-laws  or  articles  of  association  of  such  corporation. 

Sec.  97. — Any  person  applying  for  membership,  or  for  stock  in  any  such 
corporation,  after  the  end  of  one  month  from  the  time  of  the  incorporation, 
may  be  required  to  pay,  on  subscribing,  such  bonus  or  assessment  as  may 
from  time  to  time  be  fixed  or  assessed,  in  such  manner  as  may  be  provided  by 
the  corporation,  in  order  to  place  such  new  member  or  stockholder  on  a  foot- 
ing with  the  original  members  and  others  holding  stock  at  the  time  of  such 
application. 

SEC.  98  (as  amended  act  1894,  P-  449)- — Such  corporation,  at  any  time  in  ad- 
vance of  the  period  of  time  at  which  it  may  cease  to  exist,  according  to  the 
plan  contained  in  the  original  article  of  association,  may  advance  to  any  mem- 
ber thereof ,  for  such  premium  as  may  be  agreed  upon,  the  sum  which  he 
would  be  entitled  to  receive  upon  the  dissolution  of  the  corporation,  or  its 
maturity  of  the  series  to  which  he  belongs,  when  said  corporation  had  more 
than  one  scries  of  stock,  for  any  number  of  shares  therein  held,  or  may  pur- 
chase from  any  member  thereof  the  share  or  shares  of  stock  held  by  him,  at 
such  price  or  sum  as,  according  to  the  article  of  association,  such  member  may 
agree  to  receive,  or  instead  of  receiving  the  whole  amount  of  said  premium 
from  the  amount  of  said  advance,  the  borrower  may  pay  the  same  in  weekly, 
monthly,  or  such  other  instalments  as  may  be  agreed  upon  ;  and  on  payment  of 
said  sum  of  money,  may  receive  from  such  member  security  as  mentioned  in 
the  next  succeeding  section  of  this  article,  for  the  payment  by  such  member 
to  such  corporation  of  the  unpaid  instalments  and  unpaid  premiums,  to  be 
paid  on  the  share  or  shares  of  stock  so  sold  or  redeemed,  together  with  in- 
terest at  the  rate  of  six  per  cent,  per  annum  on  the  sum  so  paid  or  advanced, 
at  such  lime  and  subject  to  such  lines  and  penalties  for  the  non-payment 
thereoi  01  may  be  prescribed  in  the  articles  of  the  association  or  in  the  by- 
law, and  siii  h  1  01 |  oration  shall  have  power  to  issue  full  paid-up  shares  of 
stork  to  the  members  upon  such  terms  as  may  be  set  forth  in  its  by-laws. 

si  1  .  99  (as  amended,  act  1804,  p.  449). — The  payments  of  the  unpaid  instal- 
ments and  the  premiums  on  the  share  or  shares  SO  purchased  Or  redeemed, 
with  interest  on  the  money  paid  therefor  as  aforesaid,  and  all  tines  and  penal- 
it  red  in  respect  thereof  by  any  member,  shall  be  secured  to  such  C(  >r- 

poration  by  mortgage  on  real  01  lea  ehold  property,  or  by  the  hypothecation 

of  stock  of  such  corporation  heldby  such  member,  as  may  be  provided  in 
irticles  ol  association  or  by-law  !;  bul  in  ease  of  hypothecation  of  stock, 
no  greatei     utn  ol   money  shall  at  any  lime  be  drawn  out  by  any  member 
than     hall  have  been  already  paid  in  by  him  on  all  his  shares  at  the  time 
]'h  hypothecation;  ami    any  such    mortgage  and  the  mortgage  debt 
lereby,  and  the  shares  ol    lock  oi  any  such  corporation,  and  of  all 
iii  the  loan  ol   money  on  mortgage  of  real  or  leasehold  prop- 
erty, are  dei  tared  to  be  exempt  from  taxation,  to  the  extent  of  the  investments 


GENERAL   LEGISLATION.  733 

of  such  corporation  in  such  mortgages,  the  property  so  mortgaged  to  the  cor- 
poration being  taxed  in  the  hands  of  the  individual  member  or  mortgagor. 

SEC.  100.— On  the  trial  of  any  action  or  other  proceeding  at  law  or  in 
equity,  in  which  the  property  or  interest  of  any  such  corporation  mav  be  in 
any  wise  concerned,  any  member  of  such  corporation  shall  be  a  competent 
witness,  and  shall  not  be  objected  to  on  account  of  any  interest  he  may  have 
as  such  member,  in  the  result  of  any  such  action  or  proceeding. 

Sec.  tot. — Any  association  of  persons  which  may  have  been  organized  or 
established  at  any  time  prior  to  the  adoption  of  this  article,  on  being  made  a 
body  corporate,  under  the  provisions  ol  this  article,  shall  become  merged  in 
such  corporate  body  thereby  created  ;  and  every  act  done  or  to  be  done  by 
any  such  unincorporated  association  of  persons,  relating  to  the  ends  and  | 
poses  of  such  association,  and  all  mortgages,  bonds  or  other  instruments, 
made  to  such  association  of  persons,  or  to  any  person  or  persons  to  or  i or  the 
use  of  such  association  of  persons,  or  any  member  thereof  as  such,  shall  re- 
main and  continue  in  full  force  and  virtue  at  law  and  in  equity,  in  like  man- 
ner as  if  such  incorporated  association  of  persons  had  originally  been  a  body 
corporate. 

Sec.  102. — Any  trustee  or  trustees,  person  or  persons,  to  whom  any  such 
conveyances  shall  have  been  made,  to  and  for  the  use  of  such  incorporated  as- 
sociation, may  be  required  to  assign  and  transfer  the  same  to  such  corpora- 
tion, and  such  conveyances  shall  be  as  good  and  sufficient  as  if  made  to  such 
corporation  ;  and  all  the  liabilities  and  obligations  of,  by  and  between  the 
members  of  such  incorporated  association  of  persons, shall  remain  of  as  bind- 
ing force  or  effect  as  if  such  association  had  been  incorporated  from  the  first. 

Sec.  103. — The  provisions  of  the  eight  foregoing  sections  shall  be  taken  and 
held  to  apply  to  corporations  which  have  been  or  may  hereafter  be  formed  in 
this  state,  under  the  provisions  of  this  article,  for  the  purpose  of  loaning  money 
on  real  or  personal  property  or  for  buying,  selling,  leasing  or  otherwise  deal- 
ing in  land,  and  such  corporations  may  by  their  by-laws  provide  for  the  pay- 
ment of  all  or  any  part  of  their  stock  in  advance,  and  shall  have  the  power  to 
enforce  the  payment  of  all  dues,  legal  interest  or  premium  due  to  such  cor- 
poration from  its  members,  stockholders  or  borrowers,  by  such  fines  and  for- 
feitures as  the  directors  may  from  time  to  time  provide  in  its  by-laws  ;  and  it 
shall  and  may  be  lawful  for  any  of  the  corporations  mentioned  in  this  section, 
at  any  time,  either  before  or  after  the  shares  of  its  stocks  shall  have  been  fully 
paid  up,  to  redeem  or  purchase  the  same  at  such  sum  or  price  as  such  mem- 
ber may  agree  to  receive  therefor,  or  to  loan  to  such  member  the  par  value  of 
its  shares  as  fixed  by  its  certificate  of  incorporation  for  any  number  of  shares 
then  held  by  such  member,  for  any  number  of  years  and  upon  such  premium 
or  bonus  as  may  be  agreed  upon  between  the  corporation  and  member  or 
borrower,  and  either  to  deduct  such  premium  or  bonus  in  advance  or  to  make 
the  same  payable  with  and  as  a  part  of  the  weekly  dues  in  each  and  every 
week  during  the  period  of  such  loan,  and  in  the  payment  of  such  sum  of 
money  by  such  corporation,  then  to  receive  from  such  member  a  transfer  of 
all  his  or  her  interest  in  such  share  or  shares  of  its  stock,  and  also  security  by 
way  of  mortgage  on  real  or  personal  property,  or  by  hypothecation  of  unre- 
deemed shares  of  its  stock  so  sold  by  such  member  ;  and  said  mortgage  or 
hypothecation  shall  be  conditioned  for  the  repayment  by  such  member  or 
borrower  to  said  corporation  of  the  money  loaned  or  advanced  to  him  in 
weekly  instalments,  including  dues,  legal  interest  in  the  money  so  advanced 
or  loaned,  the  weekly  premium  agreed  upon  for  each  share,  and  also  all  fines, 
assessments  and  penalties  incurred  according  to  the  by-laws  in  respect  there- 
of ;  and  all  shares  of  stock  so  redeemed,  advanced  or  loaned  or  purchased  by 
such  corporation,  shall  be  considered  as  redeemed  shares,  and  shall  be  can- 
celled; and  it  shall  be  lawful  for  such  corporation  to  issue  an  equal  number 
of  new  shares  in  their  stead,  so  that  the  number  of  unredeemed  shares  may 
always  equal  and  never  exceed  the  number  of  shares  fixed  by  the  certificate 
of  incorporation  of  such  corporations  ;  and  the  member  or  members  of  such 
corporations,  so  redeeming  their  said  share  or  shares  of  stock,  shall  cease  to 
be  stockholders,  and  shall  not  be  entitled  to  vote  at  any  meeting  of  such  cor- 
porations, held  for  the  purpose  of  electing  directors  or  for  any  other  purpose, 
and  shall  not  be  eligible  for  any  of  the  offices  of  the  corporation. 

Sec  104A  (acts  1898,  p.  ggi).— And  that  no  corporation  incorporated  under 
the  laws  of  this  state  for  any  business  whatsoever,  nor  any  foreign  corporation 
doing  business  in  this  state,  shall  offer  to  procure  or  act  as  agent  for  any  per- 
son or  persons  in  procuring  or  making  any  loan  of  money  or  other  valuable 
thing  on  the  security  of  any  chattels,  nor  shall  make  any  loan  of  money  or  of 


784  APPENDIX   IV. 

any  other  valuable  thing  on  the  security  of  any  chattels  or  otherwise,  except 
in  its  own  proper  corporate  name  and  for  its  own  behalf  or  benefit  ;  and  no 
such  corporation  making  any  such  loan,  as  aforesaid,  shall  be  entitled  to 
charge  any  borrower  of  money  from  it,  or  shall  take  from  any  borrower  from 
it,  or  other  person,  any  other  thingfor  or  in  the  name  of  premium,  or  of  com- 
pensation for  renewing  or  continuing  any  such  loan,  as  it  may  be  authorized 
to  lawfully  make,  other  than  lawful  interest  at  the  rate  of  six  per  centum  per 
annum,  for  the  term  during  which  such  loan  shall  be  renewed  or  continued  ; 
and  every  security  taken  by  any  such  corporation  for  any  such  loan  as  afore- 
said, shall  express  plainly  the  period  of  time  for  which  such  loan  is  made,  and 
the  entire  interest  agreed  to  be  paid  for  said  loan  for  the  term  of  each  loan, 
which  entire  interest  shall  in  no  case  nor  by  any  means,  be  made  to  exceed 
the  rate  of  six  per  centum  per  annum  on  the  money  or  other  thing  loaned  for 
the  term  of  such  loan  ;  and  any  contract  or  security  for  any  such  loan,  or 
providing  for  the  renewal  or  continuance  of  any  such  loan,  made  in  violation 
of  this  section,  shall  be  absolutely  null  and  void.  And  no  person  or  persons 
in  this  state  shall  assume  to  deal  or  act  as  a  corporation,  or  in  any  corporate 
name,  or  in  any  other  than  in  hits,  her  or  their  own  proper  name  or  names,  in 
any  of  the  matters  or  things  prohibited  by  this  section,  under  a  penalty  of  not 
less  than  fifty  dollars  for  every  offence,  to  be  recovered  by  indictment  in  any 
court  having  criminal  jurisdiction  in  the  city  or  county  where  any  such 
offence  may  have  been  committed,  and  every  security  taken  by  any  such  per- 
son or  persons  in  any  such  name  of  a  corporation,  or  in  any  other  than  his, 
her  or  their  own  proper  name  or  names,  shall  be  absolutely  null  and  void  ; 
Provided,  this  act  shall  not  apply  to  homestead  and  building  and  loan  asso- 
ciations under  the  laws  of  this  state. 

MASSACHUSETTS. 

(P.  S.,  CHAPTER  117,  SECTIONS  1,  2,  3,  4.) 

[As  amended  by  Acts  of  1890,  Chapter  243,  and  Acts  of  1883,  Chapter  98  ] 

Sf.ction  r. — Twenty-five  or  more  persons  who  associate  themselves  together 
by  an  agreement  in  writing  with  the  intention  of  forming  a  corporation  for 
the  purpose  of  accumulating  the  savings  of  its  members  paid  into  such  corpo- 
ration in  fixed  periodical  instalments  and  loaning  to  its  members  the  funds  so 
accumulated  shall,  by  and  with  the  consent  of  the  board  of  commissioners  of 
savings  banks,  become  a  corporation  upon  complying  with  the  provisions  of 
the  three  following  sections: 

SEC.  2. — The  agreement  shall  set  forth  the  fact  that  the  subscribers  thereto 
associated  themselves  with  the  intention  of  forming  a  corporation  ;  the  name 
by  which  the  corporation  shall  be  known  ;  the  purpose  for  which  it  is  formed  ; 
the  town  or  city,  which  shall  be  within  this  commonwealth,  in  which  it  is 
located  ;  and  the  limit  of  capital  to  be  accumulated. 

Sr.c.  3. — The  name  shall  be  one  not  previously  in  use  by  any  existing  corpo- 
ration established  under  the  laws  of  this  commonwealth,  and  shall  be  changed 
only  by  act  of  the  general  court.  The  words  "  co-operative  bank  "  shall  form 
a  part  of  the  name. 

SEC.  4 — The  provisions  of  sections  eighteen,  twenty,  and  twenty-one  of 
chapter  one  hundred  and  six  shall  apply  to  such  corporations,  except  that,  in 
the  certificate  signed  by  the  secretary  of  the  commonwealth,  the  limit  of  cap- 
ital to  be  accumulated,  as  fixed  in  the  agreement  of  association,  shall  be  inserted 
in-lead  of  the  amount  of  the  capital,  that  the  certificate  required  by  -aid  section 
twenty-one  to  be  filed  and  recorded  may  be  signed  and  sworn  to  by  the  pre- 
•  iding  .ind  financial  officers,  and  a  majority  at' least  of  the  officers  possessing 
11m-  poUcrs  of  directors  bv  whatever  name  they  may  be  called,  and  that  the 
fee  1  to  be  paid  for  filing  and  recording  tin- certificates  required  by  said  section 
twenty-one,  including  the  issuing  of  the  certificate  of  organization,  shall  be 
live  dollars. 

(P.  S.,  CHAPTER  117,  SECTION  5.) 

Si-.i  TION  .s\ — The  capital  to  be  accumulated  shall  not  exceed  one  million  dol- 
1  i'  and  hall  be  divided  into  shares  of  the  ultimate  value  of  (wo  hundred  dollars 
each.  'l"ln-  han  may  be  issued  in  quarterly,  half-yearly,  or  yearly  series,  in 
inli  amounts  and  at  such  times  the  members  may  determine.  No  person 
lull  hold  more  thai  twenty-five  shares  in  the  capital  of  any  one  such  corpo- 
ration. No  share  Ol  .1  prior  series  shall  be  issued  after  the  issue  of  a  new 
scries. 

(ACTS  OF  [887,  CHAPTER  216,  SECTION  1.) 

The  limitation  of  capital  to  be  accumulated  in  any  co-operative  bank  now 


GENERAL   LEGISLATION.  735 

organized  or  hereafter  formed  under  the  provisions  of  chapter  one  hundred 
and  seventeen  of  the  public  statutes  shall  be  held  to  apply  to  capital  actually 
paid  in,  and  no  such  bank  shall  be  restrained  from  issuing  shares  so  long  .is 
the  capital  actually  paid  ih  on  shares  is  not  in  excess  of  one  million  dol 

(P.S.,  CHAPTER  117,  SECTION  6.) 
Section  6. — The  number,  title,  duties  and  o  >mpensation  of  the  officers  of  the 
corporation,  their  terms  oi  office,  the  time  of  their  election,  as  well  as  the  qual- 
ifications of  electors,  and  time  ol  each  periodical  meeting  of  the  officers  and 

members,  shall  bedetermined  by  the  by-laws,  but  no  member  shall  be  entitled 
to  more  than  one  vote  at  any  election.  All  officers  shall  continue  in  office  until 
their  successors  are  duly  elected,  and  no  corporation  shall  expire  from  neglect 
on  its  part  to  elect  officers  at  the  time  prescribed  by  the  by-laws. 

(ACTS  OF  1885,  CHAPTER  1:1,  SECTION  1.) 

In  any  co-operative  bank  now  or  thereafter  formed  under  the  provisions  of 
chapter  one  hundred  and  seventeen  of  the  public  statutes,  the  offices  of  sec- 
retary and  treasurer  may  be  held  by  one  and  the  same  person. 

(P.  S.,  CHAPTER  117,  SECTION  7.) 
Section  7. — The  officers  shall  hold  stated  monthly  meetings.  At  or  before 
these  meetings  every  member  shall  pay  to  the  corporation,  as  a  contribution 
to  its  capital,  one  dollar  as  due  upon  each  share  held  by  him  until  the  share 
reaches  the  ultimate  value  of  two  hundred  dollars,  <>r  is  withdrawn,  cancelled, 
or  forfeited.     Payment  of  dues  on  each  series  shall  commence  from  its  issue. 

(ACTS  OF  1887,  CHAPTER  216,  SECTIONS  2,  3. 1 
Section  2. — A  member  may  withdraw  his  unpledged  shares  at  any  time  by 
giving  thirty  days'  notice  of  his  intention  so  to  do,  written  in  a  book-  held  and 
provided  by  the  corporation  for  that  purpose.  Upon  such  withdrawal  the 
shareholder's  account  shall  be  settled  as  follows: — From  the  amount  then 
standing  to  the  credit  of  the  shares  to  be  withdrawn  there  shall  be  deducted 
all  hues,  a  proportionate  part  of  any  unadjusted  loss,  together  with  such  pro- 
portion of  the  profits  previously  credited  to  the  shares  as  the  by-laws  may 
provide, and  such  shareho'ders  shall  be  paid  the  balance  ;  Provided,  that  at  no 
time  shall  more  than  one-half  of  the  funds  in  the  treasury  be  applicable  to  the 
demands  of  withdrawing  members  without  the  consent  of  the  directors.  The 
directors  may,  at  their  discretion,  under  rules  made  by  them,  retire  the  un- 
pledged shares  of  any  series  at  any  time  alter  tour  years  from  the  date  of  their 
issue,  by  enforcing  the  withdrawal  of  the  same  ;  but  whenever  there  shall  re- 
main in  any  series,  at  the  expiration  of  five  years  after  the  date  of  its  issue,  an 
excess  above  one  hundred  unpledged  shares,  then  it  shall  be  the  duty  of  the 
directors  to  retire  annually  twenty-five  per  centum  of  such  excess  existing  at 
said  expiration  of  five  years  after  the  date  of  its  issue,  so  that  not  more  than  1  me 
hundred  unpledged  shares  shall  remain  in  such  series  at  the  expiration  of  nine 
years  from  the  date  of  its  issue,  and  thereafter  the  directors  may  in  their  dis- 
cretion retire  such  other  unpledged  shares  as  they  consider  the  best  interests 
of  the  bank  to  require  :  Provided,  that  whenever  under  the  provisions  of  this 
section  the  withdrawal  of  shares  is  to  be  enforced  the  shares  to  be  retired 
shall  be  determined  by  lot,  and  the  holders  thereof  shall  be  paid  the  full  value 
of  their  shares,  less  all  fines  and  a  proportionate  part  of  any  unadjusted  loss  ; 
provided  also,  that  shares  pledged  for  share  loans  shall  be  treated  as  unpledged 
shares. 

Sec  3. — Shares  may  be  issued  in  the  name  of  a  minor,  and  if  so  issued  may, 
at  the  discretion  of  the  directors,  be  withdrawn,  in  manner  as  provided  in 
section  two  of  this  act  [chap.  216,  acts  of  1887],  by  such  minor,  the  parent  or 
guardian  of  such  minor,  and  in  either  case  payments  made  on  such  withdrawals 
of  shares  shall  be  valid.  When  a  share  or  snares  are  held  by  any  one  in  trust 
for  another,  the  name  and  residence  of  the  person  for  whom  such  share  or 
shares  are  held  shall  be  disclosed  :  and  the  account  shall  be  kept  in  the  name 
of  such  holder  as  trustee  for  such  person  ;  and,  if  no  other  notice  of  the  exist- 
ance  and  terms  of  such  trust  has  been  given  in  writing  to  the  corporation,  in 
the  event  of  the  death  of  the  trustee,  such  shares  may  be  withdrawn  by  the 
person  for  whom  such  deposit  was  made  or  by  his  legal  representatives. 

(P.  S.,  CHAPTER  117,  SECTION  9.) 
[As  amended  by  Acts  of  1887,  Chapter  216,  Section  5.  and  Acts  of  1882,  Chapter  251.] 
Section  9 — When  each  unpledged  share  of  ayiven  series  reaches  the  value 


736  APPENDIX   IV. 

of  two  hundred  dollars,  all  payments  of  dues  thereon  shall  cease,  and  the 
holder  thereof  shall  be  paid  out  of  the  funds  of  the  corporation  two  hundred 
dollars  thereof,  with  interest  at  the  rate  of  six  per  cent,  a  year  from  the  time 
of  such  maturity  to  the  time  of  payment  :  Provided,  that  at  no  time  shall  more 
than  one-half  of  the  funds  in  the  treasury  be  applicable  to  the  payment  of  such 
matured  shares  without  the  consent  of  the  directors  ;  proviaea  further,  that 
when  any  series  of  shares,  either  pledged  or  unpledged,  reaches  maturity 
between  the  dates  of  adjustment  of  profits,  or  whenever  shares  are  retired 
between  such  dates,  the  holders  of  such  shares  shall  in  addition  to  the  value 
thereof,  be  entitled  to  interest  at  the  rate  of  six  per  cent,  per  annum  for  all  full 
months  from  the  date  of  the  preceding  adjustment,  and  that  before  paying 
matured  shares  all  arrears  and  fines  shall  be  deducted. 

(P.  S.,  CHAPTER  117,  SECTION  10.) 

[As  amended  by  Acts  of  1890,  Chapter  78,  and  Acts  of  1896,  Chapter  277.] 

Section7  10. — The  moneys  accumulated,  after  due  allowance  for  all  necessary 
expenses  and  the  cancellation  of  shares,  shall  at  each  stated  monthly  meeting 
be  offered  to  the  members  according  to  the  premiums  bid  by  them  for  priority 
of  right  to  a  loan.  Each  member  whose  bid  is  accepted  shall  be  entitled  upon 
giving  proper  security  to  receive  a  loan  of  two  hundred  dollars  for  each  un- 
pledged share  held  by  him,  or  such  fractional  part  of  two  hundred  dollars  as 
the  by-laws  may  allow.  If  any  money  so  offered  for  sale  remains  unsold,  the 
directors  may  invest  the  same  in  any  of  the  securities  named  in  the  second 
clause  of  section  twenty-one  of  chapter  three  hundred  and  seventeen  of  the 
acts  of  the  year  eighteen  hundred  and  ninety-four,  or  may  loan  the  same  upon 
first  mortgages  of  real  estate  situated  in  this  commonwealth,  upon  the  condi- 
tions imposed  upon  co-operative  banks,  or  may  loan  the  same  upon  the  shares 
of  the  bank  in  sums  not  exceeding  their  value  at  the  adjustment  next  preced- 
ing the  time  of  the  loan,  provided  that  the  loans  in  either  case  shall  be  at  the 
highest  rate  at  the  next  preceding  monthly  sale  of  moneys,  and  further 
provided  that  in  either  case  a  note  shall  be  given  as  required  by  section 
thirteen  of  chapter  one  hundred  and  seventeen  of  the  public  statutes. 

(P.  S.,  CHAPTER  117,  SECTION  n.) 

Section  ir. — Premiums  for  loans  shall  consist  of  a  percentage  charged  on 
the  amount  lent  in  addition  to  interest,  and  shall  be  deemed  to  be  a  considera- 
tion paid  by  the  borrower  for  the  present  use  and  possession  of  the  future  or 
ultimate  value  of  his  shares,  and  shall,  together  with  interest  and  fines,  be 
received  by  the  corporation  as  a  profit  on  the  capital  invested  in  the  loan,  and 
shall  be  distributed  to  the  various  shares  and  series  of  said  capital  as  herein- 
after provided. 

(P.  S.,  CHAPTER  117,  SECTION  12.) 

Section'  12. — A  borrowing  member,  for  each  share  borrowed  upon,  shall, 
in  addition  to  his  dues  and  monthly  premium,  pay  monthly  interest  on  his 
loan  at  the  rate  of  six  per  cent,  per  annum  until  his  shares  reach  the  ultimate 
value  of  two  hundred  dollars  each,  or  the  loan  has  been  repaid;  and  when 
said  ultimate  value  is  reached,  said  shares  and  loan  shall  be  declared  cancelled 
and  satisfied,  and  the  balance,  if  any,  due  upon  the  shares  shall  be  paid  to  the 
member. 

(ACTS  OF  1882,  CHAPTER  251,  SECTION  2.) 

Any  corporation  organized  under  said  chapter  one  hundred  and  seventeen 

may  provide  in  its  by  laws  thai  the  hid  for  loans  at  its  staled  monthly  meeting 

shall,  instead  of  a  premium,  be  a  rate  1  if  annual  interest  upon  the  sum  desired, 

Me  in  monthly  instalments.    Such  bids  shall  include  the  whole  interest 

to  be  paid,  and  may  be  at  any  rate   not  less  than  five  per  centum  per  annum. 

(P.  S.,  CHAPTER  117,  SECTION  13.) 

14,  Chapter  342.] 

Si  '  no\-  [3, — For  every  loan  made  a  note  shall  be  given,  accompanied  by  a 

fer  and  pledge  oi  thi     han         the  borrower,  ana  secured  by  a  mortgage 

of  real  <    ta  I  in  thi    commonwealth,  unencumbered  by  any  mortgage 

or  lien  other  than    uch  as  maybe  held  by  the  bank  making  the  loan.    The 

hall  be  held  by  the  corporation  as  collateral  security  for 


GENERAL   LEGISLATION.  737 

the  performance  of  the  conditions  of  said  note  and  mortgage.  Said  note  and 
mortgage  shall  recite  the  number  of  shares  pledged  and  the  amount  of  money 
advanced  thereon,  and  shall  be  conditioned  for  the  payment  at  the  stated 
meetings  of  the  corporation  of  the  monthly  dues  on  said  shares,  and  the 
interest  and  premium  upon  the  loan,  together  with  all  fines  on  payments  in 
arrears,  until  said  shares  reach  the  ultimate  value  of  two  hundred  dollars  each, 
or  said  loan  is  otherwise  cancelled  and  discharged  ;  Proiidc  .',  that  the  shares 
without  other  security  may  in  the  discretion  of  the  directors  be  pledged  as 
security  for  loans,  to  an  amount  not  exceeding  their  value  as  adjusted  at  the 
last  adjustment  and  valuation  of  shares  before  the  time  of  the  loan. 

If  the  borrower  neglects  to  offer  security  satisfactory  to  the  directors  within 
the  time  prescribed  by  the  by-laws,  his  right  to  the  loan  shall  be  forfeited,  and 
he  shall  be  charged  with  one  month's  interest  and  one  month's  premium  at 
the  rate  bid  by  him,  together  with  all  expenses,  if  any,  incurred  ;  and  the 
money  appropriated  for  such  loan  maybe  re-loaned  at"  the  next  or  any  sub- 
sequent meeting. 

(P.  S.,  CHAPTER  117,  SECTION  14.) 

Section  14. — A  borrower  may  repay  a  loan  at  any  time,  upon  application 
to  the  corporation,  whereupon,  on  settlement  of  his  account,  he  shall  be 
charged  with  the  full  amount  of  the  original  loan,  together  with  all  monthly 
instalments  of  interest,  premium  and  fines  in  arrears,  and  shall  be  given  credit 
for  the  withdrawing  value  of  his  shares  pledged  and  transferred  as  security  ; 
and  the  balance  shall  be  received  by  the  corporation  in  full  satisfaction  and 
discharge  of  said  loan  :  Provided,  that  all  settlements  made  at  periods  in- 
tervening between  stated  meetings  of  the  directors  shall  be  made  as  of  the 
date  of  the  stated  meetings  next  succeeding  such  settlement ;  and  provided, 
that  a  borrower  desiring  to  retain  his  shares  and  membership  may  at  his 
option  repay  his  loan  without  claiming  credit  for  said  shares,  whereupon  said 
shares  shall  be  re-transferred  to  him,  and  shall  be  free  from  any  claim  by 
reason  of  said  cancelled  loan. 

(ACTS   OF  1887,  CHAPTER  216,  SECTION  4.) 

Partial  payment  of  loans  on  real  estate  made  by  any  co-operative  bank  may 
be  received  in  sums  of  fity  dollars  or  any  multiple  thereof ;  and  for  each  two 
hundred  dollars  so  repaid  one  share  of  stock  shall  be  released  from  pledge. 

(ACTS  OF  1894,  CHAPTER  342,   SECTION  2.) 

When  a  member  of  a  co-operative  bank  purchases  money  at  a  lower  rate 
than  that  paid  by  him  on  an  existing  loan,  secured  by  a  mortgage,  for  the 
purpose  by  him  declared  of  reducing  the  premium  of  rate  of  interest  upon 
said  loan,  no  new  mortgage  shall  be  required,  but  an  agreement  in  writing  for 
the  reduction  of  said  premium  or  rate  of  interest,  signed  by  said  borrowing 
member  and  the  secretary  of  the  bank,  with  the  written  appn  ival  1  >\  the  pres- 
ident, shall  be  valid,  and  shall  in  no  respect  impair  or  affect  the  existing 
mortgage  contract;  and  thereafter  said  borrowing  member  shall  make  the 
monthly  payments  on  said  loan  in  accordance  with  the  terms  of  said  agree- 
ment, and  the  sum  of  money  previously  so  purchased  by  him  may  be  resold 
by  the  bank  at  the  same  meeting.  The  borrower  shall  be  required  to  give 
notice  to  the  secretary  before  the  sale,  if  he  intends  to  rebuy  his  money. 
Nothing  in  this  section  shall  be  construed  to  exempt  the  re-borrower  from 
1  aying  the  interest  and  premium  for  the  current  month  on  the  loan  made  by 
him  for  the  substitution  of  which  the  new  loan  is  made. 

(P.  S.,  CHAPTER  117,  SECTIONS  15,  16.) 

[As  amended  by  Acts  of  1SS2,  Chapter  251,  Acts  of   1885,  Chapter  121,  Section  4,  and  Acts  of 

1896,  Chapter  285.J 

Section  15. — Members  who  make  default  in  the  payment  of  their  monthly 
dues,  interest  and  premiums,  shall  be  charged  a  tine  not  exceeding  two  per 
cent,  a  month  on  each  dollar  111  arrears.  No  tine  shall  be  charged  after  the 
expiration  of  six  months  for  the  first  lapse  in  any  such  payment,  nor  upon  a 
fine  in  arrears.  The  shares  of  a  member  who  continues  in  arrears  more  than 
mx  months  shall,  at  the  option  of  the  directors,  if  the  member  fails  to  pay 
the  arrears  within  thirty  days  after  notice,  be  declared  forfeited,  and  the  with- 
drawing value  of  the  shares  at  the  time  of  forfeiture  shall  be  ascertained,  and, 
after  deducting  all  fines  and  other  legal  charges,  the  balance  remaining  shall 


738  APPENDIX  IV. 

be  transferred  to  an  account  to  be  designated  the  "  Forfeited  Share  Account," 
to  the  credit  of  the  defaulting  member.  Said  member,  if  not  a  borrower,  shall 
be  entitled,  upon  thirty  days'  notice,  to  receive  the  balance  so  transferred 
without  interest  from  the  time  of  the  transfer,  in  the  order  of  his  turn,  out  of 
the  funds  appropriated  to  the  payment  of  withdrawals.  All  shares  so  forfeited 
or  transferred  shall  cease  to  participate  in  any  profits  of  the  corporation  ac- 
cruing after  the  last  adjustment  and  valuation  of  shares  before  said  for- 
feiture. 

Sec.  16. — If  a  borrowing  member  is  in  arrears  for  dues,  interest,  premium 
or  fines  for  more  than  six  months,  the  directors  may,  at  their  discretion,  de- 
clare the  shares  forfeited,  after  one  month's  notice,  if  the  arrears  continue  un- 
paid. The  account  of  such  borrowing  member  shall  then  be  debited  with  the 
arrears  of  interest,  premium  and  fines  to  date  of  forfeiture,  and  the  shares 
shall  be  credited  upon  the  loan  at  their  .withdrawing  value.  The  balance  of 
the  account  may,  and  after  six  months  shall,  be  enforced  against  the  security, 
and  be  recovered  as  secured  debts  are  recovered  at  law. 

(ACTS  OF  1895,  CHAPTER  172,  SECTION  1.) 

No  member  of  a  co-operative  bank  whose  shares  are  withdrawn,  forfeited 
or  retired,  shall  be  charged  with  fines  upon  such  shares  in  excess  of  the  profits 
distributed  thereto,  and  if  no  profits  shall  have  been  distributed  to  such  shares 
no  fines  shall  be  charged  thereon.  Nothing  herein  contained  shall  prevent  a 
borrowing  member  being  charged  with  fines  according  to  existing  statutes 
upon  interest  and  premiums  in  arrears. 

(P.  S.,  CHAPTER  117,  SECTION  17.) 

Sec.  17. — The  general  accounts  of  every  such  corporation  shall  be  kept  by 
double  entry.  All  moneys  received  by  the  corporation  from  each  member 
shall  be  receipted  for  by  the  persons  designated  by  the  directors,  in  a  pass- 
book provided  by  the  corporation  for  the  use  of,  and  to  be  held  by,  the 
member  ;  and  said  pass-book  shall  be  plainly  marked  with  the  name  and 
residence  of  the  holder  thereof,  the  number  of  shares  held  by  him,  and  the 
number  or  designation  of  the  series  or  issue  to  which  said  shares  respectively 
belong,  and  the  date  of  the  issue  of  such  series.  All  moneys  so  received  shall  be 
originally  entered  by  the  proper  officer  in  a  book  to  be  called  the  "  cash-book," 
to  be  provided  by  the  corporation  for  the  purpose,  and  the  entries  therein 
shall  be  so  made  as  to  show  the  name  of  the  payer,  the  number  of  shares,  the 
number  or  designation  of  the  series  or  issues  of  the  particular  share  or  shares 
so  entered,  together  with  the  amount  of  dues,  interest,  premiums  and  fines 
paid  thereon,  as  the  case  may  be.  Each  payment  shall  be  classified  and  en- 
tered into  a  column  devoted  to  its  kind.  Said  cash-book  shall  be  closed  after 
the  termination  of  each  stated  meeting,  and  shall  be  an  exhibit  of  the  receipts 
of  all  moneys  paid  at  said  meeting.  All  payments  made  by  the  corporation 
for  any  purpose  whatsoever  shall  be  by  order,  check  or  draft  upon  the  treas- 
urer, signed  by  the  president  and  secretary,  and  indorsed  by  the  persons  in 
whose  favor  the  same  are  drawn.  The  name  of  the  payee,  the  amount  paid, 
and  the  purpose,  object  or  thing  for  which  the  payment  is  made,  together 
with  its  date,  shall  be  entefed  on  the  margin  of  said  order,  check  or  draft.  The 
treasurer  shall  dispose  of  and  secure  the  safe  keeping  of  all  moneys,  securities, 
and  property  of  the  corporation,  in  the  manner  designated  by  the  by-laws, 
and  the  treasurer  and  secretary  shall  give  such  security  for  the  faithful  per- 
loi  mance  of  their  respective  duties  as  the  by-laws  may  direct. 

(P.  S.,  CHAPTER  117,  SECTION  18.) 

Sec.  18. — The  profits  and  losses  may  be  distributed  annually,  semi-annually 
or  quarterly  to  the  shares  then  existing,  but  shall  be  distributed  at  least  once 
in  each  year,  and  whenever  a  new  series  of  shares  is  to  be  issued.  Profits 
and  losses  shall  be  distributed  to  the  various  shares  existing  at  the  times  of 
l  distribution,  in  proportion  to  their  value  at  that  time,  and  shall  be  com- 
puted upon  the  basis  of  a  single  share  fully  paid  to  the  date  of  distribution. 
hall  be  apportioned  immediately  after  their  occurrence. 

(ACTS  OF  [885,  CHAPTER  121,  SECTION  2.) 

Ai  nodical  distribution  of  profits  the  directors  shall  reserve  as  a 

fund  1     im  not  less  than  one  nor  more  than  five  per  cent  of  the  net 

pro!  e  tlic  next  preceding  adjustment,  until  such  fund  amounts 


GENERAL   LEGISLATION.  739 

to  five  per  cent,  of  the  dues  capital,  which  fund  shall  thereafter  be  maintained 
and  held  ;  and  said  fund  shall  be  at  all  times  available  to  meet  losses  in  the 
business  of  the  corporation  for  depreciation  of  its  securities  or  otherwise. 

(P.  S.,  CHAPTER  117,  SECTION  19.) 

Sec.  19. — Any  such  corporation  may  purchase  at  any  sale,  public  or  private, 
any  real  estate  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  other 
incumbrance,  or  in  which  it  may  have  an  interest  ;  and  may  sell,  convey, 
lease  or  mortgage,  at  pleasure,  the  real  estate  so  purchased  to  any  person  or 
persons  whatsoever.  All  real  estate  so  acquired  shall  be  sold  within  five 
years  from  the  acquisition  of  the  title  thereto. 

(P.  S.,  CHAPTER  117,  SECTION  20.) 

Sec.  20. — The  commissioners  of  savings  banks  shall  perform,  in  reference 
to  every  such  corporation,  the  same  duties,  and  shall  have  the  same  powers, 
as  are  required  of  or  given  to  them  in  reference  to  savings  banks,  and  shall 
annually  make  report  to  the  general  court  of  such  facts  and  statements  re- 
specting such  associations,  and  in  such  forms  as  they  deem  that  the  public 
interest  requires.  Every  officer  of  such  corporation  shall  answer  truly  all 
inquiries  made,  and  shall  make  all  returns  required  by  the  commissioners. 

(ACTS  OF  1889,  CHAPTER  159,  SECTION  2.) 

(As  amended  by  Acts  of  1S95,  Chapter  171.) 

Every  co-operative  bank  shall  annually  within  thirty  days  after  the  last 
business  day  of  October,  make  a  return  to  the  commissioners  of  savings  banks 
in  such  form  as  may  be  prescribed  by  them,  showing  accurately  the  condition 
thereof  at  close  of  business  on  said  day,  which  return  shall  be  signed  and 
sworn  to  by  the  secretary  and  treasurer  of  such  corporation.  The  president 
and  five  or  more  of  the  directors  shall  certify  and  make  oath  that  the  report 
is  correct  according  to  their  best  knowledge  and  belief.  Such  returns  shall 
include  all  sums  received  and  all  sums  disbursed  up  to  the  close  of  business 
on  said  day,  except  that  sums  received  for  dues,  interest,  premiums  and  fines 
on  account  of  the  next  monthly  meeting  may  be  omitted.  When  a  report  is 
defective  or  appears  to  be  erroneous,  the  board  shall  notify  the  bank  to  amend 
the  same  within  fifteen  days.  Every  co-operative  bank  neglecting  to  make 
the  return  required  by  this  act  on  or  before  the  time  named  therein,  or  to 
amend  such  report  within  fifteen  days,  when  notified  by  the  board  so  to  do, 
shall  forfeit  five  dollars  for  each  day's  neglect. 

[ACTS  OF  1896,  CHAP.  361.] 

Section  i. — Whenever,  under  the  provisions  of  section  fourteen  of  chapter 
three  hundred  and  seventeen  of  the  acts  of  the  year  eighteen  hundred  and 
ninety-four,  it  becomes  necessary  for  the  treasurer  or  other  officer  or  employee 
of  a  savings  bank  or  institution  for  savings  to  give  bond  for  the  faithful  dis- 
charge of  "his  duties,  he  may  give  a  bond  in  which  any  company  organized 
under  the  laws  of  this  state,  or  chartered  by  any  other  state  or  government 
to  transact  fidelity  insurance  or  corporate  suretyship,  and  authorized  to  do 
business  in  this  commonwealth,  may  be  surety,  or  may  be  jointly  and  severally 
bound  with  such  treasurer  or  other  officer  or  employee.  Such  bond  shall  be 
to  the  satisfaction  of  the  trustees  and  in  a  form  to  be  approved  by  the  com- 
missioners of  savings  banks,  and  an  attested  copy  thereof,  with  a  certificate  of 
the  custodian  that  the  original  is  in  his  possession,  shall  be  filed  with  the  com- 
missioners of  savings  banks. 

Sec.  2. — The  provisions  of  section  one  shall  also  apply  to  bonds  of  secreta- 
ries and  treasurers  of  co-operative  banks,  given  under  the  provisions  of  sec- 
tion seventeen  of  chapter  one  hundred  and  seventeen  of  the  public  statutes. 

[ACTS  OF  1897,  CHAP.  161.] 

No  co-operative  bank,  nor  any  person  acting  in  its  behalf,  shall  take  or 
receive  a  fee,  brokerage,  commission,  gift  or  other  consideration  for  or  on  ac- 
count of  a  loan  made  by  or  on  behalf  of  such  corporation,  other  than  appears 
on  the  face  of  the  note  or  contract  by  which  such  loan  purports  to  be  made  ; 
but  nothing  herein  contained  shall  applv  to  any  reasonable  charges  for  ser- 
vices in  the  examination  of  property  and  titles  and  preparation  and  recording 
of  conveyances  to  such   corporation  as  security  for  its  loans.     Whoever 


740  APPENDIX   IV. 

violates  a  provision  of  this  section  shall  be  punished  by  fine  of  not  less  than 
one  hundred  nor  more  than  one  thousand  dollars. 

[ACTS  OF  1890,  CHAP.  310.] 

Sectiox  1. — Except  as  is  hereinafter  provided,  no  person,  association  or 
corporation  shall  carry  on  the  business  of  accumulating  the  savings  of  its 
members  and  loaning  to  them  such  accumulations  in  the  manner  of  a  co- 
operative bank  within  this  commonwealth,  unless  incorporated  under  the 
laws  thereof  for  such  purpose. 

Sec.  2. — The  board  of  commissioners  of  savings  banks  may  authorize  any 
such  association  or  corporation  duly  established  under  the  laws  of  another 
state  to  carry  on  such  business  in  the  commonwealth,  but  said  association  or 
corporation  shall  not  transact  such  business  in  this  commonwealth  unless  it 
shall  first  deposit  with  the  treasurer  of  the  commonwealth  the  sum  of  twenty- 
five  thousand  dollars  and  thereafter  a  sum  equal  to  fifteen  per  cent,  of  the 
deposits  made  in  such  association  or  corporation  by  citizens  of  the  common- 
wealth, the  amount  of  percentage  of  deposits  so  required  to  be  determined 
from  time  to  time  by  said  board  of  commissioners  of  savings  banks  ;  or  in  lieu 
thereof  the  whole  or  any  part  of  said  sum  may  consist  of  any  of  the  securities 
named  in  the  first,  second  and  third  clauses  of  section  twenty  of  chapter  one 
hundred  and  sixteen  of  the  public  statutes*  and  acts  amendatory  thereof,  at 
their  par  value,  and  the  said  deposit  shall  be  held  in  trust  by  said  treasurer 
for  the  protection  and  indemnity  of  the  residents  of  the  commonwealth  with 
whom  such  associations  or  corporations  respectively  have  done  or  may  trans- 
act business.  Said  moneys  or  property  shall  be  paid  out  or  disposed  of  only 
on  the  order  of  some  court  of  competent  jurisdiction  made  on  due  notice  to 
the  attorney-general  of  the  commonwealth,  and  upon  such  notice  to  the  cred- 
itors and  shareholders  of  such  association  or  corporation  as  the  court  shall 
prescribe.  For  the  purpose  of  ascertaining  the  business  and  financial  condi- 
tion of  any  such  association  or  corporation  doing  or  desiring  to  do  such  busi 
ness,  said  board  may  make  examinations  of  such  associations  or  corporations 
at  such  times  and  at  such  places  as  said  board  may  desire,  the  expense  of  such 
examinations  being  paid  by  the  association  or  corporation  examined,  and  may 
also  require  returns  to  be  made  to  them  in  such  form  and  at  such  times  as 
they  may  elect.  Whenever,  upon  examination  or  otherwise,  it  is  the  opinion 
of  said  board  that  any  such  association  or  corporation  is  transacting  business 
in  such  manner  as  to  be  hazardous  to  the  public,  or  its  condition  is  such  as  to 
render  further  proceedings  by  it  hazardous  to  the  public,  said  board  shall 
revoke  or  suspend  the  authority  given  to  said  association  or  corporation,  but 
this  section  shall  not  prevent  such  a  bank  or  institution,  incorporated  under 
the  laws  of  another  state,  from  loaning  money  upon  mortgages  of  real  estate 
located  within  the  commonwealth. + 

Si  1  .  3. — Every  such  person,  association  or  corporation  transacting  business 
in  the  commonwealth  at  the  time  of  the  passage  of  this  act  shall,  within  sixty 
days  after  such  passage,  conform  to  the  requirements  of  this  act. 

SEC.  4. — Whoever  violates  any  provision  of  the  preceding  sections  shall  be 
punished  by  a  fine  not  exceeding  one  thousand  dollars  ;  and  any  provision 
thereof  may  on  petition  be  enf<  >rced  In-  injunction  issued  by  a  justice  of  the 
me  judicial  court  or  of  the  superior  court. 

SEC.  5.— This  act  shall  take  effect  upon  its  passage. 

Approved  May,2i,  1890. 

[ACTS  OF  1891,  CHAP.  403.] 

When<  ver,  upon  examination  or  otherwise,  it  is  the  opinion  of  the  board  of 
avings  banks  that  any  association  or  corporation  established 
under  tin-  laws  of  another  state,  for  the  purpose  of  carrying  on  the  business  of 
accumula  of  its  members  and  loaning  to  them  such  accumula- 

tions in  the  mannei  of  a  co-operative  bank,  and  authorized  to  do  business  in 
this  commonwealth,  is  transacting  such  bu  in<       ma  manner  hazardous  to 
il    condition  is  such  as  to  rendei  further  proceedings  byil  hazard- 
lie,  said  board  shall    revoke  or  suspend  the  authority  given  to 
lation  "i  corporation  11  it  has  been  authorized  in  do  business  in  the 
eaith  a    aforesaid,  and  if  not    0  authorized  said  board  shall  notify  it 
thi  transaction  ol    uch  busine     ;  and  in  either  case  such  association 
01  corporation  shall  thereaftei   have  no  authority  to  transact  such  business 

■ . t i <  1   and   third  clauses  of  section   21,  chapter  317,  acts 

1 

,  1 


GENERAL   LEGISLATION.  741 

within  the  commonwealth.  But  nothing  herein  contained  shall  prevent  such 
association  or  corporation  from  loaning  money  upon  mortgages  of  real  estate 
located  within  the  commonwealth.     [Approved  June  II,  1891.] 

[ACTS  OF  1896,  CHAP.  286.] 

Section  i. — Section  two  of  chapter  three  hundred  and  ten  of  the  acts  of  the 
year  eighteen  hundred  and  ninety  is  hereby  repealed  ;  Provided,  however,  that 
any  association  or  corporation  which  at  the  passage  of  this  act  is  duly  licensed 
by  the  board  of  commissioners  of  savings  hanks  to  transact  business  in  this 
commonwealth,  under  the  provisions  of  said  section,  may  be  allowed  to  con- 
tinue business,  subject  to  all  the  conditions  and  restrictions  of  such  license 
and  the  provisions  of  said  chapter  three  hundred  and  ten  as  existing  previous 
to  the  passage  of  this  act. 

Sec.  2. — This  act  shall  take  effect  upon  its  passage.  [Approved  April  14, 
1896. 

MICHIGAN. 

HOWELL'S  ANNOTATED  STATUTES  OF  1S82. 

Section  3252. — Any  ten  or  more  persons  may  associate  and  form  a  society, 
under  the  provisions  of  this  act,  for  the  purpose  of  receiving,  loaning  and  in- 
vesting money  ;  but  it  shall  not  be  lawful  for  such  society  to  discount,  buy,  or 
sell  commercial  paper  or  exchange,  to  issue  any  letters  of  credit,  nor  to  do  any 
business  pertaining  to  banking,  except  as  in  the  receiving,  loaning  and  invest- 
ing of  money  as  herein  provided. 

Sec.  3253. — The  capital  of  such  society  shall  consist  of  the  amounts  remain- 
ing therein,  of  the  sums  paid  in  on  the  shares  which  may  be  issued  from  time 
to  time  to  the  members  thereof,  and  such  shares  may  be  of  one  or  more  denom- 
inations, but  of  amounts  not  less  than  twenty-five  nor  more  than  one  hun- 
dred dollars  each,  and  may  either  be  paid  up  at  once,  or  by  periodical  instal- 
ments, or  by  voluntary  subscriptions. 

Sec.  3254. — Such  society  may  receive  loans  or  deposits  of  money  from  its 
members,  or  from  other  persons,  partnerships  or  corporations,  at  interest  n  it 
exceding  seven  per  centum  per  annum,  or  without  interest,  and  for  such  lime 
certain,  as  may  be  agreed  upon,  and  may  issue  its  bonds,  certificates  or  other 
evidences  of  indebtedness  therefor  ;  Provided,  that  such  society  shall  not  re- 
ceive any  such  loans  or  deposits  until  such  society  shall  have  actually  invested 
fifty  thousand  dollars  of  its  paid-in  permanent  stock  capital  in  real  estate 
securities,  as  provided  in  sections  eight  and  nine  [3259  and  3260]  of  this  act. 

Sec.  3255. — The  total  amount  of  loans  or  deposits  received  and  not  repaid  by 
such  society,  under  the  provisions  of  the  last  preceding  section,  shall  not  at 
any  time  exceed  two-thirds  of  the  amount  for  the  time  being  secured  to  such 
society  by  bonds  and  mortgages  or  notes  and  mortgages  on  real  estate,  as  pro- 
vided in  sections  eight  and  nine  [3259  and  3260]  of  this  act  ;  it  being  the  true 
intent  of  this  section  that  at  least  one-third  of  the  amount  invested  in  the 
securities  as  aforesaid  shall  consist  of  the  capital  paid  in  by  the  members  of 
such  society  ;  and  it  is  hereby  declared  that,  in  case  of  the  insolvency  or  wind- 
ing up  of  such  society,  the  parties  making  such  loans  or  deposits  shall  be  pre- 
ferred creditors  of  such  society  ;  Provided,  that  if  such  society  shall  receive 
loans  and  deposits  in  excess  of  the  limits  prescribed  in  its  articles  of  associa- 
tion, the  directors  and  officers  of  such  society  receiving  such  loans  or  deposits 
on  its  behalf,  shall  be  personally  liable  for  the  amount  so  received  in  excess, 
And  provided  further,  that  no  part  of  the  capital  of  such  society  shall  be  at  any 
time  withdrawn  from  or  repaid  by  such  society  so  as  to  affect  or  impair  the 
amount  of  the  capital  required  by  this  section  to  be  invested  in  real  estate 
securities,  as  a  protection  and  guarantee  for  such  loans  or  deposits. 

Sec.  3256. — It  shall  be  the  duty  of  every  society  formed  under  this  act,  to  ex- 
hibit in  some  conspicuous  place  in  its  principal  office,  not  later  than  two  o'clock 
p.  m.,  on  the  first  business  day  of  everv  month,  and  to  continue  the  same  in 
such  place  until  the  next  exhibit  shall  be  made,  a  statement  showing  correctly 
and  distinctly  the  amount  outstanding  on  the  bonds  and  mortgages  or  notes 
and  mortgages  held  by  such  society,  and  the  amount  owing  for  loans  and  de- 
posits made  to  or  with  such  society,  and  what  proportions  such  outstanding 
amount  bears  to  such  liabilities ;  such  statement  to  be  made  up  to  the  close  of 
the  next  preceding  month,  and  to  be  signed  by  the  president  and  manager, 
and  to  be  attested  by  the  auditors  of  such  society,  and  if  any  of  such  officers 
as  aforesaid,  shall  wilfully  make  or  knowingly  consent  to  any  false  statement 
48 


742  APPENDIX   IV. 

in  such  exhibit,  he  shall  by  so  doing  be  deemed  to  have  committed  a  misde- 
meanor, and  shall,  upon  conviction  thereof,  be  punished  as  provided  in  section 
twenty  [3271]  of  this  act. 

Sec'  3257. — The  amount  of  stock  of  such  society  to  be  held  at  any  time  by 
any  person,  or  by  persons  jointly,  or  by  partnerships  and  corporations,  shall 
not  exceed  the  sum  of  five  thousand  dollars. 

Sec.  3258. — The  liability  of  any  member  of  such  society  shall  be  limited  to 
douole  the  amount  actually  paid"  in  and  remaining  with  such  society,  together 
with  the  amount  of  any  periodical  instalments  that  may  be  due  and  unpaid  on 
any  share  or  shares  issued  to  him,  except  for  labor  performed  for  such  society  ; 
and  the  liability  for  such  labor  may  be  enforced  against  any  member,  by  action 
founded  on  this  act,  at  any  time  after  an  execution  against  such  society  for 
such  labor  shall  have  been  returned  unsatisfied,  or  at  any  time  after  winding 
up  or  bankruptcy  proceedings  shall  have  been  commenced  by  or  against  such 
society  ;  Provided,  that  if  any  member  shall  be  compelled  by  such  action  to 
pay  any  claim  for  such  labor,  or  any  part  thereof,  he  shall  have  the  right  to 
call  upon  all  the  members  to  pay  their  part  of  the  sum  so  paid  by  him  as  afore- 
said, and  may  sue  them,  jointly  or  severally,  or  any  number  of  them,  and  re- 
cover in  such  action  the  ratable  amount  due  from  the  member  or  members 
so  sued. 

Sec.  3259. — Such  society  is  hereby  empowered  to  lay  out  and  invest  its 
capital,  or  other  moneys  intrusted  or  in  anywise  belonging  to  such  society,  in 
the  hrst  place,  in  paying  and  discharging  all  costs,  charges  and  expenses  in- 
curred in  the  formation  and  management  of  such  society  ;  and  the  remainder 
of  such  capital  or  other  moneys,  or  so  much  thereof  as  may  from  time  to  time 
be  deemed  necessary,  may  be  advanced  by  way  of  loan  to  any  person  or  per- 
sons, partnerships,  or  corporations  in  sums  not  exceeding  two  thousand  dollars 
to  any  one  borrower,  as  aforesaid,  and  upon  security  of  bonds  and  mortgages 
or  notes  and  mortgages,  on  unincumbered  real  estate,  of  at  least  double  the 
value  of  such  loans,  or  any  part  or  parts  of  such  capital,  or  other  moneys,  may 
be  invested  in  the  stocks  or  bonds  of  the  United  States,  or  of  any  of  the  so- 
called  New  England,  middle,  or  northwestern  states  or  in  any  bonds  lawfully 
issued  by  any  county,  city,  or  school  district  in  this  state,  and  upon  such  terms 
and  conditions  as  to  such  society  shall  seem  satisfactory  and  expedient. 

Sec.  3260. — Every  borrower  from  such  society  of  a  loan,  secured  by  bond 
and  mortgage  or  note  and  mortgage  on  real  estate,  in  accordance  with  section 
eight  [3259]  of  this  act,  shall  have  the  right  to  repay  such  loan,  together  with 
interest,  by  certain  periodical  instalments,  hereinafter  called  loan  repayments, 
extending  over  such  period  nor  less  than  one  nor  more  than  ten  years  as  shall 
be  stated  in  such  bond  and  mortgage  or  note  and  mortgage  ;  Provided,  that 
such  interest  shall  not  exceed  ten  per  centum  per  annum,  and  shall  be  cal- 
culated on  the  amount  or  balance  of  principal  from  time  to  time  owing  ;  Pro- 
vided also,  that  no  such  borrower  shall  be  charged  with  or  pay  any  commis- 
sion in  the  way  of  premium  or  discount  on  the  amount  of  loan  so  made  to  him 
on  security  as  aforesaid. 

Sec.  3201. — In  case  any  borrower  of  a  loan  from  such  society  shall  desire  to 
redeem  hi-  property  before  the  expiration  of  the  time  limited  or  mentioned  in 
his  bond  and  mortgage  or  note  and  mortgage,  for  the  repayment  of  such  loan, 
he  shall  be  allowed  to  do  so,  at  such  tune  or  at  the  end  of  such  notice  as  shall 
1  in  <;r  required  by  such  society's  by-laws,  upon  paymenl  of  any  loan, 
repayments,  or  other  sums  of  money  due  and  unpaid,  together  with  the  amount 
of  the  present   value  of  all  loan  repayments  accruing  or  to  become  payable, 

.1 ding  i"  the  terms  of  such  bond  and  mortgage  or  note  and  mortgage, such 

- lue  to  !•••  found  by  discounting  such  1<  an  repayments  lor  the  pei  iod 

at  which  each  would   be<  Ome  due,  at  the  same  rate  of  interest  as  is  promised 

paid  for  such  loan,  and  nothing  in  this  act  shall  authorize 

■  1    paymenl  in  such  case  of  any  other  money  by  way 

of  redemption  fee  or  otherwise  of  such  property. 

1202. — In  ea  e  any  borrower  oi   a  1<  tn  from  such  society  shall  make 

It  in  the  payment  of  any  loan  repayments  or  ol  any  other  moneys  pay- 

int  to  the  terms  and  requirements  of  his  bond  and  mortgage  or  note 

■  ,i  in  the  performance  01  observance  oi  any  duty  or  conditions 

mtained  in  Mich  bond  and  mortgage  or  note  and  mortgage, 

wnereb;  the  principal  and  othei    sums  ol    money  secured  by  such  bond  and 

mortgage  or  note  and  mi  thereu] to  become  immediately  due 

and  !  noi    urns  to  be  paid,  on  a  sale  or  foreclosure,  in  settlement 

or  di  'hi'  h  bond  and  mortgage  or  note  and  mortgage,  shall  be  the 

and  un   aid  loan  repayments  or  other  moneys,  and  the 

am  no  1  attorney  fees  and '  are  secured  by  such  bond  and  mort- 


GENERAL   LEGISLATION.  74:'. 

gage  or  note  and  mortgage,  together  with  the  amount  of  the  present  value  of 
all  the  loan  repayments  remaining  unpaid  after  the  payment  of  past  due  loan 
repayments  as  above,  such  present  value  to  be  found  according  to  the  rule  set 
forth  in  the  last  preceding  section. 

Sec.  3203.— When  all  moneys  intended  to  be  secured  by  any  bond  and  mort- 
gage, or  note  and  mortgage,  given  to  any  society  formed  under  this  act  have 
been  fully  paid  or  discharged,  such  society  shall  indorse  upon  such  mortgage 
a  receipt  under  the  corporate  seal  of  such  society,  signed  by  its  president  and 
manager  in  the  presence  of  two  witnesses,  and  to  be  acknowledged  by  said 
president  and  manager  before  a  notary  public,  and  such  receipt  shall  discharge 
such  mortgage  without  any  reconveyance  or  resurrender  whatever,  and  such 
receipt  shall  be  in  the  following  form  : 

The society  limited,  hereby  acknowledge  to  have  received  all  moneys 

intended  to  be  secured  by  the  within  written  mortgage,  given  by to 

for  the  sum  of .dated and  recorded   in   the   office  of  the  register  of 

deeds  in  and  for  the  county  of ,  in  liber ,  on  page of  mortgages. 

In  witness  whereof  the  "corporate  seal  of  such  society  is  hereto  affixed  this 

day  of ,  in  the  year ,  by  order  of  the  board  of  directors,  duly  made 

and  recorded. 

[L.  S.]  , 

P  rcsulciit, 

Manager. 

Sec  3264. — The  persons  proposing  to  form  a  society  under  the  provisions 
of  this  act  shall  make  written  articles  of  association,  which  shall  be  signed 
and  acknowledged  before  a  notary  public,  and  which  shall  state, 

1.  The  name  by  which  such  society  shall  be  known  ;  Provided,  that  the 
word  limited  shah  be  the  last  word  in  such  name  ; 

2.  The  place  in  this  state  where  its  principal  office  is  to  be  located  ; 

3.  The  purpose  for  which  such  society  is  formed  ; 

4.  Whether  its  capital  is  fixed,  and,  if  so,  at  what  amount,  or  whether  it  is  to 
be  of  an  amount  varying  from  time  to  time  ; 

5.  The  amount  [amounts]  of  its  several  shares,  and  how  designated,  one 
class  of  which  shall  be  known  as  permanent  stock  ; 

6.  How  such  several  shares  may  be  paid  ; 

7.  What  amount  of  capital,  if  any,  will  be  actually  paid  in  before  commenc- 
ing business  ; 

8.  The  maximum  extent,  not  exceeding  the  limits  prescribed  by  section  four 
[3255]  of  this  act,  to  which  such  society  is  to  receive  money  on  loan  or  deposit ; 

9.  The  time  such  society  shall  exist,  not  exceeding  thirty  years  ;  and 

10.  The  names,  in  full,  of  the  persons  associating,  their  respective  residences, 
and  the  number  and  class  of  shares  subscribed  for  by  each  of  them. 

Sec.  3265. — The  articles  of  association  required  by  the  last  preceding  section 
shall  be  tiled  and  recorded  in  the  office  of  the  secretary  of  state  of  this  state  ; 
and  two  copies  of  such  original  articles  shall  be  made,  which  the  said  secre- 
tary of  state  shall  certify,  over  his  official  signature  and  the  seal  of  this  state, 
as  being  correct  copies  of  such  original  articles  so  filed  and  recorded  ;  one  of 
said  copies  shall  be  filed  and  recorded  in  the  office  of  the  clerk  of  the  county  in 
which  the  principal  office  of  such  society  shall  be  located,  and  the  said  clerk 
shall  certify,  over  his  official  signature  and  the  seal  of  the  circuit  court  of  said 
county,  that  such  certified  copy  of  said  original  articles  has  been  filed  and  re- 
corded in  his  office  ;  and  the  other  copy  of  such  [said]  original  articles  shall  be 
held  by  the  society  named  therein  ;  and  the  said  articles  or  copies  thereof,  duly 
and  certified  by  either  of  the  aforesaid  officers  may  be  used  as  evidence  in  all 
courts  and  places  of  the  incorporation  of,  as  well  as  for  or  against  such  society  ; 
and  the  said  secretary  of  state  and  the  said  county  clerk  shall  each  be  paid 
such  filing,  recording  and  certifying  at  the  rate  of  ten  cents  for  each  one  hun- 
dred words  contained  in  such  articles. 

Sec.  3266. — After  such  articles  shall  have  been  filed  and  recorded  as  above 
required,  the  persons  signing  the  same  and  such  other  persons,  partnerships  and 
corporations  who  shall  from  time  to  time  be  possessed  of  any  share  or  shares  in 
the  capital  stock  of  such  society,  and  their  several  successors,  and  assigns,  shall 
be  deemed  a  body  corporate  and  politic  by  the  name  mentioned  in  such 
articles  ,  but  such  name  shall  not  be  identical  with  that  of  any  other  society 
already  formed  under  this  act,  or  so  nearly  resembling  the  same  as  to  be  cal- 
culated to  deceive,  unless  such  other  society  consents  to  the  adoption  and  use 
of  such  name  at  any  time  within  the  thirty  days  immediately  preceding  the 
expiration  of  its  charter. 


744 


APPENDIX    IV. 


Sec.  3267. — Each  society  established  under  the  provisions  of  this  act  shall 
have  a  common  seal,  which  seal  shall  not  be  altered  or  imitated,  and  shall  in 
all  cases  bear  the  corporate  name  of,  together  with  such  devise  or  motto  as 
may  be  adopted  by,  such  society,  and  such  seal  shall  be  impressed  upon  the 
original  articles  of  association  of  such  society  and  shall  have  power  in  its  cor- 
porate name  to  sue  and  be  sued,  appear,  prosecute  and  defend  all  actions  and 
causes  to  final  judgment  and  execution  in  any  courts  or  elsewhere  ;  to  do  all 
acts  that  may  be  necessary  for  receiving  or  repaying  the  moneys  paid  in  from 
time  to  time  by  its  members  or  other  persons,  partnerships,  or  corporations, 
and  for  crediting  or  paying  profit  dividends  or  interests  on  such  moneys  ;  for 
loaning  or  investing  the  moneys  so  received,  or  any  part  thereof,  and  the  in- 
terest and  profit  arising  therefrom  upon  such  real  estate,  stocks  or  bonds,  as 
are  stated  in  section  eight  [3259]  of  this  act,  and  for  receiving  and  obtaining 
repayment  thereof,  and  for  compelling  the  payment  of  any  interest  or  other 
moneys  due  on  or  in  connection  with  any  sum  or  sum  or  loaned  or  invested  ; 
and  for  enforcing  the  observance  and  fulfilment  of  any  conditions  annexed  to 
or  connected  with  money  so  received  and  repayable,  or  so  loaned  and  invested, 
or  the  forfeiture  of  any  term  or  delay  of  payment  consequent  on  the  non-fulfil- 
ment thereof  ;  and  to  give  receipts  and  acquittances  and  discharges  for  the  same, 
either  absolutely  and  wholly,  or  partially  ;  and  such  society  may,  for  all  and 
every  and  any  of  the  foregoing  purposes,  and  for  every  and  any  other  purpose 
in  this  act  mentioned  or  referred  to,  lay  out  its  capital  or  other  moneys  and 
property  for  the  time  being,  or  any  part  thereof,  with  power  to  do,  authorize, 
and  exercise  all  acts  and  powers  whatsoever  in  the  opinion  of  the  directors,  such 
society  requisite  or  expedient  to  be  done  or  exercised  in  relation  thereto. 

Sec.  3268. — The  only  real  estate  which  shall  be  lawful  for  any  society  formed 
under  this  act  to  acquire,  by  purchase  or  otherwise,  shall  be  such  as  it  may  be 
necessary  to  buy  or  take  in  the  enforcement  of  its  securities  and  the  collection 
of  any  claims  or  debts  due  to  it ;  and  all  conveyances  of  real  estate  so  acquired 
shall  be  taken  by  such  society  in  its  corporate  name  ;  and  such  real  estate  shall 
be  sold  by  such  society  within  ten  years  after  the  same  shall  be  vested  in  it  by 
purchase  or  otherwise,  and  such  society  shall  sell  and  convey  such  real  estate 
free  from  any  claim  thereon  by  any  of  its  members  or  any  person  claiming 
under  them,  by  an  instrument  under  its  corporate  seal  and  under  the  hands 
of  its  president  and  manager,  duly  authorized,  and  duly  acknowledged  ;  Pro- 
vided, however,  that  such  society  may  purchase,  or  hold  upon  lease,  any  land 
for  the  purpose  of  erecting  thereon  a  building  for  its  accommodation  and  the 
convenient  transaction  of  its  business,  or  it  may  purchase,  build,  hire  or  take 
npon  lease  any  building,  and  may  adapt  and  furnish  the  same  for  so  conduct- 
ing its  business,  and  if  occasion  requires  may  sell,  exchange,  or  let  such  land 
or  buildings,  or  any  part  thereof. 

Sec.  3269. — It  shall  not  be  lawful  for  such  society  to  acquire,  hold  or,  deal  in 
any  personal  property  other  than  as  provided  in  this  act  and  such  as  may  be 
necessary  for  the  transaction  of  its  business. 

SEC.  3270. — The  first  meeting  of  such  society  may  be  called  by  a  notice, 
signe  1  by  any  two  of  the  associates  who  signed  its  articles  of  association,  set- 
ting forth  the  time,  place,  and  objects  of  such  meeting,  such  notice  to  be  mailed 
t<  >  the  residence  of  each  associateat  least  ten  days  prior  to  such  meeting  ;  and  a 
in  ijority  of  such  associates  al  such  meeting  shall  be  competent  to  make  all  such 
by-laws  as  they  may  deem  necessary  for  the  proper  management  of  such  si  K  i- 
ety's  business,  SO  as  such  by-laws  are  it  >t  repugnant  to,  or  inconsistent  with,  the 
provi  ions-of  this  act  or  of  any  law  of  this  state  or  of  the  United  States  ;  to  elect 
the  first  board  of  directors,  which  board,  and  all  subsequent  boards,  shall  con- 
sist of  not  less  than  six  nor  more  than  nine  members  of  such  society,  and 
which  board  shall  elect  from  their  own  number  the  president  and  vice-presi- 
dent of  such  society  ;  and  also  to  elect  two  auditors  who,  as  well  as  all  their 
11  i,  may  or  may  nol  In-  members  of  such  society;  such  directors  and 
auditors  to  hold  their  Offices  until  their  successors  shall  have  been  elected  as 
1  provi  Id  tor  in  the  next  following  section  ;  and  to  transact  any  other  busi- 
foi  tin-  organization  of  such  society  and  appropriate  to  such 
in-'  ;  ing  ,  and  tin-  sei  r<  tai  y  1  >i  such  meeting  shall  make  full  and  correct  minutes 
<  .1  it  pi  01  eedings  upon  the  books  or  rei  ords  ol  such  society,  and  the  same  be- 
igned   by         chairman,  shall  be  deemed  and  taken  to   be  prima  facie 

of  the  action  ( >l  SUI  h  meeting. 

Sei  .   $271.  —  Every  society  formed  under  this  act  shall  hold  an  annual  meet- 

>f  its  meml  1      me  one  of  the  first  fourteen  days  in  the  month  of  Feb- 

di    ei     ■■•■ai.  i"  1  the  purpose  of  considering  and  determining 

upon  any  matter,  nol  requii  ing  special  not  ire,  relating  to  such  society's  business, 

and  for  the  election  of  directoi    and  auditors  to  serve  for  the  ensuing  year  orun- 


GENERAL   LEGISLATION.  745 

til  their  successors  are  elected  and  qualified  ;  but  before  such  election  takes 
place  the  retiring  directors  shall  present  to  Mich  meeting  a  report,  signed  by  the 

E resident  of  such  society's  transactions  during  their  term  of  office  accompanied 
y  such  information  and  suggestions  as  they  may  deem  proper  to  give  in  re- 
lation to  such  society's  affairs,  and  to  the  future  management  thereof  ;  and 
they  shall  also  present  to  such  meeting  an  account  of  all  the  receipts  and  dis- 
bursements of  such  society  for  the  year  ending  on  the  thirty-first  day  of  Decem- 
ber next  previous  thereto,  and  a  general  statement  of  such  society's  funds  and 
effects,  liabilities  and  assets,  as  at  the  closeoi  the  date  last  aforesaid;  such 
account  to  state  fully  and  clearly  the  amounts  received  "ii  each  class  of  shares 
issued,  the  amounts  received  on  loans,  the  amounts  received  on  deposits,  the 
amounts  received  as  principal  and  interest  from  bonds  and  mortgages  i  >i  notes 
and  mortgages,  the  amounts  received  as  principal  and  interest  from  stocks  and 
bonds,  the  amounts  received  for  fines  from  members  and  borrowers,  and  the 
amounts  received  for  incident. ds  and  for  any  and  all  other  matters  ;  and  such 
account  shall  show  on  its  contra  side  the  amounts  paid  out  for  principal  and 
interest  or  dividends  on  each  class  of  shares,  for  principal  and  interest  on  loan-, 
for  principal  and  interest  on  deposits,  for  amounts  loaned  on  bonds  and  mort- 
gages, or  notes  and  mortgages,  for  amounts  invested  in  the  several  stocks  and 
Bonds  as  allowed  by  this  act,  for  amounts  paid  on  accounts,  or  for  any  matter  or 
thing  other  than  general  management  expenses,  and  the  amounts  paid  for  rent, 
taxes,  salaries,  law  charges,  stationery,  printing,  advertising,  and  other  expenses 
of  management  ;  and  such  general  statement  shall  clearly  show  such  society's 
liability  for  principal  and  interest  or  dividends  (including  periodical  instalments 
in  arrears  the  amount  of  which  shall  be  stated  in  brackets)  on  each  class  of 
shares,  for  principal  and  interest  on  loans,  for  principal  and  interest  on  deposits, 
and  for  all  indebtedness  on  any  and  every  other  account ;  and  such  general 
statement  shall  state  fully  on  its  contra  side  the  amounts  due  and  unpaid  for  per- 
iodical instalments  and  fines  on  shares,  the  amounts  due  and  unpaid  for  princi- 
pal interest  and  fines  on  bonds  and  mortgages  or  notes  and  mortgages,  the 
amounts  due  and  unpaid  for  principal  and  interest  on  stocks  and  bonds,  the 
amount  outstanding  and  not  then  due  (not  including  prospective  interest)  on 
bonds  and  mortgages  or  notes  and  mortgages,  the  amount  of  principal  outstand- 
ing and  not  then  due  on  stocks  and  bonds,  the  amount  of  interest  accrued  but 
not  then  due  on  said  stocks  and  bonds,  the  amount  [amounts]  of  any  other 
moneys,  claims,  debts,  costs  or  damages  owing  to  such  society,  and  the  amount 
or  cash  value  of  any  and  all  real  estate,  and  of  any  and  all  personal  prop- 
erty, owned  and  held  by  such  society  ;  and  in  all  cases  the  amounts  for  prin- 
cipal shall  be  stated  in  such  accounts  and  general  statement  separate  and  dis- 
tinct from  amounts  for  interest  or  dividends  ;  and  such  account  and  general 
statement  shall  be  signed  by  the  president,  countersigned  by  the  manager, 
and  attested  by  the  auditors  of  such  society  ;  and  each  member  of  such  society 
shall  have  a  printed  copy  of  such  report,  account  and  general  statement  sent 
to  him  along  with  the  circular  notice  convening  such  annual  meeting,  such 
notice  to  be  mailed,  at  least  ten  days  before  such  meeting,  to  the  registered 
address  of  each  member  ;  and  such  society  shall  also  publish  such  report,  ac- 
count and  general  statement  in  some  newspaper  printed  in  the  county  where 
the  principal  office  of  such  society  is  located  ;  and  any  director,  president  or 
other  officer  who  shall  include,  or  knowingly  consent  to,  any  false  statement 
in  such  statement  or  report,  or  in  any  other  statement  required  to  be  made  by 
this  act,  or  by  any  vote  of  such  society  at  any  meeting  thereof,  shall  be  deemed 
guilty  of  a  misdemeanor,  and  shall,  upon  conviction  thereof,  be  punished  by  a 
fine  of  not  more  than  one  thousand  dollars,  or  by  imprisonment  in  the  state- 
prison  not  more  than  one  year,  or  by  both  such  fine  and  imprisonment,  in  the 
discretion  of  the  court. 

Sec.  3272. — The  profits  or  losses  of  such  society's  business  shall  be  as- 
certained as  at  the  close  of  the  thirty-first  day  of  December  in  each  and  every 
year,  and  the  same  shall  be  declared  by  the'  directors  in  their  report  to  the 
next  following  annual  meeting  of  such  society.  The  net  profits,  alter  provid- 
ing for  the  payment  of  accrued  interest  and  all  liabilities  other  than  for  in- 
terest or  dividends  on  capital,  and  after  setting  apart  for  the  purpose  of  form- 
ing and  maintaining  a  permanent  reserve  fund  to  meet  future  contingencies, 
such  sum,  not  less  in  any  year  than  two  per  centum  upon  the  net  profits  of  the 
business  of  such  year,  as  the  directiors  for  the  time  being  shall  think  fit,  shall 
be  apportioned  pro  rata  between  each  class  of  shareholders  according  to  the 
moneys  paid  on  their  several  shares,  and  for  the  average  or  actual  time  that 
such  moneys  have  been  in  the  possession  and  use  of  such  society,  but  no  such 
interest  or  dividend  shall  be  paid  to  any  member  (except  on  his  withdrawal 
from  such  society  under  the  provisions  of  its  by-laws  )  until  his  share  or  shares 


746  APPENDIX  IV. 

are  fully  paid  up,  and  the  interest  or  dividends  on  paid-up  shares  may  be 
paid  annually  or  semi-annually,  as  the  directors  for  the  time  being  may  de- 
termine and  order. 

Sec.  327s. — Every  society  formed  under  this  act  shall,  on  or  before  the 
seventh  day  of  February  in  each  and  every  year,  report  to  the  state  treasures 
of  this  state  the  amount  of  paid-up  capital,  an  account  of  all  the  cash  receipts 
and  disbursements  of  such  society  for  the  year  ending  on  the  thirty-first  day 
of  December  next  previous  thereto,  and  also  a  general  statement  of  such 
society's  funds  and  effects,  liabilities  and  assets,  as  at  the  close  of  the  date 
last  aforesaid,  such  account  and  general  statement  to  contain  all  the  facts  and 
information  as  are  required  by  section  twenty  [3271]  of  this  act,  to  be  given  in 
the  account  and  general  statement  to  be  presented  to  such  society's  annual 
meeting  in  said  month  of  February,  and  every  such  report  shall  be  signed  and 
verified  on  oath  or  affirmation,  before  a  notary  public,  by  two  directors  and  by 
the  president  and  manager  of  such  society,  and  if  any  person  signing  such 
report  shall,  as  to  any  material  facts,  knowingly  and  wilfully  swear  or  affirm 
falsely,  he  shall  be  deemed  guilty  of  perjury,  and  he  punished  accordingly  ; 
and  such  report  shall  be  filed  in  the  office  of  said  state  treasurer,  and  shall  be 
published  by  him  in  his  annual  report.  If  any  such  society  shall  neglect  to 
make  out  and  transmit  the  report  required  in  this  section  for  one  month 
beyond  the  period  when  the  same  is  required  to  be  made,  such  society  may 
be  deemed  to  have  wilfully  violated  the  provisions  of  this  act,  and  may  be 
proceeded  against  and  dissolved  in  the  same  manner  as  any  other  corporation 
mav  be  proceeded  against  and  dissolved. 

Sec.  3274. — Whenever  the  slate  treasurer  of  this  state  shall  upon  knowl- 
edge, information  or  belief,  derived  from  any  report  made  to  him  by  any 
such  society,  or  from  any  other  source,  be  satisfied  that  the  business  of  such 
society  is  being  conducted  in  a  manner  inconsistent  with  the  provisions  of 
this  act,  or  of  any  of  the  laws  of  this  state,  and  prejudicial  to  the  interests  of 
the  creditors  of  such  society,  or  if  such  society  shall  neglect  to  make  the  report 
as  required  by  the  last  preceding  section,  he  shall  notify  the  governor  and 
attornev-general  of  this  state  of  such  fact,  and  it  shall  thereupon  become  the 
duty  of  the  said  attorney-general  to  examine  into  the  affairs,  condition  and 
management  of  such  society,  and  to  report  such  examination  in  writing, 
together  with  a  detailed  statement  of  facts  to  the  said  governor,  who  shall  lay 
the  same  before  the  legislature  ;  and  for  the  purpose  of  making  such  exami- 
nation, the  said  attorney-general  shall  have  power  to  call  to  his  assistance  the 
services  of  an  accountant,  to  administer  all  necessary  oaths  to  the  directors  and 
officers  of  such  society,  and  other  witnesses,  and  to  examine  them  on  oath  in 
relation  to  the  affairs,  conditions,  and  management  thereof,  and  to  examine 
the  vaults,  safes,  securities,  books,  papers  and  documents  belonging  to  such 
society,  or  pertaining  to  its  affairs,  condition  and  management";  and  if  the 
said  governor  on  receipt  and  consideration  of  such  report  shall  deem  such 
society  to  be  insolvent,  or  to  have  conducted  its  business  in  a  manner  incon- 
sistent with  the]  rovisions  of  this  act,  or  of  any  of  the  laws  of  this  state,  he  shall 
order  and  it  -hall  be  the  duty  of  the  said  attorney-general  to  institute  proceedings 
against  such  society  for  the  dissolution  thereof  in  the  proper  court,  and  in  the 
manner  as  any  other  corporation  mav  be  proceeded  against  and  dissolved. 

Si-:c.  3275. —  Every  officer  of  a  society  formed    under  this   act,  having    the 

;  ;e  of  any  money  or  other  property  belonging  to  such  society 

shall,  before  entering  upon  the  execution  of  his  office,  become   bound  with 

ire  sufficient  sureties,  in  such  sum  as  the  directors  shall  require,  and 

ding  to  the  following  form  of  bond  : 

Know  all  men  by  these  presents,  thai  we,  A  B,  of ,  one  of  (he  officers 

of  the society,  limited,  established  at in  the  county  of in  the 

of  Michigan,  and  C  I)  and    E    F,  of (as  sureties   on  behalf  of   the 

said  A  i'.  I,  are  jointly  and  severally  held  and  firmly  bound  to  the  said  society, 

in  the  sum  of dollars  of  lawful imone}  ol  the  United  States,  to  be  paid  to 

lid  so<  iety,  for  which  paymenl  well  and  truly  to  be  made  we  jointly  and 
,.;  and  each  ol  us  by  himself,  our  and  each  of  our  heirs 
these  presents,  sealed  with  our  seals.  Dated 
:  day  ol in  the  year  of  oui  Lord . 

Whet  il  >ove  bounden  A  B,  hath  been  duly  appointed  to  the  oft  ice  of 

1  ilished  as  aforesaid,  and  he,  together 

with  bounden  C  D  and  E   Fas  his  sureties,  have  entered  into  the 

jeel  to  the  condition  hereinafter  contained:  Now, 

on  ol  the  above  written  bond  is  such,  thai  it  the  said  A B 

ute  his  said  "Mice,  and  shall  and  do 

1  mi  t  and  true  account  on  such  society's  books  of  all  moneys 


GENERAL   LEGISLATION.  747 

received  and  paid  bv  him,  and  shall  and  do  pay  over  all  the  moneys  remain- 
ing in  his  hands,  and  deliver  all  securities  and  effects,  hooks,  papers,  and  pro- 
perty of  or  belonging  to  such  society  in  his  hands  or  custody,  to  such  pi  i 
or  persons  as  such  society  shall  appoint,  or  according  to  die  by-laws  of  such 
society,  together  with  the  proper  or  legal  receipts  or  vouchers  for  such  i  ay- 
ments,  then  the  above  written  bond  shall  be  void  and  of  no  effect  ;  otherwise 
shall  be  and  remain  in  full  force  and  virtue. 

Sec.  3276. — If  any  director,  officer,  clerk,  agent,  servant  or  other  person  in 
the  emp  oyment  of  any  society  funned  under  this  act,  shall  embezzle  or  fraud- 
ulently dispose  of  or  convert  to  his  own  use,  or  shall  take  or  secrete  with  intent 
to  embez/.le  and  convert  to  his  own  use.  any  money  or  property  of  such  s<  iciety, 
or  of  any  of  its  dealers  or  customers,  which  shall  have  come  to  his  possession, 
or  shall  be  under  his  charge  by  virtue  of  such  office  or  employment,  or  other- 
wise, he  shall  be  deemed  by  so  doing  to  have  committed  the  crime  of  larceny, 
and  shall  be  punished  accordingly. 

Sec.  3277. — Service  of  legal  process  on  any  society  formed  under  this  act 
may  be  made  on  any  one  of  the  directors  or  on  the  manager  thereof,  or  any 
other  officer  of  such  society,  if  any  such  director  or  manager  or  other  officer 
be  in  the  county  where  such  society's  principal  office  is  located;  but  if  not 
there  by  leaving  a  copy  of  such  process  with  any  officer  thereof,  at  such  office 
as  aforesaid. 

Sec.  3278. — It  shall  be  lawful  for  any  minor  above  fourteen  years  of  age  to 
take  and  hold  shares  in,  or  to  make  loans  or  deposits  of  money  to  or  with  any 
society  formed  under  this  act,  and  for  such  society  to  pay  to  any  minor  any 
moneys  that  may  be  due  to  him  in  respect  of  any  such  shares,  loans  or  deposits 
standing  in  his  name,  and  his  receipt  therefor  shall  be  in  all  respects  valid  in 
law  ;  but  such  minor  shall  not  be  eligible  to  hold  any  office  in  such  society, 
though  he  mav,  subject  to  its  by-laws,  vote  at  any  meeting  of  its  members. 

Sec.  3279. — It  shall  be  lawful  for  any  society  formed  under  this  act  to  charge 
its  members,  borrowers  or  other  persons,  partnerships  or  corporations  do- 
ing business  with  it,  by  way  of  fine,  for  any  default  or  delay  in  payment  of 
periodical  instalments  on  shares,  loan  repayments  on  bonds  and  mortgages  or 
on  notes  and  mortgages,  or  of  any  other  moneys,  at  the  time  when  the  same 
are  due  and  payable,  at  a  rate  not  exceeding  ten  per  centum  per  annum  on  the 
amount  so  past  clue  and  unpaid,  which  fines,  however,  shall  not  be  in  addition 
to,  but  in  lieu  of,  interest  on  such  arrearages  ;  and  such  society  may  charge  its 
members,  borrowers  or  other  persons,  partnerships,  or  corporations  doing 
business  with  it,  by  way  of  fine  for  any  breach  or  non-observance  of  its  by-laws, 
or  any  of  its  business  rules  and  regulations,  such  reasonable  sum,  not  exceed- 
ing five  dollars  for  each  offence,  as  the  directors  shall  determine  and  order  ; 
and  all  such  fines  shall  be  due  and  payable  to  such  society  in  one  month  from 
such  default  or  offence. 

Sec.  3280.— The  by-laws  of  every  society  formed  under  this  act  shall  set 
forth— 

1.  When  and  how  persons  may  be  admitted  and  registered  as  members  of 
such  society  ; 

2.  The  terms  on  which  shares  to  be  known  as  permanent  stock,  and  which 
shall  not  be  repayable  or  withdrawable,  are  to  be  issued  ; 

3.  The  terms  on  which  other  shares  may  be  issued,  and  by  what  name  or 
names  they  shall  be  known,  and  how  they  may  be  withdrawn  or  converted 
into  permanent  stock  ; 

4.  The  form  of  certificate  to  be  issued  for  the  several  denominations  of 
shares,  and  how  the  same  shall  be  registered  ; 

5.  When  shares  may  be  transferred,  the  forms  and  conditions  of  transfer  ; 

6.  Provisions  for  renewing  lost  or  destroyed  share  certificates  ; 

7.  How  shares  in  default  may  be  forfeited  and  disposed  of  ; 

8.  The  amount  of  stock,  not  exceeding  the  limits  prescribed  by  section  six 
[3257]  of  this  act,  any  one  person  mav  hold  in  his  own  name  <  >r  right,  and  what 
amount  may  be  held  by  persons  jointly,  by  partnerships,  and  by  corpo- 
rations ; 

9.  The  conditions  on  which  shares  may  be  held  by  persons  jointly,  by  part- 
nerships, and  by  corporations  ; 

10.  When  share  subscriptions,  loan  repayments,  or  other  moneys  may  be 
paid  bv  members  and  borrowers  ; 

11.  When  and  how  loans  to.  or  deposits  with,  such  society  may  be  made  ; 

12.  The  form  of  bond  or  certificate  to  be  issued  for  such  loans  or  deposits  • 
Provided,  that  there  shall  be  printed  in  red  ink  on  the  face  of  every  such  bond 
or  certificate  a  notice  referring  the  holder  to  sections  three,  four,  and  live 
[3254.  3-55.  and  3256]  of  this  act  ; 


748  APPENDIX   IV. 

13.  The  terms  on  which  borrowers  may  obtain  loans,  and  how  such  loans 
may  be  repaid  and  redeemed  ; 

14.  Provisions  for  the  registration,  custody  and  delivery  of  securities  ; 

15.  Provisions  for  banking  and  checking  the  funds  of  such  society  ; 

16.  Provisions  for  the  custody  and  use  of  the  corporate  seal  of  such  society  ; 

17.  How  special  meetings  of  the  members  of  such  society  shall  be  called, 
and  on  which  of  the  rust  fourteen  days  of  February  the  annual  meeting  of 
such  members  shall  be  held  ; 

18.  What  members  may  vote,  and  how  they  may  vote,  at  any  meeting  of 
such  society,  and  the  regulations  for  the  use  of  proxies  ; 

19.  How  questions  shall  be  submitted  and  decided  at  any  meeting  of 
members ; 

20.  Provisions  for  adjourning  or  removing  any  meeting  of  members  ; 

21.  The  number  of  directors,  and  how  the  directors  and  auditors  shall  be 
elected  at  the  annual  meetings  ; 

22.  How  and  what  officers  other  than  directors  and  auditors  shall  be  ap- 
pointed and  removed  ; 

23.  What  shall  disqualify  and  remove  directors  and  auditors  from  office  ; 

24.  How  vacancies  in  the  directors,  auditors  or  other  officers  shall  be  filled  ; 

25.  The  powers  and  duties  of  directors,  auditors  and  other  officers  ; 

26.  The  manner  of  remunerating  the  directors,  auditors  and  other  officers  ; 

27.  That  such  society  shall  not  be  responsible  for  any  trust,  express  or  im- 
plied, created  by  any  member  in  reference  to  its  stock,  or  by  parties  loaning  or 
depositing  monev  to  or  with  such  society,  and  such  society  snail  not  be  bound 
to  see  to  the  execution  of  any  such  trust,"  nor  shall  notice  of  any  trust,  express, 
implied  or  constructive,  be  entered  upon  its  registers  ; 

28.  That  any  member,  borrower  or  other  person  doing  business  with  such 
sociey  may  see  and  examine  his  account  on  the  books  thereof  ; 

29.  Such  other  rules  and  regulations  as  such  society's  business  may  require. 
Sec.  3281. — Any  society  formed  under  this  act  may  alter  or  rescind  any  by-law, 

or  make  any  additional  by-law,  with  the  consent  of  a  majority  of  its  members 
(holding  not  less  than  two-thirds  of  its  capital  for  the  time  being),  present  at 
a  special  meeting  convened  for  that  [such]  purpose,  but  the  notice  calling 
such  meeting  shall  set  forth  fully  and  clearly  the  proposed  alteration,  rescis- 
sion or  addition. 

Sec.  3282. — The  by-laws  of  any  society  formed  under  this  act  shall  be  re- 
corded in  a  book  to  be  kept  for  that  purpose,  and  such  book  shall  be  open  dur- 
ing business  hours  for  the  inspection  of  the  members.  The  by-laws  so  recorded 
shall  be  binding  on  the  several  officers  and  members  of  such  society,  and  on 
all  persons  claiming  on  account  of  any  or  either  of  them,  or  under  such  by- 
laws, all  of  whom  shall  be  deemed  and  taken  to  have  full  notice  thereof  by 
such  record.  The  entry  of  such  by-laws  in  the  books  of  such  society,  or  a  true 
copv  of  (lie  same,  examined  with  the  original,  and  proved  to  be  a  true  copy, 
shall  be  received  as  evidence  thereof  in  all  courts  and  places. 

SEC.  3283. — It  shall  be  the  duty  of  every  society  formed  under  this  act,  to 
print  and  publish  in  pamphlet  form,  the  whole  of  this  act,  and  the  whole  of 
such  society's  articles  of  association  and  by-laws,  and  of  any  amendments, 
alterations,  or  additions  thereto,  and  to  supply  a  copy  thereof  to  any  person 
on  demand,  on  payment  therefor  of  a  sum  m  >t  exceeding  fifty  cents. 

SEC.  1284. — Any  society  formed  under  this  act,  desiring  for  any  reason  to  be 

lived    prior  tn  the  expiration    of  the    term  of  years  specified  in  its  articles 

k  iation,  may,  with  the  consent  of  the  majority  of  its  members  (holding 

nolle  5  than  two-thirds  of  its  capital  for  the  time  being)  given  by  resolution 

dai  a  special   meeting   convened  for  such  purpose,  tile   a  petition  in  the 

circuit  court  for  the  county  wherein  it  is  located,  setting  forth— 

1.  I  he  reasons  for  such   dissolution; 

2.  The  indebtedness  of  such  society  of  all  kinds,  with  a  classification  of  its 

tors  ;  and 

■  t    and  effects  belonging  to  such  society. 
.11  the  filing   of   such  petition,  said    court  or  circuit  judge  may  make  an 
ord<  :  appearance  in  said  cause  of  all  persons  interested  in  such  society, 

h  I'M  in  a     shall  be  properand  just.     On  proof  of  the  publication  of 
er,  and  the  entering  of  appearance  of  such  persons  as  shall  have  appear- 
ed court  may  proi  eed  and  take  the  proofs  in  said  cause,  and  hear  the 
ind  make  such  order  or  ordei    thereon  as  shall  be  just  and  proper  ;  and 

1  more  trustees  for  the  purpose  of  winding  up  such  society, 

a  n<l  the pensation  to  be  paid  them  therefor  ;  and  may  direct  the 

Screditoi  1  in  mch  ordei  ana  manner  as  said  court  may  deem  proper 
ference  to  the  provisions  ol  the  organic  act,  the  articles  of  association, 


GENERAL    LEGISLATION.  749 

and  the  by-laws  of  such  society,  and  to  the  petition  in  said  cause  ;  and  said 
court  may  provide  that  the  claims  of  all  creditors,  who  shall  have  appeared  and 
made  proof  of  the  same  in  said  cause,  shall  be  paid  before  such  society  is  dis- 
solved ;  and  said  court  may  make  an  order  that  such  society  shall  be  dissolved; 
and  a  copy  of  said  order  of  dissolution  shall  be  filed,  by  the  parties  re]  resent- 
ing such  society,  in  the  offices  of  the  secretary  ol  slate  of  this  state,  and  of  the 
clerk  of  the  county  wherein  its  articles  of  association  were  tiled  and  recorded, 
and  such  order  of  dissolution  shall  be  recorded  by  the  said  secretary  and  clerk 
in  like  manner  as  the  articles  of  association  of  such  society   were  recorded. 

Sec.  3061. — It  shall  and  may  be  lawful  for  any  number  of  persons,  not  less 
than  ten,  to  associate  themselves  to  form  with  such  other  persons,  as  shall 
afterwards  associate,  a  body  politic  and  corporate,  under  such  name  as  the 
original  associates  may  select,  for  the  purpose  of  saving  and  investing  among 
themselves  and  accumulating  sums  to  be  paid  at  intervals  of  not  exceeding  one 
month,  by  its  members  in  proportion  to  their  interests  in  the  funds  to  be 
accumulated. 

Sec.  3962.— The  persons  associating  in  the  first  instance  shall  make  and 
suscribe  in  duplicate  an  instrument  in  writing,  stating  the  name,  location  and 
place  of  business  of  such  corporation  ;  the  amount  of  each  share  therein,  the 
periods  for  payments  on  the  shares,  and  the  amount  of  each  payment  thereon  ; 
the  maximum  number  of  shares  ;  the  officers  it  will  elect,  which  shall  include 
a  president,  secretary  and  treasury,  and  the  first  officers  may  be  named  there- 
in ;  the  times  of  the  annual  elections  ;  and  [the]  period  of  the  corporate  exist- 
ence of  such  corporation,  which  shall  not  be  less  than  three  years  nor  more 
than  ten  years,  and  be  further  limited  to  the  number  of  periods  necessary  to 
pay  in  full  the  shares  subscribed  for  in  the  manner  proposed;  the  minimum 
number  of  shares  to  be  subscribed  for  previous  to  the  filing  of  said  instrument 
as  the  articles  of  association  of  said  corporation,  and  such  rules  and  limitations 
as  the  subscribers  shall  deem  proper  to  be  inserted  for  the  security  of  its  mem- 
bers. 

Sec.  3963. — Whenever  the  necessary  shares  shall  have  been  suscribed,  any 
three  or  more  of  the  suscribers  may  annex  to  one  of  the  counterparts  so  ex- 
ecuted an  affidavit  that  the  subscriptions  are  genuine  and  made  in  good  faith 
as  they  believe,  and  thereupon  such  counterpart  and  affidavit  shall  be  filed 
and  recorded  in  the  office  of  the  clerk  of  the  county  in  which  the  business  of 
the  corporation  is  to  be  conducted,  and  upon  such  "filing  the  said  association 
shall  become  a  body  politic  and  corporate,  and  such  record  or  a  certificated 
copy  thereof  shall  be  evidence  of  such  incorporation. 

Sec.  3964. — Such  corporation  shall  in  no  case  borrow  moneys  or  receive  de- 
posits, with  or  without  interest,  nor  shall  it  execute  or  indorse,  or  or  buy 
or  sell  commercial  paper,  or  in  any  way  engage  in  the  business  of  banking  ; 
it  shall  accept  no  trusts  or  agencies,  and  shall  engage  in  no  business  other 
than  that  of,  or  connected  with,  the  collection  of  the  dues  of  members  of 
the  corporation,  and  of  liquidating  the  obligations  of  the  corporation  to  its 
members. 

Sec  3965. — The  shares  of  such  corporation  shall  be  not  less  than  twenty-five 
dollars  nor  more  than  oue  hundred  and  twenty-five  dollars  each  ;  the  total 
nominal  amount  of  all  such  shares  shall  not  exceed  three  hundred  thousand 
dollars  ;  no  person  shall  become  the  owner  of  more  than  sufficient  of  said 
shares  to  amount  to  the  nominal  value  of  two  thousand  and  five  hundred 
dollars  ;  but  a  parent  or  guardian  may,  if  authorized  by  the  by-laws, 
sign  for  and  become  personally  responsible  for  the  shares  to  be  taken  in  his 
name  as  trustee  for  his  infant  child  or  children  or  ward,  to  such  extent  as  the 
by-laws  may  permit,  but  not  exceeding  for  each  child  or  ward  the  said 
sum  of  twenty-five  hundred  dollars  ;  Provided,  however,  that  this  provision 
shall  not  authorize  such  subscription  by  a  guardian  for  a  ward  and  payment 
out  of  the  moneys  of  the  ward,  except  authority  for  that  purpose  be  given  by 
the  proper  probate  court. 

Sec  3066. — Every  holder  of  one  or  more  shares  in  said  corporation  in  his 
own  right,  who  is  of  full  age,  shall  be  entitled  to  one  vote  and  no  more  at  all 
meetings  of  the  corporation,  and  no  vote  by  proxy  shall  be  allowed.  A 
quorum  shall  consist  of  such  number  not  less  than  fifteen  as  the  articles  of 
association  or  by-laws  shall  prescribe. 

Sec  3967. — At  the  time  of  organizing  the  corporation  an  initiation  fee  not 
exceeding  one  dollar  may  be  charged  to  each  member,  and  the  amount  of  the 
initiation  fee  may  be  from  time  to  time  increased  to  such  sum  as  in  the  judg- 
ment of  the  members  constituting  a  quorum  at  any  regular  meeting  may  be 
required  to  make  the  investment  of  a  new  member  equal  to  that  of  an  original 
corporator. 


750  APPENDIX   IV. 

Sec.  308. — The  by-laws  to  be  adopted  by  such  corporation  shall  provide  for 
the  collection  of  fines  by  way  of  penalty  for  any  failure  to  pay  periodical  dues, 
or  to  carry  into  effect  any  agreement  made  by  the  corporation  with  a  member, 
or  for  any  other  infraction  of  the  reasonable  by-laws  of  the  corporation  or  of 
its  article-;  of  association,  and  such  fines  shall  be  a  hen  upon  the  interest  of 
the  member  upon  whom  they  are  imposed  in  the  said  corporation,  which  lien 
may  be  enforced  and  collected  in  such  mode  as  the  articles  of  association  or 
by-laws  may  provide  :  Provided,  however,  that  the  amount  of  all  unpaid  fines 
chargeable  against  any  member,  who  is  not  an  officer  of  thecorporation,  shall  at 
no  time  exceed  the  annual  profits  of  such  member  upon  the  share  or  shares 
held  by  him,  and  any  member,  not  an  officer,  shall  be  entitled  at  any  time,  by 
making  a  demand  in  writing,  and  a  surrender  to  the  corporation  ol  all  accrued 
protits.  to  be  repaid  all  moneys  paid  by  him  on  his  share  or  shares,  except 
initiation  fee-,  and  with  such  interest,  if  any,  as  the  by-laws  shall  in  such  case 
[cases]  provide.  Such  surrender  of  profits  shall  cancel  all  fines  against  mem- 
bers who  are  not  officers,  and  the  corporation  shall  repay  such  moneys  before 
it  shall  make  other  liquidations  of  its  liabilities  to  members.  If  any  member 
shall  continuously  neglect  for  sixty  days  to  pay  the  periodic  dues  required  of 
or  fines  imposed  upon  him,  it  shall  be  lawful  for  the  corporation  to  pay  or 
tender  to  him  the  amount  which  he  may  have  actually  paid  as  periodic  d  les, 
without  interest,  or  with  such  interest  as  the  by-laws  may  in  such  cases  pro- 
vide for,  and  with  or  without  the  initiation  fee,  as  the  by-laws  shall  provide 
and  thereupon  all  the  rights  and  liabilities  of  such  member  in  the  said  corpo- 
ration shall  cease  and  determine. 

Sec.  3)i). — Any  member  may  dispose  of  any  share  held  by  him  to  any 
member  h  >lding  less  than  the  maximum  number  of  shares,  or  to  any  other 
person  who  may  be  approved,  in  such  manner  and  upon  such  conditions  as 
the  by-laws  shall  prescribe. 

Sec.  3970.  (as  amended  by  act  74,  acts  of  1887). — All  arrangements  for  the 
liquidation  of  shares  shall  be  made  with  a  member  of  the  corporati  n,  upon 
security  to  be  given,  which  security  shall  consist  either  of  unencumbered  real 
estate  worth  not  less  than  twice  the  amount  depending  on  such  security,  upon 
a  bond  or  note  and  mortgage  duly  executed,  acknowledged  and  recorded,  or 
11  ion  shares  in  said  corporation  upon  estimates  according  to  the  dues  actually 
paid  thereon,  or  upon  both  such  real  estate  security  and  such  share--. 

Sec.  3971. — It  shall  and  may  be  lawful  at  any  regular  meeting  of  the  corpo- 
ration to  offer  of  [to]  purchase,  with  any  money  then  or  soon  to  be  in  the 
treasury,  the  [share  or]  shares  of  the  member  who,  at  an  auction  or  bidding 
there  to  be  held,  shall  allow  the  greatest  discount  from  the  par  value  of  his 
share  or  shares,  upon  a  purchase  of  the  same  subject  to  the  payment  by  the 
seller  of  the  regular  periodical  dues  and  the  payment  by  him  of  such  additional 
peri  »dic  sums  not  exceeding  the  rate  of  seven  rer  cent,  per  annum  on  the 
nominal  amount  of  the  shares,  as  may  be  prescribed  by  the  by-laws.  If  at  the 
said  auction  or  bidding  no  member  present  or  represented  shall  offer  to  allow 
a  discount,  subject  to  the  payment  by  him  of  such  original  and  additi  mal 
periodic  due-,  it  shall  be  lawful  to  cast  lots  in  such  manner  as  the  by-laws  shall 
prescribe,  to  determine  the  share  in  said  corporation,  which  shall  be  paid  and 
extinguished  with  the  said  moneys,  and  the  same  shall  be  applied  according 
to  -ail  lot  upon  the  like  securities  being  given  as  in  other  cases:  Provided, 
that  in  case  the  owner  ol"  the  share  so  designated  by  lot  shall  noi  give  the  re- 
quisite security,  then  that  the  money  shall  be  deposited  in  some  bankupon 
such  interest  as  can  be  obtained,  there  to  remain  as  security  for  such  payments 
till  by  the  regular  application  of  the  same  to  the  payment  of  dues  the  share 
be  fully  paid  :  Provided  further,  however,  that  such  portion  of  the  same 
<•■  paid  to  the  owner  of  such  share  as  in  the  judgmenl  of  the  committee 
i  authorized  by  the  by-laws  to  decide  can  be  safely  paid  and  leave 
p  lyments  to  be  made  to  the  corporation  adequately  secured. 

Sice.  3972. — Any  officer  nol  acting  as  auctioneer  may  Bid  at  any  auction  au- 
thorized by  this  act,  but  if  the  purchase  shall  be  struck  off  to  any  officer  having 
anything  to  do  with  the  taking  of  securities,  or  if  the  share  of  such  officer  shall 
;n  ited  by  the  lol  mentioned  in  the  last  preceding  section,  the  security 
wlin  h  Bui  h  officer  shall  offer,  shall  be  brought  before  a  regular  meeting  of  the 
trators,  and  approved  before  any  money  shall  be  advanced  or  paid 
thereon. 

Sec.  3973. — No  member  of  such  corporation  shall  receive  any  greater 
iniary  benefil  or  advantage  from  his  share  therein  than  its  payment  in 

full.  I  or  p. 11  value  ;  every  dis nl   and    um  ol   interest  allowed 

ery  fine  oi  ted  shall,  equally  and  ratably  in  1  ro- 

1    hare  ,  befoi  the  benefitand  advantage  of  selling  and  non- 


GENERAL   LEGISLATION.  751 

selling  members,  and  every  agreement  which  any  shareholder  may  make  in 
regard  to  payments  for  his  share,  or  for  additional  payments  in  case  of  [a] 
sale  thereof,  shall  be  construed  to  have  been  fully  performed  whenever  he 
shall  have  contributed  in  dues  or  additional  dues.  Ins  ratable  proportion  oi  the 
sums  necessary,  with  the  profits  accruing  from  initiation  fees,  discounts,  dues, 
fines  and  all  other  sources,  alter  paying  all  expenses,  to  pay  in  mil  all  shares 
in  the  corporation.     Whenever  such  payments  shall  have  been  said 

corporation  shall  cea  e  and  determine  for  all  purposes,  exce]  t  winding  up  its 
affairs.  The  cancellation  and  discharge  of  a  security  given  bya  selling  share- 
holder, to  an  amount  equal  to  his  share  or  shares,  shall  be  deemed  the  pay- 
ment thereof. 

Sec.  3974.— The  interests  of  the  shareholders  of  such  corporations  shall  be 
deemed  personal  estate,  and  shall  be  liable  to  taxation  in  the  ward  or  township 
in  which  they  reside,  winch  taxation  shall  be  in  lieu  of  all  taxes  against  said 
corporation,  and  the  books  of  every  corporation  of  this  class  shall  Be  so  kept 
as  to  show  the  interest  of  each  shareholder,  and  shall  be  open  at  all  reasonable 
times  to  the  inspection  of  officers  charged  with  the  duty  of  making  assessments 
for  any  purpose. 

Sec  3975. — No  corporation  authorized  by  this  act  shall  become  the  owner 
of  any  real  estate  except  by  purchase  at  sales  made  upon  foreclosure  ol  mort- 
gages taken  by  it,  and  in  such  case,  the  land  purchased  shall  be  sold  and  dis- 
posed of  within  two  years  after  the  purchase  ,  Provided,  however,  that  it  may 
rent  an  office  and  room  for  holding  the  meetings  of  the  corporators,  as  may 
be  convenient  or  necessary. 

Sec.  3976. — Any  voluntary  association  which,  before  the  going  into  effect  of 
this  act,  may  have  been  organized  for  like  purposes,  may,  Dy  the  unanimous 
consent  and  agreement  in  writing  of  its  members,  become  a  body  corporate 
under  this  act,  upon  filing  the  original  articles  of  association  of  its  members, 
and  such  consent  and  agreement  in  writing  ;  which  consent  and  agreement 
shall  state  all  particulars  required  by  the  second  section  [3962]  of  this  act, 
not  already  stated  in  the  original  articles,  and  modify  such  articles,  if  neces- 
sary, to  conform  them  to  this  act,  with  the  county  clerk  of  the  county,  as 
required  by  the  third  section  [303]  hereof  ;  and  such  articles,  consent  and 
agreement,  having  first  annexed  to  them  an  affidavit  made  by  three  or  more 
of  the  incorporators,  that  the  signatures  to  such  articles  and  consent  and  agree- 
ment are  genuine,  that  the  persons  signing  such  consent  and  agreement  are 
all  the  members  of  such  association,  and  that  such  original  articles,  consent 
and  agreement  were  executed  in  good  faith  as  the  affiants  believe,  being  so 
duly  hied  and  recorded  on  the  record  thereof,  shall  be  evidence  of  the  fact  of 
incorporation,  and  all  acts  of  such  association  of  which  a  proper  record  shall 
have  been  kept  from  the  date  of  its  original  organization,  not  inconsistent 
with  this  act,  shall  be  deemed  valid  and  binding  as  though  the  original  orga- 
nization had  been  under  this  act. 

Sec.  3977. — Every  such  corporation  may  require,  by  its  by-laws  or  otherwise, 
bonds  from  its  president,  treasurer  and  other  officers,  to  the  amounts  and  to 
the  extent  which  it  shall  judge  necessary  to  secure  the  safe  keeping  of  its 
moneys  and  the  faithful  performance  of  the  duties  of  its  officers.  The  duties 
of  all  officers  shall  be  prescribed  by  by-laws  adopted  by  the  corporators,  and  all 
powers  granted  by  this  act,  not  expressly  devolved  thereby,  or  by  the  articles 
of  association,  or  some  by-law  upon  one  or  more  officers  of  the  corporation, 
shall  be  exercised  by  the  corporators  only,  at  meetings  where  the  quorum 
required  by  section  six  [3966]  shall  be  present. 

Sec.  3978. — Every  corporation  formed  under  this  act  shall,  in  the  month  of 
January  in  each  year  make  a  report  in  writing,  under  the  oaths  of  two  or 
more  of  its  officers,  showing  the  condition  of  its  affairs  at  the  close  of  the 
pending  [preceding]  year  to  the  following  extent  : 

1.  The  amount  of  its  shares  which  have  been  subscribed  for  ; 

2.  The  amount  which  has  been  paid  upon  such  subscriptions  in  dues  and 
penalties  ; 

3.  The  number  of  shares  which  have  been  purchased,  and  the  gross  amount 
of  the  discounts  allowed  upon  purchases  ; 

4.  The  number  of  shares  otherwise  paid  or  extinguished  ;  and 

5.  The  gross  amount  of  the  debts  of  the  corporatu  m  : 

Which  report  shall  be  filed  in  the  office  of  the  clerk  of  said  county.  The 
attorney-general  of  the  state  may  at  any  time  require  further  and  detailed 
reports  to  be  made  to  him  as  to  the  affairs  of  any  or  all  such  corporations  to 
any  extent  which  in  his  judgment  the  public  interests  [interest]  may  require, 
and  he  may  persona'lv  make  any  investigation  of  their  books,  papers  and 
securities  which  he  shall  judge  for  the  interest  of  the  public. 


752  APPENDIX   IV. 


Sec.  3979.— Every  member  of  such  corporation,  and  every  creditor  whose 
just  claim  exceeds  twenty-five  dollars,  shall  at  all  reasonable  times  be  allowed 
to  inspect  the  records  and  securities  of  said  corporation. 

Sec.  3980. — The  shareholders  of  every  such  corporation  shall  be  severally 
and  jointly  liable  for  all  labor  performed  for  such  corporation,  but  no  suit 
shall  be  brought  against  them,  or  any  of  them,  until  after  an  execution  shall 
have  been  returned  unsatisfied  against  said  corporation,  or  the  same  shall 
have  been  judicially  declared  bankrupt ;  and  any  stockholder  who  may  have 
been  so  compelled  to  pay  such  debt  may  collect  of  any  other  stockholder  his 
ratable  proportion  thereof. 

Sec.  3981. — The  circuit  court  for  the  county  in  which  any  corporation 
organized  under  this  act  shall  be  located  may,  on  application  of  the  corpora- 
tion, or  on  petition  of  any  member  or  creditor  aggrieved  by  delay  in  winding 
up  its  affairs,  and  notice  to  the  corporation,  make  such  order  and  direction  as 
it  shall  deem  best  calculated  to  secure  the  just  and  speedy  disposition  of  its 
unsettled  or  uncompleted  business. 

HOWELL'S  ANNOTATED  STATUTES. 

SUPPLEMENT   1883-1890. 

Section  3981A. — Whenever  any  number  of  persons,  not  less  than  five,  may 
desire  to  become  incorporated  as  a  mutual  building  and  loan  association,  for 
the  purpose  of  building  and  improving  homesteads  and  loaning  money  to  the 
members  thereof  only,  they  shall  make  a  statement  to  that  effect,  under  their 
hands  and  seals,  duly  acknowledged  before  some  officer,  in  the  manner  provided 
for  the  acknowledgment  of  deeds.  Such  statement  shall  set  forth  the  name 
of  the  proposed  corporation,  its  capital  stock,  its  location,  and  the  duration  of 
the  corporation,  which  shall  not  exceed  thirty  years  ;  which  statement  shall 
be  tiled  in  the  office  of  secretary  of  state.  The  secretary  of  state  shall  there- 
upon authorize  such  persons  to  open  books  for  subscription  to  the  capital  stock 
of  said  corporation  at  such  time  and  place  as  they  may  determine  ;  but  shall 
not  authorize  two  corporations  having  the  same  name. 

Sec.  3981B. — As  soon  as  one  hundred  shares  or  more  of  the  capital  stock 
shall  be  subscribed,  a  meeting  of  the  subscribers  shall  be  convened  for  the 
purpose  of  electing  directors  (not  less  than  five  in  number),  adopting  by-laws, 
and  the  transaction  of  such  other  business  as  shall  come  before  them.  Notice 
thereof  shall  be  given  by  depositing  in  the  postoffice,  properly  addressed 
to  each  subscriber,  at  least  five  days  before  the  time  fixed,  a  written  or 
printed  notice,  stating  the  object,  time  and  place  of  such  meeting.  Directors 
of  such  corporations,  organized  under  this  act,  shall  be  elected,  classified,  and 
hold  their  office  for  such  period  of  time  as  is  provided  in  the  by-laws  of  such 
corporation  or  association. 

SEC.  3981C. — The  persons  authorized  to  receive  subscriptions  to  the  capital 
stock  of  said  corporation  shall  make  a  report  of  their  proceedings,  including 
therein  a  copy  of  the  notice  provided  for  in  the  foregoing  section,  a  copy  of 
the  subscription  list,  a  copy  of  the  by-laws  adopted  by  the  corporation  and  the 
names  oi  the  directors   elected,  and   their  respective  terms   of  office;   which 
!  shall  he  sworn  to  by  at   least  a  majority  of   them,  and  shall  be  filed  in 
office  of  the   secretary  of  state.     The  secretary  of  state  shall  thereupon 
make  a  copy  of  all  papers  filed  in  his  office  in  and  about  the  organization  of 
oration,  and  duly  authenticated  under  his  hand  and  seal  of  state,  and 
ha  i  be  recoi  fed  in  the  office  of  the  register  of  deeds  in  the  county 
in  which  the  principal  office  oi     uch  company  is  located.     Upon  the  recording 
I  copy  the  cor]  oral  ion  shall  he  deemed  fully  organized,  and  may  proceed 
toh',  Unless  such  company  shall  he  organized  and  shall  proceed  to • 

ided  in  this  art  within  two  years  after  the  date  of  authoriza- 
tion, it  shall  he  deemed  revoked,  and  all  the  proceedings  thereunder  void. 

Sic.  598]  I). —  ( lor]  oration  formed  under  this  act  shall  be  bodies  corporate 
and  politii  for  the  period  for  which  they  arc  organized;  may  sued  and  be 
sued  ;  1  i  common  seal  which  they  may  alter  or  renew  at  pleasure. 

Sic.    598 1 E. — The  corporate  powers  shall  be  exercised  by  a  hoard  of  direc- 
/     vided,  rhe  numbers  of  directors  shall  not  be  increased  or  diminished, 

11    '.I    office   changed,  without    the  consent   of   the   owners  of  two- 
third    of  thi     fn'     ofstock.    The  officers  of  the  corporation  must  be  mem- 
ol  thi  board  of  dire<  tors,  and  shall  consist  of  a  president,  vice-president, 
and  trea  urer,  and  such  othei  officers  as  may  be  provided  tor  in  the 

by-la  1  .ilp  in  01  . 1. social  ion,  to  he  elected  as  the  annual  meeting 

na  ;  he  provided  for  in  the  by-laws  of  the  corpora- 


GENERAL    LEGISLATION.  753 

tion  ;  Provided,  That  the  expense  of  carrying  on  said  corporation,  including 
compensation  for  officers  and  directors,  shall  be  provided  For  in  the  by-laws 
of  such  corporation:  Ami  provided,  That  the  secretary  and  treasurer  shall 
give  bonds  and  security  to  be  approved  by  the  board  of  directors. 

Sec.  3981F. — The  shares  of  stock  shall  not  exceed  two  hundred  dollars  each 
and  shall  be  deemed  personal  property,  transferable  upon  the  books  of  the 
company  in  such  manner  as  may  be  provided  by  the  by-laws,  and  subscrip- 
tions therefor  shall  be  made  payable  to  the  corporation,  and  shall  be  payable 
in  such  periodical  instalments  and  at  such  time  as  shall  be  determined  by  the 
by-laws  ;  but  no  periodical  payment  to  be  made  exceeding  two  dollars  on  each 
share.  Said  stock  may  be  paid  off  and  retired  as  the  by-laws  shall  direct,  and 
every  share  of  stock  shall  be  subject  to  a  lien  for  the  payment  of  unpaid  in- 
stalments and  other  charges  incurred  thereon  under  the  provisions  of  the  by- 
laws, and  the  by-laws  may  prescribe  the  foi  111  and  manner  of  enforcing  such 
lien.  New  shares  of  stock  may  be  issued  in  lieu  of  shares  withdrawn  or  for- 
feited, and  the  stock  may  be  issued  in  one  or  in  successive  series,  as  may  be 
provided  in  the  by-laws,  and  in  such  amount  (not  to  exceed  the  capital  stock) 
as  the  board  of  directors  may  determine,  and  any  stockholder  wishing  to  with- 
draw from  the  said  corporation  shall  have  the  power  to  do  so  by  giving  thirty 
days'  notice  in  writing  at  a  stated  meeting  of  his  or  her  intention  to  withdraw, 
when  he  or  she  shall  be  entitled  to  receive  the  amount  paid  in  by  him  or  her, 
and  such  interest  thereon  or  such  proportion  of  the  profits  thereon  as  the  by- 
laws may  determine,  less  all  fines  and  other  charges;  but  payments  of  the 
stock  so  withdrawn  shall  only  be  due  when  the  funds  applicable  to  the  demand 
of  withdrawing  stockholders  are  sufficient  to  meet  and  liquidate  the  same,  and 
then  only  in  the  order  of  the  respective  times  of  the  presentation  of  the  notices 
of  such  withdrawal  ;  Provided,  That  at  no  time  shall  more  than  one-half  of  the 
funds  of  the  treasury  of  the  corporation  be  applicable  to  the  demands  of  with- 
drawing stockholders  without  the  consent  of  the  board  of  directors,  and  that 
no  stockholder  shall  be  entitled  to  withdraw  whose  stock  is  held  in  pledge  for 
security.  Upon  the  death  of  a  stockholder  his  or  her  legal  representative 
shall  be  entitle  to  receive  the  full  amount  paid  in  by  him  or  her  on  all  shares 
not  borrowed  upon  or  pledged  to  the  association  as  collateral  security,  and  such 
interest  thereon  or  such  proportion  of  the  profits  thereon  as  are  granted  to 
withdrawing  stockholders,  first  deducting  all  charges  that  may  be  due  on  the 
stock  ;  but  no  fines  shall  be  charged  to  a  deceased  member's  account  from  and 
after  his  or  her  decease  unless  the  legal  representatives  of  such  decedent  as- 
sume the  future  payment  of  the  dues  on  the  stock. 

Sec.  3981 G. — Married  women  may  become  subscribers  to  the  capital  stock 
of  such  corporation,  and  hold,  control  and  transfer  their  stock  in  all  respects 
as  femmes  sole,  and  their  stock  shall  not  be  subject  to  the  control  of  or  liable 
for  the  debts  of  their  husbands.  Minors  may  become  subscribers  to  and 
owners  of  the  stock  of  such  corporations  by  guardian  or  trustee,  and  such 
guardian  or  trustee  may  withdraw  the  stock  of  such  minor,  as  provided  in 
section  six  of  this  act ;  Provided,  however,  That  such  guardian  or  trustee  shall 
give  bonds  to  the  probate  court  in  double  the  amount  of  the  withdrawal  value 
of  such  stock,  for  the  use  of  such  minor  on  his  or  her  becoming  of  age  ;  but  it 
is  hereby  provided  that  the  owner  or  legal  representative  of  the  stock  of  sucb. 
association  shall  be  entitled  to  vote  at  any  election,  when  the  stockholders  are 
called  upon  to  vote,  in  the  manner  provided  in  the  by-laws  of  such  associa- 
tion ;  And  provided  further,  That  no  stockholder  shall  cast  more  than  forty 
votes. 

Sec.  3981H.  (Am.  1889,/).  368,  act  247).— The  board  of  directors  shall  hold 
such  stated  meetings  as  may  be  provided  by  the  by-laws,  at  which  the  money 
in  the  treasury,  if  more  than  the  amount  fixed  by  the  by-laws  as  a  full  value 
of  a  share, shall  be  offered  for  loan  in  open  meeting,  and  the  stockholder  who 
shall  bid  the  highest  premium  for  the  preference  or  priority  of  loan  shall  be 
entitled  to  receive  a  loan  of  not  more  than  the  amount  fixed  by  the  by-laws  as 
the  full  value  of  a  share  of  stock,  for  each  share  of  stock  held  by  the  stock- 
holder. The  said  premium  bid  may  be  deducted  from  loan  in  one  amount,  or 
may  be  paid  in  such  proportional  amounts  or  instalments  and  at  such  times 
during  the  existence  of  the  shares  of  stock  borrowed  upon,  as  may  be  desig- 
nated by  the  by-laws  of  the  respective  associations  ;  Provided,  That  no  loan 
shall  be  made  by  said  corporation  except  to  its  own  members,  nor  in  anysum 
in  excess  of  the  "amount  of  stock  held  by  such  members  borrowing.  Good 
and  ample  real  estate  security  shall  be  given  by  the  borrower  to  secure  the 
repayment  of  the  loan,  but  wnen  the  amount  at  risk  shall  exceed  three-fourths 
of  the  appraised  value  of  real  estate,  other  collateral  security  shall  be  required 
as  provided  in  by-laws  of  association  ;  Provided,  however,  That  the  stock  of 


754  APPENDIX   IV. 

such  association  may  be  received  as  security,  to  the  amount  of  the  withdrawal 
value  of  such  stock. 

Sec.  3981L— In  case  the  borrower  shall  neglect  to  offer  security,  or  shall 
offer  security  that  is  not  approved  by  the  board  of  directors  by  such  time  as 
the  by-laws  may  prescribe,  he  or  she  shall  be  charged  with  one  month's  in- 
terest, together  with  any  expenses  incurred,  and  the  loss  in  premium,  if  any, 
on  a  resale,  and  the  money  may  be  resold  at  the  next  stated  meeting.  In  case 
of  non-payment  of  instalments,  or  interest  and  fines,  by  borrowing  stock- 
holders for  the  space  of  six  months,  payments  of  principal  and  interest  and 
fines,  without  deducting  the  premium  paid  or  the  interest  thereon,  may  be  en- 
forced by  proceedings  against  their  securities,  according  to  law,  upon  the 
order  of  the  board  of  directors  ;  Provided,  That  fine  or  penalties  for  the  non- 
payment of  instalments  of  dues,  interests  and  bonus  of  premium  shall  not 
exceed  two  per  centum  per  month  on  all  arrearages. 

Sec.  398 1  J.  {Am.  1889,  p.  368,  act  247.)— A  borrower  may  repay  a  loan  at 
any  time,  and  in  the  event  of  the  repayment  thereof  before  the  expiration  of 
the  [eighth]  eight  years  after  organization  of  the  association,  [or]  on  the  date 
of  issue  of  the  series  of  stock  in  such  association  on  which  the  loan  may  have 
been  made,  there  shall  be  refunded  to  such  borrower  one-eighth  of  the 
premium  paid  for  every  year  of  the  said  eight  years  then  unexpired  ;  Pro- 
vided, That  where  the  said  premium  has  not  been  deducted  from  the  loan, 
but  paid  in  instalments,  there  shall  be  no  premium  refunded,  and  any  mutual 
building  and  loan  association,  which  may  have  heretofore  been  incorporated 
under  the  laws  of  the  state  of  Michigan,  may  avail  itself  of  all  the  powers  con- 
ferred by  tins  act  ;  Provided,  That  at  the  time  of  such  repayment  the  stock 
upon  which  such  loan  is  based  shall  be  withdrawn  in  the  manner  provided  in 
section  six  of  this  act  relative  to  withdrawing  stockholders. 

Sec.  3981 K. — Corporations  organized  under  this  act  being  of  the  nature  of 
co-operative  associations,  therefore  no  premium,  fines  nor  interest  on  such 
premiums  that  may  accrue  to  the  said  corporation,  according  to  the  provi- 
sions of  this  act,  shall  be  deemed  usurious,  and  the  same  may  be  collected 
as  other  debts  of  like  amount  may  be  collected  bylaw  in  this  state. 

Sec.  3981 L. — No  corporation  or  association  created  under  this  act  shall 
cease  or  expire  from  neglect  on  the  part  of  the  corporation  to  elect  officers  at 
the  time  mentioned  in  their  by-laws,  and  all  officers  elected  by  such  corpora- 
tions shall  hold  their  offices  until  their  successors  are  duly  elected  and  quali- 
fied. 

Sec.  3981M. — Any  loan  or  building  association  incorporated  by  or  under 
this  act  is  hereby  authorized  and  empowered  to  purchase  at  any  sheriff's  or 
other  judicial  sale,  or  at  any  other  sale,  public  or  private,  any  real  estate  upon 
which  such  association  may  have  or  hold  any  mortgage,  lien  or  other  incum- 
brance, or  in  which  said  association  may  have  an  interest,  and  the  real  estate 
so  purchased  to  sell,  convey,  lease  or  mortgage  at  pleasure  to  any  person  or 
persi  ms  whomsoever. 

SEC  3981N. — Any  loan  or  building  association  incorporated  under  this  act, 
or  any  prior  act,  may  extend  the  duration  of  time  for  which  such  association 
was  organized  by  a  vote  of  two-thirds  of  the  capital  stock  of  such  association 
at  any  annual  meeting  of  the  stockholders  of  such  association  ;  thereupon  the 
board  of  directors  shall  transmit  a  copy  of  the  proceedings  of  such  annual 
meeting,  duly  attested,  to  the  secretary  of  slate,  who  shall  make  a  duly  authen- 
ticated copy  thereof,  as  provided  in  said  section  three  of  this  act,  certifying  to 
the  extensions  of  time  or  such  corporation,  and  the  same  shall  be  recorded 
d  in  aid  section  three  of  this  act,  and  any  building  and  loan  asso- 
ciation incorporated  under  any  prior  act,  and  extending  the  duration  of 
the  time  tor  winch  it  was  incorporated,  in  the  manner  herein  provided, shall 
deemed  a  incorporated  under  and  be  vested  with  all  of  the  power  given 
in  this  act,  the  same  as  though  such  corporation  had  been  originally  incor- 
poi  ated  under  it. 

SEC.    }08lO. —  Bach    association    formed    under    (he  provisions    of  this    act 

shall,   ai    the   clo  1   oi    its   lust    year's    operations,  and  annually   at   the    same 

:    i    eai  thereafter,  publish  in  at  least  two  newspapers  published 

m  the  same  place-,  where  their  business  may  be   located,  or  if  no  newspaper 

be  1  in    ii' li  place,  then   in  any  two  newspapers  published  nearest 

1  e  statement,  verified  by  the  oaths  or  its  president  and 

ring  the  actual  financial  condition  oi  the  association,  and  the 

ropertyand  liabilities,  specifying  the  same  particularly. 

[981P. — The  shares  held  by  any  member,  being  a  householder,  oi  any 

iation  incorporated  under  the  provisions  of  this  act  shall  be  exempted 

from  levy  and  sale  on  execution  or  attachment  to  the  amount  of  one  thou- 


GENERAL   LEGISLATION.  755 

sand  dollars  in  such  shares,  at  the  par  value  thereof  ;  Provided,  That  such 
exemption  shall  not  apply  to  any  person  who  shall  have  a  homestead  ex- 
empted under  the  general  laws  of  this  state. 

SEC.  3981Q.  {Added  [889,  />.  [44,  act  124.)— The  shares  held  by  any  mem- 
ber of  any  such  association  incorporated  under  the  provisions  ot  this  act,  and 
all  mortgages  or  other  securities  held  by  such  associations,  shall  be  exempted 
from  all  municipal  or  other  tax  under  the  laws  of  this  state. 

Added,  Acts  1895,  p.  580. 

Sec.  18. — Every  corporation  organized  under  the  provisions  of  this  act  and 
doing  business  in  this  state,  shall  hereafter  annually  during  the  month  of 
August,  file  with  the  secretary  of  state,  a  statement  under  the  oath  oi  the 
secretary  and  treasurer,  for  the  year  ending  on  the  first  day  of  the  preced- 
ing July,  showing  : 

The  name  and  location  of  such  corporation. 

Date  of  incorporation. 

Names  of  its  officers  and  directors. 

Amount  of  its  capital  stock. 

Amount  of  its  capital  stock  paid  in. 

Amount  of  its  assets. 

The  character  of  such  assets  and  the  fair  cash  value  thereof. 

The  liabilities  of  such  corporation  and  the  character  of  such  liabilities. 

The  par  value  and  the  amount  of  dues  or  assessments  chargeable  on  each 
share  of  stock  issued  by  such  corporation,  and  the  proportion  of  such  dues 
or  assessments  credited  to  the  loan  fund,  expense  fund,  or  other  fund,  and 
such  other  information  of  any  class,  kind  or  character,  as  the  secretary  of 
state  may  require. 

Sec.  19. — It  shall  be  unlawful  for  any  corporation  organized  under  the  laws 
of  any  state  (other  than  the  state  of  Michigan)  or  of  any  government  foreign 
to  the  government  of  the  United  States,  to  conduct  or  engage  in  the  business 
of  a  building  and  loan  association  as  authorized  by  this  act  without  having 
first  tiled  in  the  office  of  the  secretary  of  this  state  a  copy  certified  under  the 
oath  of  its  secretary  of  its  act  of  incorporation  or  memoranda  of  association, 
and  without  having  first  paid  to  the  secretary  of  state  (as  provided  by  act 
one  hundred  eighty-two,  public  acts  of  eighteen  hundred  ninety-one,  .is 
amended  by  act  seventy-nine,  public  acts  of  eighteen  hundred  ninety-three), 
a  franchise  fee  of  one-half  of  one  mill  upon  each  dollar  of  its  authorized 
capital  stock.  And  such  corporation  shall  be  subject  to  all  the  provisions  and 
requirements  of  said  act  one  hundred  eighty-two,  as  amended  by  said  act 
seventy-nine. 

SEc/20. — Said  foreign  corporations  shall  file  with  the  secretary  of  this  state, 
a  oipy  of  its  act  of  incorporation,  and  of  the  general  statutes  under  which  it 
is  organized,  properly  authenticated  by  the  officer  of  the  state  in  which  said 
foreign  corporation  is  incorporated,  a  copy  of  the  by-laws  and  rules  govern- 
ing it,  and  of  each  of  the  several  kinds  of  certificates  issued  to  its  shareholders 
and  stockholders,  which  statement  shall  be  made  upon  blank  forms  to  be 
furnished  by  the  secretary  of  state. 

Sec.  21. — Upon  compliance  with  the  preceding  sections  of  this  act  by  any 
foreign  corporation,  and  the  secretary  of  state  being  satisfied  that  it  is  doing 
a  lawful  business,  he  shall  authorize  such  foreign  corporation  to  do  business 
in  this  state  by  certificate  under  his  seal.  Unless  the  provisions  of  this  act 
are  fully  complied  with,  no  building  and  loan  association  either  foreign  or 
domestic,  shall  be  permitted  to  do  "business  in  this  state,  and  all  contracts 
made  by  them  while  in  default  shall  be  absolutely  void. 

Sec  22. — Every  foreign  corporation  organized  under  the  laws  of  any  state 
or  of  any  government  foreign  to  the  government  of  the  United  States,  author- 
ized to  transact  business  in'this  state,  annually  shall  file  with  the  secretary  of 
state  of  this  state,  a  statement  which  shall  comply  exactly  with  the  require- 
ments relative  to  Michigan  building  and  loan  associations,  as  provided  in 
section  eighteen  of  this  act. 

Sec  23. — If  it  appears  from  any  statement  filed  with  the  secretary  of  state 
under  the  provisions  of  this  act  that  the  corporation  filing  such  statement, 
whether  a  foreign  corporation  or  one  organized  under  the  laws  of  this  state, 
is  doing  an  illegal  or  unsafe  business,  the  secretary  of  state  shall  make,  or 
cause  to  be  made,  an  examination  into  the  affairs  of  such  corporation.  Or 
when  upon  petition  of  fifty  of  the  shareholders,  setting  forth  that  such  peti- 
tioners believe  said  corporation  to  be  conducting  its  business  contrary  to  law, 
or  that  its  affairs  are  in  an  unsound  condition,  or  that  they  believe  any  of  its 


756  APPENDIX   IV. 

statements  are  not  correct,  then  said  secretary  of  state  snail  make  or  cause  to 
be  made  an  examination  into  the  affairs  of  such  corporation.  Such  examina- 
tion shall  be  full  and  complete,  and  in  making  the  same  the  examiner  may 
put  any  officer  of  such  corporation,  or  any  other  person,  under  oath  to  answer 
truthfully  any  questions  that  may  be  asked  him,  touching  the  affairs  and  busi- 
ness of  such  corporation,  and  all  the  books,  papers  and  records  of  such  cor- 
poration, and  all  securities  held  by  it  shall  be  subject  to  his  inspection.  Any 
wilful  false  swearing  in  any  examination  shall  be  deemed  perjury.  The 
secretary  of  state  or  the  deputy  employed  by  him,  shall  be  entitled  to  five 
dollars  per  day  for  each  day  occupied  in  making  such  examination,  and  neces- 
sary expenses,  to  be  paid  by  such  corporation.  The  secretary  of  state,  his 
deputy  and  every  clerk  and  examiner  in  the  employ  of  the  secretary  of  state, 
shall  be  bound  by  oath  to  keep  secret  all  facts  and  information  obtained  in 
the  course  of  such  examination,  except  in  so  far  as  the  public  duty  of  such 
officer  requires  him  to  report  upon  or  take  official  action  regarding  such  cor- 
poration, and  no  corporation  shall  be  subject  to  visitation,  other  than  such  as 
is  required  by  this  act,  or  otherwise  authorized  by  the  laws  of  this  state. 

Sec.  24. — Should  the  secretary  of  state,  or  the  deputy  appointed  by  him,  find 
any  corporation  organized  under  this  act  conducting  its  business  in  whole  or 
in  part  contrary  to  law,  or  failing  to  comply  with  the  law,  he  shall  so  notify 
the  board  of  directors  of  such  corporation,  and  if,  after  thirty  days,  such 
illegal  practice  or  failure  continue,  he  shall  report  the  facts  to  the  attorney- 
general,  who  shall  cause  proceedings  to  be  taken  in  the  proper  court  to 
revoke  the  charter  of  such  corporation. 

Sec.  25. — If  the  secretary  or  treasurer  of  any  such  corporation  organized 
under  this  act  shall  fail  to  make  and  file  the  reports  required  by  this  act,  within 
thirty  days  after  the  same  are  due  to  be  filed,  he  shall  be  deemed  guilty  of 
a  misdemeanor,  and  upon  conviction  thereof,  shall  be  fined  any  sum  not 
exceeding  five  hundred  dollars.  Upon  failure  to  file  such  report,  it  shall  be 
the  duty  of  the  secretary  of  state  to  notify  the  president,  secretary  and  treas- 
urer of  such  corporation  of  such  failure,  and  if  such  report  is  not  filed  within 
thirty  days  from  the  date  of  such  notice,  then  it  shall  be  the  duty  of  the  secre- 
tary of  state  to  examine  such  corporation,  as  provided  in  section  twenty-three 
of  this  act 

Sec.  26. — The  refusal  of  any  such  corporation  organized  under  this  act  to 
permit  the  examination  of  its  affairs  authorized  by  this  act,  shall  be  sufficient 
cause  for  institution  of  proceedings  to  wind  up  its  affairs,  as  provided  in 
section  twenty-four  of  this  act. 

Sec.  27. — The  secretary  of  state  may  at  any  time,  for  reasonable  causes,  with 
the  concurrence  of  the  attorney-general,  revoke  the  authority  of  any  foreign 
corporation  to  do  business  in  this  state  ;  and  in  such  event,  the  attorney-gen- 
eral shall  take  proceedings  to  wind  up  the  business  of  such  foreign  corporation 
in  this  state,  and  a  receiver  may  be  appointed  for  the  assets  of  such  foreign 
corporation  in  this  state.  Stockholders  and  creditors  in  this  state  of  such 
foreign  corporation  shall  have  a  first  lien  on  all  assets  in  this  state  of  such 
foreigh  corporation,  and  the  business  in  this  state  of  such  foreign  corporation 
shall  be  closed  by  such  receiver,  and  its  assets  converted  into  money  to  satisfy 
the  claims  of  such  stockholders  and  creditors. 

SEC.  28. — In  cisc  the  authority  of  any  foreign  corporation  to  do  business  in 
this  state  is  revoked,  notice  thereof  shall  be  sent  such  foreign  corporation  by 
mail,  postage  prepaid,  and  notice  thereof  shall  be  published  in  at  least  three 
newspapers  printed  in  this  state  daily,  for  six  successive  days  ;  the  expense  of 
publication  shall  be  charged  against  such  foreign  corporation,  and  shall 
be  paid  by  it,  or  by  a  receiver  duly  appointed. 

Sec,  29. — Every  officer,  clerk  or  agent  of  any  corporation  organized  under 
this  act,  who  embezzles,  abstracts  or  wilfully  misapplies  any  money,  funds  or 
erty  of  the  corporation,  or  who,  without  proper  authority,  assigns  any 


nole,  bond,  mortgage  or  other  asset,  or  makes  any  false  entry  in  any  book,  re- 

fiorl  01    tatement  oFthe  <  orporation,  with  inteni  in  either  case  to  injure  or  de- 
th(    corporation,  01   any  member  thereof,  or  to  deceive  any  officer  or 


linted  to  1    amine  the  affairs  of  such  corporation,  on  conviction 

thereof,  shall  be  imprisoned  in  the  state  prison,  or  state  house  of  correction  or 
ory  at  Ionia,  for  a  pei  iod  1  »1  ni  >t  to  exceed  ten  years,  or  fined  not 
ed  fr  e  thousand  dollars,  or  both,  at  the  disc  retion  of  the  court. 

■  ol  procei    against  any  foreign  corporation  doing  business 

under  tn<  ofthi    ad  maybe  had  upon  such  foreign  corporation  by 

ng  with  process  again  I    uch  foreign  corporation  upon  the  secretaryof 

ho    hall  immediately  for  waul  a  copy  ol  the  process  served  by  him  by 

mail,  prepaid,  directly  to  the  secretary  of  such  corporation  at  the  last  known 


GENEUAL    LEGISLATION.  757 

postoffice  address  of  such  foreign  corporation,  and  for  each  copy  of  the  pro- 
cess the  secretary  of  state  shall  be  paid  two  dollars  by  the  moving  party  of 
the  suit,  and  the  same  taxed  as  costs  against  such  foreign  corporation. 

SEC.  31. — The  secretary  of  state  shall  annually  compile  the  reports  of  such 
associations  required  to  be  filed  in  his  office  and  publish  the  same  in  his  an- 
nual report  to  the  governor. 

SEC.  32.— Every  corporation  doing  business  under  the  provisions  of  this  act 
shall  pay  to  the  secretary  of  state  for  the  use  of  the  state  the  sum  of  five  dollars 
for  receiving  and  riling  each  annual  report  required  under  the  several  sections 
of  this  act. 

Sec.  33. — Every  association  incorporated  or  existing  under  theprovisions  of 
this  act  may,  at  any  annual  meeting,  or  at  any  meeting  duly  called  for  such 
purpose  by  a  resolution  adopted  by  a  vote  of  two-thirds  in  interest  of  its  capi- 
tal stock,  increase  or  decrease  its  authorized  capital  stock  or  amend  its  articles 
of  association  or  by-laws  in  any  manner  not  inconsistent  with  the  provisions 
of  this  act  ;  but  no  such  increase  or  decrease  of  authorized  capital  stock  nor 
such  amendment  shall  take  effect  or  become  operative  until  a  copy  of  such 
resolution,  signed  by  the  president  and  secretary  of  the  association,  shall  have 
been  filed  and  recorded  as  is  required  in  section  three  of  this  act,  with  relation 
to  the  final  report  of  such  association. 

M1WESOTA. 

STATUTES  OF  189S 

Sec.  2855. — Whenever  any  number  of  persons,  not  less  than  ten  (10),  desire 
to  be  incorporated  as  a  building  and  loan  association,  for  the  purpose  of  accu- 
mulating the  savings  and  funds  of  its  members  and  lending  them  only  the 
funds  so  accumulated,  they  shall  make  and  execute  a  written  declaration  to 
that  effect  in  the  form  now  provided  by  statute  for  the  execution  of  deeds  of 
real  estate,  to  entitle  the  same  to  the  record.  Said  declaration  shall  state  the 
name  of  such  association,  its  principal  place  of  business,  which  shall  be  with- 
in this  state,  the  limit  of  capital  to  be  accumulated,  the  time  of  its  duration,  the 
names  and  places  of  residence  of  such  persons,  and  that  it  is  organized  under 
this  act  for  the  purposes  herein  expressed.  When  so  executed,  said  declara- 
tion shall  be  filed  and  recorded  in  the  office  of  the  secretary  of  state,  where- 
upon such  officer  shall  issue  a  copy  of  such  declaration  under  his  certificate, 
in  proper  form,  setting  forth  the  time  and  place  of  filing  and  recording  thereof 
in  his  office,  which  declaration  and  certificate  shall  thereupon  be  recorded  in 
the  office  of  the  register  of  deeds  of  the  county  where  said  association  is 
located,  and  published  once  in  a  daily  or  weekly  newspaper  printed  and 
published  and  of  general  circulation  in  said  county.  Upon  complying  with 
the  foregoing  requirements,  and  upon  filing  an  affidavit  of  proof  of  such 
publication  in  the  office  of  the  secretary  of  state,  the  persons  executing  such 
declaration,  their  associates  and  successors,  shall  become  a  corporate  body. 

Sec.  2856. — The  name  shall  not  be  the  same  as,  nor  too  closely  resemble, 
that  in  use  by  any  existing  corporation  established  under  the  laws  of  this 
state.  The  words  "  building  and  loan  association,"  or  "  savings  and  loan  as 
sociation,"  shall  form  a  part  of  the  same,  and  no  corporation  not  organized 
under  this  act  shall  be  entitled  to  use  a  name  embodying  either  said  combina- 
tion of  words,  providing  that  associations  now  existing  may  continue  their 
present  names. 

Sec.  2857. — The  directors  of  such  association  shall  adopt  by-laws  for  its 
government  and  therein  describe  the  manner  in  which  its  business  shall  be 
transacted,  which  by-laws  shall  be  conformable  to  the  provisions  of  this  act 
and  the  laws  of  this  state,  and  at  all  times  be  open  to  the  inspection  of  all 
members  of  the  association  at  its  home  office,  and  a  copy  thereof  and  of  any 
amendments  thereto,  duly  certified  by  the  president  ami  secretary  of  the  asso- 
ciation, shall,  immediately  upon  its  adoption,  be  filed  in  the  office  of  the 
public  examiner.  The  directors  may  amend  said  by-laws  from  time  to  time  in 
such  manner  as  they  see  fit  so  long  as  such  amendments  are  not  in  conflict 
with  the  provisions  of  this  act  or  the  laws  of  this  state. 

Every  such  association,  which  has  not  already  done  so,  shall,  before  its  next 
annual  election  after  the  passage  of  this  act,  divide  its  board  of  directors  by 
resolution  thereof  into  three  classes,  consisting  of  an  equal  number  in  each 
class,  as  nearly  as  may  be  ;  the  term  of  office  of  the  first  class  shall  expire  at 
the  end  of  one  year  from  and  after  the  next  annual  election  ;  of  the  second 
class  at  the  end  of  two  years,  and  of  the  third  class  at  the  end  of  three  years  ; 
and  at  each  succeeding  annual  election  after  the  one  at  which  the  full  board 
is  elected  there  shall  be  elected  a  number  of  directors  equal  to  those  whose 


758  APPENDIX   IV. 

terms  of  office  expire  at  that  time,  and  the  directors  so  elected  shall  hold  their 
office  for  the  term  of  three  (3)  years,  and  until  their  successors  are  elected  and 
qualified. 

Sec.  2858. — For  every  loan  made,  a  note,  non-negotiable,  or  bond,  secured 
by  hrst  mortgage  on  real  estate  shall  be  given,  which  security  shall  be  in 
double  the  value  of  the  loan  and  satisfactory  to  the  directors,  and  shall  be 
accompanied  by  a  transfer  and  pledge  of  the  shares  of  the  borrowers  to  the 
association.  The  shares  so  pledged  shall  be  held  by  the  corporation  as  col- 
lateral security  for  the  performance  of  the  conditions  of  said  note  or  bond 
and  mortgage,  provided  that  the  shares,  without  other  security,  may,  in  the 
discretion  of  the  directors,  be  accepted  as  security  for  the  loans  for  an  amount 
not  exceeding  their  withdrawal  value  as  provided  by  this  act.  Stockholders 
who  have  borrowed  money  of  an  association  on  real  estate  security,  and  who 
have  pledged  their  stock,  or  any  portion  thereof  as  collateral  thereto,  as  pro- 
vided herein,  shall  not  be  entitled  to  have  the  value  of  such  stock  applied  on 
the  mortgage  debt  where  the  payment  of  such  stock  is  more  than  three  (3) 
months  in  arrears,  unless  the  same  has  reached  a  withdrawal  age  as  fixed  by 
this  act,  and  when  such  stock  has  reached  that  age  the  withdrawal  value 
thereof  shall  be  applied  on  said  debt  whenever  the  stock  is  three  months  in 
arrears. 

Sec.  2859. — Any  such  association  may  purchase  at  any  sale,  public  or  private, 
any  real  estate,  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  other 
incumbrance,  or  in  which  it  may  have  any  interest,  and  may  sell,  convey, 
lease  or  mortgage  the  same  at  pleasure  to  any  person  or  persons  and  may  ac- 
quire and  hold  a  lot  or  lots  whereon  is  erected  a  building  or  buildings  requi- 
site for  the  convenient  transaction  of  its  business,  and  from  portions  of  which 
not  required  for  its  own  use  a  revenue  may  be  derived  ;  the  cost  of  such  build- 
ing and  lot  or  lots  in  no  case  to  exceed  five  (5)  per  cent,  of  its  assets  ;  provided 
that  any  such  association  may  acquire  any  leasehold  interest  necessary  for 
the  transaction  of  its  business. 

Six.  2860. — Every  building  and  loan  association  heretofore  or  hereafter  in- 
corporated under  the  laws  of  this  state  and  governed  by  this  act  shall  deposit 
and  keep  with  the  state  treasurer,  or  with  a  duly  chartered  trust  company  of 
this  state,  approved  by  the  public  examiner,  in  trust  for  all  its  members  and 
creditors,  all  mortgages  or  other  securities  received  by  it  in  the  usual  course 
of  its  business.  When  deposited  with  a  trust  company,  such  company  shall 
certify  to  the  public  examiner  the  possession  of  such  securities,  and  the  same 
shall  not  be  surrendered  without  the  authority  and  sanction  of  the  said  public 
examiner.  Provided,  that  every  such  corporation  heretofore  organized  not 
having  or  owning  mortgage  or  other  securities  to  the  amount  of  twenty-five 
thousand  dollars    ($25,600)  shall  deposit  witli  the  state  treasurer  additional 

nlirs  to  make,  with  the  securities  so  owned  and  deposited,  the  sum  of 
twenty-five  thousand  dollars  1  §25,000),  and  every  such  association  hereafter 
Organized  under  this  act  shall  deposit  and  keep  with  the  state  treasurer  in 
trust  as  aforesaid,  securities  of  the  value  of  twenty-five  thousand  dollars 
($25,0001    before  commencing  to  do  business.     The  securities  mentioned  in 

provision  shall  consist  of  bonds  or  treasury  notes  of  the  United  States,  or 
national  hank  stocks,  or  the  bonds  of   this   state,  or  of  any  other  state  of  the 

ed  Slates,  or  of  any  solvent  city,  county  or  town  oi  this  state  or  of  any 
other  state  of  the  United  States,  having  the  legal  authority  to  issue  the  same, 
and  such  securities  maybe  withdrawn  from  time  to  lime  when  mortgaged 
ities  oi  (  orresnonding  value  shall  be  deposited  as  provided  in  this  act,  or 
when  securities  of  like  character  are  substituted  therefor,  or  when  the  same 
shall  have  been  pad  or  are  required  for  foreclosure  or  suit ;  and  it  shall  be  f he 
duty  of  the  public  examiner  from  time  to  tune  to  examine  such  association  to 
i.im  whether  or  nol  its  securities  are  deposited  as  required  by  this  act 
Pro-  when*      1  required  by  the  laws  of  any  other  state  or  territory 

.lion,  all  set' 1 111  ties  taken  in  SU(  h  slate,  territory  or  nation,  by  any  associa- 
tion 01    anized  under  the  laws  oi  tins  state,  and  subject  to  (he  provisionsof 
d  othet  securities  sufficient   to  allow  such  association  to  enter  and 
do1  in     ihIi  state,  territory  or  nation,  maybe  deposited  with  some 

•  1  authorized  to  n  ceive  the  same  in  such  slate,  territory  or  nali  m,  under 
the  I  I  •  of,  I  or  the  benefit  oi  its  mem  hers  and  creditors,  and  to  this  end, 

upon  entation  to  the  nublii  examiner  of  a  duly  authenticated  copy  of 

ilution  ol   the  board  ol  directors  ol  any  such  association,  having  on  de- 

i'-  a  with  the    tate  treasurer  or  a  duly  chartered  trust  company  securities  in 

of  twenty-five  thousand  doll. us  ($25,000)  demanding  the  transfer  and 

ecuritii     to  be  tran  ferred  or  the  amount  thereof  to  any  other 

Btate,  tei  1  itoi  y  or  nation  for  the  purpose  of  enabling  such  association  to  com- 


GENERAL   LEGISLATION.  759 

ply  with  the  laws  thereof,  it  shall  be  the  duty  of  the  public  examiner  to  cause 
such  transfer  to  be  made.  The  expense  of  making  such  transfer  shall  be 
borne  bv  the  association  requiring  the  same  and  a  receipt  shall  be  taken  by 
the  officer  or  trust  company  making  the  transfer,  and  filed  and  kept  in  the 
office  from  which  the  securities  are  transferred  in  lieu  thereof.  But  the  secu- 
rities kept  on  deposit  in  this  state  by  any  such  association  as  required  by  this 
act  shall  at  no  time  be  reduced  in  amount  by  such  transfer  or  otherwise,  below 
twenty-live  thousand  dollars  ($25,000)  ;  and  in  every  case  where  securities 
taken  in  another  state,  territory  or  nation,  are  deposited  in  such  state,  territory 
or  nation,  or  when  other  securities  are  removed  from  this  state  to  such  other 
state,  territory  or  nation  for  the  purpose  aforesaid,  the  association  to  which 
they  belong  shall  make  a  certificate  of  such  depository  showing  the  amount 
and  character  of  such  deposit,  which  certificate  shall  be  filed  with  the  public 
examiner  and  renewed  annually,  together  with  a  statement  verified  by  the  af- 
fidavit of  some  officer  of  such  association,  who  has  knowledge  of  the  facts, 
showing  all  the  securities  taken  or  deposited  by  such  association  in  such  state, 
territory  or  nation  at  the  time  of  the  filing  such  certificate  ;  and  in  case  any 
securities  taken  in  such  state,  territory  or  nation  are  not  deposited  there,  then 
the  same  shall  be  deposited  in  this  state  as  required  by  this  act. 

Sec.  2861. — All  interests  and  dividends  and  premiums  which  may  accrue 
on  securities  held  by  the  state  treasurer  or  such  trust  company,  as  provided 
for  herein,  and  all  dues  or  monthly  payments  which  may  become  payable  on 
stock  pledged  as  security  for  loans,  the  mortgages  for  which  are  so  deposited 
in  accordance  with  the  provisions  of  this  act,  may  be  collected  and  retained 
by  the  association  depositing  such  securities  or  mortgages  so  long  as  such  as- 
sociation remains  solvent  and  faithfully  performs  all  contracts  with  its  members, 
and  when  any  mortgage  shall  have  been  fully  paid  to  said  corporation  the 
same  may  be  surrendered  to  it  upon  filing  with  the  depository  the  affidavit  of 
the  president  or  vice-president  and  secretary  of  any  such  association  that  such 
indebtedness  has  been  paid  in  full,  which  affidavit  shall  be  first  presented  to 
the  public  examiner  and  by  him  approved.  And  any  mortgage  upon  which 
default  has  been  made  may  be  surrendered  as  aforesaid  for  foreclosure  upon 
like  affidavit  that  default  exists  and  that  such  mortgage  is  withdrawn  for  the 
purpose  of  foreclosure  of  suit. 

Sec.  2862. — No  building  and  loan  associations  organized  under  the  laws  of 
any  other  state,  territory  or  nation,  shall  do  business  in  this  state  unless  such 
associations  shall  have  securities  of  the  value  of  one  hundred  thousand  dollars 
(.$100,000).  and  of  the  character  mentioned  in  this  act  on  deposit  in  trust  for 
all  its  members  and  creditors  with  some  responsible  trust  company  duly  in- 
corporated under  the  laws  of  such  state  or  territory  in  the  United  States,  or 
with  some  authorized  officer  of  this  or  some  other  state  of  the  United  States. 
Certificitaes  of  such  deposit  shall  be  made  to  the  public  examiner  of  this  state, 
certifying  the  possession  of  such  securities,  which  shall  not  thereafter  be  sur- 
rendered without  the  authority  or  consent  of  the  public  examiner  or  other 
authorized  officer  of  the  state  or  territory  in  which  said  company  is  incorpo- 
rated. 

Sec.  2863. — Every  building  and  loan  association  organized  under  the  law 
of  any  other  state,  territory  or  nation  shall,  before  commencing  to  do  business 
in  this  state,  first  file  with  the  public  examiner  of  this  state  a  duly  authenticated 
copy  of  its  charter  or  articles  of  incorporation  ;  second,  file  with  the  public 
examiner  of  this  state  the  certificate  of  the  authorized  officer  of  another  state, 
showing  that  securities  of  the  value  of  one  hundred  thousand  dollars  (Sioo,ooo) 
are  on  deposit  with  such  state  officers  or  duly  incorporated  trust  company  in 
trust  for  all  the  members  and  creditors  of  such  building  and  loan  association  ; 
third,  file  with  the  public  examiner  of  this  state  a  du!v  aul  I  o  >py  of  a 

resolution  adopted  by  the  board  of  directors  of  such  association,  stipulating 
and  agreeing  that  if  any  legal  process  affecting  such  association  be  served  on 
such  examiner,  and  a  copy  thereof  be  mailed",  postage  prepaid,  by  the  party 
procuring  the  issue  of  the  same,  or  his  attorneys,  to  sail  association,  addressed 
to  its  home  office,  then  such  service  and  mailing  of  such  process  shall  have 
the  same  effect  as  personal  service  on  said  association  in  this  state,  and  also 
an  agreement  that  said  associations  will  not  remove  any  action  commenced 
in  any  state  court  in  this  state  against  the  same  to  the  United  States  court,  and 
will  pay  every  judgment  that  may  be  taken  against  it  upon  any  such  action 
within  sixty  (00)  days  after  the  final  judgment  shall  have  been  entered  ;  fourth, 
pay  to  the  public  examiner  twenty-five  dollars  (S25)  as  fees  for  filing  the  papers 
mentioned  in  this  section. 

Sec.  2864. — When  process  against  or  affecting  any  foreign  building  and  loan 
association  is  served  on  the  public  examiner,  the  same  shall  be  by  duplicate 


760  APPENDIX  IV. 

copies,  one  of  which  shall  be  filed  in  the  office  of  the  public  examiner,  and 
the  other  by  him  immediately  mailed,  postage  prepaid,  to  the  home  office  of 
said  association. 

Sec.  2865. — The  word  "  process  "  in  this  act  shall  include  any  writ,  declara- 
tion, summons  or  order  whereby  any  action,  writ  or  proceeding  shall  be  com- 
menced, or  which  shall  be  issued  in  or  upon  any  action,  suit  or  proceedings 
authorized  by  law  in  this  state. 

Sec.  2866. — Service  of  process  according  to  a  stipulation  provided  in  sec- 
tion 9  of  this  act,  shall  be  sufficient  personal  service  on  the  association  filing 
such  stipulation. 

Sec.  2867. — When  by  the  laws  of  any  other  state,  territory  or  nation,  any 
taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money  or  securities,  or  other 
obligations  or  prohibitions  are  imposed  on  buildings  and  loan  associations  of 
this  state  doing  business  in  such  other  state,  territory  or  nation,  or  upon  their 
agents  therein,  so  long  as  such  laws  continue  in  force  the  same  obligation 
and  prohibition  of  whatever  kind,  shall  be  imposed  upon  all  building  and  loan 
associations  of  such  other  state,  territory  or  nation,  doing  business  in  this  state 
and  upon  their  agents  here. 

Sec.  2868. — Any  building  and  loan  association  organized  under  the  laws 
of  any  ether  state  or  territory  that  shall  remove  any  action  that  shall  be  com- 
menced against  it  in  a  court  of  this  state  to  the  United  States  court,  or  that 
shall  fail  to  pay  any  judgment  rendered  against  it  upon  a  suit  in  any  court  of 
the  state  within  sixty  (60)  days  after  the  rendition  of  final  judgment  in  such 
case,  or  that  shall  fail  to  make  yearly  statements  to  the  public  examiner  as 
hereafter  mentioned,  or  statements  of  the  amount  and  value  of  its  stock  held 
in  this  state  as  hereafter  required  or  to  pay  the  fees  of  the  public  examiner  as 
provided  in  this  act  or  to  do  any  other  act  required  in  this  act  to  be  done  and 
performed,  shall  upon  violation  of  the  provisions  of  this  act  have  no  right  or 
authority  to  do  or  transact  any  further  business  in  this  state,  and  the  public 
examiner  shall  thereupon  cause  notice  of  determination  of  such  authority  to 
do  business  to  be  mailed  to  such  corporation  and  to  be  published  in  some 
newspaper  of  general  circulation  at  the  capital  of  this  state,  and  shall  com- 
municate the  facts  to  the  attorney-general  of  this  state,  who  shall  institute  such 
proceedings  in  the  matter  as  the  case  may  require  ;  Provided,  any  such  cor- 
poration  may  be  again  authorized  to  commence  business  in  this  state  upon 
such  terms  as  the  public  examiner  may  deem  just  and  proper,  and  upon  full 
compliance  with  the  provisions  of  this  act. 

SEC.  2869. — All  building  and  loan  associations  hereafter  incorporated  in  this 
stale  --hall  have  an  authorized  capital  of  two  million  dollars  (62,000,000)  at  the 
time  of  the -incorporation.  Every  share  of  capital  stock  issued  by  any  such 
associations  shall  be  of  the  par  value  of  one  hundred  dollars  ($100),  but  this 
provision  shall  not  be  construed  to  forbid  the  issue  by  any  such  association  of 
]  .ii<l  up  certificates  fm"  a  less  amount,  in  liquidation  of  stock  surrendered  for 
cancellation  or  withdrawn  before  reaching  its  maturity  period;  Provided, 
that  such  paid-up  certificates  shall  be  certificates  of  indebtedness  only,  and 
the  stock  in  liquidation  of  which  such  certificates  are  issued  shall  be  there- 
urrendered  and  cancelled. 

■•jo. — Any  building  and  loan  association  heretofore  or  hereafter  incor- 
porated  under  the  laws  01  this  state,  may  at  any  lime  increase  the  amount  of 
its  capital  stock  by  a  vote  of  at  least  three-fourths  of  its  board  of  directors  ; 
/'■  VI  led,  that  no  such  increase  shall  be  made  unless  three-fourths  of  the 
capital  stock  previou  a  orized  1  actually  been  issued  and  the  amount 
of  iii  a  le  at  any  one  time  shall  not  exceed  the  amount  issued  previous 

1"  1  In-  time  of  s  i<  h  i"  n  a  e.    Any  amendments  of  the  articles  of  incorporation 
of  anj      ich  a    ociation  in  any  other  respeci  shall  be  clone  at  an  annual  meet- 
ing by  a  two-thirds  vote  of  stock  represented  and  voted  at  such  annual  meel 
ing  on  the  question  ol  such  amendment  or  amendments,  and  only  upon  the 
in. liter  provided  t"  be  given 

Sec.  2871. — Whenever  any  building  and  loan  association  increases  its  capital 

rwise  .hip  ml  .  its  articles  ol    incorporation  as  provided  in  this 

a'  1,  a co]  .  ol  Up-  re  olution  "i  the  board  "i  directors  or  stockholders  making 

01  other  amendment  duly  verified  In'  oath  of  the  president  and 

iation,  shall  be  filed  in  the  office  of  the  register  of  deeds 

"i  the  county  in  which  the  home  office  of  said  association  is  located,  and  in 

"inn-  secretary  <>i   state,  and  be  published  four  successive  times  in 

ly  ■>!   weekly  nev    papei  published  at   the  capital  of  the  state,  or  in 

the  county  where  the  as  ociation  has  its  home  office.     Proof  of  which  publi- 

II  be  filed  in  tin-  ofn<  e  "i  the  se<  retary  of  slate. 

'  7-'-  — In  each  year   every  building   and   loan   association   organized 


GENERAL   LEGISLATION.  761 

under  the  laws  of  this  state  and  doing  husiness  in  this  or  any  other  territory 
shall,  within  thirty  (30)  days  after  the  end  of  the  year  for  which  its  report  to 
its  stockholders  is  made,  deposit  with  the  public  examiner  an  annual  report 
of  its  affairs  and  operations  lor  said  year.  Such  report  shall  be  verified  under 
oath  of  the  president  and  secretary,  or  by  three  directors  of  the  association, 
and  shall  contain  the  following  information:  first,  the  amount  of  authorized 
capital,  and  the  par  value  of  each  share  of  stock  ;  second,  the  number  t>i 
shares  sold  during  the  year  ;  third,  the  number  of  shares  cancelled  and  with- 
drawn during  the  year ;  fourth,  the  number  of  shares  in  force  at  the  end  of 
the  year;  fifth,  a  detailed  statement  of  the  receipts  and  disbursements  during 
the  year  ;  sixth,  a  detailed  statement  of  the  assets  and  liabilities  at  the  end  of 
the  year.  Such  report  shall  also  show  the  total  amount  received  as  dins  on 
stock  under  each  separate  class  or  kind  of  stock,  and  all  deductions  therefrom 
for  expenses,  withdrawals,  cancellations,  forfeitures,  refunded  or  otherwise, 
and  the  amounts,  if  any,  Of  such  profits  credited  to  stock  or  subject  to  such 
credit.  The  report  shall  also  show  the  number  of  shares  in  force  of  each 
monthly  issue  or  series,  and  the  amount  expended  during  the  year  in  payment 
of  salaries  of  officers,  clerks,  agents  and  all  other  employees,  the  amount  ex- 
pended for  travelling  expenses,  rent,  postage,  including  telegraph  and  ex]  ress 
charges,  printing,  books  and  stationery,  office  supplies,  office  furniture,  adver- 
tising, commission  paid  agents  or  other  persons,  and  all  other  items  of  ex- 
pense. In  addition  to  such  annual  report  and  six  (6)  months  after  such  re- 
port has  been  submitted  to  the  public  examiner,  every  such  association  shall 
prepare  a  report  of  its  business  for  the  preceding  six  (6)  months,  which  report 
shall  state  the  amount  of  resources  included  in  mortgage  loans,  the  amount 
of  loans  on  stock  of  the  association,  the  amount  of  loans  on  other  securities, 
specifying  the  kind  of  such  securities,  the  amount  of  unpaid  dues,  fines,  pre- 
miums and  interest,  the  amount  due  from  agents,  the  amount  due  from  banks, 
the  amount  invested  in  real  estate  and  secured  by  foreclosure,  the  amount  in- 
vested in  furniture  and  fixtures,  the  amount  of  expenses  paid  during  the  six 
months,  the  amount  of  cash  on  hand,  and  the  amount  of  all  other  resources  of 
the  association  not  enumerated  heretofore,  and  shall  state  as  its  liabilities  the 
amount  received  from  stock  subscriptions,  the  amount  due  from  stock  delin- 
quent in  each  class  or  kind  of  stock,  and  the  unpaid  clients  on  such 
stock,  the  amount  set  aside  as  an  expense  fund  from  each  class  or 
kind  of  stock,  the  amount  of  undivided  profits  at  the  beginning  of  said 
period  of  six  (6)  months,  the  amount  received  as  interest,  premiums, 
fees,  fines  or  other  sources  as  profits  during  said  period,  the  amount  of 
such  interest  and  premium  delinquent  at  the  end  of  such  period,  the  amount 
of  all  bills  payable  and  the  amount  of  all  other  liabilities  at  the  close  of  said 
period  of  six  (6)  months.  Such  report  shall  be  made  within  twenty  (20)  days 
after  the  close  of  said  period  of  six  (6)  months,  and  shall  be  verified  by  the 
secretary  and  president  or  vice-president  of  the  association,  and  within  thirty 
(30)  days  a  statement  of  the  assets  and  liabilities  shall  be  published  at  least 
once  in  some  newspaper  in  the  city  or  town  where  the  association's  principal 
place  of  business  is,  and  a  copy  of  such  semi-annual  report  verified  by  the 
secretary  shall  be  filed  with  the  public  examiner  within  ten  (10)  days  after  the 
printing  thereof  ;  Provided,  that  all  such  statements  herein  required  to  be 
made  shall  be  uniform  and  in  accordance  with  a  form  to  be  prescribed  there- 
for by  the  public  examiner,  and  shall  correctly  show  the  proportion  which 
the  entire  expenses  of  the  association  for  the  term  reported  bears  to  the  gross 
earnings  of  said  association  for  that  term.  And  provided  further,  that  all  re- 
ports required  of  building  and  loan  associations  organized  under  the  laws  of 
this  slate  and  doing  a  general  business  are  also  required  of  all  foreign  build- 
ing and  loan  associations  doing  business  in  this  state,  and  all  the  provisions 
of  this  act  relating  to  such  reports,  the  filing  thereof  and  the  fees  therefor 
shall  apply  to  such  foreign  building  and  loan  associations. 

If  any  such  association  shall  fail  to  furnish  to  the  public  examiner  of  the 
state  any  report  required  by  this  act  at  the  time  so  required  it  shall  forfeit  the 
sum  of  twenty-five  dollars  ($25)  for  every  day  such  report  shall  be  delayed  or 
withheld,  and  the  examiner  may  maintain  an  action  in  his  name  of  office  to 
recover  such  penalty,  and  the  same  shall  be  paid  into  the  treasury  of  the  state 
and  applied  to  the  expenses  of  the  department  of  said  examiner.  After  receiv- 
ing such  annual  report,  the  public  examiner,  if  satisfied  that  such  corporation 
has  complied  with  all  [the]  provisions  of  this  act  and  is  entitled  toclo  business 
in  this  state,  shall  issue  his  certificate  stating  the  compliance  with  such  provi- 
sion and  that  that  such  corporation  is  entitled  to  do  business  in  this  state, 
which  certificate  shall  be  in  force  for  the  period  of  one  (1)  year  unless  sooner 
rescinded  as  provided  in  this  act.    The  public  examiner  shall  also  issue  such 


762  APPENDIX   IV. 

certificate  to  a  domestic  corporation  which  has  complied  with  the  law  in  re- 
gard to  its  articles  of  incorporation,  and  the  deposit  of  securities  and  in  all 
other  respects  except  the  filing  of  said  report,  which  commenced  business  at 
some  intervening  period  in  any  year.  Such  certificate  shall  also  be  issued  to 
any  foreign  corporation  authorized  to  do  business  in  this  state  after  conn  lying 
with  the  conditions  of  section  nine  (9)  of  this  act  and  shall  be  in  force  until  the 
time  herein  required  for  such  annual  report. 

Sec.  2873.— It  shall  be  the  duty  of  such  public  examiner,  at  least  once  in  each 
year,  and  as  often  as  he  may  deem  necessary,  10  assume  and  exercise  over 
every  building  and  loan  association  incorporated  under  the  laws  of  this  state, 
its  business  officers,  directors  and  employes,  all  the  powers  and  authority  con- 
ferred upon  him  over  banks  and  other  moneyed  corporations  under  the  laws 
of  this  state,  provided  he  shall  not  have  the  power  to  suspend  operations  of 
any  such  association,  except  in  the  manner  provided  in  the  next  succeeding 
section.  And  such  public  examiner  shall  have  the  same  supervision  and  con- 
trol over  the  business,  within  the  state,  of  other  corporations  of  like  kind  in- 
corporated under  the  laws  of  other  states,  territories  or  nations,  doing  business 
in  this  state.  Upon  the  completion  of  any  examination  of  any  association 
made  by  said  public  examiner  or  under  his  direction,  the  association  so  exam- 
ined shall  pay  to  said  examiner  a  fee  to  be  determined  as  follows,  viz.  :  For 
the  first  one  hundred  thousand  dollars  iStoo,ooo)  of  assets,  a  fee  of  ten  ($10) 
and  for  each  additional  one  hundred  thousand  dollars  ($100,000  j  of  assets,  or 
major  portion  thereof,  an  additional  fee  of  five  dollars  1851. 

Sec.  2874  (as  amended,  acts  1897,  p.  461).— If  it  shall  appear  to  said  pub- 
lic examiner  from  any  examination  made  by  him,  or  from  any  report  of  any 
examination  made  bv  him,  or  from  any  annual  or  semi-annual  report  afore- 
said, that  any  corporation  governed  by  this  act  is  violating  its  charter,  or  the 
law,  or  that  it  is  conducting  business  in  an  unsafe,  unauthorized  or  dishonest 
manner,  he  shall,  by  an  order  under  his  hand  and  seal  of  office  addressed  to 
such  corporation,  direct  conformity  with  the  requirements  of  its  charter  and 
of  the  law  ;  and  whenever  such  corporation  shall  refuse  or  neglect  to  make 
such  report  or  account  as  may  be  lawfully  required,  or  to  comply  with  such 
order  aforesaid  within  thirty" days  from  the  date  thereof,  or  if  it  has  become 
apparent  that  there  is  such  a  deficiency  in  its  assets  that  the  purpose  for 
which  the  association  was  organized  cannot  be  carried  out,  the  public  ex- 
aminer may,  if  such  corporation  be  organized  under  the  laws  of  the  state  of 
aesota,  forthwith  take  possession  of  the  books,  records  and  the  assets  of 
every  description  of  such  corporation  and  shall  at  once  proceed  to  make  a 
careful  and  detailed  examination  of  the  condition  of  the  affairs  of  such  cor- 
poration ;  and  the  hooks,  records  and  assets  of  such  corporation  so  held  by 
him  shall  not  be  subject  to  levy  or  attachment  or  garnishment  at  any  time 
while  under  his  control.  If  at  the  close  of  such  examination  it  shall  appear 
to  the  public  examiner  that  such  corporation  is  able  to  complete  and  fulfill  its 
contracts  with  its  members,  and  that  it  is  for  the  best  interests  of  the  stock- 
holders that  such  corporation  --hall  continue  to  do  business,  but  that  its  offic- 
and  directors  or  any  of  them  are  disqualified  from  acting  as  such  by  reason 
of  in  v,  dishonest  v  or  negligence  in  the  management  of  the  affairs 

of  -aid  corporation,  he  shall  tile  a  statement  in  writing  with  the  attorney- 
general  settingforth  the  facts  in  relation  to  such  disqualification,  whereupon 
the  attorney-general  shall  apply  to  the  district  court  of  the  county  where  the 
,    1  corporation  islocated  for  an  order  to  show  cause  why 
uch  tnd  directors  or  any  of  them  should  not  be  removed,  which  order 

if  gra  1  I    be   1    turnable  nol   less  than  ten  (10)   days  from  the  date  of 

[j    lI    hi    heal  upon   said  order  to --how  cause,  the  court 

th  '  th     tffairs  of  such  corporation  are  being  mismanaged,  or  that 
are  dishonest,  incompetent  or  negligent,  the 
.  direct  the  removal  of  such  officers  or  directors  or  any  of  them,  and 
ni.r  i       lire  thi   public  examiner  to  call  a  special  meeting  of  the  stock- 

hol  poration  at  its  home  office  in  the  manner  prescribed  by  its 

by-laws  for  the  purpose  of  electing  directors  or  officers  to  fill  such  vacancies 
mii  ( ,i  such  removal  and  for  such  other  business  as  may 
ich  meeting.    The  officers  and  directors  elected  at 
1  1  ,1  1,,  :.  til  hold  offii      until    Mp-  nexl    annual   meeting  of   such 

1    on,   and  until  their  succes  01     are   elected    and    qualified,  but   no 
01   directorwho  shall  ha  removed  for  cause  shall  be  eligible 

I  ion. 

Upon  the  election  and  qualification  ol    uch  newly  elected  officers  and  direc- 
;   ill  forthwith  relinquish  the  books,   records  and 
i<  h  .  01  ]  mi  atii  'ii  to  ii  .  pro]  er  officers. 


GENERAL   LEGISLATION.  763 

If  at  the  close  of  such  detailed  examination,  as  aforesaid,  it  shall  appear  to 
the  public  examiner  that  the  corporation  is  unable  to  complete  and  fulfill  its 
contracts  with  its  members,  and  that  it  would  be  unwise  and  unprofitable  for 
such  corporation  to  continue  to  do  business,  he  shall  file  a  statement  in  writ- 
ing with  the  attorney-general,  setting  forth  the  condition  of  such  corporation, 
with  his  reasons  for  such  proceedings.  Whereupon  the  attorney-general 
shall  apply  to  the  said  district  court  tor  an  order  to  show  cause  why  the 
affairs  of  such  corporation  should  not  be  wound  up  and  settled  for  the  best 
interests  of  all  its  stockholders,  which  order,  if  granted,  shall  lie  returnable 
not  less  than  ten  (10)  days  from  the  date  ot  service  thereof.  If  at  the  heai  ing 
upon  said  order  to  show  cause,  the  court  shall  find  that  such  corporation  is 
unable  to  complete  and  fulfill  its  contracts  with  its  members,  and  that  it  is 
unwise  and  inexpedient  to  continue  to  business,  the  court  shall  order  and 
direct  that  such  corporation  go  into  liquidation  and  its  affairs  be  wound  up 
and  settled  under  the  direction  of  the  court.  And  the  court  shall  thereupon 
vest  the  management  and  control  of  such  corporation  in  such  of  the  direc- 
tors or  officers  thereof  as  may  be  best  fitted  in  the  judgment  of  the  court  to 
settle  and  wind  up  the  affairs  of  such  corporation.  The  office  of  the  remain- 
ing directors  and  officers  of  such  corporation  shall  be  declared  vacant  by  the 
court ;  Provided,  that  the  court  may  remove  all  or  any  of  the  directors' and 
officers  of  such  corporations,  if  in  its  judgment  it  shall  be  for  the  best  interest 
of  the  corporation  so  to  do  ;  and  upon  the  removal  of  all  directors,  the  court 
shall  appoint  as  directors  of  such  corporation  not  less  than  three  persons,  at 
least  two  of  which  shall  have  been  stockholders  for  at  least  one  year  prior  to 
the  date  of  such  appointment ;  the  persons  in  whom  the  management  of  the 
affairs  of  such  corporation  is  vested,  as  aforesaid,  shall  give  such  bonds,  or 
fidelity  insurance,  as  may  be  required  by  the  court  ;  Provided,  that  at  least 
two  ot  such  directors  shall  reside  in  the  state  of  Minnesota.  The  court  may, 
at  any  time,  for  cause,  as  aforesaid,  remove  any  or  all  officers  and  directors, 
and  appoint  others,  as  aforesaid  ;  Provided,  further,  that  whenever  the  number 
of  shareholders  of  such  corporation  shall  be  less  than  fifty  1 50 1  and  their  hold- 
ings of  stock  less  than  five  hundred  (500)  shares,  the  court  shall  remove  all 
officers  and  directors  of  such  corporation  and  appoint  one  stockholder  resid- 
ing in  the  state  of  Minnesota  as  special  commissioner  to  wind  up  its  affairs  ; 
and,  provided,  further,  that  all  such  liquidation  shall  be  under  the  supervision 
of  the  court.  Such  officers  and  directors  shall  report  in  such  manner  and  at 
such  times  as  the  court  shall  direct. 

Sec.  2875.—  All  officers  of  any  buildingand  loan  association  governed  by  this 
act  and  doing  business  in  this  state,  who  sign  or  endorse  checks,  or  handle 
any  funds  of  such  association,  shall  give  such  bonds  or  fidelity  insurance  for 
the  faithful  performance  of  their  duties  as  the  board  of  directors  may  require, 
and  no  such  officer  shall  be  deemed  qualified  to  enter  upon  the  duties  of  his 
office  until  his  bond  is  approved  by  the  board  of  directors  and  the  public  ex- 
aminer, with  whom  such  bond  shall  be  filed  ;  provided,  that  the  public  exam- 
iner may  require  of  any  association  at  any  time  such  increase  of  said  bond  or 
additional  security  thereto  or  such  increase  of  said  insurance  as  he  may  deem 
necessary  for  the  protection  of  the  members.  The  penalty  for  the  failure  of 
any  association  to  file  and  maintain  the  bonds  or  policy  as  required  by  the 
provisions  of  this  section  shall  be  a  fine  of  one  hundred  dollars  ($100)  for 
each  day  such  association  transacts  business  after  such  bond  has  become  due 
under  the  provisions  of  this  act.  Said  bond  or  policy  shall  be  held  in  trust 
for  the  benefit  and  protection  of  the  members  of  such  association  and  shall  be 
enforceable  by  any  member  whenever  the  cause  of  action  shall  accrue 
thereon. 

Sec.  2876. — The  name  "building  and  loan  association,"  as  used  in  this  act, 
shall  include  all  corporations,  societies,  organizations  or  associations  doing  a 
saving  and  loan  or  investment  business  on'the  building  society  plan,  whether 
mutual  or  otherwise,  and  whether  issuing  certificates  of  stock,  which  mature 
at  fixed  time  in  advance  or  not. 

Sec.  2877. — Any  officer,  director  or  agent,  or  any  foreign  building  and  loan 
association, or  any  other  person  whatever.who  shall  in  this  state  solicit  subscrip- 
tions to  the  stock  of  such  association,  or  who  shall  sell  or  issue  or  knowingly 
cause  to  be  sold  or  issued  to  a  resident  of  this  state  any  stock  of  such  associa- 
tion while  such  association  shall  not  have  had  the  certificate  of  the  public  ex- 
aminer authorizing  it  to  do  business  in  this  state  as  herein  described,  or  has 
not  deposited  as  required  by  this  act  securities  of  the  value  and  at  the  time 
herein  prescribed  or  before  said  association  has  complied  with  all  the  provi- 
sions of  this  act,  or  when  said  association  shall  have  been  notified  and  re- 
quired to  discontinue  business  in  this  state  as  hereinbefore  provided,  shall  be 


76-1  APPENDIX   IV. 

guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  punished  by  a 
hue  of  not  less  than  one  hundred  dollars  ($ioo)  nor  more  than  five  hundred 
d(  illars  i  S500 !,  or  by  imprisonment  of  not  less  than  ten  ( 10)  days  or  more  than 
six  (6)  months,  or  both  such  tine  and  imprisonment  in  the  discretion  of  the 
court. 

Any  corporation  governed  by  this  act  may,  if  ordered  by  a  majority  vote  of 
its  directors,  or  a  vote  of  three-fourths  of  its  stock,  at  any  regular  or  special 
meeting  of  its  shareholders,  voluntarily  go  into  liquidation  ;  Provided,  that  the 
public  examiner  shall  consent  in  writing  thereto.  Notice  of  such  action  by 
the  directors  or  stockholders,  and  the  consent  of  the  public  examiner,  shall  be 
mailed  to  each  stockholder  of  such  corporation,  at  his  last  recorded  address  ; 
and  thereupon  such  corporation  going  into  voluntary  liquidation  may  adopt 
such  methods  and  measures  as  may  be  lawful,  equitable  and  just  for  the  wind- 
ing up  of  its  affairs,  subject  to  the  direction  and  control  of  the  public  examiner  ; 
Provided,  that  the  methods  so  adopted  shall,  as  nearly  as  may  be,  conform  to 
the  original  plans  and  objects  of  such  corporation;  Provided,  also,  that  any 
change  in  such  plans  or  methods  shall  be  approved  by  the  public  examiner  be- 
fore being  so  adopted  by  such  corporation  ;  and  it  is  further  Provided,  that  if  it 
shall  appear  to  be  for  the  best  interests  of  such  corporation,  the  board  of 
directors  may  change  the  plan  of  loans  to  a  definite  time  or  times  of  payment, 
at  a  rate  of  interest  not  exceeding  the  legal  contract  rate  per  annum  ;  or  may 
negotiate  or  assign  any  or  all  of  its  mortgages  for  cash,  at  such  times  and  on 
such  terms  of  settlement  as  may  appear  to  the  best  interest  of  such  corpo- 
ration. 

Any  such  corporation  in  course  of  liquidation  shall  have  authority  to  consol- 
idate with  any  other  corporation  organized  for  the  same  purpose  upon  such 
terms  as  •may  be  agreed  upon  and  authorized  by  the  boards  of  directors  of  the 
respective  corporations,  the  majority  of  the  stock  consenting  thereto,  and  to 
transfer  to  such  consolidated  corporation  its  entire  assets,  subject  to  existing 
liabilities. 

All  expenses  of  such  liquidation,  whether  voluntary  or  otherwise,  including 
the  compensation  of  officers,  employes  and  directors,  shall  be  paid  from  the 
funds  belonging  to  such  corporation,  subject  to  the  approval  of  the  public 
examiner,  in  lieu  of  the  expenses  provided  for  in  section  thirty  (30)  of  this  act. 

And  if  such  corporation  shall  have  been  organized  under  the  laws  of  any 
other  state  or  territory,  the  public  examiner  shall  hie  his  statement  in  writing 
with  the  attorney-general,  setting  forth  the  facts  or  particulars  in  which  said 
alleged  violation  or  refusal  consists,  which  statement  shall  be  prima  facie 
evidence  of  such  violation  or  refusal  ;  and  said  attorney-general  shall  upon  re- 
ceiving such  communication,  if,  in  his  judgment,  the  facts  of  the  case  are  suf- 
ficient to  warrant  such  action,  give  notice  to  such  corporation  that  it  is  no 
longer  authorized  to  do  business  in  this  state,  by  depositing  such  notice  in  the 
■nice,  properly  sealed  and  stamped,  addressed  to  said  corporation  at  its 
principal  office  in  the  state  where  incorporated,  and  thereupon  said  corpora- 
tion shall  cease  to  have  any  right  in  this. state,  and  said  notice  may  be  published 
in  the  same  manner  as  provided  in  section  fourteen  1  141  of  this  act. 

The  proceedings  prescribed  in  this  section  for  the  winding  tin  and  liqui- 
dation of  the  affairs  of  corporations  governed  by  this  act  shall  be  exclusive  of 
any  remedies  provided  by  the  laws  of  the  state  of  Minnesota  relating  to  gen- 
eral corporations. 

Sec.  2878. — Any  officer,  director  or  agent  of  any  building  and  loan  associa- 
tion incorporated  under  the  laws  of  this  state  or  any  other  person  whatever, 
who  shall  sell  01  i  ue  or  knowingly  cause  to  be  sold  or  issued  to  any  person 
not  a  resident  of  the  county  in  which  the  home  office  of  said  association  is 
I  "  ated,  or  in  the  counties  immediately  adjacent  thereto,  any  stock  of  said 
ii  1  h  [1  lid  a  iociation  does  not  nave  on  deposit  with  the  public 
<  aminer  01  omeloanortru  l  company,  as  required  by  this  act,  securities  of 
the  value  and  at  the  time  hereinafter  prescribed,  or  while  such  association 
shall  nol  have  a  certificate  ol  the  public  examiner  authorizing  it  to  do  business 
ribed,  shall  be  guilty  of  a  misdemeanor  and  upon  conviction 
therefor  hall  he  punii  hed  by  .1  fineoi  nol  less  than  one  hundred  dollars  ($100), 
and  nol  mon   than  five  hundred  dollars  1S500),  or  by  imprisonment  of  not  less 

than  ii  11  1  10    da\    .  more  than  |o ,  months  or  both  such  fine  and  imprison- 

in  the  'ii  '  retion  "i  <  om  1. 

\nv  premiums  for  loan,  made  by  any  association  governed  by 
thisacl    hall  nol  Inc. ,n  idered  or  treated  as  interest,  nor  render  such  associa- 
.  the  laws  relating  to  usury. 

1   ;  refofore  organized  under  the  laws  of 

this   tale,  or  incorporated  undei  this  acl   shall  not  issued  preferred  stock,  but 


GENERAL   LEGISLATION.  765 

may  issue  different  series  of  stock,  and  all  shares  of  stock  hereafter  issued 
shall  be  of  the  par  value  when  matured  of  one  hundred  dollars  ($100)  each. 
Any  such  association  mayissue  instalment  stock  to  be  paid  in  periodical  sums, 
and  prepaid  stock  upon  which  a  gross  sum  shall  be  paid  in  advance,  and 
which  instalment  and  prepaid  stock  shall  mature  when  the  amount  so  paid, 
together  with  the  dividends  declared  upon  the  same,  shall  equal  the  par  value  of 
such  stock  (and  a  dividend  bearing  prepaid  stock  upon  which  a  larger  sum  is 
paid  than  on  the  prepaid  stock,  and  upon  which  a  partial  dividend  may  be 
paid  annually  out  of  the  lull  dividend  apportioned  thereto),  and  may  also  issue 
lull  paid  stock  upon  which  the  par  value  thereof  shall  he  paid  in  advance,  in 
the  certificate  of  which  stock  the  right  of  withdrawal  may  be  waived  for  a  defi- 
nite time,  and  upon  which  full  paid  stock  a  full  dividend  or  a  definite  dividend 
may  be  paid,  which  dividend  shall  in  no  case  exceed  tlie  per  cent,  of  profits 
earned  by  all  classes  or  series  of  stock  at  the  time  the  said  dividend  is  de- 
clared. Any  such  association  may  issue  from  time  to  time  a  limited  amount 
of  guaranty  or  permanent  stock  for  which  the  full  par  value  shall  be  paid  at 
the  time  of  issue  or  in  instalments  of  five  dollars  ($5)  on  each  share,  from 
time  to  time,  at  the  option  of  the  purchaser,  until  the  full  par  value  of  one  hun- 
dred dollars  ($100)  is  paid.  Such  guaranty  or  permanent  stock  to  be  paid  a 
dividend  on  the  amount  paid  in,  such  dividend  not  to  exceed  the  per  cent,  of 
profits  earned  by  all  classes  or  series  of  stock  at  the  time  such  dividend  is -de- 
clared. The  balance  of  profits  (if  any)  and  the  principal  paid  on  said  stock 
not  to  be  paid  to  holders  of  same  until  all  lawful  claims  of  every  other  class 
of  stock  shall  have  been  fully  liquidated  and  paid  by  such  association.  Pro- 
vided, that  the  total  amount  of  guaranty  or  permanent  stock  at  its  par  value 
issued  by  any  association  shall  not  exceed  at  the  time  of  its  issue  twenty  (20) 
per  cent,  of  the  amount  of  payments  to  the  credit  of  all  other  classes  of  stock. 
No  building  and  loan  association  shall  issue  any  certificate  of  shares  until  the 
terms  and  conditions  thereof  shall  have  been  first  submitted  to  and  approved 
by  the  public  examiner. 

Sec.  2881  (as  amended  1897,  p.  521). — Any  shareholder  whose  share  or  shares 
are  not  in  arrears  or  pledged  upon  a  loan,  shall  be  entitled  to  withdraw  such 
share  or  shares  at  any  time  twenty-four  (24)  months  from  and  after  the  date 
of  the  first  payment  on  such  share  or  shares,  and  not  before  such  date. 

Provided,  that  the  board  of  directors  may,  if  they  deem  it  to  the  interest  of 
the  association,  buy  in  the  share  or  shares  of  any  shareholder  desiring  to  with- 
draw at  a  previous  date,  paying  therefor  the  sum  paid  in  on  said  shares  less 
such  discount  as  may  be  agreed  upon,  and  which  shall  not  in  any  case  exceed 
eight  (8)  per  cent.  Any  such  shareholder  may  give  notice  of  withdrawal  in 
writing  to  the  secretary  of  said  association,  and  the  liability  of  said  share- 
holder to  pay  further  instalments  and  right  to  share  in  future  profits  shall 
cease  with  said  notice.  Such  withdrawing  shareholder  shall  be  entitled  to 
receive,  at  the  end  of  two  (2)  years  from  the  date  of  his  first  payment,  all 
monthly  payments  made  on  account  of  such  share  or  shares  (not  including 
admission  fees  or  fines)  less  the  following  deductions : 

Fifty  (50)  cents  on  each  certificate  in  payment  for  issuing  and  cancelling  the 
same,  and  two  (2)  per  cent,  of  the  amount  so  paid  in  for  a  contingent  or  reserve 
fund  to  be  used  by  the  association  to  meet  any  contingency  or  loss  in  its  busi- 
ness, from  the  depreciation  of  its  securities  or  otherwise  (provided,  that  if  the 
share  or  shares  on  which  such  notice  of  withdrawal  is  given  are  in  arrears,  a 
fine  of  ten  (10)  cents  per  share  for  each  thirty  (30)  days  such  share  or  shares 
are  delinquent  maybe  deducted,  in  addition  to"  the  withdrawal  fee  and  charge 
for  the  reserve  fund  hereinbefore  provided  for).  All  stockholders  who  do  not 
give  the  notice  as  herein  provided,  failing  to  make  payments  shall  be  subject 
to  a  fine  of  ten  (10)  cents  per  share  per  month  for  each  month  such  payments 
are  in  arrears,  for  a  period  of  six  (6)  months  after  the  last  payment  made 
(such  fines  in  the  aggregate  not  to  exceed  the  sum  of  sixty  (60)  cents  per  share  , 
and  at  the  end  of  such  period  of  six  (6)  months,  if  the  arrearages  and  tines 
remain  unpaid  the  balance  of  such  monthly  payments,  if  any,  alter  deducting 
the  certificate  fee,  contingent  fund  and  fines  as  herein  provided,  shall  be  sub- 
ject to  withdrawal  at  a  period  not  less  than  twenty-four  (24)  months  from  the 
date  of  the  first  payment,  on  application  of  the  stockholder.  If  such  delinquent 
shares  are  not  reclaimed  or  called  for  within  twenty-four  (24)  months  from  the 
date  of  the  last  payment,  the  balance,  if  any,  to  the  credit  of  such  delinquent 
shares  shall  be  transferred  to  the  contingent  fund  herein  provided  for,  and  the 
delinquent  shareholder  shall,  from  the  time  of  such  transfer,  have  no  further 
claim  upon  the  association  on  account  of  such  share  or  shares,  or  the  pay- 
ments made  thereon. 


766  APPEKDIX   IV. 

Provided,  that  such  shares  which  may  have  been  pledged  as  collateral  for  the 
payment  of  a  loan  and  become  delinquent,  shall  be  adjusted  as  provided  for 
in  section  four  (4)  of  this  act  If  such  withdrawing  member  has  made  twenty- 
four  (24)  or  more  payments  and  less  than  thirty-six  (36)  payments  he  shall  re- 
ceive the  amounts  paid  less  the  deductions  provided  for,  and  interest  on  such 
amount  at  the  rate  of  rive  (5)  per  cent,  per  annum,  for  the  actual  time  the  asso- 
ciation has  had  the  payments  in  excess  of  twenty-four  (24)  months  ;  and  if 
such  withdrawing  member  has  made  thirty-six  (36)  or  more  payments  and  less 
than  forty-eight  148)  payments,  he  shall  receive  the  amount  paid  in,  less  the  de- 
duction provided  for,  and  interest  on  such  amount  at  the  rate  of  six  (6)  per  cent, 
per  annum  for  the  actual  time  the  association  has  had  the  payments  in  excess 
of  twenty-four  (241  months  ;  and  if  such  withdrawing  member  has  madeforty- 
eight  (48)  payments  and  less  than  sixty  (60)  payments  he  shall  receive  the 
amount  paid  in,  less  the  deductions  provided  for,  and  interest  on  said 
amount  at  the  rate  of  seven  (7)  per  cent,  per  annum  for  the  actual  time  the 
association  has  had  the  payments  in  excess  of  twenty-four  (24)  months  ;  and 
if  such  withdrawing  member  has  made  sixty  (60)  or  more  payments,  and  the 
stock  has  not  reached  a  maturity  value,  he  shall  receive  the  amount  paid  in 
less  the  deductions  provided  for,  and  interest  on  such  amount  at  the  rate  of 
eight  (,8)  per  cent,  per  annum  for  the  actual  time  the  association  has  had  the 
pavments. 

Provided,  that  the  net  profits  of  the  association  for  the  time  the  association  has 
had  the  use  of  all  its  funds,  shall  amount  to  the  sum  of  five  (5),  six  (6),  seven  (7), 
and  eight  f8)  per  cent,  per  annum,  computed  on  the  amounts  paid  in  all  the 
shares  in  force  at  the  time  such  withdrawals  are  made,  and  if  such  profits  are 
not  sufficient  when  so  computed,  then  the  stock  so  withdrawn  shall  be  en- 
titled to  a  rate  per  cent,  found  to  be  earned  as  net  profits  during  said  period, 
such  interest  payments  to  be  in  all  cases  in  lieu  of  such  profits. 

Provided,  further,  that  if  by  reason  of  extraordinary  losses  the  entire  net 
profit  is  exhausted,  the  withdrawing  member  shall  not  be  entitled  to  the  in- 
terest herein  named  ;  and  if  by  reason  of  extraordinary  losses,  the  association 
is  compelled  to  charge  such  losses  against  its  capital  actually  paid  in,  all  with- 
drawing shares  shall  be  subject  to  a  "pro  rata  charge  of  such  losses  with  those 
remaining  undrawn,  and  in  such  case  all  payments  herein  provided  shall  be 
considered  of  no  effect,  and  the  withdrawing  member  shall  only  be  entitled 
to  such  sums  as  may  be  found  to  be  due  him  after  the  adjustment  of  such 
losses  among  all  shareholders. 

And  provided,  further,  that  whenever  the  capital  of  an  association  has  been 
impaired  by  losses  in  excess  of  its  reserve  fund  and  profits  earned,  it  shall  be 
the  duty  of  the  directors  to  suspend  sales  of  all  classes  of  stock  until  such 
losses  have  been  adjusted  and  distributed  pro  rata  as  a  charge  upon  the  shares 
of  stock  in  force. 

And  provided,  further,  that  no  more  than  one-half  {%)  of  the  amount  re- 
ceived in  payments  on  stock  by  such  association  in  any  month  shall  be  used 
to  pay  the  withdrawal  and  maturity  value  of  stock  without  the  consent  of  the 
board  of  directors. 

And  provided,  further,  that  any  association  that  has  issued  shares  maturing 
at  a  definite  period,  which  finds  that  its  assets  will  not  be  sufficient  under  the 
mutual  system  to  mature  its  stock  at  such  period  without  unusual  assessments, 
may  with  the  consent  of  any  stockholder  settle  and  discharge  his  stock  by 
paying  to  him  at  the  maturity  period,  or  sooner,  if  its  directors  deem  it  prac- 
tii  able,  such  sum  as  he  had  paid  into  such  association  for  monthly  dues  and 
withdrawal  assessments,  and  such  proportion  of  the  profits  as  shall  be  mutu- 
ally deemed  by  them  equitable. 

SEC.  27^.  (As  added,  Acts  [895,  p. 238). — Every  association  shall,  in  addition 
to  the  contingent  fund  provided  for  by  section  twenty-seven  (27)  of  this  act, 
set  apart  out  of  the  net  profit  of  each  year,  for  a  contingent  or  reserve  fund, 
the  sum  not  less  than  five  (SJ  per  centum,  and  not  to  exceed  ten  (10)  per 
< .  ntum  of  sin  h  nel  profits  tor  that  year  ;  Provided,  that  such  contingent  or 
.  ,  Mm,!  fiall  not  at  any  time  exceed  the  sum  of  five  (S)  per  centum  of  the 
total  uch  association,  the  same  to  be  used  for  the  purpose  of  making 

tnj  i"     by  depreciation  of  stock,  and  not  otherwise. 

Sei  .  2882.-  Upon  the  death  "I  a  stockholder  in  any  such  association  his  heirs 
..1  personal  representatives  upon  giving  sixty  (60)  days  notice  to  the  associa- 
tion, shall  receive  from  such  association  the  then  withdrawal  value  of  his 
eable  to  the  provisions  of  section  twenty-seven  (-71  of  this  act. 
.-,-;_!•, -.cry  such  association  shall  provide  in  its  by-laws  in  what 


GENERAL  LEGISLATION.  767 

manner  application  and  bids  for  loans  shall  be  received  and  who  shall  be  en- 
titled to  loans  thereunder  ;  such  proportion  of  the  loan  fund  shall  be  loaned 
upon  such  application  as  the  directors  shall  deem  advisable  ;  Provided,  the 
securities  shall  be  in  the  character  and  amount  as  required  by  this  act  ;  and 
Provided,  further,  that  the  provisions  of  this  section  relating  to  bidding  lor 
loans  shall  not  apply  to  associations  which  fix  the  rate  of  interest  and  pre- 
mium in  any  other  manner. 

Sec.  2884. — All  associations  governed  by  this  act  may  in  payment  of  their 
expenses,  use  a  sum  not  to  exceed  fourteen  (14)  per  cent,  of  their  receipts  for 
payments  on  stock.  Whenever  a  distribution  the  profits  is  made  and  at  least 
twice  in  each  year,  each  association  shall  charge  against  the  profits  accrued 
four-fifths  of  such  expenses  ;  or,  if  there  is  not  a  sufficient  amount  of  the  profits 
to  pay  such  part  of  the  expense  incurred,  then  the  total  amount  of  profits  shall 
be  so  charged  with  expense  and  the  balance  of  said  four-fifths  (4-5)  of  such 
expenses  shall  be  carried  as  "  Expenses  Paid  "  until  the  next  report  or  distri- 
bution of  profits.  The  remaining  one-fifth  of  such  expenses  shall,  at  the  lime 
of  making  the  charges  to  profits  as  herein  provided,  be  carried  to  an  account 
to  be  called  "Permanent  Expense,"  which  shall  finally  be  paid  as  follows: 
Whenever  any  share  of  stock  has  reached  a  maturity  value  the  share  of  per- 
manent expense  contributed  by  said  share  of  stock  shall  be  charged  against 
it,  and  the  sum  found  after  deducting  said  share  of  permanent  expense  shall 
be  deemed  the  true  maturity  value  of  said  stock.  All  fees  and  fines  received 
by  any  association  may  be  used  for  the  payment  of  expenses  in  addition  to  the 
amount  herein  provided  for. 

Sec.  2885. — That  not  more  than  three  (3)  of  the  officers  of  any  such  associa- 
tion incorporated  under  the  laws  of  this  state  shall  be  members  of  the  board 
of  directors  of  such  association.  Provided,  that  no  change  shall  be  required 
under  this  section  until  the  next  annual  meeting  of  such  association. 

Sec.  2886. — All  corporations  organized  in  this  state  and  doing  business  in 
this  or  any  other  state  as  building  and  loan  associations  shall  comply  with 
and  be  subject  to  all  provisions  of  this  act  within  sixty  (60)  days  after  its  pas- 
sage, and  shall  be  entitled  to  all  the  privileges  and  benefits  thereof  without 
reincorporating. 

Sec.  2887. — This  act  shall  not  apply  to  any  association  organized  under  the 
laws  of  this  state  which  confines  its  loaning  and  business  operations  wholly  to 
its  county  and  the  counties  adjacent  and  adjoining  thereto  ;  Provided,  that 
any  such  association  heretofore  incorporated  which  desires  to  hereafter  con- 
fine its  business  to  adjacent  counties  as  aforesaid,  may  file  with  the  public  ex- 
aminer a  statement  to  that  effect,  and  also  containing  the  names  of  those  hold- 
ing the  amount  held  by  them  of  the  stock  of  said  association  outside  such 
counties,  and  so  long  as  such  association  thereafter  confines  its  sale  of  stock 
within  the  limits  aforesaid,  it  shall  not  be  subject  to  the  provisions  hereof, 
and  any  sales  of  stock  outside  the  limits  of  said  counties,  made  after  filing  of 
such  statements  by  any  officer,  director,  or  agent  of  any  association,  shall 
subject  such  person  to  all  the  penalties  prescribed  in  section  twenty-four  (24) 
of  this  act.  Provided,  further,  that  nothing  in  this  section  shall  be  so  construed, 
to  prevent  the  bona  fide  sale  or  transfer  of  the  individual  stock  of  any  mem- 
ber of  such  association. 

Sec.  2888. — Every  such  association  shall  be  assessed  for  and  pay  taxes  upon 
its  office  furniture  and  fixtures,  and  all  real  estate  acquired  in  the  course  of  its 
business. 

Sec.  2889  (as  amended  1895  p.  ). — The  amount  standing  to  the  credit  of 
each  member  of  any  such  association,  upon  its  books,  shall  be  considered  and 
held  as  the  individual  credit  of  such  member,  and  each  member  shall  list  the 
shares  held  by  him  for  taxation  at  their  real  value  in  money  in  the  county  of 
his  residence,  the  same  as  other  creditors  are  listed. 

Sec.  1890. — It  shall  be  the  duty  of  every  such  association  not  incorporated 
under  the  laws  of  this  state,  to  make  and  forward  to  the  public  examiner,  upon 
the  first  day  of  May  in  each  year,  a  statement  containing  the  names  and  the 
withdrawal  value  of  all  its  stock  held  and  owned  by  residents  of  this  state,  to- 
gether with  the  place  of  residence  of  every  such  stockholder  except  those 
having  loans  as  provided  in  the  foregoing  section,  and  it  shall  be  the  duty  of 
said  public  examiner  to  make  out  and  forward  to  the  county  auditors  of  the 
proper  counties  a  statement  of  the  stock  held  by  them.  And  it  shall  be  the  duty 
of  the  said  county  auditors,  upon  receiving  the  statements  provided  for  in  this 
and  the  foregoing  sections,  to  furnish  the  assessors  of  each  town  in  his  county 
having  such  stockholders,  with  the  names  of  such  stockholders,  and  the  value 
of  their  stock  as  given  in  such  statements,  for  the  purpose  of  assessment 


768  APPENDIX   IV. 

Sec.  2891. — Any  such  association  shall  have  authority  to  consolidate  with 
one  or  more  other  corporations  organized  for  the  same  purpose,  upon  such 
terms  as  may  be  agreed  upon  when  such  consolidation  shall  be  deemed  ad- 
visable by  a  majority  vote  of  its  members,  and  to  transfer  to  such  consolidated 
corporation  its  entire  assets  subject  to  the  vested  rights  of  its  members. 

Sec.  2892. — All  securities,  cash,  mortgages,  certificates,  bonds,  notes,  receipts, 
statements  and  records  heretofore  deposited  with  or  received  by  the  state 
auditor  pursuant  to  law,  shall  upon  the  passage  of  this  act,  be  transferred  and 
delivered  bv  him  to  the  slate  treasurer,  who  shall  receive  the  same,  and  who 
with  his  sureties  shall  be  liable  for  the  safekeeping  thereof.  The  treasurer 
shall  deliver  up  such  securities  only  upon  the  written  order  of  the  public  ex- 
aminer except  in  pursuance  of  this  act.  All  securities  of  such  association 
heretofore  required  to  be  deposited  with  the  state  auditor  shall  be  hereafter 
deposited  as  in  this  act  provided.  Upon  filing  any  mortgage,  the  treasurer 
shall  receive  a  fee  of  fifteen  (15)  cents  therefor,  and  upon  withdrawal  of  the 
same  he  shall  receive  a  fee  6(  ten  (10)  cents  therefor,  to  be  paid  by  the 
association  so  filing  or  withdrawing  it. 

Sec.  2893. — The  public  examiner  and  state  treasurer  respectively  shall 
retain  all  the  fees  by  this  act  provided  to  be  paid  to  them  or  either  of  them 
in  lieu  of  any  allowance  for  clerk  hire  made  necessary  by  the  extra  labor 
imposed  by  this  act,  and  they  are  respectively  hereby  authorized  and  em- 
powered to  make  and  execute  any  and  all  orders,  releases  or  other  papers 
which  the  state  auditor  was  heretofore  authorized  to  make  or  execute  in  the 
premises. 

Sec.  2894.— At  least  thirty  (30)  days  nrior  to  any  annual  or  special  meeting 
of  the  stockholders  of  any  such  association  governed  by  this  act,  a  notice  stat- 
ing the  time  and  place  of  such  meeting  shall  be  deposited  in  the  postoffice  at 
the  headquarters  of  such  association,  directed  to  each  member  to  his  address 
as  the  same  appears  at  such  time  on  the  books  of  the  association,  and  when 
so  deposited,  postage  prepaid,  shall  be  deemed  a  legal  and  sufficient  notice  of 
any  such  meeting,  and  there  shall  be  attached  to  and  accompany  such  notice 
any  proposed  amendment  or  amendments  to  the  articles  of  incorporation,  of 
any  such  association,  and  a  statement  of  any  officers  to  be  elected  at  such 
meeting.  Any  amendments  so  proposed  and  of  which  such  notice  shall  have 
been  duly  given,  may  be  adopted  at  such  meeting  by  the  vote  of  two-thirds 
of  the  stock  represented  and  voting  thereat.  Any  member  of  such  associa- 
tion entitled  to  vote  at  such  meeting  may  vote  in  person  or  by  proxy  ;  but  no 
person  shall  be  appointed  such  proxy  who  shall  not  reside  in  the  same  county 
where  the  stockholder  so  appointing  him  resides  at  the  time  of  such  appoint- 
ment, except  that  stockholders  residing  outside  of  this  state  may  appoint 
proxies  residing  in  any  county  in  this  state  ;  and  no  person  shall  be  appointed 
proxy  in  any  case  who  is,  at  the  time,  an  officer,  agent  or  employee  of  any 
such  association  ;  and  no  person  shall  hold  proxies  to  exceed  five  hundred 
votes  for  any  such  meeting. 

Upon  all  questions  to  be  voted  upon  at  such  meeting  the  vote  shall  be  taken 
by  calling  the  roll  of  persons  entitled  to  vote  thereat  with  the  number  of  votes 
which  each  is  entitled  to  cast,  and  the  vote  shall  be  by  written  or  printed 
ballot,  the  form  for  which  may  be  prescribed  by  the  board  of  directors. 

Approved  April  2},  1891. 

[ACTS  1895,  p.  238.] 

This  act  shall  not  apply  to  any  association  organized  under  the  laws  of  this 

state  which  confines  its  loaning  and  business  operation   wholly  to  its  county 

and  the  counties  adjacent  and  adjoining  thereto  ;  Provided,  that  any  such  as- 

iiion  heretofore  incorporated  which  desires  hereafter  to  confine  its  busi- 

it counties,  as  aforesaid,  may  file  with  the  public  examiner  a 

statemenf  to  thai  effect,  and  also  containing  the  names  of  those  holding  the 

by  them  of   the  Stock  of  said  association  outside  such   counties; 

an'!  iation  thereafter  confines  its  sales  of  stock  within  the 

limit    afon  said  it  -hall  nol  he  subject  to  the  provisions  hereof  ;  and  anysales 

of    ti  limil    ol    aid  counties  made  after  filing  of  such  statements 

ny  officer,  directoi  or  agenl  <•!  any  such  association  shall  subject  such 

on  to  all  the  penalties  prescribed  in  section  twenty-four  of  this  act  ;  /'/<>- 

■.■id,  d,  further,  that  nothing  in  this  section  shall  be  so  construed  to  prevent  the 

of  the  indiviilu.il  .lock  of  any  member  of  such  asso- 

ciatioa 

1  oved  April  25, 1895. 


GENERAL   LEGISLATION.  769 

(ACTS  1895,  p.  312). 

Section  1. — It  shall  be  lawful  for  any  building,  loan  and  savings  associa- 
tion, doing  a  general  business  and  incorporated  under  the  laws  of  this  state, 
to  receive  deposits  and  invest  their  surplus  money  as  hereinafter  provided. 

Sec.  2. — Any  such  association  may,  by  a  resolution  of  a  majority  of  the 
board  of  directors,  invest  its  surplus  moneys  not  otherwise  invested  as  pro- 
vided by  law,  in  the  purchase  of  real  estate  at  any  tax  sale  held  in  any  county 
in  this  state,  or  in  the  purchase  from  the  state  of  any  lands  bid  in  for  or  by  the 
state  at  any  such  tax  sale,  pursuant  to  the  statutes  in  such  case  made  and  pro- 
vided, and  remaining  unredeemed  ;  and  the  auditor  of  the  county  wherein 
the  lands  so  purchased  are  situated  shall  execute  to  the  association  so  pur- 
chasing a  certificate  of  sale,  or  a  state  assignment  certificate,  as  the  case  may 
be,  as  if  the  purchaser  were  a  natural  person  ;  Provided,  that  the  amount  so 
invested  in  each  month  shall  not  exceed  fifty  (50)  per  centum  of  moneys  not 
otherwise  invested  in  any  one  month  ;  Provided,  further,  that  the  full  amount 
so  invested  shall  not  at  any  time  exceed  twenty  (20)  per  centum  of  the  whole 
amount  otherwise  invested.  But  no  moneys  shall  be  invested  in  such  tax 
titles  except  such  moneys  as  shall  have  accumulated  and  remained  uninvested 
for  a  period  of  sixty  (60)  days  after  all  acceptable  applications  for  loans  by 
its  members  shall  have  been  provided  for. 

Sec.  3. — Any  association  mentioned  in  section  one  (1)  of  this  act,  to  which 
a  certificate  of  sale  or  a  state  assignment  certificate  is  issued,  pursuant  to 
section  three  (3)  of  this  act,  shall,  if  the  lands  therein  described  are  not  re- 
deemed according  to  law,  take  hold  and  own  the  same  in  fee-simple  and  be 
authorized  to  sell  and  convev  the  same  to  all  intents  and  purposes  and  to  the 
same  extent  and  degree  as  if  said  lands  had  been  acquired  by  such  association 
in  the  regular  course  of  its  business  under  and  pursuant  to  chapter  one  hun- 
dred and  thirtv-one  (131)  of  the  general  laws  of  1891,  entitled  "  An  act  to 
amend  an  act  entitled,  'An  act  relative  to  building,  loan  and  savings  associa- 
tions, doing  a  general  business,  the  same  being  chapter  two  hundred  and 
thirty-six  (236)  of  the  general  laws  of  one  thousand  eight  hundred  and  eighty- 
nine  (1889)  and  all  acts  and  parts  of  acts  and  all  laws  of  this  state  incon- 
sistent with  this  act  are  hereby  repealed. 

Approved  April  26th,  1895. 

MISSISSIPPI. 

ANNOTATED  CODE  OF  1892. 

Sec  851. — A  loan  of  money  shall  not  be  made  by  a  corporation  to  any  stock- 
holder therein  *  *  *  ;  but  banks  and  building  associations  may  loan  money 
to  their  stockholders. 

ACTS  1898,  p.  10. 

Sec  1. — A  privilege  tax  is  levied  as  follow  son  the  following  industries 
carried  on  in  this  state,  to-wit.     *  *  * 

Sec  13.  Building  and  Loan  Associations  :  On  each  building  and  loan 
association  whose  stock  or  shares  represent  monthly  payments  not 
exceeding  five  hundred  dollars        -------  25  00 

Same  :  Whose  shares  of  stock  represent  monthly  payments  of  five 
hundred  dollars  or  more  and  less  than  one  thousand  dollars        -  50  00 

Same  :  Whose  stock  or  shares  represent  monthly  payments  of  one 

thousand  dollars  or  more  and  less  than  two  thousand  dollars        -        100  00 

Same  :  Whose  stock  or  shares  represent  monthly  payments  of  two 
thousand  dollars  or  more  and  less  than  three  thousand  dollars        -     15000 

Same  :  Whose  stock  or  shares  represent  monthly  payments  of  three 

thousand  dollars  or  more 200  00 

And  each   building    and    loan    association    incorporated  by  any  foreign 

country,  or  other  state  of  this  union,  but  whose  principal  office  is  not  in  this 

state,  and  which  shall  establish  agencies  or  branches  in  this  state,  shall  pay 

to  the  treasurer  of  the  state  direct  a  privilege  tax  as  follows  : 

ON   EACH   BUILDING   AND   LOAN   ASSOCIATION, 

Whose  stock  or  shares  held  by  residents    in    this   state  represent 

monthly  payments  of  not  exceeding  five  hundred  dollars        -        -        25  00 

Same  :  Whose  stock  or  shares  held'bv  residents  of  this  state  represent 
monthly  payments  of  five  hundred  dollars  or  over  and  less  than 
one  thousand  dollars 50  00 


770  APPENDIX   IV. 

Same  :  Whose  stock  or  shares  held  by  resident  owners  in  this  state 
represent  monthly  payments  of  one  thousand  dollars  or  over  and 
less  than  two  thousand  dollars        -- ioo  00 

Same  :  Whose  stock  or  shares  held  by  resident  owners  in  this  state 
represent  monthly  payments  of  two  thousand  dollars  and  less  than 
three  thousand  dollars        -__.".____  j-0  oo 

Same  :  Whose  stock  or  shares  held  by  resident  owners  in  this  state 
represent  monthly  payments  of  more  than  three  thousand  dollars    250  00 

Same  :  And  all  building  and  loan  associations  within  this  state,  or  doing 
business  in  this  state,  who  loan  their  money  to  others  besides  their  own  mem- 
bers, or  exclusively  to  others  than  their  members,  the  same  privilege  as  is 
herein  imposed  on  building  and  loan  associations  which  loan  exclusively  to  its 
members.  And  the  above  tax  on  building  and  loan  associations  shall  be  in 
lieu  of  all  other  taxes,  whether  state,  county  or  municipal  (except  tax  on  real 
estate)  shall  be  made,  and  this  applies  to  both  resident  and  non-resident  com- 
panies doing  business  in  this  state  ;  and  when  any  foreign  building  and  loan 
association  shall  desire  to  pay  any  such  privilege  tax,  the  treasurer  of  this 
state  shall  require  from  said  association  a  statement,  verified  and  sworn  to  by 
the  president  and  secretary  of  said  association,  of  the  actual  amount  of  stocks 
and  shares  of  stock  held  by  residents  of  this  state  in  said  association,  for  any 
and  all  calendar  months  for  six  months  next  before  the  date  of  the  application 
for  such  privileges,  and  from  said  statement  the  treasurer  shall  estimate  the 
said  privilege  and  report  the  same  to  the  auditor  of  public  accounts,  who  shall 
issue  the  privilege,  upon  the  payment  to  him  by  said  association  the  tax  due  in 
accordance  with  the  schedule  set  out  in  this  act. 

ACT  1S96,  p.  33. 

Foreign  mutual  benefit  or  insurance  or  building  and  loan  or  saving  associa- 
tions doing  business  in  the  state  of  Mississippi,  through  local  sections, 
branches,  lodges  or  bodies,  shall,  by  special  appointment,  in  writing,  executed 
like  letters  of  attorneys  to  be  recorded  in  the  same  manner  in  the  office  of  the 
chancery  clerk  where  such  agent  resides,  or  by  law,  designate  some  member 
of  such  local  section,  branch,  lodge  or  body,  in  each  county  in  which  such 
benefit  or  insurance  or  building  and  loan  or  saving  association  may  do 
business,  who  shall  receive  process  of  summons  in  any  suit  against  such 
mutual  association.  Should  such  foreign  organization  refuse  or  neglect  to 
comply  with  the  provisions  of  this  act,  then  the  member  of  such  local  order  or 
section  who  collects  from  the  members  thereof  their  dues  or  assessments,  or 
who  transmits  or  reports  such  collections  to  the  chief  or  supreme  officers  of 
such  foreign  association,  shall  be  deemed  the  agent  of  such  organization  upon 
whom  the  service  of  process  issued  by  any  court  in  this  state,  shall  be  sufficient 
to  compel  the  appearance  of  such  defendant 

Approved  March  9,  1896. 

MISSOURI. 

ACTS  1895,  P-  28- 

Sec.  1. — Any  number  of  persons,  not  less  than  twenty-five,  who  are  residents 
of  this  state,  and  who  shall  have  associated  themselves  together  by  an  agree- 
ment in  writing,  such  as  is  hereinafter  described,  with  the  intention  to  con- 
stitute a  corporation  for  the  purpose  of  assisting  each  other,  and  all  who  may 
.  /ard  bei  ome  associated  with  them,  in  acquiring  real  estate,  making  im- 
I  rovements  thereon,  and  removing  incumbrances  therefrom,  by  advancing 
to  its  members  out  01  a  fund  accumulated  by  the  payment  of  periodical  instal- 
ments or  otherwise,  a  sum  equal  to  the  par  of  their  shares,  and  for  the  further 
I  11 1  ose  of  accumulating  the  savings  of  its  members  to  be  returned  to  such 
ol  its  members  who  do  not  obtain  advances  for  any  of  tlie  purposes  above 
ntioned,  when  the  savings  and  the  profits  arising  therefrom  shall  amount 
toa  '  ■  rtain  sum  per  share,  to  I  •  •   fied  in  the  articles  of  agreement,  shall 

tie  .1  1  orporation  on   com]  lying  with  the  provisions  oi  this  act,  and  shall 
tin  a  (  or]  oration,  with  all  the  powers  and  privileges,  and  subject  to  all 
the  dutie  ,  [imitations  and  restrictions,  conferred  by  general  laws  upon  cor- 
poration ,  <■■■:<  <  1  1  as  hereinafter  otherwise  provided. 

Si  o.  2. — Said  articles  ol  agreemenl  mentioned  in  the  foregoing  section  shall 
<••!  forth  : 

t.  The  name  of  the  proposed  corporation,  which  shall  not  be  the  same  as 
Uic  name  oi  any  coi  poration  already  incoi  porated  in  this  state  for  similar  pur- 


GENERAL   LEGISLATION.  771 

poses  and  actually  carrying  on  business,  nor  so  nearly  the  same  as  to  be 
liable  to  be  mistaken  therefor.  The  words  "  building  and  loan  association," 
or  "savings  and  loan  association,"  shall  form  part  of  the  name  of  every  corpo- 
ration created  under  this  act. 

2.  The  name  of  the  city  or  town  and  county  in  which  such  association  is  to 
be  located. 

3.  The  limit  of  the  capital  to  be  accumulated,  the  number  of  shares  into 
which  it  is  divided  and  the  par  value  of  each  share,  the  number  of  shares  sub- 
scribed for,  which  shall  not  be  less  than  30  in  number,  and  that  the  hrst 
month's  dues  have  been  paid  there  m. 

4.  The  names  and  places  of  residence  of  the  several  incorporators,  and  the 
number  of  shares  subscribed  by  each. 

5.  The  number  of  directors  and  the  names  of  those  agreed  upon  for  the  first 
year. 

6.  The  number  of  years  the  corporation  is  to  continue,  which  in  no  case 
shall  exceed  fifty  years. 

7.  The  purposes  for  which  the  corporation  is  formed. 

The  articles  of  agreement  shall  be  signed  and  acknowledged,  as  required 
by  law  in  the  case  of  deeds  conveying  real  estate,  by  any  ten  of  the  parties 
thereto,  and  shall  be  recorded  in  "the  office  of  the  recorder  of  deeds  in  the 
count v  or  city  in  which  the  corporation  is  to  be  located  ;  and  a  copy  thereof, 
certified  by  the  said  recorder  to  be  a  correct  copy  of  the  same  as  filed  in  his 
office,  shall  be  filed  in  the  office  of  the  secretary  of  state. 

Sec.  3. — The  shareholders  of  such  corporation  may  make  and  adopt  all  nec- 
essary by-laws,  rules  and  regulations  for  the  government  of  the  affairs  and 
business  of  the  corporation,  provided  that  the  same  shall  not  be  inconsistent 
with  the  constitution  or  laws  of  the  state.  A  copv  of  such  by-laws,  rules  and 
regulations  shall  be  filed  in  the  office  of  the  state  treasurer.  Unless  corpora- 
tions organized  hereunder  shall  engage  in  business  as  provided  in  this  act 
within  two  years  after  the  date  of  the  issuing  of  the  certificate  of  incorpora- 
tion, such  certificate  shall  be  deemed  revoked. 

Sec.  4 — The  number,  title  and  functions  of  the  officers  of  any  corporation 
created  by  virtue  of  this  or  any  previous  act,  their  terms  of  office,  the  time  of 
their  election,  as  well  as  the  qualification  of  electors,  and  the  time  of  each 
periodical  meeting  of  the  officers  and  shareholders  of  such  corporation,  shall 
be  provided  for  in  the  by-laws.  No  person  shall  be  eligible  to  become  or 
shall  continue  a  director  unless  he  shall  be  the  owner  of  at  least  two  shares 
of  the  capital  stock  of  such  corporation,  and  not  delinquent  in  any  manner 
upon  any  payments  due  from  him  to  said  corporation.  Any  proxy  dated  prior 
to  six  months  before  the  annual  meeting  of  any  association's),  as  provided  in 
its  by-laws,  shall  be  void.  All  officers  of  any  building,  loan  and  savings  as- 
sociation (except  the  president  and  vice-president)  doing  business  in  this 
state,  whether  created  under  this  act  or  any  previous  laws  of  this  state,  who 
have  the  custody  or  handling  of,  sign  or  indorse  checks,  or  any  of  the  funds 
or  securities  of  such  association,  shall  give  such  security  for  the  faithful  per- 
formance of  their  duties  as  the  by-laws  may  require,  and  no  such  officer 
shall  be  deemed  qualified  to  enter  upon  the  duties  of  his  office  until  such 
security  is  approved  by  the  board  of  directors  and  the  circuit  court  in  the 
county  in  which  the  main  office  of  the  association  is  located.  All  such  bonds 
shall  be  filed  with  the  state  treasurer,  or  some  depository  designated  by  him  : 
Provided,  that  the  state  treasurer  may  require  of  any  officer  at  any  time  such 
additional  security,  or  such  increase  of  said  bond,  or  new  bond,  as  he  may, 
upon  sufficient  cause  shown,  deem  necessary  for  the  protection  of  the  corpo- 
ration and  its  members.  The  penalty  for  the  failure  of  any  ass.  .ciatii  m  to  hie 
and  maintain  security  furnished  by  its  officers,  as  required  by  provisions  of 
this  section,  shall  be  a  fine  of  ten  dollars  ($10)  for  each  day  such  association 
shall  transact  business  after  the  time  such  bond  should  have  been  given  and 
deposited  under  the  provisions  of  this  act,  which  penalty,  when  collected, 
shall  be  paid  into  the  state  treasury  and  credited  to  the  building,  loan  and 
savings  association  fund  in  the  state  treasurer's  office. 

Sec.  5.— No  corporation  created  under  this  act  shall  cease  or  expire  from 
neglect  on  the  part  of  such  corporation  to  elect  officers  at  the  time  mentioned 
in  the  charter  or  by-laws,  and  all  officers  elected  by  such  corporations  'shall 
hold  their  respective  offices  until  their  successors  are  duly  elected. 

Sec.  6.— The  object  of  such  corporations  shall  be  the  accumulation  of  a 
capital  in  money,  to  be  derived  from  payments  by  its  members  in  periodical 
instalments  or  otherwise,  at  such  time  and  in  such  manner  as  shall  be  pro- 
vided in  the  by-laws,  and  from  the  profits  and  accumulation  arising  from  the 
investment  of  such  payments.    The  capital  so  accumulated  by  any  corpora- 


772  APPENDIX   IV. 

tion  created  by  virtue  hereof  shall  not  exceed  in  the  aggregate  and  full  ulti- 
mate value  the' sum  of  ten  million  dollars,  and  shall  be  divided  into  shares  or 
equal  value  ;  the  ultimate  value  of  such  shares  shall  not  exceed  one  thousand 
dollars.  Said  capital  may  be  issued  in  full  paid,  prepaid  or  instalment  shares, 
in  such  amounts  and  at  such  times  and  in  such  manner  as  may  be  provided  in 
the  by-laws.  Payments  of  dues  or  instalments  on  shares  shall  commence 
and  date  from  the  time  provided  in  the  by-laws.  There  shall  be  issued  to 
every  shareholder  a  certificate  signed  by  the  president  and  secretary  of  the 
corporation,  and  evidenced  by  its  corporate  seal,  setting  forth  distinctly  and 
clearly  the  class  of  stock  for  which  he  has  subscribed,  and  the  provisions  in 
the  by-laws  relating  to  stock  of  the  class,  the  interest  which  it  may  draw,  and 
the  withdrawal  value  which  it  may  have  at  any  time,  and  also  the  time  when 
the  said  stock  shall  be  withdrawable.  Such  certificate  shall  be  deemed  in  all 
courts  of  justice  to  be  a  contract  between  the  corporation  and  the  share- 
holder, and  shall  determine  at  all  times  the  liability  of  the  corporation  to  the 
holders  of  its  shares.  It  shall  be  subject  to  a  lien  in  favor  of  the  corporation 
for  the  payment  of  unpaid  instalments,  hues  and  other  charges  incurred 
thereon,  under  the  provisions  of  the  charter  and  by-laws.  The  by-laws  may 
prescribe  the  form  and  manner  of  enforcing  such  lien.  New  shares  may  be 
issued  in  lieu  of  any  shares  withdrawn,  redeemed,  cancelled  or  forfeited. 
Said  capital,  as  accumulated,  shall  from  time  to  time  be  loaned  or  advanced  to 
members  of  the  corporation,  who  shall  give  security  for  the  prompt  and  con- 
tinued payment  of  all  dues,  interest,  premiums  and  fines,  until  each  of  the 
shares  so  advanced  upon  shall  reach  the  ultimate  and  full  value  thereof. 

Sec.  7. — The  moneys  accumulated  for  payments  on  account  of  stock,  inter- 
est, premiums  and  fines  as  aforesaid,  or  from  any  other  source  whatsoever,, 
after  due  allowance  made  for  all  necessary  and  proper  expenses,  and  subject 
to  the  provisions  hereinafter  in  section  15  contained  and  set  forth  respecting 
the  withdrawal  and  cancellation  of  shares,  may,  at  times  provided  in  the  by- 
laws, be  offered  to  such  shareholder  or  shareholders  who  shall  bid  the  highest 
premium  for  the  preference  or  priority  of  right  to  have  a  loan  or  advance  of 
a  sum  equal  to  the  ultimate  value  of  one  or  more  of  his  or  their  respective 
shares  ;  and  such  shareholders  so  bidding  the  highest  premium  as  aforesaid 
shall  be  entitled  to  receive  a  loan  or  advance  of  [a]  sum  of  money  equal  to 
the  full  value  of  each  share  held  by  him,  in  the  method  provided  for  in  the 
by-laws  of  such  association  ;  the  said  premium  bid  may  be  deducted  in  gross 
from  the  amount  of  the  loan,  or  may  be  charged,  and  be  required  to  be  paid 
in  proportionate  amounts  or  instalments,  at  such  time  during  the  existence  of 
the  shares  of  stock  loaned  or  advanced  upon  as  may  be  provided  in  the  by- 
laws of  the  association  ;  Provided,  that  where  the  stock  of  an  association  is 
issued  in  series,  or  at  different  times,  in  such  manner  that  all  said  stock  will 
not  mature  at  the  same  time,  then  the  borrower  shall  pay  only  such  propor- 
tion of  the  full  premium  as  the  number  of  months  his  stock  lacks  of  being 
one  hundred  and  twenty  months  old,  bears  to  one  hundred  and  twenty 
months.  Said  association  may  provide  in  its  by-laws  that  the  bid  for  loans  at 
its  stated  meetings,  instead  (if  a  premium  shall  be  a  stated  rate  of  annual  in- 
I  upon  the  sum  desired,  payable  in  periodical  instalments  ;  such  bids 
shall  be  the  interest  to  be  paid  during  the  whole  period  of  the  loan  or  ad- 
vance.  A  shareholder  shall  be  entitled  to  borrow  such  fractional  part  of  a 
share  as  the  by-laws  mav  provide.  In  case  there  shall  be  a  balance  of  money 
remaining  undisposed  of  at  any  stated  meeting,  the  directors  may,  at  their 
di  cretion,  loan  the  funds  so  remaining  on  hand  l<>  others  than  stockholders 
on  til  .  of  prime  unincumbered  real  estate;  Provided,  that  any  such 

ition  may,  by  its  by-laws,  dispense  with  the  ol  ering  of  its  money  for 
bid-,  and  in  lieu  thei  eof  loan  or  advance  its  money  to  members  al  such  a  rate 
ot  im  or  interests  and  premium  as  may  be  provided  by  the  by-laws,  such 

1    1  be  paid  in  gross  instalments. 

>]  loans  or  ad  vain  es  as  af<  iresaid  shall  consist  of  a  per- 

011  the  ..in  Mini  to  In-  loaned,  advanced  or  bon  ov  ed,  and   shall  be  a 
1  addition  to  inter  aforesaid,  on  the  amount  loaned,  and   said 

n    hall  !"■  <li  emed  and  taken  to  in-  .1  ,  on  iderati< r  bonus  paid  by 

the  borrower  f 01  1  ent  and  immediate  use  and  possession  of  the  future 
or  ultimate  value  ol  the  shares  so  pledged,  and  shall,  together  with  interest 
and  fine   ;  eived  by   aid  corporation  as  a  profit  on  the  amount  of 

ll  in    .    i,  ,|  in    .11-!  loan,  and  shall   be   ratably  divided   and   distributed   to 

il ties  and    '■!  ies  ol  said  capital, 
fo  premium,  fines  or  interest  or  interest  on  such  premiums,  that 
01  accrue  to  tin-  said  corporation  according  to  the  pro- 
ai  tide,  shall  be  deemed  usui  ie  ,  and  the  same  may  be  collected 


GENERAL   LEGISLATION.  773 

as  debts  of  like  amount  are  now  by  law  collected  ;  Provided,  that  this  section 
shall  be  no  protection  against  any  unreasonable  and  extortionate  charge,  fine 
or  interest  made  by  such  corporation  in  ils  spirit  usurious,  and  oppressive 
acts,  and  they  shall  be  open  to  investigation  and  correction  by  the  courts  of 
the  state. 

Sec.  io. — For  every  loan  or  advance  made  as  aforesaid,  a  non-negotiable 
note  or  a  bond  secured  by  first  mortgage  or  deed  of  trust  on  real  estate  shall 
be  given,  accompanied  by  a  transfer  and  pledge  of  the  shares  of  stock  of  the 
member  or  members  so  obtaining  a  loan  or  advance.  Said  shares  so  trans- 
ferred and  pledged  shall  beheld  by  corporation  as  additional  or  collateral 
security  for  the  performance  of  the  agreements,  covenants  and  conditions  of 
said  note  or  bond  and  mortgage  or  deed  of  trust.  Said  note  or  bond  and 
mortgage  or  deed  of  trust  snail  recite  and  set  forth  the  number  of  shares 
transferred  and  pledged  by  the  particular  shareholder  so  borrowing,  and  the 
amount  of  money  advanced  thereon,  and  shall  be  expressed  to  be  conditioned 
for  the  payment  at  the  stated  meetings,  or  at  such  other  times  as  maybe 
agreed  upon,  of  [to]  the  corporation  of  the  dues  on  the  number  of  shares  so 
pledged  and  advanced  upon,  and  the  interest  and  premium  u[  on  the  loan  or 
advance  for  which  said  shares  are  pledged,  and  said  note  or  bond  and  mort- 
gage or  deed  of  trust  given,  together  w*ith  all  fines  chargeable  upon  arrears 
of  such  payment,  until  said  shares  shall  reach  the  ultimate  value  thereof,  or 
said  loan  shall  be  otherwise  sooner  cancelled  and  discharged  ;  Provided, 
however,  that  the  shares  of  the  particular  corporation,  without  other  security, 
may,  in  the  discretion  of  the  board  of  directors,  be  accepted  as  securitv  lor 
loans  or  advances,  to  an  amount  not  exceeding  three-fourths  of  the  with- 
drawal value  of  such  shares  at  the  time,  as  shown  by  the  books  of  such 
association.  In  case  a  shareholder  shall  neglect  to  offer  security  for  a  loan 
or  advance,  within  such  time  as  the  by-laws  may  prescribe,  or,  offering 
security,  the  same  shall  not  be  approved  or  accepted  by  the  board  of  direct*  1  s, 
his  right  to  such  loan  or  advance  shall  be  forfeited,  and  he  shall  be  charged 
with  and  pay  interest  and  premium  at  the  agreed  rate,  until  the  next  stated 
meeting,  together  with  all  expenses  incurred,  if  any  ;  and  the  money  so  for- 
feited shall  be  subject  to  be  reloaned  at  the  next  or  any  subsequent  stated 
meeting.  The  provisions  of  this  section  shall  apply  to  corporations  hereto- 
fore organized  as  well  as  to  those  hereafter  to  be  organized. 

Sec.  II. — In  case  any  borrowing  shareholder  shall  for  the  period  of  six- 
successive  months  fail  to  pay  the  dues,  interest,  fines  and  other  charges  re- 
quired of  him  by  the  by-laws,  or  shall  become  indebted  to  such  association  in 
a  sum  equal  to  the  gross  amount  of  the  dues,  interest,  fines  and  other  charges 
for  the  period  of  six  months,  the  association  may  proceed,  according  to  law, 
to  foreclose  the  mortgage  or  deed  of  trust  given  by  such  borrower  as  security 
for  the  loan,  in  which  event  the  defaulting  borrower,  in  addition  to  amount 
loaned,  as  shown  by  the  bond  and  mortgage  or  deed  of  trust  given  by  such 
borrower,  shall  be  charged  with  all  dues,  interest,  premiums  and  fines  and 
other  sums  due  and  in  arrears,  and  shall  have  and  be  given  credit  for  the 
withdrawal  value  of  the  shares  pledged  and  transferred  by  him  as  aforesaid, 
in  accordance  with  the  rule  hereinafter,  in  section  No.  15,  provided  for  the 
withdrawal  and  cancellation  of  shares.  Where  the  full  amount  of  agreed 
premium  has  been  deducted  at  the  time  of  making  the  loan  or  advance,  the 
borrower  shall  also  be  credited  with  one  one  hundred  and  twentieth  part  of  the 
amount  of  the  premium  for  every  month  that  the  series  in  which  the  loan  was 
made  lacks  of  being  one  hundred  and  twenty  months  old  ;  and  the  balance 
found  to  be  remaining  due  over  and  above  such  credit,  together  with  all 
expenses  incurred  in  and  about  the  foreclosure  of  said  deed  of  trust,  shall  be 
recovered  and  enforced  on  his  security.  If  the  amount  realized  from  the  sale 
of  the  property  pledged  for  the  loan  or  advance,  less  all  legal  charges,  shall 
exceed  the  amount  thus  found  due,  the  balance  shall  be  paid  to  the  delinquent 
borrower. 

Sec.  12. — Any  corporation  created  by  or  under  this  act  is  herebv  authorized 
and  empowered  to  purchase  at  any  sheriff's  or  other  judicial  sale,  or  at  any 
other  sale,  public  or  private,  any  real  estate  upon  which  such  corporation  may 
have  or  hold  any  mortgage,  deed  of  trust,  judgment,  lien  or  other  encum- 
brance, or  in  which  such  corporation  may  have  an  interest  ;  and  the  real 
estate  so  purchased  to  sell,  convey,  lease  or  mortgage,  at  pleasure,  to  any 
person  or  persons  whatsoever. 

Sec.  13. — A  shareholder  may  repay  a  loan  at  any  time  upon  application  to 
said  corporation,  by  giving  thirty  days'  notice  in  writing,  upon  such  terms 
and  conditions  as  may  be  prescribed  in  the  by-laws  of  the  association  ;  if 
there  be  no  such  by-law,  then,  on  settlement  of  his  account,  such  borrower 

50 


774  APPENDIX   IV. 

shall  be  charged  with  the  full  amount  of  the  loan  as  originally  made  to  him, 
together  with  all  instalments  of  dues,  interest,  premium  and  tines,  and  other 
sums  of  money,  then  remaining  due  and  unpaid,  and  shall  receive  and  be 
given  credit,  if  he  desires  to  surrender  his  shares,  for  the  withdrawal  value  of 
the  shares  pledged  and  transferred  by  him  as  security  for  said  loan,  in  ac- 
cordance with  the  rule  hereinafter  (in  section  15)  provided  for  the  withdrawal 
and  cancellation  of  shares  ;  and  where  the  full  amount  of  the  agreed  premium 
bid  has  been  deducted  at  the  time  of  making  the  loan  or  advance,  then  the 
borrower  shall  also  be  credited  with  one  one  hundred  and  twentieth  part  of 
the  amount  of  the  gross  premium  bid  for  every  month  that  the  series  in  which 
the  loan  was  made  lacks  of  one  hundred  and  twenty  months  old;  and  the 
balance  found  remaining  due,  over  and  above  such  credit,  shall  be  received 
by  said  corporation  in  full  satisfaction  and  discharge  of  said  loan  or  advance  ; 
Provided,  that  all  settlements  made  at  periods  intervening  between  stated 
meetings  of  the  directors  shall  be  made  as  of  the  date  of  the  stated  meeting 
next  succeeding  such  settlement  ;  And  provided  further,  that  a  shareholder 
desiring  to  retain  his  shares  and  membership  thereunder  may,  at  his  option, 
repay  his  loan,  as  above  provided,  without  claiming  credit  for  said  shares  as 
part  payment  of  the  amount  of  his  debt,  whereupon  said  shares  shall  be 
transferred  to  him,  and  he  shall  assume  and  be  entitled  to  all  privileges  of 
non-borrowing  members,  free,  clear  and  discharged  of  and  from  any  claim 
thereon  by  reason  of  said  cancelled  loan  or  advance. 

Sec.  14. — Each  shareholder  shall  pay  to  said  corporation,  at  or  before  each 
stated  meeting  of  the  directors,  or  at  such  time  as  may  be  provided  in  the  by- 
laws, as  a  contribution  to  the  capital  thereof,  the  sum  fixed  as  dues  for  each 
and  every  share  held  by  him,  until  each  share  shall,  under  the  provisions  of 
this  act,  reach  the  ultimate  value  thereof — provided  that  no  funds  shall  be 
taken  from  one  series  to  mature  any  other  series — or  the  by-laws  of  the  asso- 
ciation may  authorize  the  board  of  directors  to  allow  and  pay  interest,  at  a 
rate  not  exceeding  eight  per  cent,  per  annum,  on  such  instalments  as  are  paid 
in  advance.  Whenever  an  unpledged  share  shall  reach  its  maturity,  all  pay- 
ments thereon  shall  cease,  and  the  holder  thereof  shall  be  entitled  to  receive, 
and  shall  be  paid  out  of  the  funds  of  the  said  corporation,  the  maturing  value 
thereof ;  and  from  the  date  of  such  maturity  to  the  date  of  such  payment 
shall  also  be  entitled  to  receive,  and  shall  be  paid,  interest  at  rate  not  exceed- 
ing eight  per  cent,  per  annum,  on  the  sums  so  due  and  payable ;  Provided, 
however,  that  at  no  time  shall  more  than  one-half  of  the  funds  in  the  treasury 
be  applicable  to  the  payment  of  such  matured  shares  without  the  consent  of 
the  directors  ;  And  provided  further,  that  the  directors  of  said  corporation 
may,  at  their  discretion,  under  rules  made  by  them,  retire  the  unpledged  full- 
paid  shares  or  prepaid  shares  at  any  time,  and  may  in  like  manner  retire 
instalment  shares  at  any  time  after  the  expiration  of  three  years  from  the 
date  of  the  issue  thereof,  by  enforcing  the  withdrawal  of  the  same  ;  Andpro- 
vided further,  that  the  retired  shareholders  shall  be  entitled  to  receive,  and 
shall  be  paid,  the  full  value  of  their  shares  at  the  time,  less  all  fines  and  their 
proportionate  part  of  any  loss.  The  particular  shares  to  be  so  involuntarily 
retired  shall  be  determined  under  such  regulations  as  the  directors  may  pre- 
scribe. Borrowing  shareholders,  for  each  share  borrowed  upon,  shall,  in 
addition  to  the  dues  aforesaid,  pay  the  stated  periodical  payment  of  interest, 
and  in  associations  in  which  the  premium  is  paid  in  instalments,  the  period- 
ical payment  of  premium  agreed  upon,  until  such  shares  shall  reach  the 
ultimate  value  thereof,  when  said  shares  ami  said  loan  shall  be  declared  can- 
!  and  satisfied.  An  association  may,  in  its  by-laws,  provide  that  the 
holders  oi  free  or  unborrowed  shares  shall  not  receive  anymore  than  the  face 
value  of  their  shares,  less  the  average  premium  paid  by  the  borrowers  of 
1  Mon  up  to  date. 

Skc.  i> — Any  shareholder,  or  the  legal  representative  of  any  deceased 
shareholder,  wishing  to  withdraw  from  the  said  corporation,  shall,  subject  to 
IIk- 1  .;  the  by-laws,  and  his  certificate  of  slock  and  the  limitations 

lafter  mentioned,  have  power  to  do  so,  upon  giving  one  month's  written 
his  intention  so  to  do,  delivered  to  the  association  at  or  before  a 
I  meeting  of  the  directors,  or  at  such  other  time  as  (he  by-laws  may  pro- 
ire  a  stated  meeting,  the  lime  of  such  notice  shall  not  be 
(Commenced  to  run  until  (he  first  stated  meeting  thereafter. 
1  .  '  nbei  0  withdrawing,  or,  if  deceased,  his  legal  representative,  shall, 
if  hi  idrawable  according  to  the  term  of  the  contract,  be  entitled 

nand,  the  amount  actually  withdrawable  al  the  time  ol  mak- 

ipplication foi  withdrawal,; rding  to  the  by-laws  of  the  corporation 

and  tl  ions  of  the  certificate  of  stock.    At  no  time,  however,  shall  more 


GENERAL   LEGISLATION.  775 

than  one-half  of  the  receipts  of  the  corporation  for  any  fiscal  month,  and,  when 
the  corporation  is  indebted  on  matured  shares  of  an  earlier'series,  not  more 
than  one-third  of  said  receipts,  be  applicable  to  the  demands  of  the  withdraw- 
ing shareholders,  or  of  shareholders  whose  stock  has  been  forfeited  in  the 
manner  hereinafter  provided,  without  the  consent  of  the  directors  ;  and  when 
the  demands  of  withdrawing  shareholders  exceed  the  moneys  applicable  to 
their  payment,  they  shall  be  paid  in  the  order  in  which  their  notice  of  with- 
drawal shall  have  been  filed  with  the  association.  No  shareholder  shall  be 
entitled  to  withdraw  whose  stock  is  pledged  as  security  for  a  loan  from  the 
association,  or  whose  stock  is  subject  to  any  other  hen  or  charge  in  favor  of 
the  association. 

Sec.  16. — In  case  any  member  not  having  a  loan  from  the  association  shall 
fail  to  pay  dues  or  fines  for  three  months,  then  the  shares  of  such  member 
may,  at  the  option  of  the  board,  be  forfeited  by  paying  back  to  or  crediting  such 
member  with  the  same  amount  as  he  would  oe  entitled  to  if  he  had  voluntarily 
withdrawn,  less  all  tines  and  charges  due.  Should  a  member  fail  entirely 
in  his  payments  for  twelvemonths,  then  his  shares  shall  ipso  facto  be  can- 
celled, and  he  shall  be  credited  with  the  same  amount  as  if  he  had  voluntarily 
withdrawn,  less  all  hues  and  charges  to  date,  and  shall  at  once  cease  to  be  a 
member  ol  the  association.  The  amount  so  placed  to  his  credit  shall  be  paid 
to  him  out  of  the  funds  hereinbefore  made  available  for  that  purpose,  but  shall 
not  bear  interest.  The  by-laws  may  provide  for  fines  to  be  paid  in  case  of 
default  in  payment  of  monthly  dues  and  premiums.  All  payments  made  by 
said  corporation  for  any  purpose  whatsoever  shall  be  by  order,  check  or  draft, 
signed  by  the  president  and  the  secretary.  The  name  of  the  payee,  the  amount 
paid  and  the  purpose  for  which  said  payment  shall  be  made,  together  with 
the  date  of  such  payment,  shall  be  entered  on  the  said  order,  check  or-draft 

Sec.  17. — All  such  corporations  heretofore  and  hereafter  organized  in  this 
state  shall  have  the  power,  if  provided  in  its  bv-laws,  to  borrow  money  for 
temporary  purposes,  not  inconsistent  with  the  objects  or  their  organization  ; 
but  no  loan  for  such  purpose  shall  have  a  longer  duration  than  two  years,  nor 
shall  such  indebtedness  exceed  at  one  time  the  aggregate  amount  of  the  in- 
come from  dues  and  interest  for  six  months. 

Sec.  18. — The  board  of  directors  of  any  association  formed  under  the  pro- 
visions of  this  or  any  previous  act  may  from  time  to  time  declare  dividends 
from  the  earnings  of  the  association,  to  be  paid  or  credited  in  such  manner 
as  may  be  provided  in  the  by-laws,  but  no  dividend  shall  be  declared  except 
from  the  earnings  of  the  association  ;  and  if  the  said  board  of  directors  shall 
declare,  credit  or  pay  any  dividend  when  the  company  is  insolvent,  they  shall 
be  jointly  and  severally  liable,  to  the  extent  of  the  dividend  so  declared,  cred- 
ited or  paid,  for  all  the  debts  of  the  association  then  existing,  or  that  shall  be 
thereafter  contracted  while  they  shall  respectively  continue  in  office  ;  Piv- 
vided,  that  any  of  the  board  of  directors  who  shall  object  to  the  declaring  of 
such  dividend,  or  to  the  payment  or  crediting  of  the  same,  and  who  shall,  at 
any  time  before  the  time  fixed  for  the  payment  thereof,  file  a  certificate  of  his 
objection,  in  writing,  with  the  secretary  of  the  company,  and  with  the  state 
treasurer,  shall  be  exempt  from  such  liability.  But  no  director  who  shall  be 
present  at  any  meeting  when  such  dividend  is  declared  shall  be  exempt  loin 
such  liability,  unless  he  shall  then  and  there  object  to  the  declaration,  credil 
or  payment  of  such  dividend,  and  shall  also  procure  his  objection  to  be  noted 
in  the  book  of  minutes  of  such  association. 

Sec.  19.— Any  officer,  director,  trustee,  attorney,  agent  or  servant  of  any 
association  heretofore  or  hereafter  to  be  incorporated,  who  shall  use  or  dis- 
pose of  any  part  of  the  moneys,  property,  assets  or  funds  of  such  association, 
or  assign,  transfer,  cancel,  deliver  up  or  acknowledge  satisfaction  of  any  bond, 
mortgage  or  other  written  instrument  belonging  to  such  association,  unless 
duly  authorized,  or  otherwise  than  in  the  regular  and  legitimate  business  of 
the  corporation,  or  who  shall  be  guilty  of  any  fraud  in  the  performance  of  his 
duties,  shall  be  liable  civilly  to  the  corporation,  and  also  to  any  other  party 
injured,  to  the  extent  of  the  damage  thereby  caused,  and  shall  also  be  deemed 
guiltv  of  a  misdemeanor. 

Sec.  20.— Any  mutual  building,  loan  and  savings  association  hereinbefore 
organized  under  the  laws  of  this  state  shall  have  power  to  provide  for  the 
transaction  of  future  business  under  the  provisions  of  this  act,  by  calling  a 
meeting  of  its  stockholders  for  that  purpose  ;  notice  of  such  meeting  shall  be 
given  in  the  manner  provided  in  its  by-laws  for  special  or  annual  meetings  of 
stockholders.  When  so  assembled,  the  stockholders  shall  have  the  power,  by 
a  majority  vote  of  the  stockholders  present,  to  change,  alter  or  repeal  their 
present  constitution  and  by-laws,  and  to  adopt  such  new  constitution  and  by- 


776  APPENDIX   IV. 

laws  as  they  may  deem  needful  for  their  future  government,  provided  they  do 
not  conflict  with  the  laws  or  constitution  of  this  state. 

Sec.  21. — Any  two  or  more  corporations  may  unite  and  become  incorporated 
in  one  body,  with  or  without  any  dissolution  or  division  of  the  funds  of  such 
corporations,  or  any  or  either  of  them,  or  any  such  corporation  may  trans- 
fer its  engagements,  funds  and  property  to  any  other  such  corporation 
upon  such  terms  as  may  be  agreed  upon  by  three-fourths  of  the  members 
of  each  of  such  bodies  present  at  the  meeting  of  the  members  con- 
vened for  that  purpose,  by  notice  stating  the  object  of  the  meeting,  sent 
through  the  postofnee  to  every  member,  and  by  a  general  notice,  appearing 
daily  at  least  one  week,  or  weekly  at  least  two  weeks,  in  some  newspaper 
published  at  the  place  of  the  principal  business  of  the  corporation  ;  but  no 
such  transfer  shall  prejudice  any  right  of  any  creditor  of  any  such  corpora- 
tion to  have  payment  of  his  debt  out  of  the  assets  and  property  thereof,  nor 
shall  any  creditor  be  thereby  deprived  of  or  prejudiced  in  any  right  of  action 
then  existing  against  the  officers  or  directors  of  said  corporation  for  any 
neglect  or  misconduct. 

Sec.  22. — Xo  member  of  any  corporation  who  has  borrowed  money  from 
the  same  shall  be  allowed  to  vote  on  any  question  affecting  the  claim  of  such 
corporation  against  himself. 

Sec.  23. — Every  such  corporation  may  extend  the  time  of  its  duration  so  as 
to  make  the  entire  period  of  its  corporate  existence  not  to  exceed  fifty  years, 
by  a  vote  of  three-fourths  of  its  stockholders,  at  any  meeting  called  for  that 
purpose — notice  of  such  meeting  having  been  first  given  as  provided  in  sec- 
tions 2499  and  2500  of  chapter  42  of  the  Revised  Statutes  of  1889  of  the  state  of 
Missouri — and  by  paying  into  the  state  treasury  a  fee  of  five  dollars  for  a  cer- 
tificate of  such  extension. 

Sec.  24. — Foreign  building  and  loan  associations  doing  business  in  this  state 
shall  conduct  their  business  in  this  state  in  accordance  with  the  laws  of  the 
state  governing  domestic  associations,  and  no  such  association  shall  do  any 
business  in  this  state  until  it  shall  procure  from  the  state  treasurer  a  certifi- 
cate of  authority  to  do  so.  To  procure  such  authority  such  association  shall 
comply  with  the  following  provisions  : 

First — It  shall  deposit  with  the  state  treasurer  one  hundred  thousand  dol- 
lars, either  in  cash  or  bonds  of  the  United  States  or  of  the  state  of  Missouri,  or 
of  any  county  or  municipal  corporation  in  the  state  of  Missouri,  satisfactory  to 
the  state  treasurer. 

Second— -It  shall  file  with  the  treasurer  a  certified  copy  of  its  charter,  con- 
stitution and  by-laws,  and  other  rules  and  regulations  showing  its  manner  of 
conducting  business,  together  with  a  statement  such  as  is  required  semi-an- 
nually from  all  associations. 

Third — It  shall  also  file  with  the  said  state  treasurer  a  written  instrument, 
duly  executed,  agreeing  that  a  summons  may  issue  against  it  from  any  city  or 
county  in  this  state,  directed  to  the  sheriff  of  the  county  or  city  in  which  the 
office  of  the  state  treasurer  is  situated,  commanding  him  to  serve  the  same  by 
certified  copy  personally  upon  the  said  state  treasurer,  or  by  leaving  a  copy 
thereof  at  his  office.  The  said  state  treasurer  shall,  however,  mail  a  copy  of 
any  papers  served  upon  him,  postage  prepaid,  to  the  home  office  of  such  asso- 
ciation. 

Sic.  25. — Whenever  such  association  has  complied  with  the  provisions  of 
this  act,  and  the  state  treasurer  is  satisfied  that  such  association  is  doing  busi- 
ness according  to  the  laws  of  this  state, and  is  in  sound  financial  condition,  he 
shall  issue  his  certificate  of  authority  to  such  association  to  do  business  in  this 
Annually  thereafter,  in  the  month  of  January,  upon  the  filing  of  the 
semi-annual  statement  herein  provided  for,  it"  the  state  treasurer  shall  be 
satisfied  as  aforesaid,  he  shall  issue  a  renewal  of  such   certificate  of  authority. 

Sec.  26. — Such  foreign  associations  may  collect  and  use  the  interest  on  any 
1  ities  so  deposited, so  long  as  it  fulfils  its  obligations  and  complies  with 
the  provisions  of  this  act.  It  may  also  exchange  them  for  other  securities  of 
equal  value  and  satisfactory  to  the  secretary  ol  the  state. 

Si  1     27.      rhe  deposit  made  with  the    itate  M  easurer  shall  be  held  as  security 

for  all  claims  of  residents  of  this  state  against  said  association,  and  shall  be 

liable  for  all  judgments  or  decrees  thereon,  and  subjected  to  the  payment  of 

!  tin-   ame  manner  as  the  property  of  other  non-residents.    Should 

ition  cea  e  to  do  business  in   this   state,  the  state  treasurer  may 

cm  tii     in  his  discretion,  after  one  year's  notice  of  the  fact,  retaining 

Buffil  ienl  to  satisfy  all  outstanding  liabilities. 

Sec  28. — Should  the  state  treat  urer find, upon  examination,  that  any  foreign 
association  docs  nut  conduct  its  business  in  accordance  with  the  law,  or  that 


GENERAL   LEGISLATION.  777 

the  affairs  of  any  such  association  are  in  an  unsound  condition,  or  if  such 
association   refuses  to  permit   examination  to  be  made,  he  may  cancel  ihe 

authority  of  such  association  to  do  business  in  this  stale,  and  cause  a  n  itice 
thereof  to  be  mailed  to  the  home  office  of  the  association,  and  to  be  published 
in  at  least  one  newspaper  published  in  Jefferson  City.  After  the  publication  of 
such  notice,  it  shall  be  unlaw!  ul  for  any  agent  of  said  association  I 
any  further  stock  deposits  from  members  residing  in  this  state, except  pay- 
ments on  stock  on  which  a  loan  has  been  taken. 

Sice.  29. — Foreign  building  and  loan  associations  shall  pay  to  the  state 
treasurer  the  following  fees,  which  shall  be  paid  into  the  treasury,  to 
credit  of  the  building  and  1  ian  association  fund  in  the  office  ol  said 
treasurer,  to  wit:  For  filing  each  application  for  admission  to  do  bu  1  in 
this  state,  one  hundred  dollars  ;  for  each  certificate  of  authority  ami  annual 
renewal  of  same,  fifty  dollars.  Said  foreign  associations  shall  pay  t<  1  the  said 
treasurer  for  filing  each  semi-annual  statement  as  follows  :  If  the  assets  of  the 
association,  as  shown  by  the  statement  tiled,  amount  to  §50,000  or  less,  S3.00  ; 
if  more  than  $50,030  and  less  than  $  100,000,  $5.00  ;  if  more  than  8100,006  and 
less  than  $250,000,  $10.00  ;  if  more  than  $250,000  and  less  than  8500,000, 
$20.00;  it  more  than  $500,000  and  less  than  $1,000,000,  $30.00,  and  if  more  than 
$1,000,000,  $50.00;  for  each  copy  of  a  paper  filed  in  his  office,  twenty-five 
cents  per  folio  ;  for  affixing  the  seal  of  office  and  certifying  any  paper,  one 
dollar. 

Sec.  30.— It  shall  be  unlawful  for  any  foreign  building  and  loan  association 
to  do  business  in  this  state  without  having  first  complied  with  the  provisions 
of  this  act,  and  any  such  association  violating  any  of  the  provisions  of  this 
act,  or  failing  to  comply  with  any  of  its  provisions,  shall  be  fined  not  less 
than  fifty  nor  more  than  one  thousand  dollars,  to  be  recovered  by  an  action  in 
the  name  of  the  state,  and  on  collection  paid  into  the  state  treasury,  to  the 
credit  of  the  building  and  loan  association  fund  in  the  office  of  the  said  state 
treasurer  ;  Provided,  that  building,  loan  and  savtngs  associations  organized  in 
other  states  having  heretofore  transacted  business  in  this  state,  which  shall 
not  have  complied  with  the  provisions  of  this  act,  shall  have  the  right  to  close 
up  their  business  and  fulfil  their  contracts  heretofore  entered  into  with 
citizens  of  this  state,  through  their  duly  authorized  agents,  without  being  sub- 
ject to  the  penalties  prescribed  by  this  act. 

Sec.  31. — The  stock  in  any  building  and  loan  company  or  association  shall 
be  liable  to  sale  on  execution  issued  from  a  court  of  record  by  the  sheriff,  and 
upon  such  sale,  it  shall  be  the  duty  of  the  proper  officer  of  said  corporation  or 
association  to  transfer  and  assign  the  same  to  the  purchaser  on  its  stock- 
book,  and  issue  certificates  to  the  purchaser,  reciting  the  fact  of  such  sale,  and 
thereupon  the  purchaser  shall  be  substituted  to  all  the  rights,  duties  and  privi- 
leges that  the  original  owner  had  before  the  sale. 

Approved  April20,  1895. 

[ACTS  1897,  p.  91.] 

Section  I. — There  is  hereby  created  a  bureau  of  building  and  loan  super- 
vision. The  chief  officer  of  said  bureau  shall  be  designated  as  the  super- 
visor of  building  and  loan  associations.  He  shall  be  a  citizen  of  this  state 
and  have  knowledge  and  experience  of  building  and  loan  business,  and  be 
appointed  by  the  governor,  by  and  with  the  advice  and  consent  of  the  senate, 
and  shall  hold  his  office  for  a  term  of  four  years  ;  but  the  governor  shall  have 
the  power  to  suspend  the  supervisor  from  office  whenever,  in  his  opinion,  the 
public  interest  may  require  it,  or,  with  the  advice  and  consent  of  the  senate, 
to  remove  him  from  office.  If  a  vacancy  shall  at  any  time  occur,  the  same 
shall  be  filled  by  the  governor  by  the  appointment  for  the  unexpired  term, 
subject  to  confirmation  of  the  senate,  if  in  session  ;  if  not,  then  at  its  next  ses- 
sion. The  supervisor  shall  receive  a  salary  of  two  thousand  dollars  per 
annum  and  necessary  travelling  expenses.  He  may  appoint  such  clerical  help 
as  mav  be  necessary  to  properly  attend  to  the  duties  of  his  office,  at  a  cost  not 
to  exceed  fifteen  hundred  dollars  per  annum,  and  may  from  time  to  time 
appoint  such  examiners  as  may  be  necessary  to  carry  out  the  provisions  of 
this  act.  Before  entering  upon  his  duties  the  supervisor  shall  give  bond  to 
the  state  of  Missouri  in  the  sum  of  ten  thousand  dollars,  to  be  approved  by 
the  governor  and  attorney-general,  and  shall  be  filed  in  the  office  of  the 
secretary  of  state. 

Sec  2. — Every  such  corporation  shall  semi-annually,  in  the  months  of 
March  and  September,  publish  in  one  or  more  newspapers  of  general  cir- 
culation in  the  county  where  the  principal  office  of  such  corporation  is  lo- 
cated, a  statement,  verified  by  the  oath  of  its  president  and  secretary  in  such 


778  APPENDIX    IV. 

form  as  the  supervisor  may  prescribe,  and  the  said  report  shall  be  made  upon 
blanks  prepared  by  the  supervisor  and  furnished  by  him  to  such  association. 
The  first  report  to  be  made  under  this  act  shall  be  made  in  the  month  of 
March,  1897,  and  every  six  months  thereafter.  In  addition  to  the  semi-annual 
reports  hereinabove  provided,  each  association  shall,  when  requested  by  the 
mi:  ervisor,  answer  in  writing,  under  oath,  by  its  president  and  secretary,  such 
questions  as  may  be  propounded  by  the  supervisor  relating  in  any  way  to  the 
business  of  such  association.  The  state  supervisor  shall  cause  said  report  to 
be  published  in  a  newspaper  published  in  the  county,  town  or  city  wherein  is 
located  the  principal  office  of  such  association,  the  cost  of  such  publication  to 
be  paid  by  such  association.  Such  report  shall  be  verified  by  the  oath  or 
affirmation  of  the  president  and  secretary  of  such  association,  and  any  wilful 
swearing  to  any  statement  or  statements  which  are  untrue  with  regard  to 
such  reports  shall  be  deemed  perjury,  and  shall  subject  the  offender  to  prose- 
cution and  punishment  as  prescribed  by  law  for  that  offence.  Every  such 
report  shall  be  made  within  twenty  days  after  the  day  to  which  it  relates, 
and  shall  be  accompanied  by  twenty  cents  for  each  one  thousand  dollars  of 
assets  shown  thereby,  which  moneys  shall  be  paid  into  the  state  treasury,  to 
the  credit  of  a  fund  to  be  known  as  the  "  Building  and  loan  supervision 
fund."  The  secretary  of  each  association  submitting  such  report  shall  deposit 
in  the  postoffice  and  prepay  the  postage  thereon,  correct  copies  of  such  semi- 
annual report  properly  addressed  to  each  shareholder  as  his  address  may 
appear  on  the  books  of  the  association.  Any  secretary  or  president  of  any 
such  association  who  shall  wilfully  neglect  or  refuse  to  file  such  statement 
within  the  period  hereinabove  prescribed,  shall  be  subject  to  a  fine  of  not  less 
than  twenty  dollars  nor  more  than  two  hundred  dollars  for  each  neglect  or 
refusal  to  furnish  such  statement,  said  fine  shall  be  recovered  by  indictment 
against  such  secretary  or  president,  and  when  collected  shall  be  paid  into 
the  state  treasury  and  credited  to  the  building  and  loan  supervision  fund. 

Sec.  3. — It  shall  be  the  duty  of  the  supervisor,  in  person  or  by  one  or  more 
persons  by  him  appointed  for  that  purpose,  who  are  not  officers  or  agents  of 
or  in  any  manner  interested  in  any  building  and  loan  association,  to  make  a 
full  and  careful  examination  of  the  affairs  of  any  such  association  whether 
heretofore  or  hereafter  organized,  in  his  discretion  not  oftener  than  once  in 
each  year,  and  make  his  report  thereon  as  herein  provided.  The  officer  mak- 
ing such  examination  shall  have  power  to  administer  oaths,  to  take  all  testimony 
by  him  deemed  necessary  and  proper,  and  compel  the  attendance  of  witnesses 
and  the  production  of  books  and  papers,  and  by  like  process  and  in  like  man- 
ner us  is  now  provided  by  law  to  procure  the  attendance  of  witnesses  and 
production  of  books  and  papers,  in  actions  at  law  in  the  courts  of  record  in 
this  state.  In  every  such  examination,  inquiry  shall  be  made  as  to  the  nature 
and  resources  of  the  corporation  generally,  the  mode  of  conducting  and  man- 
aging its  affairs,  the  action  of  its  directors,  the  investment  of  its  funds,  the  se- 
curity afforded  its  members  and  those  by  whom  its  engagements  are  held,  and 
whether  the  requirements  of  its  charter  and  the  law  have  been  complied  with  in 
the  administration  of  its  affairs.  The  supervisor  shall,  as  soon  as  practicable 
after  such  examination,  forward  a  report  of  the  result  of  such  examination,  to- 
gether with  such  suggestions  as  to  him  may  seem  proper,  to  the  president  of 
such  association.  The  refusal  of  any  such  corporation  to  permit  the  examina- 
tion of  it  -  affairs  as  required  by  this  act  shall  be  a  sufficient  cause  for  the  institu- 
tion of  proceedings  to  wind  up  its  affairs  as  hereinafter  provided.  The  ex- 
1  examination  shall  be  paid  out  of  the  building  and  loan  super- 
vision funds,  bul  the  amount  to  be  charged  therefor  shall  not  exceed  the  sum 
of  five  dollars  per  day  for  the  time  actually  expended  in  making  Hie  same,  and 
the  actual  and  necessary  expenses  incident  thereto. 

;  iid  supervisor  shall,  annually,  on  or  before  the  first  day  of 

January  in  each  year,  report  to  the  governor  the  financial  condition  of  all  as- 
sociations doing  business  in  this  slate.  No  association  organized  after  the 
taking  effeel  ol  tl  acl  shall  be  permitted  to  do  business  outside  its  home  and 
immediately  adjoining  counties  until  it  shall  have  assets  equal  to  liabilities, 
ubtedly  good,  of  at  lea  1  one  hundred  thousand  dollars  based  on  dues 
paid  in. 

SEi  .  5. — If  it  shall  a:  |  iear  to  the  said  supervisor  from  any  report  of  any  such 
iation,  whether  heretofore  or  hereafter  organized,  or  from  any  exami- 
nation made  by  him,  01  by  the  person  or  persons  appointed  in- him  to  make 
lination,  or  from  any  knowledge  or  information  in  his  possession, 
bom  whal  itained,  thai  any  such  association  has  committed  a 

ition  of  its  1  harter  or  ol  law,  or  thai    aid  association  is  conducting  its  busi- 
in  an  an  afe  and  unauthorized  manner,  or  that  the  assets  of  any  such  as- 


GENERAL    LEGISLATION.  779 

sociation  are  insufficient  to  justify  the  continuance  of  business  by  such  associ- 
ation, he  shall  communicate  the  tact  to  the  officers  or  directors  of  such  asso- 
ciation. Such  officers  or  directors  shall  be  allowed  sixty  days  within  which 
to  make  the  assets  sufficient  or  to  correct  any  illegal  i  radices  ;  and  in  case 
such  assets  are  not  made  sufficient  or  the  illegal  practices  corrected  within 
the  time  herein  provided,  or  whenever  it  shall  appear  to  the  said  supervisor 
that  it  is  unsafe  or  inexpedient  for  any  such  association  to  continue  to  transact 
business,  said  supervisor  shall  institute  proceedings  in  the  circuit  court  in  the 
city  or  county  in  which  such  association  has,  or  had,  its  principal  office,  to 
enjoin  or  restrain  such  association  from  the  further  prosecution  ol  its  business 
either  temporarily  or  perpetually,  or  for  such  injunction  and  the  dissolution 
of  such  association  and  the  settling  and  winding  up  of  its  affairs,  or  for  any 
and  all  of  said  remedies  combined  as  the  supervisor  may  deem  necessary. 

Sec.  6. — Such  proceedings  shall  be  conducted  by  the  attorney-general  of  the 
state,  and  in  the  name  of  the  state  of  Missouri  as  plaintiff, at  the  relation  of -aid 
supervisor.  The  jurisdiction  of  circuit  court,  and  the  processes,  j  leading  and 
proceedings  had  in  the  cases  instituted  under  this  act,  shall  be  the  same  as  are 
now  provided  by  law  for  the  winding  up  and  dissolution  of  insurance  com- 
panies, far  as  such  provisions  of  law  are  applicable.  The  actual  expenses  of 
attorney-general  shall  be  paid  out  of  the  "  building  and  loan  supervision  fund  " 
in  carrying  out  the  provisions  of  this  section. 

Approved  March  12, 1897. 

MOMTAMA. 

ACTS  1897,  p.  231. 

Section,  i. — A  corporation  for  the  purpose  of  raising  money  to  be  loaned 
among  its  members  shall  be  known  in  this  act  as  a  building  and  loan  associa- 
tion. Associations  organized  under  the  laws  of  this  state  shall  be  known  in 
this  state  as  "  domestic  "  associations  and  those  organized  under  the  laws  of  other 
states  and  territories  "foreign  "  associations.  Associations  may  be  organized 
and  conducted  under  the  general  laws  of  Montana,  relating  to  corporations, 
except  as  otherwise,  provided  in  this  act. 

Sec.  2. — Any  building  and  loan  association  heretofore  organized  and  exist- 
ing under  and  by  virtue  of  the  law  of  the  state  of  Montana,  may  be  incorpo- 
rated under  the  provisions  of  this  act,  by  calling  a  meeting  of  its  stockholders 
upon  notice  published  in  a  paper  having  a  general  circulation  in  the  county 
in  which  the  general  office  of  the  company  is  located,  and  by  mailing  a  notice 
of  such  meeting  to  the  last  known  address  of  its  stockholders  ten  days  pre- 
vious to  such  meeting.  Should  a  majority  of  the  stock  vote  to  become  incor- 
porated under  this  act,  the  president  and  secretary  shall  file  a  certificate  of  the 
vote  with  the  secretary  of  state,  and  such  company  shall  thereafter  act,  and  be 
incorporated  under  this  act.  The  validity  of  its  securities  and  contracts  shall 
in  no  wise  be  affected  by  its  reformation  as  provided  in  this  sectii  in. 

Sec.  3. — The  capital  stock  named  in  the  articles  of  incorporation  shall  be 
deemed  to  refer  to  the  authorized  capital,  and  the  organization  may  be  com- 
pleted and  business  commenced  when  five  per  cent,  thereof  is  subscribed. 
Directors  may  be  elected  for  any  term  not  less  than  one  year  nor  longer  than 
three  years,  but  if  such  term  be  longer  than  one  year,  it  shall  be  so  arranged 
that  the  term  of  office  of  an  equal  number  of  directors,  as  nearly  as  may  be, 
will  expire  each  year. 

Sec.  4. — Such  corporation  shall  have  power  to  issue  stock  to  members  on 
such  terms  and  conditions  as  the  constitution  and  by-laws  may  provide.  To 
assess  and  collect  from  members  and  depositors  such  dues,  fines,  interest  and 
premium  on  loans  made  or  other  assessments  as  may  be  provided  for  in  the 
constitution  and  by-laws.  Such  dues,  fines,  premiums  or  other  assessments 
shall  not  be  deemed  usury  although  in  excess  of  the  legal  rate  of  interest.  To 
permit  members  to  withdraw  all  or  part  of  their  stock  deposits  at  such  times 
and  upon  such  terms  as  the  constitution  and  by-laws  may  provide.  Any- 
member,  however,  who  withdraws  his  entire  stock,  or  whole  stock  is  matured, 
shall  be  entitled  to  receive  all  dues  paid  in  and  dividends  declared,  less  all  fines 
or  other  assessments  and  lessa/wra/a  share  of  all  losses,  if  any  have  occurred  ; 
Provided,  that  any  member  who  withdraws  within  sixty  days  shall  be  entitled 
to  receive  the  full  amount  paid  in,  less  ten  per  cent,  and  any  sum  which  he  may 
have  received  from  the  company.  To  cancel  shares  of  stock  upon  which  all 
pavments  have  been  withdrawn,  or  upon  which  loans  have  been  cancelled 
and  re-issue  them  as  new  stock.  To  issue  stocks  to  minors  and  permit  the 
same  to  be  withdrawn  as  other  stock  and  the  receipt  of  such  minor  shall  be  a 
valid  acquittance  if  his  rights  have  been  fully  secured   to  him.    To  acquire 


780  APPENDIX   IV. 

hold,  incumber  and  convey  such  real  estate  and  personal  property  as  may  be 
necessary  for  the  transaction  of  its  business  or  necessary  to  enforce  or  protect 
its  security.  To  borrow  money  not  exceeding  20  per  cent,  of  its  assets  and 
issue  its  evidence  of  its  indebtedness  therefor.  To  make  loans  to  members 
and  depositors  on  such  terms,  conditions  and  securities  as  may  be  provided  in 
the  constitution  and  by-laws.  To  cancel  such  loans  and  release  the  securi- 
ties on  such  terms  as  the  board  of  directors  may  provide.  But  any  member 
may  have  his  loan  cancelled  upon  the  following  terms,  to-wit  :  After  the 
premium  for  one  year  has  been  paid,  and  also  the  premium  and  interest  up  to 
date  of  cancellation,  the  borrower  shall  pay  the  sum  actually  borrowed  less  the 
dues  paid  and  the  dividends  credited.  He  shall  pay  also  any  fines  or  other  as- 
sessments required  by  the  constitution  and  by-laws.  To  invest  the  money  of 
the  association  in  city,  county  or  state  warrants  and  bonds.  To  loan  money  to 
other  building,  and  loan  association.  To  accumulate  from  the  earnings  and  in- 
vest as  the  board  of  directors  may  determine  a  reserve  fund  for  the  payment  of 
contingent  losses.  To  make  such  annual  or  semi-annual  distribution  of  the 
earnings  I  after  paying  expenses  and  setting  aside  a  sum  for  the  reserve  fund  as 
hereinafter  provided),  as  the  constitution  and  by-laws  may  prescribe.  To  in- 
crease or  decrease  its  authorized  capital  for  the  face  value  of  its  shares  at  any 
time  by  a  majority  vote  of  its  directors,  and  a  certificate  of  such  action  shall  be 
made  by  the  president  and  secretary  and  duly  filed  with  the  secretary  of  state. 
To  dissolve  the  corporation  when  its  continuance  shall  be  deemed  by  a  majority 
vote  of  its  members  to  be  no  longer  desirable,  subject,  however,  to  the  vested 
rights  of  its  members.  To  provide  by  constitution  adopted  by  its  members,  and 
by  laws  adopted  by  its  board  of  directors,  for  the  proper  exercise  of  the 
powers  herein  granted  and  of  the  conduct  and  management  of  its  affairs. 
All  such  other  powers  as  are  necessary  and  proper  to  enable  such  corporations 
to  carry  out  the  purpose  of  its  organization. 

Sec.  5. — Withdrawing  members  and  depositors  shall  be  entitled  to  all  re- 
ceipts of  the  association,  except  what  is  necessary  for  the  payment  of  expenses 
and  outstanding  contracts  as  fast  as  collections  are  made,  in  the  order  in 
which  the  application  for  withdrawals  are  registered  on  the  books  of  the  as- 
sociation, and  shall  be  entitled  to  be  paid  as  fast  as  collections  are  made  by 
the  association,  and  in  no  other  way. 

Sec.  6. — All  officers  of  such  association  who  have  charge  or  possession  or 
(of  ?)  money,  securities  or  property,  shall  give  bond  before  entering  upon 
their  duties  to  the  satisfaction  of  the  board  of  directors  and  the  State  Ex- 
aminer for  the  faithful  performance  of  the  same,  and  the  safekeeping  and 
pro-ier  application  of  all  moneys  or  property  coming  into  their  hands.  All 
officers  of  such  corporation  on  being  re-elected  to  office  shall  renew  their 
bnuls.  The  bond  may  be  increased  or  additional  securities  required  at  any 
time  by  the  board  of  directors.     Directors  shall  not  be  eligible  as  bondsmen. 

Sec.  7. — The  amount  to  be  set  aside  to  the  fund  for  contingent  losses  shall 
be  determined  by  the  board  of  directors,  but  in  all  permanent  or  serial  associ- 
ations at  least  five  per  cent,  of  the  net  earnings  shall  be  set  aside  each  year 
for  such  fund  until  it  reaches  at  least  five  per  cent,  of  the  outstanding  loans. 
All  losses  shall  be  paid  out  of  such  fund  until  the  same  is  exhausted,  and 
whenever  the  amount  in  said  fund  falls  below  five  per  cent,  of  the  loans  as 
aforesaid,  it  shall  be  replenished  by  annual  appropriation  of  at  least  five  per 
cent,  of  the  net  earnings  as  hereinbefore  provided  until  it  again  reaches  said 
amount. 

Sec.  8.  All  expenses  of  any  such  association  shall  be  paid  in  such  manner 
as  may  be  determined  by  the  vote  of  the  owners  of  the  majority  of  the  stock 
in  force  in  any  such  association  and  indicated  in  its  by-laws;  Provided,  that 
after  an  association  h:is  been  organized  for  two  years,  the  expenses  must  be 
paid  oul  of  the  earnings  only.  The  charges  incident  to  a  loan  if  paid  by  the 
borrower,  shall  nol  be  deemed  a  part  of  the  current  expenses.  A  portion  of 
the  earnings  to  be  determined  by  the  board  of  directors  shall  also  be  reserved 
annually  01  semi  annually  for  the  paymenl  of  contingent  losses  as  provided 
in  '<  'I'M  7  "I  this  act,  and  the  residue  of  such  earnings  shall  be  transferred 
as  a  dividend  annually  or  semi-annually  in  such  proportion  to  the  credit  of 
all  i.i  the  corporation  by  its  constitution  and  by-laws  may  provide, 

to  be  paid  to  them  al  such  time  and  in  such  manner  in  conformity  with  this 
a*  t  1  ill  ■  .  orporation  by  its  constitution  and  by-laws  may  provide.  All  losses 
shall  In-  assessed  in  tin:  same  proportion  and  maimer  on  all  members  after 
am  'unt  in  the  re  ei  ve  fund  ha  1  been  applied  to  the  payment  of  the  same. 

1  11  ii  .1    ociation  shall  lie  assessed  for,  and  pay  taxes  upon 

furniture  and  fixture    and  all  real  estate  acquired  in  the  course  of   its 

busine  ».     Theamounl  standing  to  tin-  credit  of  each  member  of  any  such 


GENERAL    LEGISLATION.  7<Sl 

association  upon  its  books  to  be  considered  and  held  as  the  individual  credit 
of  such  member,  and  each  member  shall  list  the  shares  held  by  him  for  taxa- 
tion at  their  real  value  in  money  in  the  county  of  his  residence  the  same  as 
Other  credits  are  listed,  except  shares  from  which  loans  have  been  made  or 
money  advanced  by  the  association,  and  such  shares  shall  be  listed  for  taxa- 
tion at  the  net  cash  value  of  the  stock  to  be  ascertained  by  deducting  the  loan 
from  the  cash  value  of  the  shares.  Corporations  organized  under  this 
act  shall  be  subject  to  taxation  in  no  other  way.  All  foreign  and  domestic 
associations  authorized  to  do  business  in  this  state  shall  by  the  first  day  of 
March  in  each  year  deliver,  or  cause  to  be  delivered,  to  the  county  assessor  of 
the  several  counties  wherein  their  stockholders  may  reside  a  list  of  such 
stockholders,  together  with  the  actual  money  value  of  the  stock  held  by  such 
stockholders,  and  as  a  penalty  for  the  failure  of  any  such  association  to  comply 
with  this  section  they  shall  forfeit  and  pay  to  the  state  the  sum  of  five  hundred 
dollars. 

Sec.  io.— Foreign  building  and  loan  associations  wishing  to  do  business  in 
this  state,  shall  first  procure  from  the  state  auditor  a  certificate  of  authority  to 
do  so.  To  procure  such  authority,  such  association  shall  comply  with  the 
following  provisions: 

First  It  shall  deposit  with  the  state  treasurer  twenty-five  thousand  dollars, 
either  in  cash  or  bonds  of  the  United  States,  or  the  state  of  Montana,  or  any 
county  of  municipal  corporation  in  the  state  of  Montana  or  first  mortgages 
on  real  estate  taken  in  the  regular  course  of  business  which  are  not  delin- 
quent. 

Stroud.  It  shall  file  with  the  secretary  of  statea  certified  copy  of  its  charter, 
constitution  and  by-laws  and  other  rules  and  regulations  showing  its  manner 
of  doing  business,  together  with  a  statement  such  as  is  required  annually 
from  all  associations. 

Third.  It  shall  also  file  with  the  secretary  of  state  a  certificate  duly  executed 
under  the  seal  of  the  corporation,  and  the  signature  of  its  president,  vice- 
president  or  other  acting  head,  and  its  secretary,  if  there  be  one,  certifying 
that  the  said  corporation  has  consented  to  be  sued  in  the  courts  of  this  state, 
and  that  service  of  process  may  be  made  upon  some  person,  a  citizen  of  this 
state,  whose  name  and  place  of  residence  shall  be  designated  in  such  certifi- 
cate, and  such  service  when  so  made  upon  such  agent  shall  be  valid  service 
on  the  corporation,  or  company,  and  such  agent  shall  reside  at  the  principal 
place  of  business  of  such  corporation  or  company.  The  written  consent  of 
the  person  so  designated  to  act  as  such  agent  shall  also  be  hied  in  like  manner, 
and  such  designation  shall  remain  in  force  until  the  filing  in  the  same  offices 
of  a  revocation  thereof  or  of  the  consent  executed  in  like  manner.  A  certi- 
fied copy  of  a  designation  so  filed,  accompanied  with  a  certificate  that  it  has 
not  been  revoked,  is  presumptive  evidence  of  the  execution  thereof,  and  con- 
clusive evidence  of  the  authority  of  the  officer  executing  it. 

Sec.  ii. — All  building  and  loan  associations  organized  under  the  laws  of 
any  other  state,  territory  or  nation  doing  business  in  this  state,  shall  deposit 
with  the  state  treasurer  of  the  state,  all  the  mortgages  or  other  securities 
taken  by  them  in  this  state,  to  be  held  in  trust  for  all  their  members  and  cred- 
itors ;  Provided,  that  any  such  association  licensed  to  do  business  in  this  state 
shall  be  entitled  to  collect  any  interest  on  such  mortgages  or  securities  and 
instalments  on  any  stock  which  may  be  pledged  to  further  secure  such  mort- 
gages ;  Provided,  further,  that  upon  the  failure  of  any  foreign  corporation  now 
doing  business  in  this  state  to  procure  a  license  as  provided  for  in  this  act,  or 
upon  the  revocation  or  expiration  of  the  license  as  provided  for  in  this  act, 
that  all  such  interests  and  instalments  may  be  collected  by  a  receiver  ap- 
pointed by  the  court  having  proper  jurisdiction  ;  and  all  money  collected  by 
such  receiver  shall  be  turned  over  to  the  treasurer  of  the  state  to  be  held  for 
the  benefit  of  the  members  and  creditors  of  such  corporation  in  this  state. 
Provided,  further,  that  foreign  building  and  loan  associations  that  have  here- 
tofore transacted  business  in  this  state,  must  comply  with  the  provisions  of 
this  act.  within  sixty  days  from  the  time  its  takes  effect,  and  such  foreign  asso- 
ciations as  do  not  comply  within  the  prescribed  time  shall  have  the  right  to 
close  up  their  business  and  fulfil  their  contract  heretofore  entered  into  with 
the  residents  of  this  state  without  being  subject  to  the  penalty  or  require- 
ments of  this  act. 

Sec.  12. — Such  foreign  association  may  collect  and  use  the  interest  on  any 
securities  so  deposited  so  long  as  it  fulfils  its  obligations  and  complies  with 
the  provisions  of  this  act.  It  may  also  exchange  them  for  other  securities  of 
equal  value  and  satisfactory  to  the  state  treasurer  or  withdraw  them  as  pro- 
vided for  in  section  27  of  this  act. 


782  APPENDIX    IV. 

Sec.  13. — Whenever  such  association  has  complied  with  the  provisions  of 
this  act  and  the  state  auditor  is  satisfied  that  such  association  is  doing  business 
according  to  the  laws  of  this  state,  relating  to  such  associations,  and  is  in 
sound  financial  condition,  he  shall  issue  his  certificate  of  authoiit\  10  such 
association  to  do  business  in  this  state.  Annually  thereafter,  upon  "the  filing 
of  the  annual  statement  herein  provided  for,  if  the  state  auditor  shall  be  satis- 
fied as  aforesaid,  he  shall  issue  a  renewal  of  such  certificate  of  aulhoi  il\ . 

Sec.  14. — The  deposit  made  with  the  state  treasurer  shall  be  held  as  secu- 
rity for  all  claims  of  residents  of  this  state  against  said  association,  and  shall  be 
liable  for  all  judgments  or  decrees  thereon,  and  subject  to  the  payment  of  the 
same  in  the  same  maimer  as  the  property  of  other  non-residents.  Should  any 
association  cease  to  do  business  in  this  state,  the  state  treasurer  may  re. ease 
sureties  in  his  discretion,  retaining  sufficient  to  satisfy  all  outstanding  liabili- 
ties and  value  of  stock  held  by  residents  of  the  state  of  Montana. 

Sec.  15. — Every  building  and  loan  association  doing  business  in  thi  state 
shall,  annually  at  the  end  of  each  fiscal  year,  or  within  forty  days  thereafter, 
make  a  full  detailed  report  in  writing  of  the  affairs  and  business  of  the  associa- 
tion for  the  preceding  year,  and  showing  its  financial  condition  at  the  end  of 
said  fiscal  year.  With  the  first  report  made  by  any  association  it  sha  1  also 
file  a  certified  copy  of  its  constitution  and  by-laws  or  other  rules  and  regula- 
tions, showing  its  manner  of  doing  business.  The  statement  shall  be  in  such 
form  and  contain  such  information  as  may  be  prescribed  by  the  state  exam- 
iner. It  shall  be  sworn  to  by  the  secretary  of  such  company  and  its  correct- 
ness attested  by  at  least  three  directors  or  an  auditing  committee  appointed 
by  tli e  board  of  trustees.  The  original  shall  be  filed  with  the  state  examiner 
within  forty  days  after  the  close  of  its  fiscal  year,  and  such  an  abstract  thereof 
as  the  state  examiner  may  require  shall  be  posted  for  sixty  days  in  the  office 
or  meeting  place  of  such  association  and  also  published  three  times  consecu- 
tively in  the  paper  which  does  the  county  printing  of  the  county  in  which  said 
association  is  located. 

Sec  17. — The  state  examiner  shall  examine  all  building  and  loan  associa- 
tions doing  business  in  this  state,  and  governed  by  this  act,  once  a  year.  Also, 
whenever  ten  per  cent,  ot  the  subscribed  stock  of  any  association  files  a  written 
application  with  the  state  examiner  requesting  him  to  make  examination  of 
any  association,  he  shall  make  such  examination  forthwith. 

SEC.  18. — Should  the  state  examiner,  upon  examination,  find  any  domestic 
association  conducting  its  business  in  whole  or  in  part  contrary  to  law,  or 
failing  to  comply  with  the  law,  he  shall  so  notify  the  board  of  "directors  of 
such  association  in  writing,  and  if  after  thirty  days,  such  illegal  practices,  or 
failure  continues,  he  shall  communicate  the  facts  to  the  attorney  general,  who 
shall  cause  proceedings  to  be  instituted  in  the  proper  court  to  revoke  the 
charter  of  such  association.  Should  the  state  examiner  find  upon  such  exam- 
ina  ion  that  the  affairs  of  any  such  association  are  in  an  unsound  condition, 
and  that  the  interests  of  the  public  demand  the  dissolution  of  such  association 
and  the  winding  up  of  affairs,  he  shall  so  report  to  the  attorney  general  who 
shall  institute  the  proper  proceedings  for  that  purpose. 

Sec.  19. — Such  stale  examiner  shall  have  access  to  and  may  compel  the  pro- 
duction of  all  lim-ks,  1  a>  crs,  securities  and  moneys,  of  the  association  under 
examination.  He  shall  have  power  to  administer  oaths  to  and  examine  the 
officers  and  agents  of  such  association  and  its  affairs. 

SEC.  20. — When  the  state  examiner  deems  it  to  be  to  the  interest  of  the 
public,  he  may  publish  the  results  of  such  examinatii  m  in  some  newspaper  of 
ral  circulation  in  the  county  in  which  such  association  is  located,  if  it  bea 
<\'  imestic  association,  and  in  some  newspaper  in  the  city  of  Helena.  Montana,  if 
it  be  a  foreign  corporation.  The  expense  of  such  publication  shall  be  paid  by 
ill  •  asso<  iation  whose  statemenl  is  published. 

SEC.  21. — Should  the  state  examiner  find  upon  examination   that  a  foreign 

i  not  conducl  its  busine  s  in  accordance  with  the  law,  or  that 

"t  any  such  association  are  in    unsound    condition,  or  if  such  asso- 

i!  refuses  to  permit  examinatii  »n  to  be  made,  he  shall  report  such  facts  to 

auditor,  who  may  cancel  the  authority  of  such  associatii  m  to  do  busi- 

i ••      tate,  and  1  in  ea  n  >tii  e  thereof  to  he  mailed  to  the  home  office  of 

and  hed  in  at  least  one  newspaper  published  in  the 

!  1   lena.  Alter  the  publication  of  such  notice,  it  shall  be  unlawful  for  any 

1 1  ion  to  receive  any  further  stock  deposits  from  members 

1    cepl   payment     on    lock  on  which  a  loan  has  been 

Foreign  building  and  loan  a  doing  business  or  desiring 

to  the  slate  auditor  the  following  fees : 


GENERAL   LEGISLATION.  783 

For  filing  each  application  for  admission  to  do  business-  in  this  state,  ten 
dollars,  for  each  one  hundred  thousand  dollars  capital  stock  or  fraction  thereof 
actually  issued  and  in  force  for  any  increase  of  capital  the  same  rale  per  thou- 
sand shall  be  charged  as  for  filing  the  original  capital  stock.  For  each  certifi- 
cate of  authorityand  annual  renewal  of  the  same,  one  hundred  dollars.  Both 
foreign  and  domestic  shall  pay  to  the  state  auditor  for  filing  each  annual  state- 
ment as  follows  :  If  the  assets  of  the  association  as  shown  by  the  statement 
filed  amount  to  fifty  thousand  dollars  or  less,  three  dollars  ;  if  more  than  fifty 
thousand  dollars  and  less  than  one  hundred  thousand  dollars,  five  dollar-  ;  if 
more  than  one  hundred  thousand  dollars  and  less  than  two  hundred  and  fifty 
thousand  dollars,  ten  dollars  ;  if  more  than  two  hundred  and  fifty  thousand 
dollars  and  less  than  i\vc  hundred  thousand  dollars,  twenty  dollars;  if 
more  than  five  hundred  thousand  dollars,  twenty-five  dollars  :  tor  fur- 
nishing each  copy  of  a  paper  filed  in  his  office,  twenty-five  cents  per  folio. 
For  affixing  the  seal  of  office  and  certifying  any  paper,  one  dollar.  Both 
foreign  and  domestic  associations  shall  pay  to  the  state  examiner  for  each  ex- 
amination made  by  him  a  fee  of  one-twentieth  of  one  per  cent,  of  its  assets  as 
shown  by  its  last  annual  statement;  Provided,  that  the  examination  fee  shall 
not  be  less  than  twenty  dollars  nor  more  than  fifty  dollars  per  annum  for  any 
domestic  association,  nor  more  than  two  hundred  dollars  per  annum  for  any 
foreign  association. 

Sec.  23. — All  fees  provided  for  in  this  act  and  paid  to  the  state  auditor, 
state  examiner,  or  secretary  of  state  shall  be  by  them  turned  into  the  state 
treasury. 

Sec.  24. — The  state  treasurer  and  sureties  shall  be  responsible  for  the  safe- 
keeping of  all  securities  or  cash  deposited  with  him  in  compliance  with  the 
the  provisions  of  this  act. 

Sec.  25. — It  shall  be  unlawful  for  any  building  and  loan  association  to  do 
business  in  this  state  without  having  first  complied  with  the  provisions  of  this 
act,  and  any  association  violating  any  of  the  provisions  of  this  act,  or  failing  to 
comply  with  any  of  its  provisions,  shall  be  fined  not  less  than  fifty  nor  more 
than  one  thousand  dollars,  to  be  recovered  by  an  action  in  the  name  of  the 
state  and  on  collection  paid  into  the  state  treasurer  and  an}'  officer,  employee, 
or  other  person  who  solicits  business  for,  aids  or  assists,  any  building  and  loan 
association  to  do  business  contrary  to  the  provisions  of  this  act,  or  without  hav- 
ing complied  with  the  provisions,  shall  be  guilty  of  a  misdemeanor,  and  on  con- 
viction thereof  shall  be  fined  not  more  than  five  hundred  dollars  or  imprisoned 
not  more  than  six  months,  or  both.  Such  fines  when  collected  to  be  paid  into  the 
state  treasurer.  Provided,  that  except  as  to  taxation,  this  act  shall  not  affect 
any  such  association  heretofore  organized  under  the  laws  of  the  state  of  Mon- 
tana, unless  it  elects  to  come  under  its  provisions. 

Sec.  26. — The  state  examiner  shall  keep  and  preserve  in  permanent  form  a  full 
record  of  his  proceedings,  including  a  concise  statement  of  each  association  ex- 
amined, and  he  shall  annually  make  a  report  of  the  general  conduct  and  condi- 
tion of  the  building  and  loan  associations  doing  business  in  this  state,  with 
such  suggestions  as  he  may  deem  expedient.  Such  report  shall  also  include 
the  information  contained  in  the  statement  required  of  the  association  and 
arranged  in  tabulated  form.  He  shall  also  report  the  whole  amount  of  the 
income  of  his  office,  the  source  whence  derived  and  the  expenses,  in  detail, 
during  the  year  ending  on  the  30th  dav  of  November. 

Sec.  27. — Building  and  loan  associations  shall  be  authorized  to  provide  in 
their  constitution  and  by-laws  of  the  time  and  terms  of  the  dissolution  of  such 
corporation  ;  also,  in  the  cases  of  dissolution  of  such  corporation  its  b<  ard  <  >f  di- 
rectors may,  by  a  majority  vote,  be  authorized  to  sell  and  transfer  its  mort- 
gage securities  or  other  property,  or  both,  to  another  corporation,  person  or 
persons,  subject  to  the  vested  or  accrued  rights  of  the  mortgagors.  Every 
building  and  loan  association  heretofore  incorporated  under  the  laws  of  the 
state  of  Montana,  which  has  loaned  its  money  on  real  estate  situated  outside 
of  the  county  in  which  its  principal  office  is  located,  shall  deposit  and  keep 
with  the  state  treasurer  or  with  a  duly  chartered  bank  or  trust  company 
of  this  state,  approved  by  the  secretarv  of  state,  in  trust  for  all  its 
members  and  creditors,  all  mortgages  or  other  securities  received  by  it  in 
the  usual  course  of  business.  Every  building  and  loan  association  which  has 
heretofore  made,  or  mav  hereafter  make,  a  deposit  in  accordance  with  the 
laws  of  this  state,  mav,  at  any  time,  by  and  with  the  c<  insent  of  the  state  treas- 
urer, withdraw  from  the  state  treasurer  or  from  the  trust  company  or  bank 
with  whom  its  securities  have  been  deposited,  any  such  securities,  for  the 
purpose  of  depositing  such  securities  with  a  special  trustee  for  the  purpose 
of  securing  the  withdrawal  value  of  its  fully  paid  stock,  or  evidence  of  indebt- 


784  APPENDIX   IV. 

edness,  or  whenever  required  by  the  laws  of  any  other  state,  territory  or 
nation,' that  its  mortgages  or  other  securities  shall  be  deposited  in  such  state, 
territory,  or  nation,  for  the  purpose  of  enabling  such  association  to  enter  and 
do  business  in  such  state,  territory,  or  nation  ;  or  whenever  such  mortgage 
securities  are  required  for  the  purpose  of  foreclosure  and  suit  ;  or  whenever 
any  of  such  mortgages  have  been  fully  paid  and  liquidated.  Provided,  that 
at  ho  time  shall  the  amount  of  securities  on  deposit  with  the  state  treasurer, 
or  with  the  duly  chartered  bank  or  trust  company,  be  of  less  value  than 
twenty-five  thousand  dollars.  Applications  for  the  withdrawal  of  securities 
as  herein  provided  shall  be  made  by  the  president,  or  vice-president  and 
secretary,  who  shall  state  under  oath  the  purpose  for  which  the  withdrawal 
of  such  securities  is  to  be  made. 

Sec.  28.— Sections  770,  771,  772,  773,  774,  775,  776,  777,  778,  779,  780,  781, 
782,  783,  784,  7S5,  786,  787,  788,  789,  790,  800,  801,  802,  803,  804,  806,  807,  808, 
809,  81b,  Sir,  812,  813,  814,  815,  816,  817,  818,  819,  820,  821,  822,  823,  824,  825, 
826,  827,  828,  829,  830,  831,  832,  833,  834,  835,  836,  837,  838,  839,  840,  841,  842, 
843,  844  and  845  of  the  Civil  Code  of  Montana  are  hereby  repealed. 

Sec.  29. — This  act  shall  take  effect  from  and  after  June  1,  1897. 

Approved  March  4th,  1897. 

NEBRASKA. 

CONSOLIDATED  STATUTES  OF  1895. 

Section  1849. — Any  number  of  persons,  not  less  than  five,  may  associate 
themselves  together  and  become  a  corporation  as  provided  in  chapter  twenty- 
five  of  the  Revised  Staututes,  commencing  at  section  123  of  said  chapter  [sec- 
tion 336,  Consolidated  Statutes  of  1891]  under  the  title  of  "corporations  for  the 
purpose  of  raising  moneys  to  be  loaned  among  the  members  of  such  corpora- 
tion, for  use  in  buying  lots  or  houses,  or  in  building,  or  repairing,  or  re- 
moving incumbrances  from  houses  ;  and  such  corporation  shall  be  author- 
ized and  empowered  to  levy,  assess,  and  collect  from  its  members  such  sums 
of  money,  by  rates  of  stated  dues,  fines,  interest  on  loans  advanced,  and  pre- 
miums bid  by  members  for  the  right  of  precedence  in  taking  loans,  as 
the  corporation,  by  its  by-laws,  shall  adopt  ;  also  to  acquire,  hold,  encumber, 
and  convey  all  such  real  estate  and  personal  property  as  may  be  legitimately 
pledged  to  it  on  such  loans,  or  may  otherwise  be  transferred  to  it  in  the  due 
course  of  its  business  ;  Provided,  that  the  dues,  fines,  and  premiums  so  paid 
by  members  of  such  corporation,  although  in  excess  of  twelve  per  cent,  per 
annum,  on  loans  taken  by  them,  shall  not  be  construed  to  make  the  loans  so 
taken  usurious  ;  And  provided,  also,  that  no  person  shall  hold  more  than  ten 
shares  in  any  such  association  in  his  own  right,  each  share  not  to  exceed  two 
hundred  dollars. 

Skc.  1850.— All  stockholders  of  any  such  association  shall  be  deemed  and 
held  liable  to  any  amount  equal  to  their  stock  subscribed,  or  by  them  at  any 
time  held  in  addition  to  said  stock,  for  the  purpose  of  securing  the  creditors  of 
said  association. 

Sec.  1851.— All  contracts  and  loans  made  by  any  corporation  or  association 
already  formed  and  now  in  existence  in  this  state,  under  and  by  virtue  of  said 
ter  twenty-five  of  the  Revised  Statutes  [chap.  9,  this  stat],  to  and  with 
any  member  of  said  corporation  or  association,  and  not  inconsistent  with  the 
this  state,  nor  anything  in  this  act  contained,  are  hereby  declared  to 
and  binding  contracts  between  said  corporation  or  association  and 
the  !'  1  so  contracting ;  and  the  securities  given  by  said  mem- 

I   contract  or  loan  to  said   corporation  or  association,  for  the 
Li  ity  of  any  loan,  fine,  or  forfeiture,  according  to  the  terms  and  conditions 
oi    contract,  therein  referred  to,  and  not  inconsistent  with 
law  of  this  state  or  in  this  act  contained,  is  hereby  declared  to  be  legal, 
I   and  binding  security,  and  contracl  in  law  in  the  hands  of  said  corpora- 
tion ,i  . nid   with   the  1  arty  making  the  same,  notwithstanding  a 
■  inter    t  than  twelve  per  cent,  per  annum  may  have  been  con- 
ed in  said  contract. 
Sec.  18:52. — That  in  all  corporations  or  associations  now  formed  and  in  ex- 
in  thi      tati     ind  doing  business  in  this  state,  which  said  corporation 
tion  h.  1  e  made  loans  to  any  of  its  members  and  taken  securities 
oi  their  constitution  and  by-laws,  thai  any  payment 
:  ;e  ol  'in,  ail,  by  any  memberto  said  corporation  or  as- 
forfeitun     01  fines  which  may  be  due  to  said  corpora- 
tion 1  I    cording  to  th(    terms  of  the   contract    between  said  cor- 
poi  ■  d  aid  member  to  said  corporation  or  association,. 


GENERAL    LEGISLATION.  785 

shall  be  deemed  in  law  a  waiver  of  anything  in  said  contract  or  loan  that 
might  be  deemed  usurious  in  the  same  under  the  laws  of  tins  state  at  the  time 
the  same  was  made  and  securities  given,  and  a  ratification  of  said  loan  or  eon- 
tract,  and  of  its  present  and  future-  legality  between  said  parties,  as  now  ex- 
isting under  and  by  virtue  of  this  act. 

Sice.  1853. — Any  association  of  not  less  than  five  persons,  hereafter  incor- 
porated under  the  laws  of  this  state,  which  shall  be  organized  within  this 
state  for  the  purpose  of  raising  a  fund  for  the  collection  of  dues  or  stated  j  ay- 
ments  from  its  members,  to  be  loaned  anion-  its  members,  shall,  in  further- 
ance of  such  purpose,  and  after  having  complied  with  the  requirements  of 
this  act.be  authorized  and  empowered  to  levy,  assess,  and  collect  from  its 
members  such  sums  of  money,  by  rates  of  stated  dues,  fines,  interest  on  loans 
advanced,  and  premiums  bid  by  members  for  the  right  o!  ]  recedence  in 
taking  loans,  as  the  corporation  may  provide  for  in  its  constitution  or  by-laws, 
also,  to  acquire,  hold,  and  convey  all  such  real  estate  and  personal  property 
as  may  be  legitimately  pledged  to  it  upon  said  loans,  or  may  otherwise  be 
transferred  to  it  in  the  due  course  of  its  business  (subject,  however,  to  the 
limitations  hereinafter  named).  The  words  "loan  and  building  association," 
"building  association,"  or  "building  and  loan  association  "  shall  form  part  of 
the  corporate  name  of  every  such  corporation. 

Sec.  1854. — Every  such  association  hereafter  formed  shall  adopt  a  constitu- 
tion which  shall  substantially  give  effect  to  the  provisions  of  this  act,  and 
shall  also  adopt  such  by-laws  for  the  government  and  management  of  its 
business  as  it  shall  deem  proper  ;  Provided,  the  same  shall  not  be  inconsistent 
with  this  act,  and  shall  not  contravene  the  laws  or  constitution  of  this  state, 
or  the  United  States,  and  may  alter  and  amend  the  same  from  time  to  time  in 
such  manner  as  may  be  provided  by  its  articles  of  incorporation.  Such  con- 
stitution shall  contain  equitable  provisions,  permitting  any  shareholder  wish- 
ing to  do  so  to  withdraw  from  the  association,  in  manner  as  follows  :  After 
three  months  from  date  of  issue  of  the  certificate  of  shares,  a  shareholder,  or 
the  legal  representative  of  a  deceased  shareholder,  wishing  to  withdraw  from 
the  said  corporation,  shall  have  the  power  to  do  so  by  giving  thirty  days' 
notice  of  such  intention  to  withdraw,  such  notice  being  given  in  writing  at 
the  regular  meeting  of  the  board  of  directors.  At  the  first  regular  meeting 
after  the  expiration  of  the  thirty  days'  notice,  or  at  any  time  thereafter,  the 
member  so  withdrawing,  or,  if  deceased,  his  legal  representative,  shall  be 
entitled  to  receive,  on  demand,  the  amount  paid  in  by  him  or  her,  less  the 
admission  fee  and  expense  charges  and  such  rate  of  interest  as  the  by-laws 
may  determine,  less  all  fines  and  other  charges.  Should  there  have  been, 
however,  a  net  loss  instead  of  a  net  gain,  then  such  withdrawing  shareholder 
shall  receive  the  actual  amount  paid  in,  less  his  proportion  of  such  net  loss. 
At  no  time,  however,  shall  more  than  one-half  of  the  unloaned  funds  in  the 
treasury  of  the  corporation  be  applicable  to  the  demands  of  the  withdrawing 
shareholders  without  the  consent  of  the  board  of  directors.  No  shareholder 
shall  be  entitled  to  withdraw  whose  stock  is  pledged  as  security  for  a  loan, 
either  from  the  association  or  from  any  other  party.  It  shall  contain  equi- 
table provisions  permitting  the  payment  of  loans  before  maturity,  and  for 
crediting  borrowing  members  who  have  paid  premiums  in  advance  and  who 
repay  their  loans  before  maturity,  with  an  equitable  share  of  the  premiums 
paid  by  them.  Such  constitution  shall  also  provide  that  if  any  member  has 
become  delinquent  in  his  payments  on  any  shares  to  an  amount  equal  to  the 
payments  due  thereon  for  any  period  named  therein  (not,  however,  less  than 
three  nor  more  than  twelve  months),  such  shares  shall  be  cancelled,  and  he 
shall,  as  to  such  shares,  cease  to  be  a  member,  and  shall  become  a  debtor  or 
creditor  of  such  association  as  the  case  may  be,  and  it  shall  make  equitable 
provisions  for  crediting  such  member  with  the  same  amount  as  if  he  had 
voluntarily  withdrawn  from  the  association,  and  if  any  sum  be  due  him  after 
deducting  fines  and  losses,  if  any,  to  date  of  cancellation,  it  shall,  if  he  be  a 
borrower,  be  credited  on  his  loan,  and  if  he  be  not  a  borrower  it  shall  be 
held  subject  to  his  order.  Such  constitution  may,  within  the  limits  aforesaid, 
fix  different  periods  for  the  cancellation  of  shares  of  borrowers  and  non- 
borrowers,  and  may  also,  within  said  limits,  leave  the  period  for  cancellation, 
wholly  or  in  part,  to  the  discretion  of  the  board  of  directors. 

SEC.  1855. — A  copy  of  the  articles  of  incorporation,  constitution,  and  by- 
laws of  every  such  association  shall  be  filed  in  the  office  of  the  auditor  of 
public  accounts,  who  shall,  with  the  state  treasurer  and  attorney-general, 
examine  the  same  carefully  and  if  they,  or  any  two  of  them,  shall  find  that 
they  conform  with  the  requirements  of  this  act  and  contain  a  just  and  equi- 
table plan  for  the  management  of  the  association's  business,  they,  or  any  two 


786  APPENDIX   IV. 

of  them,  shall  issue  to  such  association  a  certificate  of  their  approval  of  such 
constitution  and  by-laws  ;  but  if  they,  or  any  two  of  them,  find  their  provisions 
to  be  unjust  or  inequitable  or  oppressive  to  any  class  of  shareholders,  they 
shall  withhold  their  approval.  It  shall  not  be  lawful  for  any  association  here- 
after organized  within  this  state  for  the  purposes  set  forth  in  section  i  of  this 
act  [163]  to  transact  any  business  except  the  execution  of  its  articles  of  incor- 
poration, the  adoption  of  a  constitution  and  by-laws,  and  the  election  of 
directors  and  officers,  until  it  shall  have  procured  the  certificate  of  approval 
above  provided  for,  nor  shall  any  amendment  of  the  articles  of  incorporation, 
constitution,  or  by-laws  of  any  such  association  become  operative  until  a  copy 
of  the  same  shall  have  been  filed  and  a  certificate  of  approval  obtained  as 
above  provided  in  regard  to  original  articles  of  incorporation,  constitution, 
and  by-laws. 

Sec.  1856. — No  loan  shall  be  made  by  such  association  except  to  its  own 
members,  nor  shall  any  loan  be  made  to  any  member  of  any  sum  in  excess  of 
the  par  value  of  his  stock,  and  the  association  shall  have  a  lien  on  as  many  of 
the  borrower's  shares  as  shall  equal  at  their  face  value  the  nominal  amount  of 
the  loan  ;  good  and  ample  real  estate  security  unincumbered,  except  by  prior 
liens  held  by  such  association,  shall  also  be  given  by  the  borrower  ;  Provided, 
however,  that  the  stock  of  such  association  may  be  received  as  security  for  a 
loan  of  the  amount  of  the  withdrawal  value  of  such  stock  without  other 
security.  No  evidence  of  indebtedness  taken  by  such  association  for  the 
return  of  any  such  loan  shall  be  negotiable  in  form,  and,  whatever  be  its  form, 
every  such  evidence  of  indebtedness  shall  be  non-negotiable  in  law,  and  no 
such  debt,  or  evidence  of  debt,  shall  be  assignable  or  transferable  in  any 
manner  so  as  to  prevent  the  discharge  thereof  by  payment  made  to  the 
association. 

Sec.  1857. — -Such  associations  may  purchase,  hold,  lease,  and  convey  real 
estate  for  the  following  purposes,  and  no  other  :  1st.  Such  as  it  may  need  to 
occupy  as  a  place  of  business.  2d.  Such  as  shall  in  good  faith  be  conveyed 
to  it  in  satisfaction  of  debts  previously  contracted  in  the  ordinary  course  of 
business.  3d.  Such  as  it  shall  purchase  at  sales  under  judgments,  decrees, 
or  mortgages  held  by  the  association,  or  shall  purchase  in  good  faith  to  secure 
debts  due  to  it.  But  no  such  association  shall  hold  the  title  and  possession  of 
any  real  estate  longer  than  three  years,  except  for  the  first  purpose  above 
named.  Nothing  in  this  section  shall  be  construed  to  forbid  the  mortgaging 
of  real  estate  to  such  association. 

SEC,  [858. — Shares  of  stock  in  any  such  association  may  be  subscribed  for, 
held,  transferred,  surrendered,  withdrawn,  and  forfeited,  and  payments 
thereon  received  and  receipted  for,  by  any  minor  over  the  age  of  fourteen 
years,  in  the  same  manner  and  with  the  same  binding  effect  as  though  such 

Eerson  were  of  full  age,  except  that  the  said  minor,  or  his  estate,  shall  not  be 
ound  'Mi  his  subscription  to  stock  except  to  the  extent  of  payments  actually 
made  thereon.  A  trustee  or  guardian  may  acquire,  hold,  transfer,  and  with- 
draw and  receive  all  moneys  due  upon  shares  in  such  association  for  the  use 
and  account  of  any  minor  ;  but  before  he  shall  be  permitted  to  withdraw, 
transferor  receive  payment  u  >on  any  shares  so  held,  such  trustee  or  guardian 
shall  file  with  the  county  judge  where  such  association  is  located  a  bond  for 
twice  the  value  of  the  snares  withdrawn,  transferred,  or  money  received, 
which  bond  shall  be  approved  by  said  judge  and  shall  be  conditioned  upon 
his  faithfully  accounting  for  the  proceeds  of  the  shares  withdrawn,  trans- 
ferred, or  money  received,  and  the  use  thereof,  and  paying  the  same  to  said 
minor  at  his  or  her  majority. 

Skc.  [859.— Such  associations  shall  not  be  subject  to  taxation  on  their  capital 
stock,  nor  on  their  loans,  advances,  or  mortgages,  but  shares  in  said  associa- 
tion shall,  for  the  purposes  of  taxation,  be  considered  and  held  as  credits,  and 
members  and  holders  of  such  shares  shall  list  the  same  for  taxation,  and  the 
ame  shall  be  taxed  in  such  manner  and  subject  to  such  deductions  as  may  be 
provided  by  law  for  the  taxation  of  other  credits.  The  real  estate  of  such 
ill  be  subject  to  taxation  in  the  same  manner  as  provided  by 
law  in  the  case  of  other  corporations  and  individuals. 

-The  fees,  dues,  tines,  ink-rest,  premiums  and  other  payments  of 

money  made,  1  ontracted  for,  or  required  to  be  made,  by  any  member  of  such 
iciation,  by  virtue  of  or  in  conformity  with  the  provisions  of  its  constitu- 
tion and  by-laws,  though  the  same  may  aggregate  a  greater  amount,  taking 
into  ai  1  ounl  all  the  terms  and  conditions  ol  payment  io  and  from  such  mem- 
ber, than  1  01  may  be  allowed  by  the  lawsol  this  state  to  be  taken  or  collected 
as  interest  on  ordinary  contracts  for  tin:  payment  of  money,  shall  not  make 
any  bui  h  payment  or  contract  therefor  usurious,  but  all  such  contracts  may  be 


GENERAL   LEGISLATION.  787 

enforced,  and  such  fees,  dues,  fines,  interest,  premiums  and  payments  col- 
lected in  the  same  manner  as  other  debts  on  contracts  not  usurious  ;  Pro- 
vided, that  the  certificate  of  approval  provided  for  in  section  4  of  tins  act 
[1855],  issued  to  such  association,  shall  be  conclusive  evidence  of  such  compli- 
ance with  the  requirements  of  this  act  .is  to  entitle  it  to  the  benefits  ol  this  sec- 
tion ;  Provided,  further,  that  no  association  hereafter  formed  within  this  slate, 
except  such  as  hold  such  certificate  of  approval,  shall  be  exempt  from  the 
operation  of  the  usury  law  of  this  state. 

Sec.  1861. — Every  such  association  shall  annually,  and  at  such  other  times 
as  required  by  the  auditor  of  public  accounts,  state  treasurer  and  attorney 
general,  or  any  two  of  them,  tile  in  the  office  of  the  auditor  of  public  accounts 
a  statement,  verified  by  the  oath  of  its  president  or  secretary  and  ap|  roved  by 
three  of  its  directors,  in  such  form  as  maybe  prescribed  by  the  auditor  of 
public  accounts,  setting  forth  its  actual  financial  condition  and  the  amount  ol" 
its  assets  and  liabilities,  and  furnishing  such  other  information  as  to  its  affairs 
as  the  auditor  of  public  accounts  may  require,  and  a  copy  of  such  annual 
statement  shall  be  published  in  a  newspaper  of  general  circulation  in  the 
county  where  such  association  is  located,  three  consecutive  tunes,  ami  due 
proof  of  such  publication  by  affidavit  shall  be  filed  with  the  auditor  of  public 
accounts.  Whenever  the  constitution  of  an  association  fixes  a  date  for  the 
close  of  its  fiscal  year,  the  annual  report  of  such  associations  [association] 
shall  show  its  condition  at  such  date  ;  in  all  other  cases  such  report  shall  show 
the  condition  of  the  association  at  the  close  of  the  calendar  year,  and  no  other 
or  further  notice  or  statement  of  the  amount  of  the  existing  debts  of  such  cor- 
poration shall  be  required  to  be  published  or  given.  The  auditor  of  public 
accounts,  state  treasurer  and  attorney  general,  or  any  two  of  them,  shall  have 
power  to  call  for  special  reports  from  any  such  association,  whenever  in  their 
judgment  the  same  may  be  necessary  or  advisable.  Any  association  failing 
to  comply  with  the  provisions  of  this  section  shall  forfeit  its  charter  rights. 

Sec.  1862. — Every  person  who  shall  wilfully  or  knowingly  subscribe,  or 
make  or  cause  to  be  made,  any  false  statement  or  false  entries  in  any  books 
of  any  association  organized  for  the  purposes  set  forth  in  section  one  (i)  of 
this  act  [1853],  or  exhibit  false  papers  with  the  intent  to  deceive  anv  person 
authorized  to  examine  into  the  affairs  of  such  association,  or  shall  make,  state 
or  publish  any  false  statement  of  the  financial  condition  of  such  association, 
shall  be  deemed  guilty  of  a  felony  ;  and  upon  conviction  thereof  shall  be  fined 
not  exceeding  ten  thousand  (10,000)  dollars  and  be  imprisoned  in  the  state 
penitentiary  not  less  than  one  (1)  nor  more  than  five  (5)  years. 

Sec.  1863. — The  person  or  persons  appointed  under  the  laws  of  this  state  to 
make  an  examination  of  corporations,  firms  or  individuals  doing  a  banking 
business  shall  make  an  examination  and  report  of  every  association  organized 
under  the  laws  of  this  state  for  the  purposes  named  in  section  one  (1)  of  this 
act  [1853],  as  often  as  shall  be  deemed  necessary  and  proper  and  at  least  once 
a  year,  and  the  rights,  powers,  duties,  privileges  and  compensation  of  such 
person  or  persons  in  connection  with  such  examinations,  shall  be  the  same  as 
is  or  may  provided  by  law  with  reference  to  examinations  of  banks  and  cor- 
porations, firms  or  individuals  transacting  a  banking  business  ;  and  such  asso- 
ciation shall  pay  the  same  fees  for  such  examinations  as  is  or  may  be  pro- 
vided by  law  in  case  of  the  examinations  of  banks. 

Sec  1864. — Whenever  it  shall  appear  to  the  auditor  of  public  accounts,  state 
treasurer,  attorney  general  or  any  two  of  them,  from  any  examination  or 
report  provided  for  by  this  act,  that' any  building,  homestead  or  other  associa- 
tion organized  under  the  laws  of  this  state  for  the  purposes  set  forth  in  section 
one  (1)  of  this  act  [1853],  is  conducting  its  business  in  an  unsafe  or  unauthor- 
ized manner,  or  is  jeopardizing  the  interests  of  its  members,  or  that  it  is 
unsafe  for  such  association  to  transact  business,  they  shall  communicate  such 
facts  to  the  attorney  general,  who  shall  thereupon  apply  to  the  supreme  court 
or  to  the  district  court  of  the  county  where  such  association  is  located,  or  to  a 
judge  of  either  of  said  courts,  for  the  appointment  of  a  receiver  to  take  charge 
of  and  wind  up  the  business  of  such  association  ;  and  if  such  fact  or  facts  be 
made  to  appear,  it  shall  be  sufficient  to  authorize  the  appointment  of  a 
receiver  and  the  making  of  such  orders  and  decrees  in  such  cases  as  equity 
may  require. 

Sec  1865.— It  shall  be  unlawful  for  any  corporation  hereafter  organized 
under  the  laws  of  this  state  to  use  the  words  -'loan  and  building  association" 
or  "  building  and  loan  association  "  as  a  part  of  its  corporate  name  unless  it 
shall  have  complied  substantially  with  the  requirements  of  this  act ;  and  every 
such  corporation  using  such  words  unlawfully  as- part  of  its  corporate  name 
shall  be  fined,  at  the  discretion  of  the  court,  in  any  sum  not  exceeding  twenty- 


788  APPENDIX   IV. 

five  (25)  dollars  for  each  day  it  shall  so  unlawfully  use  such  words  as  part  of 
its  corporate  name. 

Sec.  i860. — Any  association  now  organized  in  conformity  to  existing  laws  of 
this  state  for  the  purposes  set  forth  in  section  one  (I)  of  this  act  [1853],  which 
shall  voluntarily  comply  with  all  the  requirements  of  this  act,  shall  be  entitled 
to  all  the  benefits  and  privileges  herein  granted;  any  such  association  now 
organized  shall  be  required  to  comply  with  the  provisions  of  this  act  in  the 
following  particulars  :  It  shall,  within  ninety  days  after  this  act  shall  have 
become  a  law,  file  with  the  auditor  of  public  accounts  a  certified  copy  of  its 
articles  of  incorporation,  constitution  and  by-laws,  shall  make  and  publish 
reports  in  full  compliance  with  section  ten  (10)  hereof  [1861],  shall  be  subject 
to  examination  in  all  respects  as  provided  in  section  twelve  (12)  hereof  [1863], 
and  its  affairs  may  be  wound  up  in  the  manner  provided  in  section  (13)  of  this 
act  [1864],  and  before  any  amendment  to  either  its  articles  of  incorporation, 
constitution  or  by-laws,  hereafter  made,  shall  become  operative,  a  copy  of 
such  amendment  shall  be  filed  with  the  auditor  of  public  accounts  ;  and  the 
auditor,  together  with  the  state  treasurer  and  attorney  general,  shall  examine 
the  same,  and  if  they  or  any  two  of  them  shall  find  that  such  amendment  does 
not  introduce  an}'  unjust  or  inequitable  feature  or  provision,  they  or  any  two 
of  them  shall  issue  their  certificate  of  approval  and  such  amendment  shall 
become  valid  ;  but  if  they  or  any  two  of  them  withhold  such  certificate,  such 
amendment  shall  be  of  no  effect. 

Sec.  1867. — Every  corporation,  company  or  association  contemplating  doing 
business  in  this  state  and  having  for  a  part  of  its  title  or  name  the  words 
"  loan  and  building  association,"  "  building  and  loan  association,"  "  savings 
and  loan  association,"  or  "  co-operative  bank,  saving  and  investment  com- 
pany," and  every  corporation,  company  or  association  whose  stock  is  pay- 
able by  an  accumulating  fund  in  regular  or  stated  periodical  instalments, 
and  every  corporation,  company,  or  association  doing  a  business  in  a  form 
and  character  similar  to  that  authorized  to  be  done  by  section  one  (1)  of  this 
act  [1853],  shall,  if  organized  or  incorporated  in  any  county,  state,  or  territory 
other  than  the  state  of  Nebraska,  be  known  in  this  act  as  a  foreign  building 
and  loan  association. 

Sec.  1868. — It  shall  not  be  lawful  for  any  foreign  building  and  loan  asso- 
ciation, directly  or  indirectly,  to  transact  any  business  in  this  state  without 
first  procuring  a  certificate  of  approval  and  authorization  from  the  auditor  of 
public  accounts,  state  treasurer,  and  attorney  general,  or  any  two  of  them. 
Before  obtaining  such  certificate  such  foreign  building  and  loan  association 
shall  furnish  the  auditor  with  a  statement  sworn  to  by  the  president  or  secre- 
tary of  the  association,  which  statement  shall  show  :  The  name  and  locality 
of  the  association  and  itemized  account  of  its  actual  financial  condition  and 
the  amount  of  its  property  and  liabilities,  the  amount  and  number  of  shares 
subscribed,  the  amount  which  has  been  paid  in  on  such  shares,  the  number 
of  shares  redeemed,  the  estimated  cash  value  of  each  share  of  its  stock,  and 
all  such  other  information  touching  its  affairs  as  said  officers,  or  any  two  of 
them,  may  require.  Such  foreign  building  and  loan  association  shall  also  file 
with  the  auditor  of  public  accounts  a  certified  copy  of  the  laws  of  the  state, 
territory  or  government  under  which  it  is  incorporated,  and  of  its  charter  or 
articles  of  incorporation  and  of  the  constitution  and  by-laws  and  all  amend- 
ments thereto,  and  shall  appoint  an  attorney  in  each  county  in  which  it  trans- 
acts or  solicits  business  who  shall  be  a  resident  of  such  county,  and  shall  file 
with  the  auditor  of  public  accounts  a  written  instrument,  duly  signed  and 
sealed,  authorizing  such  attorney  of  such  associations  to  acknowledge  service 
of  process  in  behalf  of  such  association,  consenting  that  service  of  process, 
le  or  final,  upon  such  attorney  shall  be  taken  and  held  as  valid  as  if 
served  upon  the  association  according  tothe  laws  of  this  or  any  other  state, 

and  waiving  all  clai r  right  oi  error  by  reason  of  such  acknowledgment  oi 

i'  e.     If  after  examination    of  such   statements  and   certified  copies  of 

in  truments,  and  after  said  association  shall  have  complied  with  the  require- 

men  ict  as  to  the  appointment  of  an  attorney  or  attorneys,  the  auditor 

."  1  ounts,  -late  treasurer  and  attorney  general,  or  any  two  of  them, 

shall  he  satisfied  that  such  association    is  solvent    and   that  the  capital  and  in- 

nenl    are  secure,  and  thai  the  laws,  charters,  articles  of   incorporation, 

■  n  and    l>v  laws  governing   it   afford   as  ample  protection  to    the 

int.  lembei    as  is  afforded  by  the  laws  of  this  state  to  members  of 

:  incorporated  undei  the  laws  of  the  state  oi    Nebraska 

for  itioned  in    ection  one  [363]  of  this  act,  then  the  auditor  of 

publ  treasurer  and  atto r  genei  al,  or  any  two  "i   them, 

01  iation  a  certificate  oi  approval  authorizing  it  to  transact 


GENERAL   LEGISLATION.  789 

business  till  the  31st  day  of  January  of  the  ensuing  year,  in  those  counties  of 
this  state  in  which  it  shall  nave  appointed  a  resident  attorney  as  above  pro- 
vided. 

SEC.  [869, — The  statements  required  of  foreign  building  and  loan  associa- 
tions shall  be  renewed  annually  in  January  in  such  maimer  as  required  by 
this  act  and  shall  be  made  at  such  other  times  as  the  auditor  of  public  ac- 
counts, state  treasurer,  and  attorney  general,  or  any  two  of  them,  may  deem 
it  expedient  to  demand  the  same,  and  the  auditor  of  public  account-,  state 
treasurer  and  attorney  general,  or  any  two  of  them,  may  at  any  time  revoke 
the  certificate  of  approval  and  authorization  oi  any  such  association  for  cause. 

SEC.  1870. — Any  person,  agent  or  company,  doing  business  or  attempting  to 
do  business  in  this  state  for  any  foreign  building  and  loan  association  which 
shall  not  at  the  time  be  the  holder  of  a  valid  certificate  oi  approval  and 
authorization,  as  provided  for  in  section  seventeen  (17)  of  this  act  [1868],  shall 
be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be 
fined  in  any  sum  not  exceeding  one  thousand  (r.ooo)  dollars,  or  imprisoned  in 
the  county  jail  not  more  than  thirty  days,  or  both,  at  the  discretion  of  the 
court. 

NEVADA. 

GENERAL  STATUTES  OF  1885. 

Section  948. — Corporations  for  the  purpose  of  aggregating  the  funds  and 
savings  of  the  members  thereof,  and  others,  and  preserving  and  safely  invest- 
ing the  same  for  their  common  benefit,  may  be  formed  according  to  the 
provisions  of  this  act,  and  such  corporations,  and  the  members  and  stock- 
holders thereof,  shall  be  subject  to  all  the  conditions  and  liabilities  herein 
imposed,  and  to  none  other. 

Sec.  949. — Any  five  or  more  persons  who  may  desire  to  form  an  incor- 
porated company  for  the  purposes  specified  in  the  preceding  section,  may 
make,  sign  and  acknowledge,  before  some  officer  competent  to  take  the 
acknowledgment  of  deeds,  and  file  in  the  office  of  the  county  clerk  of  the 
county  in  which  the  principal  place  of  business  of  the  company  is  intended  to 
be  located,  and  a  certified  copy  thereof  in  the  office  of  the  secretary  of  state, 
a  certificate  in  writing,  in  which  shall  be  stated  the  corporate  name  of  the 
corporation,  the  object  for  which  the  corporation  shall  be  formed,  the  time  of 
its  existence,  not  to  exceed  fifty  years,  the  number  of  directors  and  their 
names,  who  shall  manage  the  affairs  of  the  company  for  the  first  six  months, 
and  the  name  of  the  city  or  town  and  county  in  which  the  principal  place  of 
business  of  the  company  is  to  be  located. 

Sec.  951. — A  copy  of  any  certificate  of  incorporation  filed  in  pursuance  of 
this  act,  and  certified  by  the  county  clerk  of  the  county  in  which  it  is  filed,  or 
his  deputy,  or  by  the  secretary  of  state,  shall  be  received  in  all  courts,  actions, 
proceedings,  and  places,  as  presumptive  evidence  of  the  facts  therein  stated. 

Sec.  950. — When  the  certificate  shall  have  been  filed,  the  persons  who  shall 
have  signed  and  acknowledged  the  same,  and  such  persons  as  may  there- 
after become  their  associates  or  successors,  shall  be  a  body  politic  and  cor- 
porate, and  by  their  corporate  name  have  succession  for  the  period  limited, 
and  power  : 

1.  To  sue  and  be  sued  in  any  court. 

2.  To  make  and  use  a  common  seal,  and  to  alter  the  same  at  pleasure. 

3.  To  purchase,  hold,  sell,  convey  and  release  from  trust  or  mortgage,  such 
real  or  personal  estate  as  hereinafter  provided  in  this  act. 

4.  To  appoint  such  officers,  agents  and  servants  as  the  business  of  the  cor- 
poration shall  require  ;  to  define  their  powers,  prescribe  their  duties  and  fix 
their  compensation,  and  to  require  of  them  such  security  as  may  be  thought 
proper  for  the  fulfilment  of  their  duties. 

5.  To  loan  and  invest  the  funds  of  the  corporation  ;  to  receive  deposits  of 
money,  and  to  loan  and  invest  the  same  ;  to  collect  the  same,  with  interest, 
and  to  pay  such  deposits,  without  interest,  or  with  so  much  of  the  earnings 
and  interest  as  the  by-laws  of  the  corporation  may  provide. 

6.  To  make  by-laws,  not  inconsistent  with  the"  laws  of  this  state,  for  the 
organization  of  the  company  and  the  management  of  its  property  the  regulation 
of  its  affairs,  the  conditions  on  which  deposits  shall  be  received,  the  time  and 
manner  of  dividing  the  profits,  and  the  time  and  manner  in  which  any  person 
may  become  or  may  cease  to  be  a  member  of  the  corporation,  and  for  carry- 
ing on  all  kinds  of  business  within  the  objects  and  purposes  of  the  company. 

Sec.   952. — No  corporation,  formed  under  this  act,  shall  loan  any  money 


790  APPENDIX  IV. 

without  adequate  security  on  real  or  personal  property,  except  when  any 
such  corporation  shall,  by  a  by-law  to  that  effect,  adopted  by  a  two-thirds  vote 
of  all  the  stock  of  the  company  subscribed  and  taken,  authorize  the  making  of 
loans  to  persons  of  reputed  solvency,  when  ordered  by  a  vote  of  not  less  than 
three-fourths  of  all  the  directors  thereof. 

Sec.  953. — The  corporate  powers  of  the  corporation  shall  be  exercised  by  a 
board  of  not  less  than  five  directors,  residents  of  this  state,  and  a  majority  of 
them  citizens  of  the  United  States,  who  shall  be  holders  of  stock,  each  to  such 
amount  and  under  such  conditions  as  the  by-laws  may  prescribe  (if  a  capital 
is  provided  for  in  the  certificate  of  incorporation),  or  members,  each  having 
deposits  with  the  corporation  to  the  amount  of  at  least  one  hundred  dollars  (if 
the  company  has  no  capital  stock).  All  directors  to  hold  office  after  the 
expiration  of  the  term  of  the  directors  named  in  the  certificate  of  incorpora- 
tion, shall  be  annually  elected,  at  such  time  and  place,  and  in  such  mode,  and 
upon  such  notice,  as  shall  be  directed  by  the  by-laws  of  the  company.  All 
such  elections  shall  be  by  ballot,  and  each  stockholder  who  shall  be  a  mem- 
ber and  shall  have  signed  the  by-laws,  shall  be  entitled  to  such  number  of 
votes  as  shall  be  fixed  by  the  by-laws,  not  exceeding  one  vote  for  every  share  of 
stock  held  by  him  ;  and  the  by-laws  may  provide  what  qualifications  shall 
entitle  a  member,  not  a  stockholder,  or  the  members  of  a  corporation  having 
no  stock,  to  a  vote  ;  and  the  persons  receiving  the  greatest  number  of  votes 
shall  be  directors.  The  president  of  the  corporation,  who  shall  also  be  the 
president  of  the  board  of  directors,  shall  be  chosen  by  said  board  from  among 
their  own  number.  When  any  vacancy  shall  occur  in  the  board  of  directors, 
by  death,  resignation  or  otherwise,  it  shall  be  filled  for  the  remainder  of  the 
term  in  such  manner  as  may  be  prescribed  by  the  by-laws  of  the  company. 

Sec.  954. — If  it  shou'd  happen  at  any  time  that  an  election  of  directors  shall 
not  be  made  on  the  day  designated  by  the  by-laws  of  the  company,  the  cor- 
poration shall  not  for  that  reason  be  dissolved,  but  it  shall  be  lawful  on  any 
other  day  to  hold  an  election  for  directors,  in  such  manner  as  shall  be  provided 
for  by  the  by-laws  of  the  company,  and  the  directors  shall  be  continued  in 
office  until  their  successors  sha'l  be  elected. 

Sec.  955. — The  call  for  the  first  meeting  of  the  directors  shall  be  signed  by 
one  or  more  persons  named  directors  in  "the  certificate  setting  forth  the  time 
and  place  of  meeting,  which  notice  shall  be  delivered  personally  to  each 
director,  or  published  at  least  ten  days  in  some  newspaper  of  the  county  in 
which  is  tlie  principal  place  of  business  of  the  corporation,  or,  if  no  news- 
paper be  published  in  the  county,  then  in  the  newspaper  nearest  thereto. 

Six-.  956. — A  majority  of  the  whole  number  of  directors  shall  form  a  board 
for  the  transaction  of  business,  and  every  decision  of  a  majority  of  the  persons 
duly  assembled  as  a  board,  or  a  larger  number  if  the  by-laws  shall  so  require, 
sha'l  be  valid  as  a  corporate  act, 

Sec.  957.— It  shall  not  be  lawful  for  the  corporation  or  the  directors  to  make 
any  dividend,  except  from  the  sur  his  profits  arising  from  the  business  of  the 
corporation  ;  and  the  directors  shall,  at  such  times  and  in  such  manner  as  the 
by-laws  shall  prescribe,  declare  and  pay  dividends  of  so  much  of  the  profits  of 
the  company  and  of  the  interest  arising  from  the  capital  stock  and  deposits, 
as  may  be  appropriated  for  thai  purpose  by  the  provisions  of  the  by-laws.  And 
it  shall  not  be  lawful  lor  the  corporation  or  the  directors  to  contract  any  debt 
or  liability  against  the  corporation  for  any  purpose  whatever  ;  hut  the  capital 
stock  and  the  assets  of  the  corpi  nation  •-hall  be  security  to  depositors  who  are 
not  tockholders,  and  the  by-laws  may  provide  that  the  same  security  shall 
extend  to  deposits  made  by  stockholders. 

Sec.  598. — Corporations  formed  under  this  act  may  prescribe  by  their  by-laws 
tin-  time  and  conditions  in  which  repayment  is  to  be  made  by  depositors,  but 
whenever  there  is  any  call  by  depi  >sitors  f.  u-  a  repayment  of  a  greater  amount 
than  the  corporation  may  have  disposable  for  that  purpose,  it  shall  not  be 
;  ill'-  dn  cMois  or  officers  to  make  any  new  loans  or  investments  of 
IIm-  lands  of  the  depositors,  or  of  the  earnings  thereof,  until  such  excess  of  call 

e  cea  ed  ;  and  the  directors  of  any  corporation  formed  under  this  act, 

and  In    111'    no  capital    stock,  shall    retain,  on   each  dividend   dav,  at  least  five 

pei  '-nt.  oi  the  net  profits  of  the  corporation  l<>  constitute  a  reserve  fund, 
wIik  ted  in  the  same  manner  as  other  funds  of  the  corporation, 

and    hall  in-   used   toward  paying  any  losses   which  the  corporation  may 
1  11  in  the  pursuance  of  its  lawful  business.    And  the-  corporation  may 
for  the  disposal  of  any  excess  in  the  reserve  fund  over 
on'-  hundred  thou  and  dollai  1,  and  the  final  disposal,  upon  the  dissolution  of 

11 rporation,  ol  the  re  lerve  fund,  orof  the  remainder  thereof  after  payment 

<ii  1-. 


GENERAL    LEGISLATION.  791 

Sec.  959. — No  corporation  formed  under  this  act  shall,  by  any  implication 
or  construction,  be  deemed  to  possess  the  power  of  creating  and  issuing  bills, 
notes  or  other  evidence  of  debt,  for  circulation  as  money. 

Sec  960. — The  real  and  personal  estate  which  it  shall  be  lawful  for  any  such 
corporation  to  purchase,  hold  and  convey,  shall  be  :  First — The  lot  and 
building  in  which  the  business  of  the  company  may  be  carried  on  :  Provided, 
that  the  cost  of  the  same  shall  not  exceed  one  hundred  thousand  dollars. 
Second— Such  as  shall  have  been  mortgaged  or  pledged  to  it.  or  conveyed  in 
trust  for  its  benefit  in  good  faith,  for  money  loaned  in  pursuance  of  the  regular 
business  of  the  corporation.  Third— Such  as  shall  have  been  purchased  at 
sales  under  pledges,  mortgages  or  deeds  of  trust  made  for  its  benefit,  or 
upon  judgments  or  decrees  obtained  or  rendered  for  money  so  loaned.  And 
ihe  said  corporation  shall  not  purchase,  hold,  or  convey  real  estate  in  any 
other  case,  or  for  any  other  purpose  ;  and  all  such  real  estate  as  is  described 
in  the  second  and  third  subdivisions  of  this  section,  shall  be  sold  by  the  said 
corporation  within  five  years  after  the  same  shall  be  vested  in  it  by  purchase 
or  otherwise  ;  and  the  said  corporation  shall  not,  directly  or  indirectly,  deal  or 
trade  in  buying  or  selling  any  goods,  wares  or  merchandise  whatever,  except 
such  personal  property  as  may  be  requisite  for  its  immediate  accommodation 
for  the  convenient  transaction  of  its  business  ;  and  except  bonds,  securities,  or 
evidences  of  indebtedness,  public  or  private,  gold  and  silver  bullion,  and 
United  States  mint  certificates  of  ascertained  value,  and  evidences  of  debt 
issued  by  the  United  States. 

Sec.  961. — Any  married  woman,  being  a  member,  or  holding  stock  in  her 
own  name  in  any  company  formed  under  this  act,  may  cast  her  own  vote,  and 
appoint  her  own  proxy  to  vote  for  her.  Whenever  any  stock  or  deposits  are 
held  by  any  person,  or  executor,  administrator,  trustee  or  guardian,  he  shall 
represent  such  stocks  or  deposits,  and  may  vote  accordingly. 

Sec.  962. — Whenever  any  deposit  shall  be  made  by  any  minor,  the  directors 
of  said  corporation  shall  pay  to  such  depositor  such  sums  as  may  be  due  to 
him  or  her,  although  no  guardian  shall  have  been  appointed  by  or  for  such 
minor  or  the  guardian  of  such  minor  shall  not  have  authorized  the  drawing 
of  the  same  ;  and  the  check,  receipt  or  acquittance  of  such  minor  shall  be  as 
valid  as  if  the  same  was  executed  by  a  guardian  of  such  minor,  or  the  said 
minor  was  of  full  age,  if  such  deposit  was  made  personally  by  said  minor. 
And  whenever  any  deposit  shall  be  made  in  her  own  name  by  any  woman 
being,  or  thereafter  becoming  married,  said  directors  shall  pay  such  sums  as 
may  be  due  to  her  on  her  on  her  own  receipt  or  acquittance  ;  and  any  person 
authorized  thereto,  by  resolution  of  the  board  of  trustees  or  directors  of  any 
corporation,  association  or  society  having  funds  deposited,  or  owning  stock  in 
any  corporation  formed  under  this  act,  shall  be  entitled  to  receive  such  deposit, 
or  transfer  such  stock,  and  to  cast  the  vote  of  such  corporation,  association  or 
society. 

Sec.  963. — Every  corporation  incorporated  or  doing  business  under  the 
provisions  of  this  act  shall  cause  to  be  published  annually,  once  a  week  for  at 
least  six  successive  weeks,  in  one  public  newspaper  printed  in  (he  county  in 
which  such  corporation  may  be  located,  a  true  and  accurate  statement  of  all 
depositors  who  shall  have  deposits,  dividends  or  interest  to  their  credit  on  the 
books  of  said  corporation,  and  concerning  whom  at  the  date  of  such  statement 
the  officers  of  the  corporation  shall  have  had  no  knowledge  during  the  two 
years  next  preceding  such  date  ;  such  statement  shall  contain  the  name, 
residence,  and  occupation,  if  known,  of  the  person  making  the  deposit,  or  in 
whose  favor  the  dividend  was  declared,  and  in  all  cases  so  published  the 
expense  of  advertising  shall  be  deducted  from  the  sums  unclaimed,  in  propor- 
tion to  the  amount  of  each  respectively. 

Sec  964. — Corporations  formed  for  the  purpose  designated  in  section  one 
[948]  of  this  act  may  have  a  capital  stock,  and  may  i^sue  certificates  to  represent 
shares  of  such  capital  slock;  Provided,  that  the  certificate  directed  by  the 
second  section  [049]  of  this  act  to  be  executed  and  tiled  shall  also  contain  a 
statement  of  the  amount  of  such  capital  stock  and  number  oi  shares  of  which 
it  shall  consist.  The  rights  and  privileges  to  be  accorded  to  such  capital  stock, 
as  distinct  from  those  to  be  accorded  to  depositors,  and  the  obligations  to  be 
imposed  upon  it,  in  the  same  relation,  shall  be  fixed  by  the  by-laws. 

Sec  965. — It  shall  not  be  lawful  for  the  directors  to  divide,  withdraw  or  in 
any  way  pay  to  the  stockholders,  or  any  of  them,  any  part  of  the  capital  stock, 
nor  to  reduce  the  amount  of  the  same. 

Sec  966. — Whenever  it  is  desired  to  increase  the  amount  of  the  capital 
stock,  a  meeting  of  stockholders  may  be  called  by  a  notice  signed  by  at  least 
ajnajority  of  the  directors,  and  published  at  least  sixty  days  in  every  issue  of 


792  APPENDIX   IV. 

some  newspaper  published  in  the  county  where  the  principal  place  of  busi- 
ness of  the  company  is  located,  which  notice  shall  specify  the  object  of  the 
meeting,  the  time  and  place  where  it  is  to  be  held,  and  the  amount  to  which 
it  is  proposed  to  increase  the  capital  stock,  and  a  vote  of  two-thirds  of  all  the 
shares  ot  stock  represented  at  the  meeting  shall  be  necessary  to  an  increase 
of  the  amount  of  capital  stock. 

Sec.  967. — If,  at  any  meeting  so  called,  a  sufficient  number  of  votes  has  been 
given  in  favor  of  increasing  the  amount  of  capital  stock,  a  certificate  of  the 
proceedings  showing  a  compliance  with  these  provisions,  the  amount  of  the 
capital  actually  paid  in,  and  the  amount  to  which  the  capital  stock  is  to  be  in- 
creased, shall  be  made  out,  signed  and  verified  by  the  affidavit  of  the  chair- 
man and  secretary  of  the  meeting,  certified  by  a  majority  of  the  directors, 
and  filed  as  required  by  the  second  section  [949]  of  this  act.  When  so  filed 
the  capital  stock  of  the  corporation  shall  be  increased  to  the  amount  specified 
in  the  certificate. 

Sec.  968.— The  stock  of  the  company  shall  be  deemed  personal  estate,  and 
shall  be  transferable  in  such  manner  as  shall  be  prescribed  by  the  by-laws. 

Sec.  959. — No  certificate  representing  shares  of  stock  shall  be  issued,  nor 
shall  such  stock  be  considered  as  acquired  until  the  whole  sum  of  money 
which  such  certificate  purports  to  represent  shall  have  been  paid  into  the  cor- 
poration. 

Sec.  970. — Any  stockholder  may  pledge  his  stock  by  a  delivery  of  the  certi- 
ficate or  other  evidence  of  his  interest,  but  may  nevertheless  represent  the 
same  at  all  meetings  and  vote  as  a  stockholder. 

Sec.  971.— Any  corporation  formed  under  this  act  may  dissolve  and  disincor- 
porate itself  by  presenting  to  the  county  judge  of  the  county  in  which  the 
principal,  place  of  business  of  the  company  is  situated  as  named  in  the  certifi- 
cate of  incorporation,  a  petition  to  that  effect,  setting  forth  the  reason  there- 
for, signed  by  all  the  directors  of  the  corporation.  Notice  of  application  shall 
then  be  given  by  the  clerk,  which  notice  shall  set  forth  the  nature  of  the  ap- 

Elication,  and  shall  specify  the  time  and  place  at  which  such  application  shall 
e  heard,  and  shall  be  published  in  every  regular  issue  of  some  newspaper  in 
the  county  where  the  application  is  to  be  heard,  for  at  least  three  months, 
and  if  no  newspaper  is  published  in  the  county  where  the  application  is 
made,  then  such  notice  shall  be  posted  up  at  least  thirty  days  previous 
to  the  tune  when  such  application  is  to  be  heard,  in  three  public  places 
in  said  county,  one  of  which  shall  be  the  court  house  of  said  county. 
At  the  time  and  place  appointed,  or  at  any  other  time  to  which  it  may 
be  postponed  by  the  judge,  he  shall  proceed  to  consider  the  applica- 
tion, and  if  satisfied  that  the  members  and  stockholders  of  the  corpora- 
tion will  be  benefited  thereby,  and  that  no  indebtedness  of  the  corporation 
exists  other  than  to  depositors  who  have  not  demanded  their  deposits.be 
shall  enter  an  order  declaring  it  dissolved.  The  hearing  of  such  application 
for  dissolution  shall  not  Ik-  had  by  the  judge  until  after  the  expiration  of 
twenty  days  from  and  after  the  last  publication  of  the  notice  aforesaid.  After 
filing  the  petition  tor  dissolution  no  more  deposits  shall  be  received  nor  certi- 
ficatesof  stock  be  issued  by  the  officers  of  the  Corporation. 

Skc.  972.—  Upon  the  dissolution  of  any  corporation  formed  under  this  act, 
the  directors,  at  the  time  of  the  dissolution,  shall  be  trustees  lor  the  members 
11  I  others  interested  in  the  corporation  dissolved,  and  shall  have  full  power 
and  authority  to  sue  for  and  recover  the  debts  due  to  and  property  oi  the  cor- 
poration, -' nli-all  of  its  affairs,  and  divide  among  11k-  members  and  stock- 
holders in  such  proportion  as  the  by-laws  shall  direct.  The  money  and  other 
pro;  hall  remain  after  the  payment  of  all  the  expenses,  and  all  un- 

claimed deposits  and  ih'-j  interest  accruing  thereon, and  unclaimed  shares  and 
money  da-  thereon  not  called  for  within  thirty  days  after  the  collection  of  all 

!    il  sdness,  shall  be  paid  by  the  said  trustee   into  the  state  treasury, 

1  by  a  statement  setting  forth  the  lime  that   such  deposits  were 

m  el  1    hare  a*  quired  by  the  person  holding  the  same,  at  the  time  of 

ilution,  and  tin-  name  and  residence,  if  known,  ol   the  person  making 

or  holding  the  same,  the  amount  of  such  deposit  or  shares,  and  also  ol    the 

dividend  1  not  called  for,  and  the  name  of  the  mason  or  persons  to  whom  the 

i.,  or  the   dividends  belong,  if  known.    All  amounts   of  un- 

■   idend    and  deposits  paid  into  the  stale-  treasury  as  aforesaid,  shall 

1"-  1  ■•'  eived,  inv<    t<  d  and  a<  1  OUnted  for  and  paid  out  in  the  same  manner  and 

by  the  fame  offii  er  as  is  provided  by  law  concerning  escheated  estates.  Upon 
mi  nl  b    thi     aid  trustees  the  state  treasurer  shall  give  to  them  a  re- 
ceipl   foi  the  amounl    0  paid  in,  winch  shall  fully  discharge  them  from  all 
liabilil  itoi    oi   ito<  1. holders. 


GENERAL   LEGISLATION.  793 

Sec.  973. — The  misnomer  of  any  such  corporation  in  any  instrument  shall 
not  vitiate  or  impair  the  same  it  it  be  sufficiently  described  to  ascertain  the 
intention  ol  the  parlies. 

Sec.  974. — All  corporations  for  the  accumulation,  preservation  and  invest- 
ment of  funds  and  savings,  all  savings  and  loan  societies,  and  all  associations 
or  societies  for  the  like  purpose,  claiming  in  good  faith  to  be  incorporated 
under  the  laws  of  this  state,  may  avail  themselves  of  the  provisions  of  and 
become  incorporated  under  this  act,  by  filing  with  the  county  clerk  of  the 
county  in  which  their  principal  place  of  business  is  located,  and  a  certified 
copy  thereof  in  the  office  of  the  secretary  of  state,  a  certificate  stating  their 
intention  and  election  to  become  so  incorporated,  which  intention  anil  elec- 
tion may  be  made  and  declared  by  the  trustees  or  acting  trustees  ol  such  cor- 
poration, association  or  society,  or  a  majority  thereof.  The  certificate  stating 
such  intention  and  election  shall  be  signed  by  the  president  and  secretary  of 
such  corporation,  association  or  society,  and  shall  be  acknowledged  before 
some  officer  competent  to  take  the  acknowledgment  of  deeds.  .Such  certifi- 
cate shall  in  other  respects  conform  to  the  requirements  of  this  act. 

NEW  HAMPSHIRE. 

PUBLIC  STATUTES,  1891,  CHAPTER   LXV. 

Section  4. — The  treasurer  of  every  savings  bank,  trust  company,  loan  and 
trust  company,  loan  and  banking  company,  building  and  loan  association,  and 
other  similar  corporations,  organized  under  the  laws  of  this  state,  shall,  on  or 
before  the  first  day  of  May  in  each  year,  transmit  to  the  state  treasurer,  upon 
blanks  to  be  furnished  by  him,  a  statement  under  oath  of  the  following  facts 
as  they  existed  on  the  first  day  of  April  in  such  year :  The  amountof  all 
general  and  special  deposits  on  which  the  corporation  pays  interest,  and  of  its 
capital  stock  belonging  to  residents  of  each  town  in  the  state,  including  all 
dividends  that  have  been  declared  thereon  and  not  paid  ;  the  value  of  the  in- 
terest of  such  residents  in  all  the  real  estate  of  the  corporation  wherever 
situated  ;  and  all  the  loans  of  the  corporation  secured  by  mortgage  upon  real 
estate  situated  in  this  state  made  at  a  rate  not  exceeding  five  per  cent,  per 
annum,  if  it  were  divided  proportionately  among  all  depositors  of  the  corpo- 
ration ;  the  difference  between  the  two  sums  for  each  town  ;  and  the  same 
facts  in  relation  to  depositors  and  stockholders  who  do  not  reside  in  this  state, 
or  whose  residence  is  unknown. 

Sec  7. — Every  buiiding  and  loan  association  organized  under  the  provisions 
of  the  public  statutes  shall  pay  annually,  to  the  collector  of  the  town  or  city 
in  which  the  association  is  located,  a  tax  equal  to  the  rate  of  taxation  in  the 
place  where  the  association  is  located,  upon  the  whole  amount  paid  upon  its 
stock  or  shares  which  are  in  force,  less  the  amount  of  notes  held  by  it  secured 
by  mortgages  upon  the  homestead  of  the  debtor,  upon  which  the  debtor  pays 
a  tax  in  this  state,  and  no  other  tax  shall  be  assessed  upon  such  stock  or  shares 
or  against  the  holders  on  account  thereof. 

Sec  10. — The  real  estate  of  any  corporation  mentioned  in  this  chapter  shall 
be  taxed  to  such  corporation  in  the  town  where  situated,  as  real  estate  of  other 
parties  is  taxed. 

Sec  11. — The  taxes  assessed  as  aforesaid  upon  savings  banks,  trust  com- 
panies, loan  and  trust  companies,  loan  and  banking  companies,  building  and 
loan  associations,  and  other  similar  corporations,  and  upon  sti  ick  fire  insurance 
companies  organized  under  the  laws  of  this  state,  shall  be  in  lieu  of  all  other 
taxes  against  the  corporations  and  against  their  stockholders  and  depositors 
on  account  of  their  interests  therein. 

Sec  12. — If  any  such  corporation  shall  not  pay  its  taxes  when  due,  it  shall 
pay  interest  thereon  from  that  time  at  the  rate  of  ten  per  cent,  per  annum. 

SEC  13. — The  state  treasurer  shall  issue  his  extent  against  any  such  corpo- 
ration which  fails  to  pay  its  taxes  when  clue  for  the  sum  unpaid  and  interest  : 
and  all  property  owned  by  the  corporation  on  the  first  day  of  April  preceding 
shall  be  holden  for  the  payment  thereof. 

Sec  14. — The  state  treasurer  may  use  the  taxes  paid  into  the  treasury  under 
the  provisions  of  this  chapter,  while  the  same  remain  in  the  treasury,  for  the 
payment  of  ordinary  state  charges. 

Sec  15. — The  portion  of  such  taxes  not  distributed  to  towns  as  provided  in 
this  chapter  shall  be  retained  in  the  state  treasury  for  use  as  provided  by  law. 


794  APPENDIX   IV. 

CHAPTER  CLXII. 

Section  i. — The  provisions  of  this  title,  so  far  as  they  properly  may,  shall 
apply  to  state  banks,  savings  banks  or  institutions  for  savings,  private  banks, 
loan  fund  associations,  trust  companies,  loan  and  trust  companies,  loan  and 
banking  companies,  and  loan  and  building  associations,  unless  otherwise  ex- 
pressly limited  in  their  operation. 

Sec.  2. — There  shall  be  a  board  of  bank  commissioners  consisting  of  three 
competent  persons.  No  person  who  is  not  a  resident  of  the  state,  and  no  per- 
son who  is  indebted  to  any  savings  bank  or  trust  company  in  this  state  or  who 
holds  any  stock  or  office  in  any  such  bank  or  company,  or  who  is  an  agent  of 
any  corporation  or  person  engaged  in  the  business  of  selling  or  negotiating 
in  this  state  loans,  stocks  or  securities  of  any  kind,  or  who  is  an  officer  or 
stockholder  in  any  such  corporation,  shall  be  eligible  to  the  office.  No  more 
than  two  members  shall  be  appointed  from  one  political  party. 

Sec.  3. — The  members  of  the  board  shall  be  appointed  by  the  governor, 
with  advice  of  the  council ;  and  any  member  may  be  removed  by  the  same 
authority  whenever  the  public  good  requires  it.  One  member  shall  be  ap- 
pointed each  year,  to  succeed  a  member  whose  term  of  office  expires  on  the 
first  day  of  December  of  that  year,  and  shall  hold  office  for  three  years  from 
that  date,  unless  sooner  removed.  Whenever  a  vacancy  occurs,  an  appoint- 
ment shall  be  made  for  the  unexpired  part  of  the  term.  The  terms  of  the 
present  members  are  extended  to  the  first  day  of  December  next  following 
the  expirations  thereof,  as  heretofore  limited. 

Sec.  4. — The  annual  salary  of  the  members  of  the  board  shall  be  two 
thousand  dollars  each,  payable  quarterly  from  the  treasury  of  the  state.  They 
shall  be  allowed  in  addition  their  actual  travelling  expenses  incurred  while 
making  the  examinations  required  by  law.  Their  bills  tor  such  expenses  shall 
be  audited  by  the  governor  and  council. 

[From  Chapter  hi,  Session  Laws  of  1893.] 

Section  i. — The  board  of  bank  commissioners  may  employ  a  clerk  in  their 
office  at  a  compensation  not  exceeding  seven  hundred  and  fifty  dollars  per 
annum,  to  be  paid  from  the  state  treasury. 

[Approved  February  22,  1893.] 

Skc.  5. — The  board  shall  be  provided  with  an  office  in  the  state  house  or  in 
some  other  suitable  place  in  the  city  of  Concord. 

SEC.  6. — The  board  shall  have  the  general  supervision  of  all  banks  (except 
national  banks),  trust  companies,  loan  and  trust  companies,  loan  and  banking 
companies,  loan  and  building  associations,  and  other  similar  institutions  in 
the  siate.  The  members  shall  examine  into  the  condition  and  management 
of  all  such  institutions  once  at  least  each  year,  and  oftener  when  so  directed 
by  the  governor.  Upon  such  examinations  they  shall  inspect  all  their  books, 
ii<  ites,  bonds  and  other  evidences  of  debt,  shall  ascertain  the  quantity  of  specie 
and  other  money  and  funds  on  hand,  and  shall  make  all  inquiries  necessary  to 
learn  their  ability  to  perform  their  engagements,  and  to  learn  whether  they 
have  violated  any  provision  of  law. 

SEC.  7. — Any  commissioner  may  examine,  under  oath  by  him  administered, 
any  officer,  agenl  or  servant  of  any  such  institution,  or  any  other  person,  in 
relation  to  the  affairs  and  condition  of  the  institution. 

SEC  8. — The  treasurer  of  all  institutions  under  the   supervision   of  the  bank 

commis    ioners  shall  balance  their  books  at  the  close  of  business  on  the  last  busi- 

day  in  fune  in  each  year,  and  within  fifteen  days  thereafter  shall  make 

1  the  commissioners   upon   blanks   furnished    by   them,  showing   the 

true  condition  of  the  institutions  al  the  lime.    The  commissioners  shall  pre- 

hai  information  the  reports   -hall   contain   and   their   form,   and   shall 

iably  furnish  blanks  upon  which  they  are  to  be  made.    (As  amended 

i  hall  file  with  the  secretary  of  state,  on  before  the-  first 

day  <     Di       nbei  in  each  year,  their  annual  report  which  shall  contain  a  state- 
menl  ol   tl  •      .nn\  liabilities  ol   each  institution   under  (heir  super- 

thi mi   oi    earnings    ol    each    institution    between    the   dates 

aminations  of  the  commissioners,  or  foratwelve  months' period, 

they    may  select,  and  the  disbursements  ol    the  same    period  for  taxes, 

and  othei  together  with  the  rate  and  amount  of  dividends 

iatd  during  tin-    iame  time     Said  repoH     hall  also  give  the  names  oi    the 

and  clerk    nf  each  institution,  ol   the  amounl   oi   the  officers' bonds, 

impensal paid  to  each  officer,  and  the  kinds  and  amounts 


GENERAL   LEGISLATION.  795 

of  stocks  and  bonds  held  by  each  institution,  with  the  par  value,  book  value 
and  the  estimated  value  thereof,  and  the  true  condition  of  each  institution. 
They  shall  make  such  recommendations  therein  as  they  think  will  promote 
the  public  good.     (As  amended  in  1897.) 

Sec.  10. — If  any  bank  commissioner  shall,  in. the  annual  report  of  the  bank 
commissioners,  make  a  statement  which  purports  to  be  the  condition  of  an 
institution  under  their  supervision  without  having  fully  and  carefully  exam- 
ined into  the  condition  01  such  institution,  or  shall  make  a  false  statement  of 
the  condition  of  any  institution  with  intent  to  deceive,  he  shall  be  fined  not 
exceeding  one  thousand  dollars,  or  be  imprisoned  not  exceeding  live  years 
for  each  offence. 

Sec.  11. — No  guaranty  savings-bank,  trust  company,  loan  and  trust  com- 
pany, loan  and  banking  company,  or  other  similar  corporation  shall  com- 
mence the  transaction  of  business  until  it  has  satisfied  the  bank  commission- 
ers that  its  capital  stock  has  been  paid  in  in  accordance  with  the  provisions  of 
its  charter. 

Sec.  12. — If  any  institution  placed  under  the  supervision  of  the  bank  com- 
missioners shall  refuse  to  permit  an  examination  of  its  affairs  by  the  commis- 
sioners or  shall  refuse  to  furnish  the  necessary  facilities  therefor.or  if  it  is  judged 
by  the  commissioners  to  be  necessary  to  the  public  safety  that  it  shouldYiot 
continue  to  transact  business,  the  commissioners  shall  represent  the  facts  by 
petition  to  some  justice  of  the  supreme  court. 

Sec.  13. — Such  justice  shall  issue  an  injunction  prohibiting,  so  far  as  may  be 
thought  necessary,  the  transaction  of  business  by  such  institution,  and  the 
commissioners  shall  cause  the  same  to  be  duly  served. 

Sec.  14. — Whenever  the  bank  commissioners  shall  deem  it  necessary  for 
the  public  safety,  they  may  lay  the  facts  in  writing  before  the  attorney-gen- 
eral, and  may  require  him  to  file  an  information  against  any  corporation 
under  their  supervision,  at  the  next  term  of  the  supreme  court  for  the  county, 
for  the  purpose  of  vacating  its  charter. 

Sec  15. — In  either  of  such  cases  they  may  apply  to  the  supreme  court  or  a 
justice  thereof  to  appoint  an  assignee  of  the  property  and  effects  of  the  insti- 
tution. The  court  of  justice  may  appoint  an  assignee  and  prescribe  orders 
and  rules  by  which  he  shall  be  governed. 

Sec  16. — The  assignee  shall  take  possession  of  all  the  estate,  propertv, 
rights  and  credits  of  the  institution,  and  demand,  receive,  sue  for  and  recover 
the  same  wherever  found.  He  may  require  the  institution,  its  officers,  owners 
or  others  havjng  its  property  or  the  control  of  it,  to  execute  a  transfer  or  con- 
veyance thereof  to  him,  and  he  may  sell  and  convey  any  such  property,  and 
do  any  act  necessary  to  convert    the  assets  of  the  institution   into  money. 

Sec  17. — The  court,  or  any  justice  thereof  in  vacation,  may  make  any  orders 
necessary  to  carry  the  assignment  into  effect,  and  may  affix  such  penalties  for 
disobedience  thereof  as  may  be  thought  necessary. 

Sec  18. — The  assignees  of  insolvent  institutions  shall  make  reports  to  the 
bank  commissioners  as  the  treasurers  'thereof  are  required  to  do  ;  and  the 
bank  commissioners  shall  make  examinations  into  their  affairs  as  into  the 
affairs  of  solvent  institutions,  and  shall  incorporate  the  results  of  their  exam- 
inations in  their  annual  report. 

Sec  19. — Upon  application,  the  court  may  issue  an  injunction  restraining 
all  proceedings  at  law  by  any  creditor  against  such  institution  and  may  order 
notice  to  be  published,  requiring  all  creditors  to  prove  their  claims  against 
the  institution  and  to  present  them  to  such  persons  within  such  time  as  may 
be  directed,  and  in  default  to  be  precluded  from  all  benefit  of  the  assets  of  the 
institution. 

Sec  20. — The  proceeds  of  the  property  of  an  insolvent  institution  shall  be 
distributed  according  to  the  decree  of  the  court : 

1.  To  pay  the  expenses  of  the  assignment. 

2.  To  pay  all  bills  issued  by  the  bank  pro  rata. 

3.  For  the  payment  in  equal  proportion  of  all  debts,  claims,  and  obliga- 
tions owing  by  the  institution. 

4.  The  remainder  to  be  divided  among  the  stockholders  according  to  their 
interests. 

Sec  21. — At  the  expiration  of  one  year  from  the  final  decree  distributing  the 
assets  of  an  insolvent  institution,  the  assignee  shall  make  renort  to  the  court, 
or  to  some  justice  thereof,  of  the  names  and  residences,  if  known,  of  all  per- 
sons entitled  to  unclaimed  dividends  and  of  the  amount  of  all  such  dividends. 
The  court  of  justice  shall  thereupon  order  the  same  to  be  paid  into  the  state 
treasurer  and  a  copy  of  the  report  to  be  delivered  to  the  state  treasurer.    The 


796  APPENDIX  IV. 

receipt  of  the  state  treasurer  shall  be  a  full  discharge  of  the  assignee  for  such 
dividends. 

Sec.  22. — The  state  treasurer  shall  keep  in  a  book  provided  for  that  purpose 
a  record  of  all  such  dividends,  with  the  names  of  the  persons  to  whom  they 
belong,  and  their  residences,  so  far  as  known.  He  shall  pay  the  dividends,  less 
one  percent,  for  his  services,  to  the  persons  to  whom  they  belong,  or  to  their 
legal  representatives  whenever  called  for,  without  interest.  All  dividends 
heretofore  or  hereafter  paid  into  the  state  treasury  that  are  not  claimed  within 
fifteen  years  after  such  payment  shall  escheat  to  the  state. 

Sec.  23. — Every  assignee  shall  receive  such  reasonable  compensation  for 
his  expenses  and  services,  in  the  execution  of  his  trust,  as  the  court  may 
order. 

*  Sec.  24. — Every  assignee,  before  acting  as  such,  shall  file  in  court  a  bond 
to  the  county,  in  such  sum  and  with  such  sureties  as  the  court  or  justice  may 
approve,  to  execute  faithfully  the  duties  of  his  appointment,  to  comply  with 
the  orders  of  the  court,  and  to  render  an  account  of  his  proceedings  therein 
to  the  court  when  required. 

Sec.  25. — Any  person  aggrieved  by  any  default  or  misconduct  of  the  as- 
signee in  his  trust,  may,  by  leave  of  the  court,  institute  a  suit  on  such  bond, 
and  recover  the  damages  sustained  thereby. 

Sec.  26. — ff  any  state  bank,  without  legal  authority,  shall  fail  to  pay  on  re- 
quest its  bills  in  specie,  its  charter  shall  be  forfeited,  and  the  governor  shall 
direct  an  immediate  examination  of  its  affairs  by  two  or  more  of  the  bank 
commissioners,  and  such  proceedings  shall  be  had  as  the  commissioners 
judge  necessary. 

CHAPTER    CLXV. 

Section  30. — No  officer  or  employee  of  a  savings  bank,  trust  company,  loan 
and  trust  company,  loan  and  banking  company,  or  loan  and  building  associa- 
tion shall  directly  or  indirectly  receive  any  fee,  present  or  benefit  whatsoever 
from  any  borrower  or  applicant  for  a  loan  from  such  institution  as  an  induce- 
ment to  making  the  loan,  or  from  any  one  negotiating  securities  to  the  insti- 
tution, except  the  usual  compensation  for  drawing  mortgages  and  other  papers 
pertaining  to  the  loan  ;  nor  shall  any  such  officer  or  employee  negotiate  loans 
in  their  own  behalf  with  themselves  as  officials  of  the  bank. 

Sec.  31. — If  any  officer  or  employee  of  any  institution  mentioned  in  the  pre- 
ceding section,  shall  violate  the  provisions  of  the  section,  he  shall  be  fined  not 
exceeding  ten  thousand  dollars,  or  be  imprisoned  not  more  than  ten  years,  or 
both. 

Sec.  32. — If  any  officer  of  a  savings  bank,  a  loan  and  trust  company,  a  loan 
and  banking  company,  or  a  building  and  loan  association,  shall  embezzle, 
abstract  or  wilfully  misapply  any  of  the  moneys  funds  or  credits  of  the  in- 
stitution, or  shall  make  any  false  entry  in  any  book,  report  or  statement  of  the 
institution  with  intent  in  either  case  to  injure  or  defraud  it  or  any  corporation 
or  person,  or  to  deceive  any  officer  of  the  institution,  or  any  committee  or  ex- 
aminer appointed  to  examine  the  affairs  of  the  institution,  or  the  bank  com- 
missioners, he  shall  be  fined  nol  exceeding  twenty  thousand  dollars,  or  be 
imprisoned  not  exceeding  ten  years. 

CHAPTER   CLXVI. 

Section  r. — Twenty-five  or  more  persons  of  lawful  age  may  associate  to- 
gether by  articles  of  agreemenl  and  form  acorporation  for  the  purpose  of 
accumulating  the  savings  of  its  members  and  of  loaning  the  funds  so  accum- 
ulated to  them  to  enable  them  to  purchase  homesteads  and  to  improve  their 
condition. 

Sec.  .'.  -The  articles  of  agreement  shall  sel  forth  the  name  of  the  corpora- 
tion, tin-  object  for  which  ii  is  established,  the    place  iii  which  its  business  is 
to  he  c  .lined  on,  and  l  he  limit  ni  the  capital  to  In-  accumulated  by  it  ;  and  shall 
•ii' d  by  the  parlies  who  unite  to  form  the  corporation,  and  they  shall 
affix  to  theii    ignatures  their  postoffice  addresses. 

The  n  'me  assumed  by  the  corporation  shall  indicate  that  il  is  a  co- 
building  and  loan  a  iso<  i.ii h m,  and  shall  nol  be  one  thai  is  in  use  by 
oration,     [t  shall  not  be  changed  except  by  the  legislature, 
nil  articles  of  agreemenl  shall  be  recorded   in  the  office  of  the 

<  lerk  "f  I  he  town  in  which  I  he  business  (.1  Hie  corporation  is  hi  be  carried  on, 

and  in  that  ol  the  secretary  ol  state.    When  so  recorded,  the  signers  thereof 
ctions  ',  and  i.  chapter  172,  Public  Statutes. 


GENERAL   LEGISLATION.  797 

and  their  associates  and  successors  shall  become  and  be  a  corporation 
having  all  the  rights  and  powers  and  being  subject  to  all  the  duties,  liabil- 
ities, and  restrictions  of  similar  corporations,  except  so  far  as  the  same  are 
limited  or  enlarged  by  this  chapter. 

SEC.  5. — The  capital  stock  of  any  such  corporation  shall  not  exceed  at  any 
time  one  million  dollars,  and  shall  be  divided  into  shares  of  the  ultimate  value 
oi  two  hundred  dollars  each.  The  shares  may  be  issued  in  quarterly,  half- 
yearly,  or  yearly  series, — each  series  to  consist  of  such  number  of  shan 
the  members  may  determine, — but  no  shares  oi  a  prior  series  shall  be  issued 
alter  the  issue  oi  a  new  series  has  been  begun. 

SEC.  6. — No  person  shall  hold  more  than  twenty-live  shares  of  the  capital 
stock  of  any  one  such  corporation  at  a  time. 

Sec  7. — Each  shareholder  shall  be  entitled  to  give  one  vote  upon  any  prop- 
osition brought  before  a  meeting  of  shareholders,  and  no  more  ;  and  no 
shareholder  shall  vote  by  proxy. 

Sec.  8. — Any  such  corporation  may  collect  of  its  shareholders  monthly  dues 
of  one  dollar  upon  each  share  held  by  them  until  the  ultimate  value  of  the 
shares  reaches  two  hundred  dollars  each,  or  they  are  withdrawn,  cancelled, 
or  forfeited  ;  and  shall  loan  the  money  so  collected,  together  with  the  interest, 
premiums,  tines,  and  profits  arising  from  the  business,  to  those  of  its  share- 
holders who  will  pay  the  highest  premium  for  such  loans  above  the  legal  rate 
of  interest,  and  will  give  satisfactory  security  for  the  payment  thereof,  includ- 
ing a  pledge  of  shares  of  the  capital  stock  of  the  corporation  of  the  same 
amount  as  the  loan.  If  it  is  unable  to  loan  all  its  money  to  shareholders,  it 
may  loan  it  to  others  at  a  rate  of  interest  not  exceeding  the  lawful  rate,  upon 
mortgages  of  improved  real  estate  of  a  value  exceeding  the  amount  of  the  loan 
by  fifty  per  cent,  at  least,  or  upon  other  security  deemed  to  be  equally  good. 

Sec  9. — It  may  impose  fines  upon  its  shareholders,  and  upon  those  of  its 
borrowers  who  are  shareholders,  for  the  non-payment  of  dues,  interest  and 
premiums  as  they  become  due,  not  exceeding  two  per  cent,  a  month  upon  the 
same  unpaid,  and  not  extending  beyond  a  period  of  six  months  from  the  time 
of  the  first  default  ;  and  it  shall  have  a  lien  upon  the  shares  of  delinquent 
shareholders  for  all  sums  due  to  it  from  them,  and  may  dispose  of  the  shares 
to  enforce  the  lien,  as  provided  in  the  by-laws. 

Sec  10. — It  may  purchase  houses,  or  may  purchase  land  and  erect  houses 
thereon,  and  may  sell  or  lease  the  same  to  its  shareholders. 

Skc  11. — The  interest,  premiums,  fines  and  profits  received  by  the  corpora- 
tion, less  losses  and  the  amount  paid  for  the  necessary  expenses  of  the  business, 
shall  be  equitably  distributed  among  the  shares  and  added  to  the  dues  paid  by 
the  shareholders  at  least  once  a  year,  until  the  value  of  each  share  in  the  series 
reaches  two  hundred  dollars,  when  it  shall  be  paid  to  the  shareholder  and 
the  share  shall  be  retired. 

Sec  12. — Any  shareholder  may  withdraw  from  the  corporation  by  giving 
notice  of  his  intention  to  do  so,  thirty  days  at  least  prior  to  the  withdrawal ; 
but  the  directors  may  decline  to  use  more  than  one  half  of  the  funds  in  the 
treasury  to  meet  the  demands  of  withdrawing  shareholders,  in  which  case 
such  shareholders  shall  wait  until  funds  accumulate  and  shall  be  paid  in  the 
order  in  which  they  gave  their  notices,  and  without  interest  or  profits  after  the 
date  fixed  bv  them  for  the  withdrawal. 

Sec  13. — If  the  withdrawal  takes  place  within  a  year  after  the  shareholder 
became  a  member  of  the  corporation,  he  shall  be  entitled  to  receive  the  amount 
of  the  dues  paid  by  him,  without  interest  or  profits,  less  all  fines  and  other 
charges  against  him  and  his  proportionate  part  of  any  unadjusted  loss  ;  if  it 
does  not  take  place  until  after  the  expiration  of  such  year,  he  shall  be  entitled 
to  receive  the  value  of  his  shares,  as  determined  bv  the  directors,  less  his  fines, 
charges  and  proportionate  share  of  unadjusted  losses,  and  less  such  propor- 
tion of  the  profits,  previously  credited  to  the  shares  as  the  by-laws  provide. 

Sec  14.— At  any  time  after  four  years  from  the  date  of  issue,  the  directors 
may,  pursuant  to  the  provisions  of  the  by-laws,  if  any,  on  subject,  retire 
unpledged  shares  of  any  series  and  compel  their  withdrawal  by  paving  to  the 
shareholders  the  amount  of  dues  paid  upon  the  shares,  and  the  proportion  of 
profits  belonging  to  them  according  to  the  last  preceding  adjustment  and 
valuation  of  shares,  less  the  amounts  due  from  such  shareholders  for  tines  and 
other  charges  and  for  their  proportionate  shares  of  unadjusted  losses,  if  any.  If 
all  unpledged  shares  are  not  so  retired,  the  directors  shall  determine  by  lot 
which  shall  be  retired. 

Sec  15. — Upon  the  death  of  a  shareholder,  his  legal  representatives  shall 
be  entitled  to  receive  the  full  amount  paid  in  by  him,  together  with  an 
equitable  proportion  of  the  interest  and  profits  pertaining  to  his  shares,  less  all 


798 


APPENDIX   IV. 


fines  and  charges  against  him  at  the  time  of  his  decease,  and  a  proportionate 
share  of  anv  unadjusted  losses  then  existing. 

Sec.  16. — The  officers  of  the  corporation  shall  hold  monthly  meetings  for 
receiving  dues  from  and  selling  loans  to  shareholders. 

Sec.  17. — The  contracts  which  such  corporations  are  authorized  to  make  as 
set  forth  in  this  chapter  shall  not  be  deemed  to  be  usurious,  but  the  dues, 
premiums,  fines  and  interest  arising  from  such  contracts  may  be  collected  as 
other  debts. 

Sec.  18. — All  building  and  loan  associations  hereafter  organized  under  the 
provisions  of  this  chapter  shall  notify  the  bank  commissioners  of  their  organiza- 
tion before  beginning  business  ;  and  the  bank  commissioners  shall  have  power 
to  prescribe  the  form  of  books  to  be  used  by  them. 

LAWS  OF  1§93. 

CHAPTER  LXII. 

Section,  r. — It  shall  not  be  lawful  for  any  building  and  loan  association  not 
organized  under  the  laws  of  this  state  to  transact  any  business  in  this  state, 
unless  such  association  shall  possess  assets  of  at  least  five  hundred  thousand 
dollars  ($500,000.00 1  and  shall  first  obtain  a  license  from  the  bank  commissioners 
authorizing  the  association  so  to  do  ;  and  the  bank  commissioners  may  refuse  to 
issue  such  "license,  or  revoke  the  same  after  it  is  granted,  if  for  any  reason  they 
become  satisfied  that  the  condition  of  said  association  is  such  as  to  make  the 
transaction  of  its  business  within  the  state  hazardous  or  unsafe.  Before  receiv- 
ing such  license,  the  association  shall  file  with  the  bank  commissioners  a  certi- 
fied copy  of  its  charter  and  by-laws,  and  a  full  statement,  under  oath,  of  its  presi- 
dent and  secretarv,  showing  the  financial  condition  and  standing  of  the  as- 
sociation, in  accordance  with  blanks  furnished  by  them,  and  thereafter  shall 
file  an  annual  statement  within  twenty  days  .after  "the  first  day  of  May.  Upon 
receiving  such  copies  and  statement,  if  the  commissioners  are  satisfied  with 
the  same,  and  that  the  association  meets  and  has  complied  with  all  the  require- 
ments of  this  chapter,  they  shall  grant  such  license,  authorizing  such  associa- 
tion to  do  business  by  authorized  agents  until  the  first  day  of  May  thereafter  ; 
and  annually  thereafter,  on  the  first  day  of  May,  such  license  may  be  renewed, 
so  long  as  such  association  shall  comply  with  the  requirements  aforesaid  and 
the  commissioners  shall  regard  the  association  as  safe,  reliable  and  entitled  to 
public  confidence.  The  bank  commissioners  may  also  require  returns  to  be 
made  to  them,  showing  the  condition  of  said  associations,  at  such  forms  and  at 
such  times  as  they  may  elect.  For  each  license  and  renewal,  as  above,  the  as- 
sociation shall  pay  to  the  state  treasurer  the  sum  of  twenty-five  dollars  ($25.00). 

Skc.  2. — The  name  "  building  and  loan  association,"  as  used  in  this  act.  shall 
include  all  corporations,  societies,  organizations  or  associations  doing  a  saving 
and  loan  or  investment  business  on  the  building  society  plan,  whether  mutual 
or  otherwise,  and  whether  issuing  certificates  ot  stock,  which  mature  at  a  fixed 
time  in  advance,  or  not. 

SEC.  3. — If  any  state  shall,  by  its  laws,  deny  any  building  and  loan  associa- 
tion of  this  state,  doing  business  in  such  other  state,  any  rights  or  privileges 
which  are  granted  to  building  and  loan  associations  of  that  state,  then  this  state 
shall,  in  like  manner,  deny  to  building  and  loan  associations  of  that  slate  all 
such  rights  and  privileges,  and  they  shall  be  subjected  in  this  state  to  all  the 
restrictions,  taxes,  lines,  license  lees,  de-posits,  burdens  and  penalties  imposed 
by  thai  state  upon  building  and  loan  associations  of  this  stale. 

Sic.  4. — Any  officer,  director  or  agent  of  any  foreign  building  and  loan  as- 
1  ion,  "i  any  other  person  whatever,  who  shall  in  this  state  solicit  sub- 
tions  to  tlu-  stock  of  such  association,  or  who  shall  sell  or  issue,  or  know- 
ing! v  cause  to  be  sold  or  issued,  to  a  resident  of  this  slate  anv  stock  of  such  as- 
1  ion  while  such  association  shall  not  have  had  the  certificate  of  the  bank 
■  ommi  loners  authorizing  it  to  do  business  in  this  stale  as  herein  described,  or 
before  said  association  has  complied  with  all  the  provisions  of  this  act,  or  when 
said  asso<  iation  shall  have  been  notified  and  required  to  discontinue  business 
in  thi  1     hereinbefore  provided,  shall  be  guilty  of  a  misdemeanor,  and 

upon   '  oip.it  lion  thereof  shall  be  punished  by  a   fine  of  not  less  than  one  hun- 
dred dollars  ($100.00)  nor  more  than  live  hundred  dollars  1  $500.00),  or  by  im- 
Eonment  of  not  less  than  ten  (10)  days,  nor  more  than  six  (0)  months,  or 
oil  1,  su(  h  in i'-  and  inn  >  1  onment,  in  the  discretion  of  the  court. 
Si  1  .  --.      Tin    .K  I    hall  lake  effect  on  the  first  day  of  April,  1893. 
Approved  March  31,  [893. 


GENERAL   LEGISLATION.  799 

NEW  JERSEY. 

GENERAL  STATUTES,  1895,  p.  331. 

Section  i. — Any  number  of  persons,  not  less  than  five,  may  associate  and  form 
an  incorporated  company  for  the  purpose  of  assisting  each  other,  and  all  who 
may  afterwards  become  associated  with  them  in  acquiring  real  estate,  mak- 
ing improvements  thereon,  and  removing  incumbrances  therefrom,  by  the 
payment  of  periodical  instalments  ;  and  for  the  further  purpose  of  accumulat- 
ing a  fund  to  be  returned  to  its  members  who  do  not  obtain  advances,  lor 
purposes  above  mentioned,  when  the  funds  of  such  association  shall  amount 
to  a  certain  sum  per  share,  to  be  specified  in  the  articles  of  association. 

Sec.  2. — Any  such  persons  who  shall  sign  a  certificate,  setting  forth  that 
they  have  formed  such  an  association,  under  the  provisions  of  this  act, 
and  the  name  adopted  for  such  association,  and  the  city,  borough  or  township 
where  it  is  to  located  and  its  business  transacted,  and  who  shall  cause  the 
same  to  be  delivered  to  the  clerk  of  the  county  which  embraces  the  place  of 
its  location,  thereupon,  together  with  all  who  may  afterwards  become  mem- 
bers, their  successors  and  assigns,  shall  be  a  body  corporate  and  politic  in  law, 
with  all  the  powers  mentioned  in  the  first  section  of  the  act  entitled,  "  An  act 
concerning  corporations." 

Sec  3. — The  said  clerk  shall  immediately  file  said  certificate,  and  record  the 
same  in  a  book  to  be  kept  for  that  purpose,  for  which  he  shall  be  entitled  to 
receive  the  sum  of  twenty-five  cents. 

Sec  4. — Parents  or  guardians  may  take  and  hold  shares  in  such  associa- 
tions in  behalf  of  their  minor  children  or  wards,  and  trustees  in  behalf  of 
married  women,  and  may  act  in  such  association  in  behalf  of  those  they  rep- 
resent. 

Sec  5. — The  right  of  membership  in  all  associations  formed  under  this  act 
shall  consist  in  the  periodical  payment  of  such  sum  of  money,  at  such  times, 
and  subject  to  such  penalties  as  shall  be  determined  by  the  constitution 
adopted  and  filed  as  aforesaid,  or  in  the  payment  of  a  principal  sum  specified 
in  such  constitution  to  be  repaid  by  the  company,  in  such  way  and  manner  as 
shall  therein  be  designated,  with  interest,  not  exceeding  seven  per  centum  per 
annum. 

Sec.  6. — The  funds  of  every  association  formed  under  this  act  shall  be  in- 
vested in  the  purchase  of  lands  or  building  lots,  and  erecting  buildings  and 
improvements  thereon,  or  in  the  purchase  of  lots  and  houses  already  built  ; 
which  lands,  dwellings  and  improvements  shall  be  sold  to  the  members  of 
such  associations,  payable  in  the  shares  of  the  company,  or  in  periodical  in- 
stalments for  a  period  such  as  shall  be  agreed  upon  and  designated  in  their 
constitution,  and  which  shall  not  exceed  the  term  of  twenty  years  ;  at  the  ex- 
piration of  which  term  the  lands,  dwellings  and  improvements  so  sold  and 
conveyed  to  the  members  of  such  associations,  shall  become  the  property  of 
the  grantees,  discharged  from  all  further  payment,  and  clear  of  all  encum- 
brance ;  or  in  loans  to  members  on  mortgage  of  real  or  personal  estate,  pay- 
able in  shares  of  said  company,  or  by  such  periodical  instalments  ;  or  in  the 
redemption  of  shares,  or  in  all  or  any  of  these  modes. 

Sec  7. — It  shall  be  lawful  for  married  women  and  minors  to  hold  shares  in 
any  associations  formed  under  this  act ;  Provided,  said  shares  are  paid  for  out 
of  the  earnings  of  said  married  women  and  minor  children,  or  with  money 
given  to  them  by  others  than  the  husbands  of  said  married  women,  or  the 
male  parents  of  minor  children. 

Sec  8. — Every  company  formed  under  this  act  shall  adopt  a  constitution 
which  shall  embrace  all  the  provisions  of  the  foregoing  sections,  and  such 
articles  for  their  government  and  the  management  of  their  business  as  they 
shall  deem  proper  ;  Provided,  the  same  shall  not  be  inconsistent  with  this  act 
or  with  the  act  concerning  corporations  aforesaid,  and  shall  not  contravene 
the  laws  or  constitution  ot  this  state  or  the  United  States,  and  may  alter  and 
amend  the  same,  from  time  to  time,  in  the  manner  therein  provided  ;  the  in- 
vestments of  every  such  association  shall  be  made  either  in  loans  to,  or  in  re- 
demption of  the  shares  of,  or  in  purchasing  lots  and  erecting  dwellings  for  the 
members,  or  in  all  of  said  modes,  or  in  such  other  ways  as  the  constitution  of 
the  particular  association  shall  provide  ;  and  no  premium  given  for  priority  of 
loan  or  acquisition  of  a  building,  or  discount  given  on  the  redemption  of  shares, 
shall  be  deemed  to  be  usurious. 


800  APPENDIX   IV. 

GENERAL  STATUTES,  1895,  P-  333-  Sec.  16. 

Section  9.— Every  company  formed  under  this  act  shall  furnish  to  the  secre- 
tary of  state,  if  required,  an  annual  statement  of  the  business  and  condition  of 
the  company,  which  shall  be  duly  attested,  under  oath  or  affirmation,  by 
the  proper  officers  of  said  company. 

Sec.  10. — Any  company  formed  in  pursuance  of  this  act  shall  have  power  to 
dispose  of  or  sell  any  lands  and  tenements  toothers  than  those  constituting 
the  said  company,  on  terms  according  to  or  not  inconsistent  with  the  consti- 
tution of  such  company  ;  and  the  purchasers  of  said  tenements  so  sold  or  dis- 
posed ot  shall  not  thereby  be  constituted  members  of  any  such  company 
formed  as  aforesaid. 

Sec.  11. — The  original  associates,  or  those  formed  into  companies  under  this 
act,  or  their  assigns,  and  who  shall  have  actually  created  a  fund,  and  expended 
the  same  in  acquiring  lands  and  tenements,  shall  be  alone  deemed  to  have  and 
to  exercise  the  right  of  members  in  said  companies. 

Sec.  12.— All  deeds  of  conveyance  of  lands  or  tenements,  granted  by  any 
company  formed  in  pursuance  of  said  act,  shall  be  held  to  be  valid  and  bind- 
ing, with  all  the  restrictive  clauses  as  against  nuisances,  or  what  may  be 
deemed  nuisances  by  the  constitutions  of  any  companies  so  formed,  as  afore- 
said, unless  the  same  are  in  violation  of  the  constitution  of  this  state  or  the 
laws  thereof,  or  of  the  United  States. 

Sec.  13. — All  matters  not  herein  provided  for  shall  be  regulated  by  the  con- 
stitution and  by-laws  of  said  associations,  respectively. 

Sec.  14. — The  legislature  may  at  any  time  alter,  amend  or  repeal  the  charter 
of  any  association  created  under  this  act. 

Sec.  15. — Companies  organized  under  this  act  may  divide  or  partition  the 
lands  by  them  owned  among  their  members  by  lot  in  such  way  as  to  them 
may  seem  most  advantageous,  and  all  conveyances  made  in  pursuance  of 
such  allotment,  shall,  for  all  purposes,  be  valid  and  effectual. 

GENERAL  STATUTES,  1895,  p.  333. 

Section7  iS. — Any  mutual  loan  homestead  or  building  association  heretofore 
organized  under  the  laws  of  this  state  shall  have  power  to  meet  and  reorganize 
and  provide  for  the  transaction  of  their  future  business  under  the  provisions 
of  the  act  to  which  this  is  a  supplement  [act  of  April  9,  1875,  pages  331  and 
332,  revision  of  1895],  by  giving  notice  thereof  by  advertisement  for  four 
weeks  successively,  at  least  once  in  each  week,  in  a  newspaper  published  or 
circulating  where  such  company  or  association  is  located,  which  advertise- 
ment snail  be  signed  by  the  secretary,  and  state  the  time,  place  and  purpose 
for  which  such  meeting  is  called,  and  also  by  sending  a  written  or  printed 
notice  to  each  stockholder,  containing  the  same  information;  when  so  as- 
sembled they  shall  have  power,  by  a  two-thirds  vote  of  the  stock  present,  to 
change,  alter  or  repeal  their  present  constitution  and  by-laws  and  to  adopt 
such  new  constitution  and  by-laws  as  they  may  deem  needful  for  their  future 
government  ;  Provided,  the  same  do  not  conflict  with  the  laws  or  constitution 
of  this  state  or  of  the  United  States. 

Sec.  [9. — Nothing  in  the  act  to  which  this  is  a  supplement  [act  of  April  9, 
[875,  pages  331  and  332,  revision  of  [895]  shall  be  construed  to  prevent  any 
lation,  formed  under  the  provisions  of  said  act,  from  taking  a  premium 
for  priority  of  loan  or  acquisition  of  real  estate,  or  discount  on  the  redemption 
of  shares  ;  and  that  no  premium  or  discount  so  taken  for  such  purposes  shall 
be  deemed  to  be  usurious. 

GENERAL  STATUTES,  [895,  p.  334. 

Section  19. — Any  a  sociation  which  now  is  or  hereafter  may  become  in- 
1  undei  tne  provisions  ol  the  act  to  which  this  is  a  further  supple- 
ol    Vpril  o,  [875,  pages  92  and  93,  revision  of  1877],  may  issue  snares 

ock  ni  dm 'lent  series  to  mature  and  terminate  in  such  maimer  as  maybe 
[nated  in  and  by  the  constitution  or  by-laws  of  such  association  or  any 
ndmenl  law  1  ullv  made  thereto. 

». — All  shan     "i     tock   heretofore  <  sued   indifferent  series  by  any 
n  according  t"  the  provisions  of  its  constitution   or  by-laws, 
hall  be  as  valid  and  effei  1 1  ■ .  1 1  I"  all  intents  and  purposes  as  if  this  act  had  been 
in  force  prior  to  I  ling  of  such  shares. 

■I      When     n  titution   ">    !>v-laws   of  any  such   association 

maki     no  provi  ion  for  the  manner  in  which  the  same  may  be  amended,  such 


GENERAL   LEGISLATION.  801 

association  may  amend  its  constitution  or  by-laws  at  any  regular  meeting  of 
the  association  by  a  vote  of  two-thirds  of  its  members  present  at  such  meet- 
ing ;  Provided,  that  the  proposed  amendment  shall  have  been  submitted  in 
writing  and  entered  upon  the  minutes  of  said  association  at  least  four  weeks 
before  a  vote  shall  be  taken  thereon. 

GENERAL  STATUTES,  1895,  p.  334. 

Preamble. — Whereas,  doubts  having  arisen  as  to  the  legal  right  of  asso- 
ciations formed  or  incorporated  under  or  by  virtue  of  the  above  mentioned 
act  [act  of  April  9,  1875,  pages  331  and  332,  revision  of  1895],  and  the  several 
supplements  thereto,  to  issue  new  or  a  series  of  shares  under  their  original 
acts  of  incorporation  ;  and  whereas,  a  number  of  said  associations  have  issued 
new  or  a  series  of  shares,  believing  that  they  had  a  legal  right  so  to  do  ;  now, 
in  order  to  remove  all  doubts  on  the  subject,  and  to  legalize  the  same  and 
the  issuing  of  certificates  of  stock  therefor,  and  to  hereafter  authorize  the 
forming  of  such  new  series. 

Sec.  25. — All  new  or  series  of  shares  heretofore  issued  by  any  associa- 
tion formed  or  incorporated  under  and  by  virtue  of  the  act  to  which  this  is  a 
supplement  [act  of  April  9,  1875,  pages  331  and  332,  revision  of  1895],  and  the 
several  supplements  thereto,  be  and  the  same  are  hereby  confirmed  and  made 
valid  both  in  law  and  equity,  notwithstanding  the  issue  of  said  new  series 
may  have  increased  the  number  of  shares  of  said  association  beyond  the  limit 
fixed  in  its  certificate  of  incorporation. 

Sec.  26. — The  board  of  directors  of  all  associations  heretofore  incorporated 
or  which  may  be  hereafter  incorporated  under  and  by  virtue  of  the  above 
named  act  and  the  several  supplements  thereto,  are  hereby  empowered  to 
authorize  the  formation  of  a  new  or  a  series  of  shares  upon  the  same  terms 
and  conditions  the  original  shares  of  stock  were  issued,  whenever  at  least  one 
hundred  shares  shall  have  been  subscribed,  and  to  issue  certificates  of  stock 
for  the  shares  taken  in  said  new  series,  notwithstanding  the  issue  of  said  new 
series  may  increase  the  number  of  shares  of  said  association  beyond  the  limit 
fixed  in  its  certificate  of  incorporation. 

Sec.  27. — Whenever  a  new  series  has  been  or  shall  be  formed  under  this 
supplement  the  relative  value  of  the  shares  of  the  respective  series  shall  be 
kept  separate  and  distinct,  and  the  value  thereof  reported  in  an  annual  state- 
ment to  the  shareholders. 

GENERAL  STATUTES,  1895,  p.  335. 

Section  31. — Any  number  of  persons  not  less  than  seven  may  associate  them- 
selves together  for  the  purpose  of  enabling  occupants  of  lands  and  other  per- 
sons, to  purchase  the  land  or  to  borrow  money  thereon  of  said  association  by 
mortgage  or  otherwise,  on  the  terms  and  conditions  and  subject  to  the  liabil- 
ities prescribed  in  this  act ;  the  aggregate  amount  of  the  capital  stock  of  any 
such  company  shall  not  be  less  than  one  hundred  thousand  dollars,  the  whole 
amount  of  which  as  fixed,  shall  be  subscribed  for,  and  fifty  per  centum  there- 
of actually  paid  in,  before  such  company  shall  commence  business. 

Sec.  32. — The  persons  so  associating  shall,  under  their  hands  and  seals, 
make  a  certificate  which  shall  specify  the  following  matters  : 

1.  The  name  they  have  assumed  to  designate  such  company,  and  to  be  used 
in  its  business  and  dealings  ; 

2.  The  amount  of  the  capital  stock  as  fixed  by  them,  and  the  number  and 
par  value  of  the  shares  ; 

3.  The  names  and  residences  of  the  shareholders,  and  the  number  of  shares 
held  by  each  ; 

4.  The  period  at  which  said  company  shall  commence  and  terminate  ; 
which  certificate  shall  be  acknowledged  or  proved  as  required  of  deeds  of 
real  estate,  and  recorded  in  the  office  of  the  secretary  of  state,  and  upon  being 
so  recorded  said  association  shall  be  a  body  corporate,  entitled  to  all  the 
rights  and  privileges,  and  subject  to  all  the  liabilities  under  the  laws  of  this 
state  ;  and  said  certificate  or  a  copy  thereof  duly  certified  by  said  secretary  of 
state  shall  be  evidence  in  all  courts  and  places. 

Sec.  33. — Any  association  created  under  this  act  shall  have  full  power  and 
lawful  authority  to  lend  money  and  to  secure  the  payment  thereof  and  of  in- 
terest thereon,  in  monthly  or  other  periodical  instalments  extending  over  any 
number  of  months  that  may  be  agreed  upon,  giving  credit  at  the  end  of  every 
year  during  the  existence  of  a  loan,  for  all  payments  made  and  received  on 
account  of  the  principal  ;  and  interest  shall  be  chargeable  on  the  amount  of 


802  APPENDIX   IV. 

such  principal  remaining  unpaid  at  the  beginning  of  such  year  at  the  legal 
rate  per  annum,  but  shall  be  payable  monthly,  or  at  such  other  periods  as 
may  be  agreed  on,  and  no*interest  received  from  any  borrower  by  reason  of 
such  payments  shall  be  deemed  or  taken  to  be  usurious  ;  Provided,  that  the 
excess  shall  in  no  case  be  greater  than  three-quarters  of  one  per  centum  per 
annum. 

Sec.  34. — Any  association  created  under  this  act  shall  have  the  further  law- 
ful power  and  authority  to  undertake,  for  a  consideration  and  upon  terms  to 
be  agreed  upon  by  the  parties,  to  cancel  the  indebtedness  of  the  borrower 
and  to  surrender  all  evidences  thereof  in  case  the  borrower  shall  die  before 
he  or  she  shall  have  paid  his  or  her  indebtedness  in  full ;  Provided,  that  the 
instalment  of  principal  that  would  have  fallen  due  next  after  the  day  of  the 
death  of  the  borrower,  and  all  other  charges  due,  by  agreement,  between  the 
parties,  shall  be  first  paid  in  full  to  the  lender  by  the  personal  representatives 
of  the  decedent 

Sec.  35  — The  business  of  said  association  shall  be  conducted  by  a  board  of 
directors  of  not  less  than  seven  in  number,  who  shall  be  stockholders,  and 
shall  be  elected  annually,  at  a  stockholder's  meeting  to  be  provided  for  in  the 
by-laws  of  the  association,  and  the  board  of  directors  shall  elect  from  their 
number  a  president,  and  shall  provide  for  the  election  and  appointment  of 
such  other  officers  and  agents  as  may  be  necessary, 

GENERAL  STATUTE  1895,  P-  334- 

Sectiox.  23. — It  shall  be  lawful  for  any  association  incorporated  under  the 
provisions  of  the  act  to  which  this  is  a  supplement  [act  of  April  9,  1875,  pages 
331  and  332,  revision  of  1877],  or  otherwise  lawfully  existing  in  this  state,  to 
change  the  name  set  forth  in  its  original  certificate  of  incorporation,  by  a  two- 
thirds  vote  of  the  board  of  directors  of  such  association  ;  Provided,  that  a 
certificate  under  the  hands  of  the  president  and  the  secretary  of  such  associa- 
tion, setting  forth  such  proposed  new  name,  and  that  the  same  was  adopted 
by  a  two-thirds  vote  of  the  board  of  directors  of  such  association,  at  a  meeting 
regularly  held  on  a  date  specified  in  said  certificate,  shall  be  delivered  to  the 
clerk  of  the  county  where  such  association  is  or  shall  be  located,  to  be  by  him 
filed  and  recorded. 

Sec.  24. — The  name  so  certified  to  have  been  adopted  shall,  from  the  time 
of  filing  such  certificate  of  change,  be  the  true  and  proper  corporate  title  of 
such  association  instead  of  the  name  set  forth  in  the  original  certificate  of 
incorporation  ;  and  all  deeds,  mortgages,  contracts,  actions,  judgments,  trans- 
act ions  and  proceedings  whatsoever  heretofore  or  hereafter  made,  received, 
entered  into,  carried  on  or  done  by  said  association  before  the  adoption  or 
certification  as  aforesaid  of  such  change  of  name,  but  wherein  the  said  associa- 
tion shall  have  been  called  by  the  name  so  subsequently  adopted,  are  hereby 
declared  to  be  as  good,  valid  and  effectual  in  law  as  though  said  association 
were  called  therein  by  the  name  set  forth  in  its  original  certificate  of  incor- 
poration. 

Chapter  251. 

SECTION  i. — Every     *     *    *    loan  and  building  corporation  or  association 
organized  under  the  laws  of  other  states  or  foreign  governments,  an  applica- 
lion  for  authority  to  transact  business  in  this  state,  shall  file  in  the  department 
Me  aduly  authenticated  copy  of  its  charter  <>r  certificate  of  organization 
or  mi  orporafion,  and  a  report  of  its  condition  at  the  close  of  business  on  the 
thirty-firs!  day  oi  December  last  preceding,  in  such  form  as  may  be  prescribed 
by  the  board  of  bank  commissioners,  constituted  by    ''An  act  concerning 
anks,"  approved  April  twenty-first,  one  thousand  eight   hundred  and 
seventy-six,  which  shall  be  verified  by  the  affidavits  of  the  president   or  vice- 
and  the  treasurer  or  cashier  or  secretary  of  such  corporation,  and 
it    hall  he   the  duty   of  the   secretary  of  slate  to  furnish   blank  forms  for  the 
rl  required,  and  the  said  board  shall  call  for  like  reports  at  such  other 
times ;,   may  seem  to  them  expedient. 
Sec.  2. — If  it  shall  appear  by  the  report  aforesaid  that  such  corporation  is 
-  ai  tually  paid  in,  well  invested  and  unimpaired  capital  stock  of 
idn  d  thousand  dollars,  it  may  be  admitted  to  transact  business 
inth  to  rtificate  ol  authority  to  be  issued  by  the  secretary  of 

under  the  direction  ol  the  said  hoard,  which  certificate  shall  only  be 
d  when    ui  h  corporation  shall  have  complied  with  the  further  require- 
ment- ol  thi 


GENERAL   LEGISLATION.  803 

Sec.  3. — The  bank  commissioners,  before  directing  the  issue  of  the  certificate 
of  authority  as  aforesaid,  shall  require  every  such  corporation  to  deposit  with 
the  secretary  of  state  such  securities  as  they  may  prescribe,  amounting  to  at 
least  thirty  thousand  dollars,  which  securities  shall  be  held  by  the  secretary  of 
state  in  trust,  for  the  benefit  of  the  creditors  of  such  corporation  within  this 
state,  and  the  bank  commissioners  shall  have  authority  to  order  a  change  of 
such  securities  or  any  part  thereof  at  any  time,  and  no  change  or  transfer  of 
the  same  shall  be  made  without  their  assent  ;  such  deposit  shall  be  maintained 
intact  in  the  full  sum  of  thirty  thousand  dollars  at  all  times,  but  the  cor]  "ra- 
tion shall  be  at  liberty  to  receive  the  dividends  or  interest  on  the  securities 
deposited  ;  Provided,  that  if  any  such  corporation  shall  have  and  keep  a 
deposit  of  at  least  one  hundred  thousand  dollars  with  any  department  or 
officer  of  the  state  where  organized,  it  may  be  admitted  to  the  state  without 
making  the  deposit  herein  required. 

Sec.  4. — Every  such  corporation  shall  file  a  like  report  in  January,  annually, 
and  if  such  corporation  shall  fail  to  file  such  annual  report  prior  to  the 
fifteenth  day  of  February,  or  to  furnish  such  additional  reports  or  information 
as  maybe  called  for  by  the  bank  commissioners,  within  five  days  after  notice 
to  do  so,  it  shall  be  liable  in  a  penalty  of  two  hundred  and  fifty  dollars  and 
costs  of  action,  to  be  sued  for  and  collected  in  the  name  and  for  the  benefit  of 
the  state. 

Sec  5. — Every  such  corporation  shall  pay  for  filing  a  certified  copy  of  its 
charter  or  certificate  of  organization  or  incorporation,  twenty  dollars;  for 
filing  original  and  annual  reports,  twenty  dollars  ;  for  certificate  of  authority, 
annually,  two  hundred  and  fifty  dollars  ;  for  certificate  for  each  agency,  five 
dollars,  and  shall  defray  all  expenses  incurred  in  making  any  examination 
of  its  affairs  as  herein  provided  for  ;  and  the  bank  commissioners  may  maintain 
an  action,  in  the  name  of  the  state,  against  such  corporation,  for  the  rec<  very 
of  such  expenses,  in  any  court  of  competent  jurisdiction. 

Sec.  6. — If  any  such  corporation  or  association  itself,  or  by  agents,  attorneys, 
solicitors,  surveyors,  canvassers,  collectors  or  other  representatives  of  whatever 
designation,  or  any  agent,  attorney,  solicitor,  surveyor,  canvasser,  collector, 
or  other  representative,  or  any  individual  or  firm,  whether  on  behalf  of  such 
corporation  or  not,  shall  solicit,  negotiate  or  in  anywise  transact  any  business 
in  this  state,  except  in  the  enforcement  of  contracts  by  legal  process,  without 
having  complied  with  the  requirements  of  this  act,  they  shall  be  liable  in  a 
penalty  of  two  hundred  and  fifty  dollars  and  all  costs  of  suit,  to  be  sued  for 
and  collected  on  complaint,  in  the  name  and  for  the  benefit  of  the  state,  by 
the  bank  commissioners  ;  the  first  process  against  any  corporation  or  person 
complained  of  may  be  by  capias  ad  respondendum,  and  the  person  or  persons 
against  whom  judgment  may  be  obtained  shall  be  committed  to  any  county 
jail  until  such  penalty  and  costs  are  paid,  and  the  necessary,  expenses  incurred 
by  the  bank  commissioners  in  carrying  out  the  provisions  of  this  act,  when  not 
otherwise  provided  for,  shall  be  paid  by  them  out  of  the  fees  and  taxes  col- 
lected as  herein  provided  for. 

Sec  7. — The  bank  commissioners  shall  have  authority  themselves,  or  by 
such  person  or  persons  as  they  may  designate,  to  examine  the  affairs  of  any  such 
corporation  whenever  they  may  deem  it  expedient,  and  it  shall  be  the  duty  of 
the  officers  and  employees  of  every  such  corporation  to  exhibit  its  books,  securi- 
ties, records  and  accounts  for  such  examination,  and  to  otherwise  facilitate  the 
same  so  far  as  it  may  be  in  their  power  to  do,  and  the  bank  commissioners, 
or  any  examiner  appointed  by  them,  shall  have  power  to  examine,  under  oath 
or  affirmation,  the  officers  and  employees  of  any  such  corporation  relative  to 
its  business  and  affairs,  and  for  that  purpose  any  such  examiner  shall  have 
power  to  administer  oaths  and  affirmations. 

Sec  8. — Whenever  it  shall  appear,  as  the  result  of  examination  or  otherwise, 
that  the  affairs  of  any  such  corporation  are  in  an  unsound  condition  because 
of  illegal  or  unsafe  investments,  or  that  its  liabilities  exceed  its  assets,  or  that 
it  is  transacting  business  without  authority,  or  in  violation  of  law,  or  for  any 
other  reason  which  may  seem  to  them  satisfactory,  the  bank  commissioners 
shall  have  power  to  cancel  the  authority  of  any  such  corporation  of  another 
state  to  transact  business  in  this  state,  and  as  to  such  corporations  of  this  state 
it  shall  be  the  duty  of  the  attorney  general,  on  notice  by  the  bank  commis- 
sioners, to  apply  forthwith,  by  petition  or  bill  of  complaint  or  information,  to 
the  chancellor  for  an  injunction  restraining  such  corporation  from  the  trans- 
action of  further  business,  or  the  transfer  of  any  portion  of  its  assets  in  any 
manner  whatsoever,  and  for  such  other  relief  and  assistance  as  may  be 
appropriate  to  the  case,  and  the  chancellor,  being  satisfied  of  the  sufficiency 
of  such  application,  or  that  the  interests  of  the  people  so  require,  may  order  an 


804  APPENDIX  IV. 

injunction,  and  make  other  appropriate  orders  in  a  summary  way,  and  there- 
after proceed  in  said  cause  according  to  law  and  the  practice  of  the  court  of 
chancery. 

Sec.  io. — In  all  suits  or  actions  brought  in  any  court  of  this  state  against 
any  such  corporation,  not  organized  under  the  laws  of  this  state,  process 
served  upon  the  secretary  of  state  shall  be  good  and  valid  to  all  intents  and 
purposes,  and  on  service  of  such  process  in  duplicate  it  shall  be  the  duty  of 
the  secretary  of  state  to  notify  such  corporation  immediately. 

Sec.  u_ — The  board  of  bank  commissioners  shall  make  annual  report  to 
the  legislature,  which  shall  embrace  a  statement  of  proceedings  taken  under 
this  act  and  a  summary  of  the  annual  report  made  by  each  corporation. 

GENERAL  STATUTES  1895,  p.  336. 

Section  36. — Every  mutual  loan,  homestead  and  building  association  organ- 
ized under  the  laws  of  this  state,  or  doing  business  therein,  shall  furnish, 
through  its  secretary  or  other  appropriate  agent,  to  the  chief  of  the  bureau  of 
statistics  of  labor  and  industries  an  annual  statement  of  its  business  and  con- 
dition, according  to  the  form  required,  and  on  blanks  furnished  by  said  chief, 
which  said  statement  shall  be  duly  attested,  under  oath  or  affirmation,  by  the 
treasurer  and  an  auditing  committee  of  the  stockholders  or  board  of  directors 
of  said  association  ;  and  the  said  board  of  directors  are  authorized  to  appro- 
priate from  the  current  income  of  said  association  a  sufficient  remuneration 
to  the  secretary  thereof  for  preparing  the  statement  aforesaid. 

Sec.  37. — On  any  failure  to  make  such  statement,  the  said  chief,  or  his  au- 
thorized agent,  with  the  approval  of  the  governor,  may  make  an  investigation 
of  the  books,  securities  and  accounts  of  any  delinquent  association,  which 
books,  securities  and  accounts  shall  at  all  times  be  open  to  the  inspection  of 
the  said  chief  or  his  duly  authorized  agent,  as  aforesaid. 

Sec.  38. — It  shall  be  the  duty  of  said  chief  of  the  bureau  of  statistics  of  labor 
and  industries  to  publish  annually  a  concise  report  on  the  standing  and  con- 
dition of  all  the  said  associations  doing  business  in  this  state,  and  to  furnish 
each  of  said  associations  with  one  or  more  copies  of  such  reports. 

ACTS  1896,  p.  167. 

Section  i.— Any  association  or  person  which  has  heretofore  organized  and 
done  business  as  a  company  or  association  under  the  provisions  of  "An  act 
incorporating  homestead  and  building  companies,"  approved  February  25th, 
[852,  and  the  supplements  thereto,  and  which  has  filed  a  certificate  of  organ- 
ization, constitution,  or  any  paper  in  the  nature  thereof,  under  said  act,  and 
which  may  have  purchased  lands  and  real  estate  in  the  name  of  said  associa- 
tion or  company,  and  which  owns  the  said  land  and  real  estate,  such  persons 
and  their  successors  shall  have  power  to  sell  or  dispose  of  any  lands  or  real 
estate  or  any  part  thereof  heretofore  purchased  or  acquired  by  them  in  the 
name  of  such  company  or  association  to  any  person  or  persons  other  than 
those  constituting  the  said  company  or  association,  and  to  give  good  and  suf- 
ficient deed  or  deeds  of  conveyance  therefor,  and  the  purchaser  or  purchasers 
oi    -Hi  h  lands  or  re. tl  estate  or  any  part  thereof,  shall  not  thereby  be  consti- 
members  of  such  company  or  association  so  formed  as  aforesaid. 
SEC.  2.  -Any  such  sale  of  the  lands  of  such  company  or  association  must  be 
approved  and  ratified  by  the  vote  of  at  least  two-thirds  of  the  stock  present  at 
eting  of  the  association  or  company  specially  called  to  consider  such 
d     ale  of   the   lands   and    real   estate  or   pari   thereof;  notice  of  such 
ing  must  be  given  by  advertisement  for  four  weeks  successively  at  least 
li   week  in  a  newspaper  published  and  circulating  in  the  city  or 
w  li  company  or  association  is  located,  to  which  advertisement 
attended  the  names  and  office  of  the  president  and  secretary,  and 
notice    hall    itate  the  time,  place  and  purpose  for  which  such  meeting  is 
called,  and  al  0  by  mailing,  with  the  postage  prepaid,  a  written  or  printed 

■■I      aid  noli,,-   to   every  stockholder    whose  name   and   address   as   such 

■  on  the  booh    oi    aid  company  or  association  ;  in  the  event  of  such 

■  ratified  and  approved  as  aforesaid  the  presiding  officer  of  such 

ociation  shall  execute  the  t\^ct\  or  deeds,  and  the  secretary 
hall  eal  ol  the  association  or  company  thereto  and  shall  attest  the 

Appi  oved  and  enforced  March  26th,  i8(/>. 


GENERAL   LEGISLATION.  805 


NEW  MEXICO. 

LAWS  OF  i886-'87.— Chapter  ix. 

Section  i  (as  amended  by  chapter  108,  laws  of  1889).  Whenever  any  num- 
ber of  persons,  not  less  than  eight,  may  desire  to  become  incorporated  as  a 
mutual  building  and  loan  association,  for  the  purpose  of  building  and  im- 
proving homesteads,  and  loaning  money  to  the  members  thereof,  they  shall 
make  a  statement  to  that  effect,  under  their  hands  and  seals,  duly  acknowl- 
edged before  some  officer  in  the  manner  provided  for  the  acknowledgment 
of  deeds,  setting  forth  the  name  of  the  proposed  corporation,  the  name  ol  the 
city  or  town  and  county  in  which  the  corporation  is  to  he  located  ;  the  amount 
of  capital  stock  ;  and  the  number  of  shares  into  winch  it  is  divided,  and  the 
par  value  thereof;  the  number  of  shares  subscribed  for,  being  not  less  than 
two  hundred,  and  that  the  entrance  fees  thereon  of  not  less  than  twenty-five 
cents  for  each  share  subscribed  have  been  paid  in,  same  not  to  apply  as  instal- 
ments in  stock,  the  number  and  names  of  the  directors  who  are  to  manage 
its  affairs  for  the  first  six  months,  which  number  shall  not  be  less  than  six  ;  the 
number  of  years,  not  more  than  forty,  for  which  the  incorporation  is  to  con- 
tinue, and  the  purpose  for  which  it  was  formed.  Said  statement  shall  he  tiled 
in  the  office  of  the  secretary  of  the  territory,  and  a  copy  thereof,  duly  certified 
by  the  secretary,  filed  in  the  office  of  the  recorder  of  deeds  in  the  county 
where  the  business  of  such  corporation  is  to  be  carried  on. 

Upon  the  filing  with  the  secretary  of  the  territory  and  recorder  of  deeds 
the  statement  above  provided,  the  said  corporation  shall  be  deemed  fully 
organized,  and  shall  be  a  body  corporate  and  politic  for  the  period  for  which 
it  is  organized  ;  may  sue  and  be  sued  ;  may  have  a  common  seal  which  it 
may  alter  or  renew  at  pleasure;  and  shall  possess  all  other  powers  incident 
to  do  business. 

Sec.  2  (as  amended,  acts  1895,  p.  38). — Any  such  association,  at  any  annual 
election,  may  elect  a  board  of  directors,  a  certain  number  of  whom,  to  be 
designated  by  the  by-laws,  shall  serve  for  one,  two  and  three  years  respect- 
ively, and  at  each  annual  election  thereafter  such  association  shall  elect 
directors,  who  shall  hold  office  for  the  term  of  three  years,  to  fill  vacancies 
caused  by  retiring  members  of  the  board.  In  case  of  a  vacancy  occurring 
such  vacancy  shall  be  filled  by  the  board  for  the  unexpired  term  only. 

Sec.  3  (as  amended  by  chapter  108,  laws  of  1889). — The  shares  of  stock  of 
all  corporations  hereafter  incorporated  under  the  provisions  of  this  act,  shall 
be  not  less  than  two  hundred  dollars  each.  The  shares  of  any  such  corpora- 
tion heretofore  or  hereafter  organized  shall  be  deemed  personal  property, 
transferable  upon  the  books  of  the  company  in  such  manner  as  may  be  pro- 
vided by  the  by-laws,  and  subscriptions  therefor  shall  be  payable  in  such 
periodical  instalments  and  such  time  or  times  as  shall  be  determined  by  the 
by-laws  ;  but  no  periodical  payment  of  instalments  shall  be  made,  exceeding 
two  dollars  on  each  share,  and  every  share  of  stock  shall  be  subject  to  a  lien 
for  the  payment  of  unpaid  instalments  and  other  charges  incurred  thereon 
under  the  provisions  of  the  by-laws,  and  the  by-laws  may  prescribe  the  form 
and  manner  of  enforcing  such  lien.  Such  lien  shall  be  prior  to  all  liens  by 
attachment  or  otherwise.  That  new  shares  of  stock  may  be  issued  in  lieu  of 
snares  withdrawn  or  forfeited  and  the  stock  may  be  issued  on  one  or  succes- 
sive series,  as  may  be  prescribed  in  the  by-laws  and  in  such  amount  (not 
exceeding  the  total  capital  stock)  as  the  board  of  directors  may  determine. 
Any  stockholder  wishing  to  withdraw  from  the  said  corporation,  shall  have 
power  to  do  so  by  giving  notice,  at  a  stated  meeting  of  the  board  of  directors 
hereinafter  provided  for,  of  his  or  her  intention  to  withdraw,  when  he  or  she 
shall  be  entitled  to  receive  at  the  next  stated  meeting  of  said  board  the 
amount  paid  for  dues  and  such  interest  thereon  or  so  much  of  the  profits 
thereon  as  the  by-laws  may  determine,  less  all  fines  and  other  charges  ;  Pro- 
vided,  that  at  no  time  shall  more  than  one-half  of  the  funds  in  the  treasury 
of  the  corporation  be  applicable  to  the  demands  of  withdrawing  stockholders 
without  the  consent  of  the  board  of  directors,  and  no  stockholder  shall  be 
entitled  to  withdraw  whose  stock  is  held  in  pledge  for  security.  Upon  the 
death  of  a  stockholder,  his  or  her  legal  representatives  shall  be  entitled  to 
withdraw  his  or  her  shares  of  stock  upon  the  same  terms  and  conditions  as 
other  withdrawing  stockholders  except  that  no  fines  shall  be  charged  to  a 
deceased  member  s  account  from  and  after  his  or  her  decease,  unless  the 
legal  representatives  of  such  decedent  assume  the  payment  of  the  dues  on 
the  stock. 
52 


806  APPENDIX   IV. 

Sec.  4. — Married  women  may  become  subscribers  to  the  capital  stock  of 
such  corporation,  and  hold,  control,  and  transfer  their  stock  in  all  respects  as 
femmes  soles,  and  their  stock  shall  not  be  subject  to  the  control  of,  or  liable 
for  the  debts  of,  their  husbands.  Minors  may  become  subscribers  to  and 
owners  of  stock  by  guardian  or  trustee,  and  such  guardian  or  trustee  may 
withdraw  the  stock  of  such  minor  as  provided  in  section  three  of  this  act. 

Sec.  5  (as  amended  by  chapter  108,  laws  of  1889). — Every  such  corporation 
shall  lend  its  funds  on  real  estate  security  or  its  own  stock,  and  upon  the 
terms  and  conditions  and  in  the  manner  which  may  be  specified  by  its  by- 
laws. Such  corporation  may,  however,  employ  a  portion  of  its  capital  stock, 
not  exceeding  fifty  thousand  dollars  in  amount  at  any  one  time,  in  the  pur- 
chase of  real  estate  and  the  erection  of  buildings  thereon  for  rent  or  other- 
wise. It  may  also  use  such  portion  of  its  capital  as  may  be  necessary  to  pur- 
chase at  any  sale  judicial,  public  or  private,  any  real  estate  upon  which  such 
corporation  may  have  or  hold  any  mortgage,  lien  or  other  incumbrance  or  in 
which  it  may  have  an  interest,  and  the  real  estate  so  purchased,  it  may  sell, 
convey,  lease  or  mortgage  at  pleasure  to  any  person  or  persons  whatsoever. 

Sec.  6. — The  board  of  directors  of  the  corporation  shall  hold  stated  meet- 
ings, at  which  the  money  in  the  treasury,  if  equal  to  one  share  of  stock,  shall 
be  offered  for  loan  in  open  meeting,  and  the  shareholder  who  shall  bid  the 
highest  premium  for  the  preference  or  priority  of  loan  shall  be  entitled  to 
receive  a  loan  to  any  amount  equal  to  the  number  of  shares  of  stock  held  by 
such  shareholder  ;  Provided,  a  shareholder  may  borrow  such  fractional  part 
of  a  share  as  the  by-laws  may  provide.  Good  and  ample  security  shall  be 
given  by  the  borrower  to  secure  the  repayment  of  the  loan,  which  security 
shall  be  unincumbered  except  by  prior  loans  of  the  corporation.  In  case  the 
borrower  shall  neglect  to  offer  security  or  shall  offer  security  that  is  not 
approved  by  the  board  of  directors,  by  such  times  as  the  by-laws  may  provide, 
he  or  she  shall  be  charged  one.  month's  interest,  together  with  any  expense 
incurred,  and  the  money  may  be  reloaned  at  the  next  stated  meeting.  In  case 
of  non-payment  of  instalments  of  interest  and  fines  by  borrowing  stock- 
holders, for  the  space  of  six  months,  payment  of  principal  and  interest  and 
fines,  without  deducting  the  premium  paid  or  interest  thereon,  may  be  enforced 
by  proceeding  on  the  securities,  according  to  the  conditions  and  power  of  sale 
contained  in  the  mortgage,  or  by  suit  in  equity  to  foreclose  the  same.  No  loan 
shall  be  made  by  such  corporation  except  to  its  own  members,  unless  it  shall 
happen  at  any  time  that  there  is  no  demand  by  any  of  its  shareholders  for  the 
funds  ;  then  such  funds  may  be  loaned  to  others  who  are  not  shareholders. 

Sec.  7  (as  amended  by  chapter  108,  laws  of  1889).  A  borrower  may  replace 
a  loan  at  any  time,  andin  case  of  the  repayment  thereof  before  the  expiration 
of  the  eighth  year  after  the  organization  of  the  corporation,  there  shall  be 
refunded  to  such  borrower  one-eighth  of  the  premium  paid  for  every  year  of 
the  eight  years  then  unexpired  ;  and  in  case  of  recovery  of  loans  by  process 
of  law  or  foreclosure  under  the  power  of  sale  in  the  deed  of  trust  or  mortgage 
the  excess  recovered  beyond  the  amount  required  to  pay  the  loan  with 
interest,  charges,  fines,  costs  and  attorney's  fees  shall  be  returned  to  the  bor- 
rower from  whom  the  money  was  collected  or  his  or  her  legal  representa- 
tives ; 

Provided,  that  when  a  borrower  shall  pay  monthly  the  premium  bid  for 
priority  of  loan,  said  borrower  shall  not  be  entitled  to  have  refunded  to  him 
any  portion  of  the  premium  so  paid. 

Sei  .  8  (as  amended  by  chapter  10S,  laws  of  1889).  Every  such  corporation 
shall  terminate,  except  for  the  purpose  of  settling  its  affairs,  whenever  its 
Shares  in   ea<  h    and    every   series  (hereof  have   been    redeemed   by  loans  or 

advance  thereon,  or  whenever  the  funds  and  property  of  the  corporation 
shall  be  sufficient  to  pay  upon  the  unredeemed  shares  the  value  thereof,  as 
fixed  by  the  by-laws  of  such  corporation,  which  said  by-laws  and  all  amend- 
ment: of  the  same  shall  be  filed  in  the  office  oi  the  secretary  of  the  territory 
and  the  re<  1  irder  oi  deeds  in  the  county  where  the  business  <  if  such  c<  irpora- 
tion  is  1  arried  on  within  thirty  days  after  adoption.  No  members  of  such  cor- 
poration hall  be  allowed  to  vote  when  in  arrears  for  interest,  dues  or  tines  or 
upon  any  question  affecting  the  claim  of  such  corporation  against  him  or 

Sec.  9  (as  amended  by  1  hapteno8,  laws  of  1889).    All  corporations  hereto- 
fore incorporated  undei  the  laws  of  the  territory  of  New  Mexico  for  the  pur- 
1  umulating  and  loaning  funds  to  its  members,  or  thai  have  been  so 
nid  loaning  funds  to  its  members  as  building  and  loan  associa- 
tion ized  and  confirmed  as  legal  and  valid  corporations 
from                        ncorporation  ;  all  contracts  made  between  them  and  their 


GENERAL    LEGISLATION.  807 

members,  all  loans  made,  at  whatsover  premium,  discount  or  interest,  and  all 
security  taken  for  such  loans  are  hereby  declared  legal,  valid  and  binding  on 
all  parties  concerned  or  affected  thereby.  No  interest  or  premium  paid  on  a 
I  nan  of  any  corporation  organized  under  the  provisions  of  this  act,  no  premium 
or  interest  paid  or  agreed  to  be  raid  on  a  loan  made  by  any  building  and  loan 
association  heretofore  organized  for  the  purpose  of  accumulating  and  loaning 
funds  to  its  members,  no  lines  or  charges  assessed  under  the  by-laws  of  such 
corporation,  shall  be  deemed  usurious  or  subject  to  the  provisions  of  cha;  ter 
2,  sections  ! 732  to  1739,  of  the  compiled  laws  of  the  territory  of  New  Mexico, 
and  all  such  interest  and  premium  incorporated  in  notes  given  to  such  cor- 
poration, and  all  tines  and  charges  assessed  against  its  members  in  accordance 
with  its  by-laws,  may  be  collected  according  to  law. 

SEC.  n  (added  by  chapter  10S,  laws  of  [889).  The  secretary  of  every  asso- 
ciation incorporated  or  doing  business  with  [within]  this  territory  shall, 
within  twenty  days  after  the  close  of  each  fiscal  year  of  such  association,  file 
with  the  secretary  of  the  territory  of  New  Mexico  a  statement  under  oath  of 
the  receipts  and  expenditures  of  such  association  for  such  year,  its  assets  and 
liabilities,  the  number  of  shares  of  its  capital  stock  issued,  withdrawn  and  in 
force  in  each  series  of  stock  during  such  year,  also  the  number  of  shares  of 
stock  loaned  upon  each  series  of  stock.  Such  statement  shall  also  be  verified 
under  oath  bv  at  least  three  members  of  such  association  not  officers  thereof. 

Sec.  12  (added  by  chapter  108,  laws  of  18891.  It  shall  be  the  duty  of  the 
secretary  of  the  territory  whenever  five  or  more  stockholders  of  any  such 
association  request  in  a  statement  of  facts,  made  and  sworn  to  by  the  same,  or 
whenever  he  shall  deem  it  expedient  so  to  do  in  person  or  by  one  or  more 
persons  to  be  appointed  by  him  for  that  purpose,  not  officers  or  agents  of  or 
in  any  manner  interested  in  any  such  association  doing  business  in  this  ter- 
ritory, except  as  stockholders,  to  examine  into  the  affairs  of  any  such  associa- 
tion incorporated  in  this  territory  or  doing  business  by  its  agents  in  this  ter- 
ritory, and  it  shall  be  the  duty  of  the  officers  or  agents  of  any  such  association 
doing  business  in  this  territory  to  cause  their  books  to  be  opened  for  the 
inspection  of  the  secretary  of  the  territory  or  the  person  or  persons  so 
appointed,  and  otherwise  facilitate  such  examination  so  far  as  it  may  be  in 
their  power  to  do  ;  and  for  that  purpose  the  secretary,  or  person  or  persons  so 
appointed  by  him,  shall  have  the  power  to  examine  under  oath  the  officers 
and  agents  of  such  association  relative  to  the  business  of  any  such  association  ; 
and  when  the  secretary  of  the  territory  shall  deem  it  for  the  best  interests  of 
the  public  so  to  do  he  shall  publish  the  result  of  any  such  investigation  in  one 
or  more  newspapers  of  general  circulation  published  in  this  territory,  and 
annually  on  or  before  the  first  day  of  January  in  each  year  the  secretary  of  the 
territory  shall  report  to  the  governor  the  financial  condition  of  all  such  asso- 
ciations doing  business  in  this  territory  ;  Provided,  that  said  association  shall 
not  be  subject  to  any  expense  in  any  manner  by  reason  of  such  examination 
or  publication. 

Sec.  13  (added  by  chanter  108,  laws  of  1889).  And  whenever  it  shall  appear 
to  the  said  secretary  of  the  territory,  from  such  examination,  that  the  assets  of 
such  association,  incorporated  or  doing  business  in  this  state  [territory],  are 
insufficient  to  justify  the  continuance  in  business  of  any  such  association,  he 
shall  communicate  the  fact  to  the  attorney  general,  whose  duty  if  shall  then 
become  to  apply  to  the  district  court  of  the  county  in  which  the  principal  office 
of  said  association  shall  be  located  for  an  order  requiring  it  to  show  cause  why 
the  business  of  such  association  shall  not  be  closed,  and  the  court  shall  there- 
upon proceed  to  hear  the  allegations  and  proofs  of  the  respective  parties, 
either  in  open  court  or  upon  a  reference  to  a  master  in  chancery,  and  in  case 
it  shall  appear  to  the  satisfaction  of  the  said  courts  that  the  assets  and  funds 
of  said  association  are  not  sufficient  as  aforesaid,  or  that  the  interest  of  the 
public  requires,  the  said  court  shall  decree  a  dissolution  of  the  said  ass<  - 
lion  and  a  distribution  of  its  effects. 

Sec.  14  (added  by  chapter  108,  laws  of  iSSqi.  Any  such  association  may 
allow  reasonable  compensation  to  its  auditing  committees  for  their  services 
as  such,  and  may,  for  the  legitimate  purposes  of  such  association,  on  a  vote  of 
a  majority  of  all  its  directors,  borrow  money  in  anticipation  of  payment  of 
dues. 

ACTS  1897,  p.  28. 

Sec.  1. — All  corporations  organized  under  the  laws  of  this  territory  shall  file 
in  the  office  of  the  secretary  of  the  territory  of  Xew  Mexico,  a  certificate  in 
writing,  as  now  provided"  by  law.    For  the  filing  of    such   certificate    the 


808  APPENDIX   IV. 

secretary  of  the  territory  shall  collect  at  the  time  of  said  filing,  the  following 
fees : 

For  corporations  organized  for  the  construction  and  operation  of  railroads, 
under  the  railroad  incorporation  act,  $00.00  ;  for  corporations  organized  for 
mining  purposes,  $25.00;  for  corporations  organized  for  manufacturing  pur- 
poses, for  the  construction  of  wagon  roads,  irrigating  ditches,  and  the  coloni- 
zation and  improvement  of  lands  in  connection  therewith  and  for  other  indus- 
trial purposes,  where  the  capital  stock  is  $10,000  or  less,  $5.00  ;  $20,000  or  less, 
S  10.000  ;  $30,000  or  less,  $15,000;  $40,000  or  less,  $20.00;  $50,000  or  less, 
$25.00;  to  $100,000,  $35.00  ;  $100,000  or  over,  $50.00;  building  and  loan  asso- 
ciations, $25.00 ;  for  all  corporations  organized  for  colleges,  seminaries, 
churches,  libraries,  or  any  benevolent,  charitable  or  scientific  purposes,  the 
sum  of  Si. 00. 

Sec.  2. — Every  company  or  corporation  iucorporated  under  the  laws  of  any 
foreign  state  or  kingdom,  or  any  state  or  territory  of  the  United  States  beyond 
the  limits  of  this  territory,  and  hereafter  doing  business  which  by  law  requires 
the  filing  of  a  certificate  or  articles  of  incorporation  in  the  office  of  the  ter- 
ritorial secretary  of  this  territory,  shall  pay  the  same  fees  as  heretofore  pro- 
vided to  be  paid  by  domestic  corporations  of  a  like  class. 

NEW  YORK- 
REVISED  STATUTES  (9th  ed.),  1896,  p.  1028. 

Section  I. — This  chapter  shall  be  known  as  the  banking  law,  and  shall  be 
applicable  to  all  corporations  and  individuals  specified  in  the  next  section. 


Sec.  2.  *  *  *  The  term,  building  and  mutual  loan  corporations  or 
associations,  when  soused,  means  a  corporation  formed  for  the  purpose  of 
accumulating  a  fund  for  the  purchase  of  real  property,  the  erection  of  buildings, 
or  the  making  of  other  improvements  on  lands,  or  to  pay  off  incumbrances 
thereon,  or  to  aid  its  members  in  acquiring  real  property,  making  improve- 
ments thereon,  or  removing  incumbrances  therefrom,  or  of  accumulating  a 
fund  to  be  returned  to  its  members  in  specified  cases. 

The  term,  co-operative  loan  association,  when  so  used,  means  a  corpora- 
tion formed  for  the  purpose  of  encouraging  industry,  frugality,  home-building 
and  the  saving  of  money  by  its  members,  the  accumulation  of  savings,  the 
loaning  of  such  accumulations  to  its  members,  and  the  repayment  to  each 
member  of  his  savings  when  they  have  accumulated  to  a  certain  sum,  or  at 
any  time  when  he  shall  desire  the  same,  or  the  association  shall  desire  to 
repay  the  same. 

The  term,  building  and  mutual  loan  corporations  or  associations,  and  co- 
operative loan  associations,  shall  include  every  corporation,  company  or  asso- 
ciation doing  business  in  this  state,  and  having  for  a  part  of  its  title  or  name 
the  words  building  association,  building  and  loan  association,  savings  and 
loan  association,  savings  association  or  co-operative  bank,  and  every  corpora- 
tion, company  or  association  whose  stock  is  wholly  or  in  part  payable  by  a 
cumulative  fund  in  regular  or  peridiocal  instalments,  or  which  is  doing 
business  in  the  form  and  of  a  character  similar  to  that  authorized  by  Articles 
5  and  6  of  this  chapter,  organized  or  incorporated  in  any  state  or  country 

[DE  OF    THIS  STATE. 

SE(  .  J.  -  There  shall  continue  to  be  a  banking  department  charged  with  the 
execution  of  the  laws  relating  to  the  corporations  and  individuals  to  which 
this  chanter  is  applicable.  The  chief  officer  of  such  department  shall  continue 
to  be  the  superintendent  thereof,  to  be  known  as  the  superintendent  of 
banks.     *     *     * 

Si  <  .  4. — The  secretary  of  state  shall  provide  the  superintendent  of  banks 
with  an  off]  ial  eal.  Kvcry  paper  executed  by  him  as  such  superintendent 
in  in!  iuance  Oi  any  authority  conferred  on  him  by  law  and  scaled  with  his 
'  •  a]  "i  offii  e,  hall  be  received  in  evidence,  and  may  be  recorded  in  the  proper 
ding  offii  es  in  the  same  manner  and  with  the  like  effect  as  a  deed  regu- 
kn  ly  a<  knowledged  or  proven. 

,  -The  superintendent  of  banks  shall  employ  from  time  to  time  such 
l(  taminers  as  he  may   need  to  discharge  in  a  proper  manner  the 
impi    ed  upon  him  by  law.    *    *    *    He  shall  appoint  one  of  his  clerks 
i         ':i    deputy,    *    *    * 

6.— The  trustees  of  other  officers  having  bylaw  the  custody   of  the 


GENERAL   LEGISLATION.  809 

public  buildings  at  the  state  capital,  shall  assign  to  the  superintendent  suitable 
rooms  therein lor  conducting  the  business  of  the  bank  department.    *    *    * 

Sec. 7.— All  the  expenses  incurred  in  and  about  the  conduct  of  the  business 
of  the  department,  including  the  salary  of  the  superintendent  and  clerks  shall 
be  charged  to  and  paid  by  the  corporations  and  individuals  required  to  report 
to  the  superintendent  under  the  provisions  of  this  chapter  in  such  proportions 
as  the  superintendent  shall  deem  just  and  reasonable. 

The  expenses  incurred  and  services  performed  on  account  of  any  such 
corporation  or  individual  shall  be  charged  to  and  paid  by  the  cor]  oration  or 
individual  for  whom  they  were  incurred  or  performed.  If  any  corporation 
or  individual  shall  not,  after  due  notice,  pay  any  such  charges,  the  superintend- 
ent may  apply  the  proceeds  of  the  sale  or  of  the  dividends  on  any  stock  or  the 
interest  on  any  bonds  and  mortgages  in  his  hands  deposited  by  such  corpora- 
tion or  individual  to  the  payment  of  such  charges,  with  interest  at  the  rate  of 
six  per  cent. 

The  moneys  so  applied,  and  all  moneys  received  by  him  in  payment  of  such 
charges,  shall  be  deposited  and  paid  by  him  into  the  treasury  ot  the  slate,  to 
reimburse  all  sums  advanced  from  the  treasury  for  such  expenses,  except 
moneys  received  from  any  corporation  or  individual  banker  lor  expenses  in- 
curred or  services  performed  on  account  of  any  such  corporation  or  individual, 
which  moneys  shall  be  applied  by  the  superintendent  in  payment  of  such  ex- 
penses and  a  verified  account  thereof  included  in  his  annual  report. 

If  any  such  corporation  or  individual  shall  fail  to  pay  such  charges  as  herein 
required,  and  there  are  no  stocks,  bonds  or  mortgages  in  the  department,  the 
dividends  or  interest  on  which  can  be  applied  in  payment  thereof,  the  super- 
intendent shall  report  to  the  attorney  general  the  failure  of  any  such  corpora- 
tion or  individual  to  pay  such  charges,  and  the  attorney  general  shall  there- 
upon bring  an  action  in  the  name  of  the  people  for  the  recovery  of  such 
charges. 

Sec.  8. — Every  corporation  and  individual  banker  specified  in  section  2  of 
this  chapter  shall  be  subject  to  the  inspection  and  supervision  of  the  super- 
intendent of  banks.  He  shall,  either  personally  or  by  some  competent  person 
or  persons  to  be  appointed  by  him,  to  be  known  as  examiners,  visit  and  exam- 
ine every  such  corporation  and  individual  banker,  other  than  savings  banks, 
at  least  once  in  each  year,  and  savings  banks  once  in  two  years,  On  every 
such  examination  inquiry  shall  be  made  as  to  the  condition  and  resources  of 
the  corporation,  the  mode  of  conducting  and  managing  its  affairs,  the  action 
of  its  directors,  the  investment  of  its  funds,  the  safety  and  prudence  of  its 
management,  the  security  afforded  to  those  by  whom  its  engagements  are 
held,  and  whether  the  requirements  of  its  charter  and  of  law  have  been  com- 
plied with  in  the  administration  of  its  affairs  ;  and  as  to  such  other  matters  as 
the  superintendent  may  prescribe. 

He  shall  have  power  in  like  manner  to  examine  every  corporation  and  indi- 
vidual banker  specified  in  section  2  whenever  in  his  judgment  its  condition 
and  management  is  such  as  to  render  an  examination  of  its  affairs  nec- 
essary   and  expedient. 

The  superintendent  and  every  such  examiner  shall  have  power  to  admin- 
ister an  oath  to  any  person  whose  testimony  may  be  required  on  any  such 
examination,  and  to  compel  the  appearance  and  attendance  of  any  such  person 
for  the  purpose  of  any  such  examination. 

If  the  examination  shall  be  made  by  the  superintendent,  or  by  one  or  more 
of  the  regular  clerks  in  the  department,  no  charge  shall  be  made  except  for 
necessary  travelling  and  other  actual  expenses. 

Sec.  11. — Every  examiner  appointed  by  the  superintendent  shall,  before 
entering  upon  the  duties  of  his  appointment,  take  and  file  in  the  office  of  the 
clerk  of  the  county  where  he  resides,  the  constitutional  oath  of  office.     *     *     * 

Sec.  13. — No  such  corporation  shall  commence  its  corporate  business  until 
its  president  and  cashier  or  treasurer  or  secretary,  or  its  two  principal  officers, 
by  whatever  name  known,  shall  have  made  and  subscribed  an  affidavit  stating 
that  the  whole  of  its  capital  stock,  or  such  portion  thereof  as  by  law  shall  be 
required  to  be  paid  or  secured  before  the  commencement  of  it-  operations, 
has  been  actually  paid  or  secured  to  be  paid,  according  to  law.  Such  affidavit 
maybe  made  before  any  officer  authorized  to  administer  oaths  in  the  county 
where  the  corporation  has  its  principal  place  of  business,  and  shall  be  filed  in 
the  clerk's  office  of  such  county.  Every  such  corporation  shall  cease  to  be  a 
corporation  if  the  affidavit  above  required  shall  not  be  made  and  filed  within 
one  year  from  the  time  its  charter  shall  be  granted. 


810  APPENDIX   IV. 

Sec.  14.  — Every  such  corporation,  except  banks,  savings  banks  and  domestic 
corporations  specified  in  Articles  5,  6  and  7  of  this  chapter,  engaged  in  re- 
ceiving deposits  of  money  in  trust  in  this  state,  and  required  to  make  a  report 
of  its  affairs  to  the  superintendent  of  banks,  shall,  if  it  has  not  already  done 
so,  within  six  months  from  the  passage  of  this  chapter  ;  and  every  such  cor- 
poration hereafter  proposing  to  engage  in  such  business  in  this  state  shall, 
before  engaging  in  such  business,  transfer  and  assign  to  the  superintendent 
registered  public  stocks  or  bonds  of  the  United  States,  or  of  this  state,  or  of 
any  city,  county,  town,  village  or  free  school  district  in  this  state,  authorized 
by  the  legislature  to  be  issued,  to  the  amount  in  value,  and  to  be  at  all  times 
so  maintained  by  the  corporation,  of  ten  per  cent,  on  its  paid-up  capital-stock, 
but  not  less  in  any  case  than  one  hundred  thousand  dollars  in  cities  the  popu- 
lation of  which  exceeds  five  hundred  thousand  inhabitants,  and  not  less  than 
fifty  thousand  dollars  in  cities  containing  more  than  one  hundred  thousand 
inhabitants  and  less  than  five  hundred  thousand  inhabitants,  and  not  less  than 
thirty  thousand  dollars  in  cities  containing  more  than  twenty-five  thousand 
inhabitants  and  less  than  one  hundred  thousand  inhabitants,  and  not  less  than 
twenty  thousand  dollars  in  cities  or  towns  of  less  than  twenty-five  thousand 
inhabitants,  the  number  of  inhabitants  in  each  city  or  town  to  be  ascertained 
by  the  last  Federal  census  or  state  enumeration.  Such  stocks  must  be  reg- 
istered in  the  name  of  the  superintendent,  officially,  as  held  in  trust  under 
an  J  pursuant  to  this  chapter,  and  the  same  shall  be  held  by  the  superintendent 
in  trust,  as  security  for  the  depositors  with  and  creditors  of  such  corporation, 
and  subject  to  sale  and  transfer,  and  to  the  disposal  of  the  proceeds 
thereof  by  the  superintendent,  only  on  the  order  of  competent  jurisdiction. 
Until  the  order  of  such  court,  authorizing  such  sale  or  transfer  or  other  dis- 
position thereof,  the  superintendent  shall  pay  over  to  such  corporation  the  in- 
terest which  may  be  received  on  such  securities.  Should  any  corporation,  at 
any  time,  have  deposited  with  the  superintendent  more  than  the  amount  hereby 
required,  the  excess  may  be  refunded.  With  the  approval  of  the  super- 
intendent, such  a  deposit  may  be  made  by  the  corporation,  either  wholly 
or  in  part,  in  bonds  and  mortgages  satisfactory  to  the  superintendent  on  im- 
proved, unincumbered,  productive  real  property  in  this  state,  worth  at  least 
seventy-five  per  centum  more  than  the  amount  loaned  thereon. 

In  the  case  of  any  foreign  corporation  (including  building  and  loan  assso- 
ciations  organized  or  incorporated  in  any  state  or  country  outside  of  this 
state,  as  defined  in  section  two  of  this  chapter)  doing  business  in  this  state,  it 
shall  deposit  with  the  superintendent,  in  trust,  as  security  for  the  depositors 
with  and  creditors  of  said  corporation  in  this  state  one  hundred  thousand 
dollars  in  securities  enumerated  in  this  section. 

If  any  foreign  corporation  doing  business  in  this  state  shall  refuse  or  neglect 
to  make  the  deposit  herein  required  with  the  superintendent,  the  fact  shall  be 
reported  by  the  superintendent  to  the  attorney  general,  who  shall  forthwith 
take  such  proceeding  as  may  be  necessary  to  enjoin  and  restrain  such  corpo- 
ration from  transacting  any  business  in  this  state,  and  the  court  to  which  such 
application  shall  be  made  shall  be  authorized  to  make  such  order  or  decree, 
and  to  issue  such  process  in  the  premises  to  enforce  compliance  by  the  corpo- 
ration with  the  provisions  of  this  chapter,  or  to  restrain  the  transaction  of 
business  by  it  in  this  state  as  it  may  deem  proper. 

******** 

Sec.  16. — Whenever  the  superintendent  shall  deem  it  proper,  a  copy  of  any 
report  made  by  any  examiner  shall  be  published  in  the  state  paper  and  in  at 
least  une  daily  newspaper   in    the   city  of  New  York,  and  in  one   newspaper 
published  in  the  county  where  the  principal  place  of  business  of  such  corpora- 
individual  is  located. 
SEC.   17.— Whenever  the  superintendent   shall  have  reason  to  believe  that 
the  capital  stock  of  any  corporation   or  individual   banker,  subject  to  the  pro- 
vision, oi   tins  chapter,   is  reduced  by  impairment  or  otherwise  below  the 
mi  required  bv  law,  or  by  its  certificate  or  articles  of  association,  he  shall 
re    ii'  h  corporation  or  individual  banker  to  make  good  the  deficiency. 
He  may  examine  or  cause  to  be  examined  any  such  corporation  to  ascertain 
the  amount  ol   such  impairment   01  reduction  of  capital,  and  whether  the  de- 
ha    1  "-in  made  good  as  required  by  him. 
The  dire<  tors  of  every  such  corporation  upon  which  such  requisition  shall 
have  been  made     hall  immediately  give  notice  oi    such  requisition  to  each 
holdei  ol  the  corpoi  ition,  and  oi  the  amount  of  the  assessment  which  he 
mi  1  pay  foi    th     1  urpo  e  ol   making  good  such  deficiency,  by  a  written  or 
printed  io  mailed  to   uch  stockholder  at  his  place  of  residence,  or  served 


GENERAL    LEGISLATION.  811 

personally  upon  him.  If  any  stockholder  shall  refuse  or  neglect  to  pay  the 
assessment  specified  in  such  notice  within  sixty  days  from  the  date  thereof, 
the  directors  of  such  corporation  shall  have  the  right  to  sell  to  the  highest 
bidder  at  public  auction  the  stock  of  such  stockholder,  after  giving  previous 
notice  of  such  sale  for  two  weeks  in  a  newspaper  of  general  circulation 
published  in  the  place  or  county  where  such  corporation  i>  located  ;  hut  such 
stock  shall  not  be  sold  for  a  smaller  sum  than  the  valuation  put  on  it  by  the 
superintendent  in  his  determination  and  certificate  ;  and  the  necessary  ( 
of  the  sale  shall  be  paid  out  of  the  avails  of  the  stock  sold. 

If  any  such  corporation  or  individual  banker  shall  neglect  for  sixty  days 
after  the  superintendent  shall  have  required  such  deticiency  to  be  made  good, 
to  comply  with  such  request,  the  superintendent  shall  report  the  fact  to  the 
attorney-general,  who  shall  institute  such  action  or  proceeding  against  such 
corporation  or  individual  banker  as  is  now  authorized  in  the  case  of  insolvent 
corporations. 


Sec.  18. — If  any  such  corporation  or  individual  banker  shall  refuse  to  submit 
its  books,  papers  and  concerns  to  the  inspection  of  any  examiner,  or  if  any 
officer  thereof  shall  refuse  to  submit  to  be  examined  upon  oath  touching  the 
concerns  of  such  corporation  or  individual  banker,  or  if  it  shall  he  found  to 
have  violated  its  charter,  or  any  law  of  the  state  binding  upon  it.  the  superin- 
tendent may  report  the  fact  to  the  attorney  general,  who  shall  institute  such 
action  or  proceeding  against  such  corporation  or  individual  banker  as  is  au- 
thorized in  case  of  insolvent  corporations. 

If  it  shall  appear  to  the  superintendent  that  any  such  corporation  or  banker 
has  violated  its  charter  or  any  law  of  this  state,  or  is  conducting  business  in 
an  unsafe  or  unauthorized  manner,  he  shall,  by  an  order  under  his  hand  and 
official  seal,  addressed  to  such  corporation  or  banker,  direct  a  discontinuance 
of  such  illegal  or  unsafe  practices,  and  conformity  with  the  requirements  of 
its  charter,  and  with  safety  and  security  in  its  transactions  ;  and  whenever  it 
shall  appear  to  the  superintendent  that  it  is  unsafe  and  inexpedient  for  such 
corporation  or  banker  to  continue  business,  he  shall  communicate  the  facts 
to  the  attorney  general,  who  shall  thereupon  institute  such  proceedings 
against  the  corporation  or  banker  as  are  authorized  in  the  case  of  insolvent 
corporations,  or  such  other  proceedings  as  the  nature  of  the  case  may  require. 

Sec.  19. — The  creditors  and  shareholders  of  any  such  corporation  whose 
debts  or  shares  shall  amount  to  one  thousand  dollars  may  make  application  to 
the  supreme  court  by  a  verified  petition  setting  forth  facts  showing  that  an 
examination  of  the  affairs  of  the  corporation  should  be  made,  and  the  court 
mav  thereupon,  in  its  discretion,  order  such  an  examination  to  be  made  by  a 
referee  for  the  purpose  of  ascertaining  the  safety  of  the  investments  and  the 
prudence  of  the  management  of  the  corporation.  The  result  of  every  such 
examination,  together  with  the  opinion  of  the  referee  thereon,  shall  be 
published  in  such  manner  as  the  court  shall  direct.  The  court  shall  make 
such  order  in  respect  to  the  expenses  of  the  examination  and  publication  as  it 
mav  deem  proper. 

Sec.  20.— Every  corporation  and  individual  banker  subject  to  the  provisions 
of  this  chapter  shall  make  a  written  report  to  the  superintendent  of  banks,  in 
such  form  and  containing  such  matters  as  he  shall  prescribe.     *  :     If  a 

*  *  *  co-operative  loan  association,  or  a  building  and  mutual  loan  corpora- 
tion, *  *  *  such  reports  shall  be  made  annually  on  or  before  February 
first  in  each  vear,  and  shall  contain  a  statement  of  its  condition  on  the  first  day 
of  January  preceding.  The  superintendent  may,  for  good  cause  shown,  ex- 
tend the  time  for  making  any  such  report  not  exceeding  thirty  days. 

Every  such  report  shall  be  verified  by  the  oath  of  the  president  and  cashier 
or  treasurer  of  such  corporation  or  by  such  individual  banker  to  the  effect 
that  the  same  is  true  and  correct  in  all  respects.    *    *    * 

Sec.  2\—  If  anv  bank  or  individual  banker  shall  fail  to  make  such  report  *  *  * 
or  if  anv  savings  bank  or  trust  company  shall   fail   to   make  such  report 

*  *  *  Every  other  corporation  subject  to  the  provisions  of  this  chapter  which 
shall  fail  to  make  such  report  within  the  time  herein  required  or  to  include 
therein  any  matter  required  by  the  superintendent  to  be  stated  shall  forfeit  to 
the  peonle"  the  sum  often  dollars  for  evervdav  for  which  such  report  shall  be 
delayed  or  withheld,  and  for  every  day  that  any  such  omitted  matter  may  re- 
main, unreported. 

The  moneys  forfeited  by  this  section,  when  recovered,  shall  be  paid  into 


812  APPENDIX   IV. 

the  state  treasury  to  be  used  to  defray  the  miscellaneous  expenses  of  the  de- 
partment 

*  *  *  *  *  *  *  * 

Sec.  23.— The  superintendent  shall  report  annually  to  the  legislature,  at  the 
commencement  of  its  first  session  : 

1.  A  summary  of  the  state  and  condition  of  every  corporation  and  individual 
banker  required  to  report  to  him  and  from  which  reports  have  been  received 
the  preceding  year,  at  the  several  dates  to  which  such  reports  refer,  with  an 
abstract  of  the  "whole  amount  of  capital  returned  by  them,  the  whole  amount 
of  their  debts  and  liabilities,  specifying  particularly  the  amount  of  circulating 
notes  outstanding,  if  any,  and  the  total  amount  of  means  and  resources,  spec- 
ifying the  amount  of  specie  held  by  them  at  the  times  of  their  several  re- 
turns, and  such  other  information  in  relation  to  such  corporations  and  bankers 
as,  in  his  judgment,  may  be  useful.  Such  corporations  shall  be  divided  into 
classes  so  as  to  correspond  with  the  designations  thereof  in  section  2  of  this 
chapter.     *    *     * 

Such  report  may  be  divided  into  parts,  and  the  part  or  parts  containing 
the  reports  of  corporations  other  than  banks  may  be  made  on  or  before  the 
first  day  of  March  in  each  year. 


Sec.  26. — Interest  unpaid,  although  due  or  accrued  on  debts  owing  to  the  cor- 
poration or  banker,  shall  not  be  included  in  the  calculation  of  its  profits  pre- 
vious to  a  dividend.  *  *  * 

The  surplus  profits,  from  which  alone  a  dividend  can  be  made,  shall  be  as- 
certained by  charging  in  the  account  of  profit  and  loss  and  deducting  from 
the  actual  profits  : 

1.  All  expenses  paid  or  incurred,  both  ordinary  and  extraordinary,  attend- 
ing the  management  of  its  affairs  and  transaction  of  its  business. 

2.  The  interest  paid,  or  then  due  and  accrued,  on  debts  owing  by  it. 

3.  All  losses  sustained  by  it.  In  the  computation  of  such  losses,  all  debts 
owing  to  it  shall  be  included  which  shall  have  remained  due,  without  prosecu- 
tion, and  upon  which  no  interest  shall  have  been  paid  for  more  than  one  year, 
or  on  which  judgment  shall  have  been  recovered  that  shall  have  remained  for 
more  than  two  years  unsatisfied,  and  on  which  no  interest  shall  have  been 
paid  during  that  period. 

******** 

Sec.  27. — All  losses  sustained  by  any  corporation  or  banker  subject  to  this 
chapter,  in  excess  of  its  undivided  profits  then  realized  and  possessed,  shall  be 
charged  as  a  reduction  of  its  capital  stock,  and  no  dividend  shall  thereafter  be 
made  on  its  snares  of  stock  until  the  deficit  of  capital  so  created  shall  be  made 
good. 

******** 

Sec.  29. — Any  corporation  or  banker  to  which  this  chapter  is  applicable  may 
make  application  to  the  superintendent  of  banks  for  leave  to  change  its  place 
of  business  to  another  place  in  the  same  or  another  county.  If  the  proposed 
place  is  within  the  limits  of  the  town,  village  or  city  in  which  the  business  is 
i  ai Tied  on,  such  change  may  be  made  upon  the  written  approval  of  the  super- 
intendent ;  if  beyond  such  limits,  notice  of  intention  to  make  such  application, 
signed  by  the  two  principal  officers  of  the  corporation  or  individual  bankers, 
shall  be  published  once  a  week  for  two  weeks  in  a  newspaper  published  in  the 
ij  Albany  and  in  a  newspaper  published  in  the  county  in  which  such  place 
m  1  lo<  ated,  to  be  designated  by  the  superintendent  of  banks.  The 
application  shall  State  the  reasons  for  such  proposed  change,  and  be  signed  by  a 
majority  of  the  board  of  directors  of  Hie  corporation  and  (except  in  the  case  of 
corporations  enumerated  in  Articles  5  and  oof  this  chapter,  and  by  Chapter 
\22  of  the  laws  of  [8<I,  and  bv  Chapter  705  of  the  laws  of  iK()j)  be  accompanied 
by  Mr  w  1  ittenassenl  thereto  oi  at  least  two-thirds  in  amount  of  the  stockholders 

I  1  11  all'  hi  01    l>v  llif  banker. 

[f  the    uperintendeni  shall  be  satisfied  that  there  is  no  reasonable  objection 

hang  of  lo<  ation  he  shall  make  a  certificate  authorizing  such  change, 

which    hall  be  filed  in  the  office  of  tin-  superintendent,  and  a  certified  copy 

thereol  with  the  clerk  oi  the  county  in  which  the  place  of  business  of  the  cor- 

located,  and  with  the  clerk  of  the  county  to  which  its 

ol  ^1  in'     1  is  changed,  if  in  another  county,  and  published  once  in  each 


GENERAL   LEGISLATION.  813 

week  for  two  successive  weeks  in  the  newspapers  in  which  the  notice  of 
application  was  published. 

When  the  requirements  of  this  section  shall  have  been  fully  complied  with, 
the  corporation  or  banker  may,  upon  or  after  the  day  specified  in  the  certificate, 

remove  its  property  and  effects  to  the  location  designated  in  the  certificate; 
and  thereafter  its  sole  business  location  shall  be  the  location  so  specified  ;  and 
it  shall  have  all  the  rights  and  powers  in  such  new  location  to  which  it  was 
entitled  at  its  former  location  ;  but  no  such  change  of  location  shall  in  any 
manner  lessen  or  impair  any  liability  of  the  corporation  or  banker  incurred 
or  existing  at  the  time  such  change  was  made. 

*Sec.  30. — No  corporation  to  which  this  chapter  is  applicable  shall  be  incorpo- 
rated hereunder,  or  transact  any  business  in  this. state  other  than  such  as  relates 
to  its  formation,  without  the  written  approval  of  the  superintendent  of  banks 
and  without  his  written  certificate  stating  that  it  has  complied  with  the 
provisions  of  this  chapter  and  with  all  the  requirements  of  law,  and  that  it  is 
authorized  to  transact  within  this  state  the  business  specified  therein,  and  that 
such  business  can  be  safely  intrusted  to  it  ;  which  certificate  shall  be  recorded 
in  the  office  of  the  superintendent  in  a  book  to  be  kept  by  him  for  that  pur- 
pose, and  a  certified  copy  thereof  filed  in  the  office  of  the  clerk  of  the  county 
where  the  corporation  is  to  have  its  principal  business  office. 

Sec  31. — No  foreign  corporation  incorporated  for  the  purpose  of  carrying  on 
the  business  specified  in  articles  5,  6  and  7  of  this  chapter  shall  transact  busi- 
ness in  this  state  without  the  written  permission  of  the  superintendent  of  banks, 
and  a  written  certificate  from  him  stating  that  such  corporation  has  complied 
with  all  of  the  provisions  of  this  chapter  applicable  to  it,  and  with  all  the  re- 
quirements of  law,  and  that  it  is  authorized  to  transact  the  business  within 
this  state  specified  therein,  and  that  such  business  may  safely  be  intrusted  to 
it.  Such  permission  and  certificate  shall  continue  in  force  only  for  the  period 
of  one  year  from  the  date  thereof,  but  may  be  renewed  by  the  superintendent 
from  time  to  time  for  a  like  period  if  satisfied  that  the  corporation  has  com- 
plied with  all  of  the  provisions  of  this  chapter,  and  with  the  requirements  of 
law  and  that  such  business  can  be  safely  intrusted  to  it. 

Sec.  32. — No  foreign  corporation,  company  or  association  to  which  this 
chapter  is  applicable,  shall  transact  any  business  in  this  state  until  it  has  ex- 
ecuted and  filed  with  the  superintendent  of  banks  a  written  instrument  ap- 
pointing such  superintendent  its  true  and  lawful  attorney,  upon  whom  all 
process  in  any  action  or  proceeding  by  any  resident  of  the  state  against  it 
may  be  served  with  the  same  effect  as  if  it  existed  in  this  state  and  had  been 
lawfully  served  with  process  therein.  Service  in  favor  of  a  resident  of  this  state 
upon  such  attorney  shall  be  deemed  a  personal  service  upon  such  corporation, 
company  or  association.  The  superintendent  of  banks  shall  forthwith  for- 
ward a  copy  of  every  process,  served  upon  him  under  the  provisions  of  this 
section  by  mail,  prepared  (prepaid)  and  directed  to  the  secretary  of  such 
corporation,  company  or  association  at  its  last  known  postoffice  address. 
For  each  copy  of  process  the  superintendent  shall  collect  the  sum  of  two  dol- 
lars, which  shall  be  paid  by  the  plaintiff  or  moving  party  at  the  time  of  such 
service,  to  be  recovered  by  him  as  a  part  of  his  taxable  disbursements  if  he 
succeeds  in  the  suit  or  proceeding.  The  term  process  in  this  section  includes 
any  writ,  summons,  petition  or  order  whereby  any  suit,  action  or  proceeding 
shall  be  commenced  by  a  resident  of  the  state. 

Sec.  34. — Any  two  or  more  corporations,  other  than  savings  banks,  organ- 
ized under  any  one  article  of  this  chapter,  or  organized  under  laws  of  this  si  ate 
for  the  purposes,  or  either  of  them,  mentioned  in  any  one  article  of  this  chap- 
ter, are  hereby  authorized  to  merge  one  or  more  of  said  corporations  into  an- 
other in  the  manner  following  :  The  respective  boards  of  directors  of  such 
corporations  may  enter  into  and  make  an  agreement,  under  their  respective 
corporate  seals,  for  the  merger  of  one  or  more  of  said  corporations  into  an- 
other of  them,  prescribing  the  terms  and  conditions  thereof  and  the  mode  of 
carrying  the  same  into  effect,  which  agreement  shall  be  subject  to  the  ap- 
proval of  the  superintendent  of  banks. 

Sec  35. — Such  agreement  shall  be  submitted  to  the  stockholders  of  each 
of  such  corporations  at  a  meeting  thereof  to  be  called  upon  notice  of  at  least 
two  weeks,  specifying  the  time,  place  and  object  thereof,  addressed  to  each 
stockholder  at  his  last  known  postoffice  address  and  deposited  in  the  post- 
office,  postage  prepaid,  and  published  for  at  least  two  succe^ive  weeks  in  one 
of  the  newspapers  in  each  of  the  counties  el"  this  state  in  which  either  of  such 
corporations  shall  have  its  principal  place  of  business,  and  if  such  agreement 
shall  be  approved  at  each  of  such  meetings  of  the  respective  stockholders  sepa- 


814  APPENDIX    IV. 

rately  by  the  vote  or  ballot  of  the  stockholders  owning  at  least  two-thirds  of  the 
stock,  the  same  shall  be  the  agreement  of  such  corporations.  A  sworn  copy  of 
the  proceedings  of  such  meetings,  made  by  the  secretaries  thereof,  res  ectively, 
shall  be  presumptive  evidence  of  the  holding  and  action  of  such  meetings. 
Such  agreement  and  verified  copy  of  proceedings  of  such  meetings  shah  be 
made  in  duplicate  and  tiled  in  the  office  of  the  superintendent  of  banks  and  in 
the  office  of  the  clerk  of  the  county  in  which  the  principal  place  of  business  of 
the  corporation  into  which  such  corporation  or  corporations  shall  be  merged 
is  located,  and  thereupon  such  corporations  shall  be  merged  as  specified  in 
such  agreement,  and  the  provisions  of  such  agreement  shall  be  carried  into 
effect  as  therein  provided  ;  and  it  shall  be  lawful  for  said  corporation  into  which 
the  others  shall  have  been  merged  to  require  the  return  of  the  original  cer- 
tificate of  stock  held  by  each  stockholder  in  each  or  either  of  the  com  anies, 
and  in  lieu  thereof  to  issue  new  certificates  for  such  number  of  shares  of  its 
own  stock  as  under  the  agreement  of  merger  the  said  stockholder  may  be 
entitled  to  receive. 

Sec.  36. — If  any  stockholder  not  voting  in  favor  of  such  agreement  of 
merger  shall,  at  such  meeting  or  within  twenty  days  thereafter,  object  to  such 
merger  and  demand  payment  for  his  stock,  or  in  the  case  of  building  and 
mutual  loan  associations  or  co-operative  loan  associations,  if  such  stockholder 
be  a  borrower,  liquidation  of  his  indebtedness  and  cancellation  of  his  stock, 
such  stockholder,  if  the  merger  takes  effect  at  any  time  thereafter,  may,  at 
any  time  within  sixty  days  after  such  merger,  apply  to  the  supreme  court  at 
any  special  term  thereof  held  in  the  district  in  which  the  county  is  situated 
in  which  such  corporation  into  which  the  other  or  others  may  be  merged 
may  have  its  principal  place  of  business,  upon  at  least  eight  days'  notice  to 
said  corporation,  for  the  appointment  of  three  persons  to  appraise  the  value 
of  his  stock,  or  the  amount  of  said  indebtedness,  if  any,  and  the  court  shall 
appoint  such  appraisers  and  designate  the  time  and  place  of  their  Inst  meet- 
ing, with  such  directions  in  regard  to  their  proceedings  as  shall  be  ceemed 
proper,  and  also  direct  the  time  and  manner  in  which  payment  of  Mich  stock 
to  such  stockholder  or  liquidation  of  such  indebtedness  by  him  and  cancella- 
tion of  his  stock  shall  be  made.  The  court  may  fill  any  vacancies  in  the  board 
of  appraisers  occurring  by  refusal  or  neglect  to  hold  such  office.  The  ap- 
praisers shall  meet  at  the  time  and  place  designated  and  after  being  duly 
sworn  shall  honestly  and  faithfully  discharge  their  duties  and  estimate  and 
certify  the  value  of  such  stock,  an  1  the  amount  of  such  indebtedness,  if  any, 
at  the  time  of  such  decision,  and  deliver  one  copy  to  such  corporation  and 
another  to  such  stockholder  if  demanded  ;  the  charges  and  expenses  of  the 
appraisers  shall  be  paid  by  the  corporation.  When  the  corporation  shall 
have  paid  the  appraised  value  of  such  stock,  or  if  such  stockholder  be  a  bor- 
rower as  aforesaid  when  he  shall  have  paid  the  amount  of  his  indebtedness 
as  fixed  by  such  appraisal,  as  directed  by  the  court,  said  stock  shall  be  can- 
celled and  such  stockholder  shall  cease  to  be  a  member  of  said  corporation  or 
to  have  any  interest  in  such  stock  and  in  the  corporate  property,  and  such 
stock  may  be  held  and  disposed  of  by  the  corporation  for  its  own  benefit  ;  and 
if  such  stockholder  be  a  borrower  as  aforesaid,  proper  instruments  of  acquit- 
tance shall  be  duly  executed  and  delivered  to  him  by  the  cor- oration  and 
thereupon  he  shall  be  discharged  from  all  further  liability  to  the  corporation. 

Si  1  $7,  —Upon  the  merger  of  any  corporation  in  the  manner  herein  pro- 
vided, all  and  singular  the  rights,  franchises  and  interests  of  the  said  corpora- 
tion so  merged  in  and  to  every  species  of  property,  real,  personal  and  mixed, 
and  things  in  action  thereunto  belonging,  shall  be  deemed  to  be  transferred 
led  in  such  corporation  into  which  it  has  been  merged,  without  any 
!  or  transfer  and  said  last  named  corporation  shall  hold  and  enjoy 
Hi'-  ame  and  all  rights  of  property,  franchises  and  interest  in  the  same  man- 
nei  and  to  the  same  extent  as  if  the  said  corporation  so  merged  should  have 
mi  thetitleand  transact  the  businessof  such  cornoration; 
and  tin:  Mile  and  nal  <  tate  .i.  1 1  uired  by  the  said  corporation  so  merged  shall 
nol    be   deemed    to   revert  by  means  of  such  merger   or  anything   relating 

18.  -Tli'-  rightsof  creditors  of  any  corporation  that  shall  be  so  merged 
shall  nol  in  any  manm  1  l»-  impaired  In-  any  such  merger,  nor  shall  any  liabil- 
0  1  foi  the  payment  ol  any  money  due  or  to  become  due,  or  any 
claim  01  demand,  in  any  manner,  or  for  any  cause  existing  against  Mich  cor- 
poration, 01  again  t  any  stockholder  thereof,  be  in  any  manner  released  or 
impaired,  bul  m  h  <  on  oration  into  "  hii  h  the  othei  01  others  sha'l  be  merged 
1  obligation  and  liabilities  and  be  he'd  liable  to  av  and 
di  chargi  all    uch  debts  and  liabilities  of  the  merged  corporation  in  the  same 


GENERAL   LEGISLATION.  815 

manner  as  if  such  corporation  into  which  the  other  shall  become  merged  had 
itself  incurred  the  obligation  or  liability,  and  the  stockholders  of  the  respect- 
ive corporations  so  entering  into  such  agreement  shall  continue  subject  to  all 
the  liabilities,  claims  and  demands  existing  against  them  as  such  at  or  before 
such  merger,  and  no  suit,  action  or  other  proceeding  then  pending  before  any 
court  or  tribunal  in  which  any  corporation  that  may  be  merged  is  a  party 
shall  be  deemed  tohaveabated  or  discontinued  by  reason  of  any  such  merger, 
but  the  same  may  be  prosecuted  to  final  judgment  in  the  same  manner  as  if 
the  said  corporation  had  not  entered  into  the  said  agreement,  01  thi  said  last 
named  corporation  may  be  substituted  in  the  place  of  any  corporation  so 
merged  as  aforesaid,  by  order  of  the  court  in  which  such  action,  suit  or  pro- 
ceeding may  be  pending. 

REVISED  STATUTES  (9th  ed.),  1896,  p.  1108. 

ARTICLE  V. 

Section'  170. — Any  fifteen  or  more  persons  of  full  age,  and  residents  of  state 
of  New  York,  may  form  an  association  as  provided  in  this  act.  All  associa- 
tions formed  under  the  provisions  hereof  shall  be  known  as  co-O]  erative 
savings  and  loan  associations  ;  and  the  name  of  every  association  so  formed 
shall  contain  as  a  part  thereof  the  words  "co-operative  savings  and  loan  asso- 
ciation." 

Sec.  171. — The  object  and  purpose  of  such  association  shall  be  to  encourage 
industry,  frugality,  home-building  and  savings  among  its  members  ;  the  ac- 
cumulation of  savings,  the  loaning  of  such  accumulations  to  its  members  and 
the  repayment  to  each  member  of  his  savings  when  they  have  accumulated 
to  a  certain  sum,  or  at  any  time  when  he  shall  desire  the  same,  or  the  asso- 
ciation shall  desire  to  repay  the  same. 

Sec  172. — Said  association  shall  become  incorporated  by  the  said  fifteen  or 
more  persons  making,  signing  and  acknowledging,  in  the  manner  and  form 
prescribed  for  the  acknowledgment  of  deeds  in  this  state,  a  certificate,  \\  Ik  1  e- 
m  shall  be  stated  the  name  of  said  association  ;  that  the  association  is  formed 
under  and  for  the  purpose  prescribed  in  this  act  ;  the  town,  village  or  city 
where  the  association  is  located  within  this  state.  When  made  as  aforesaid 
said  certificate  shall  be  filed  and  recorded  in  the  office  of  the  superintendent 
of  banks,  and  upon  said  certificate  being  so  filed  and  recorded,  the  super- 
intendent of  banks  shall,  upon  the  payment  of  a  fee  of  one  dollar  therefor, 
issue  a  certificate,  in  proper  and  suitable  form,  declaring  the  facts  contained 
in  said  original  certificate,  and  the  filing  and  recording  thereof  in  his  office, 
and  which  latter  certificate  shall  thereupon  be  recorded  in  the  county  clerk's 
office  of  the  county  where  said  association  is  located  ;  and  upon  the  same 
being  recorded,  the  persons  named  in  the  certificate  first  above  mentioned, 
their  associates  and  successors,  shall  become  a  corporate  body,  with  power  to 
adort  by-laws  relating  to  the  manner  of  conducting  their  business  not  incon- 
sistent with  the  provisions  of  this  act.  A  copy  of  which  by-laws  and  all  sub- 
sequent amendments  thereof  shall  be  filed  with  the  superintendent  of  banks 
within  thirty  days  of  their  adoption. 

Sec.  173. — The  officers  of  the  association  shall  consist  of  a  board  of  direc- 
tors of  not  less  than  thirteen  members,  including  therein  a  president,  vice- 
president,  secretary  and  treasurer.  Said  last  named  officers  shall  be  elected 
annually  by  the  shareholders,  or  by  and  from  the  board  of  directors,  and  the 
other  members  of  the  board,  or  not  less  than  one-third  thereof,  shall  be 
elected  annually,  as  the  by-laws  shall  determine.  Other  officers  may  be  author- 
ized by  the  by-laws,  subject  to  the  restrictions  hereinafter  contained.  The 
duties  and  compensations  of  the  officers,  their  terms  of  office,  the  time  1  f  their 
election,  the  manner  of  filling  vacancies,  the  time  of  the  periodical  meetings 
of  the  officers  and  shareholders,  the  manner  of  calling  special  meetings,  and 
the  manner  of  voting,  shall  be  determined  by  the  by-laws,  except  that  the  board 
of  directors  shall  fix  each  year  the  compensation"  of  the  secretary  and  treas- 
urer, unless  otherwise  determined  by  the  by-laws  ;  and  provided,  further,  that 
no  officer,  agent  or  other  person  shall  receive  compensation  by  salary,  lees,  ex- 
penses or  otherwise  for  soliciting  the  sale  of  shares  of  the  association  ti  1  any 
person  or  persons.  All  officers  named  in  this  act  shall  hold  office  until  their 
successors  are  duly  elected  and  assume  the  duties  of  their  offices.  No  asso- 
ciation shall  expire  from  neglect  to  elect  officers  at  the  time  prescribed  in  its 
by-laws. 

Sec.  174. — The  capital  of  said  association  shall  consist  of  the  accumulated 
savings  of  its  members  which  it  holds,  and  shall  be  divided  into  shares  of  a 


816  APPENDIX   IV. 

matured  value  not  less  than  fifty  dollars  nor  more  than  two  hundred  and  fifty- 
dollars,  as  shall  be  fixed  by  the  by-laws.  The  shares  shall  be  issued  in 
series,  or  at  any  time,  as  the  by-laws  shall  determine.  No  shares  of  a  prior 
series  shall  be  issued  after  the  issuing  of  shares  in  a  new  series  when  issued 
upon  the  serial  plan,  except  additional  shares  to  a  borrowing  member  to  com- 
plete a  loan.  Shares  which  have  not  been  pledged  as  a  security  for  the  pay- 
ment of  a  loan  shall  be  called  "  free  shares."  Shares  that  have  been  so  pledged 
shall  be  called  "pledged  shares."  Each  association  shall  determine  by  its 
by-laws  the  number  of  shares  that  may  be  held  by  one  person. 

Sec.  175. — Regular  payments  made  to  the  association  upon  shares  shall  be 
called  "  dues."  At  or  before  each  stated  meeting  of  the  board  of  directors,  or  at 
any  stated  meeting  for  receiving  dues,  each  shareholder  shall  pay  to  the  board, 
or  a  committee  thereof,  or  some  officer  ot  the  association,  as  designated  by  the 
by-laws,  upon  each  share  held  by  him,  such  amount  of  dues  as  the  by-laws  re- 
quire until  the  share  of  stock  reaches  its  matured  value,  or  is  withdrawn, 
cancelled  or  forfeited.  Payment  of  dues  on  shares  in  each  series  shall  com- 
mence from  the  time  that  shares  began  to  be  issued  in  such  series,  when 
issued  upon  the  serial  plan,  and,  when  not  issued  in  series,  from  the  date  of 
issuing.  The  association  shall  have  the  power  to  impose  and  collect  a  fine 
from  each  shareholder  for  every  neglect  or  refusal  to  make  his  payment  of 
dues,  interest  or  premiums  when  due,  in  such  sums  and  in  such  manner  as  its 
by-laws  determine.  The  association  shall  also  have  power  to  charge  an  en- 
trance fee  upon  each  share  issued,  not  exceeding  twenty-five  cents  on  each 
share,  or,  in  lieu  thereof,  a  membership  fee  not  exceeding  one  dollar.  Pay- 
ments of  dues,  interest  or  premium  may  be  made  in  advance,  but  no  associa- 
tion shall  allow  interest  on  such  advance  payments  at  a  greater  rate  than  six 
per  centum  per  annum,  nor  for  a  longer  period  than  one  year. 

Sec.  176. — The  accumulations  upon  free  shares  may  be  withdrawn,  and  the 
shares  cancelled,  after  one  month's  written  notice  of  such  intention,  filed  with 
the  secretary  at  or  before  a  stated  meeting  of  the  board,  but  the  directors  may 
waive  such  one  month's  notice.  If  filed  before  such  meeting  the  one  month's 
notice  shall  not  be  deemed  to  have  commenced  until  the  first  regular  meeting 
after  the  filing  The  withdrawing  shareholder  shall  be  paid  the  amount  of 
the  withdrawal  value  of  his  accumulations,  as  determined  under  the  by-laws 
at  the  last  distribution  of  profits  before  the  notice  of  withdrawal,  together  with 
all  dues  paid  since  such  distribution,  and  with  or  without  such  interest  on  the 
value  of  the  shares  at  the  time  of  the  last  distribution,  and  on  the  dues  there- 
after paid,  as  the  by-laws  shall  determine,  less  any  fines  unpaid  and  a  propor- 
tionate share  of  any  unadjusted  loss  ;  Ptovided,  that  at  no  time  shall  more  than 
one-half  the  receipts  of  the  association,  and  when  the  association  is  indebted 
upon  matured  shares  no  more  than  one-third,  shall  be  applicable  to  the  pay- 
ment of  withdrawing  shareholders,  without  the  consent  of  the  board  of  direc- 
tors ;  and  when  the  demands  of  the  withdrawing  shareholders  exceed  the 
money  applicable  to  their  payment,  they  shall  be  paid  in  the  order  in  which 
their  notices  of  withdrawal  were  filed  with  the  secretary.  The  board  of  direc- 
toi  -  may,  at  their  discretion,  under  rules  made  by  them,  retire  the  free  shares 
at  any  time  alter  four  years  from  the  date  of  their  issue,  by  enforcing  withdraw- 
als of  the  ^aiiie  ;  Provided,  that  the  shareholders,  whose  shares  are  to  be  re- 
tired, shall  be  determined  by  lot,  and  that  they  shall  be  paid  the  full  value  of 
their  shares,  less  all  fines  and  proportionate  part  of  any  unadjusted  loss. 

SEi  .  177. — When  each  free  share  reaches  its  matured  value  all  payments  of 

'hereon  sh.ill  cease,  and  the  holder  thereof  shall  be  paid  out  of  the  funds 

of  the  association,  the  matured  value  thereof  with  such  rate  of  interest  as  shall 

bedetermined  by  the  by-laws,  from  the  time  the  board  of  directors  shall  de- 

1  have  matured  until  paid  ;  but  at  no  time  shall  more  than 

hirdofthe  receipts  of  the  association   be  applicable  to  the  payment  of 

mi'  in  '1  shares,  without  the  consent  of  the  board  of  directors.    The  order  of 

:  the  matured  shares  shall  be  determined  by  the  by-laws. 

Sec.  r78  A.I  each  stated  meeting  of  the  board  or  a  committee  thereof,  or 
othei  as  fixed  by  the  by-laws  for  the  purpose  of  making  loans, they  shall 

bers  of  the  association  desiring  to  borrow  all  accumulations  ap- 
plicable to  thai  1  hi  po  e;  the  '.uiir  shall  be  loaned  in  sums  corresponding 
with  ili'-  value  of  a  matured  share,  or  a  multiple  thereof  or  the  fractional  part 

eof.     11  there  shall  be  re  than  "in-  member  desiring  to  borrow,  the 

ri j^ht  to  a  loan  shall  be  determined  by  the  open  bidding  of  a  premium  upon 
lans  following,  which  each  association  shall  determine  for 
lav    .  namely  : 
The  I  I  hi,"  with  or  without  "rebates,"  as  the  by-laws  shall  deter- 

mine ;  that  is,  the  premium  shall  be  bid  in  the  form  of  a  certain  sum  per 


GENERAL  LEGISLATION.  817 

share,  which  shall  be  paid  in  cash  or  deducted  from  the  loan  made  to  the  suc- 
cessful bidder. 

2.  The  "  instalment  plan,"  that  is,  the  premium  shall  be  bid  in  the  form  of  a 
certain  sum  per  share,  which  the  successful  bidder  will  pay  at  each  regular 
payment  of  interest,  in  addition  to  the  interest  which  the  association  requires 
during  the  continuance  of  his  loan. 

3.  The  "premium  interest  plan  ;"  that  is,  the  premium  shall  be  bid  in  the 
form  of  the  rate  of  interest  the  successful  bidder  will  pay  upon  his  loan  during 
the  continuance  thereof  ;  the  association  in  this  plan  shall  determine  the 
minimum  rate  of  interest  at  which  the  bidding  shall  begin.  But  such 
minimum  the  rate  shall  not  exceed  the  legal  rate  of  interest. 

In  all  these  plans  the  member  bidding  the  highest  premium  shall  be  entitled 
to  the  loan  upon  giving  the  security  required  therefor,  including  the  interest 
and  premium  ;  the  interest  and  premiums  shall  be  payable  from  the  date  of 
bidding  off  the  loan,  unless  otherwise  ordered  by  the  by-laws,  and  in  case  the 
sale  takes  place  at  an  adjourned  or  special  meeting,  the  same  shall  be  payable 
from  the  last  preceding  regular  meeting  for  the  loaning  of  money  unless  the 
by-laws  otherwise  provide.  Requiring  and  receiving  such  interest  and 
premiums  or  any  other  moneys  which  the  association  may  require  under  the 
provisions  of  this  act,  shall  not  be  deemed  a  violation  of  the  usury  law.  No 
member  or  members  shall  borrow  a  larger  sum  than  shall  be  equal  to  the 
matured  value  of  the  shares  held  by  him  or  them,  nor  shall  the  association 
take  security  upon  real  estate  located  more  than  fifty  miles  from  their 
principal  office  for  the  transaction  of  their  business.  A  borrowing  member 
for  each  share  or  fractional  part  thereof  borrowed  upon,  shall  in  addition  to  the 
dues  on  his  shares  pay  interest  and  premium,  if  any,  on  his  loan  at  such  times 
as  the  by-laws  shall  prescribe,  until  the  shares  borrowed  upon  shall  reach 
their  matured  value  or  the  loan  is  repaid  ;  and  when  such  matured  value  is 
reached  the  shares  shall  cancel  the  loan  upon  them  and  the  proper  surrenders 
and  acquittances  be  made. 

Sec.  179. — For  every  loan  made,  except  as  hereinafter  provided  in  this  sec- 
tion, a  bond  secured  by  a  first  mortgage  on  real  estate,  or  a  second  mortgage 
when  the  first  mortgage  was  given  to  and  is  held  by  the  association,  or  when 
said  second  mortgage  is  given  in  a  sum  sufficient  to  cover  any  first  mortgage 
that  may  be  a  lien  on  the  property  in  addition  to  the  sum  advanced  by  the  asso- 
ciation, shall  be  given,  accompanied  by  a  transfer  and  pledge  to  the  association 
of  the  shares  borrowed  upon  and  all  accumulations  that  have  or  shall  accrue 
thereon,  as  collateral  security  for  the  repayment  of  the  loan  ;  or,  in  lieu  of 
the  mortgage,  the  borrower,  or  another,  may  transfer  and  pledge  to  the  asso- 
ciation for  the  payment  of  the  loan,  free  shares,  the  withdrawal  value  of 
which  under  the  by-laws  at  the  time  of  such  borrowing  shall  exceed  the 
amount  borrowed  and  interest  thereon  for  six  months,  and  all  fines  that  could 
accrue  in  case  the  borrower  should  default  in  the  payment  of  the  dues  upon 
the  shares  borrowed  upon,  but  an  association  may  provide  by  its  by-laws  that 
it  will  not  make  stock  loans.  If  the  borrower  neglects  to  offer  security  satis- 
factory to  the  board  of  directors,  within  the  time  provided  by  the  by-laws,  his 
right  to  the  loan  shall  be  forfeited  and  he  shall  be  charged  with  interest  and 
premium,  if  any,  for  one  month,  and  all  necessary  expenses  incurred,  if  any, 
under  the  by-laws  in  reference  to  the  proposed  loan.  All  bonds  and  mort- 
gages given  to  the  association  shall  be  deemed  conditioned  upon  the  perform- 
ance of  the  provisions  of  this  act  relating  to  the  payment  of  loans,  premiums, 
interest  and  fines  thereon,  and  the  by-laws  of  the"  association,  although  the 
same  may  not  be  fully  expressed  therein.  A  borrower  may  repay  a  loan,  and 
all  arrears  of  interest,  premium,  if  an}',  and  fines  thereon  (or  one  or  more 
shares  thereof),  at  any  stated  meeting  or  at  anytime  (but  the  by-laws  may 
otherwise  provide)  ;  when  not  made  at  a  stated  meeting,  he  shall  pay  interest 
up  to  the  first  stated  meeting  after  such  payment,  or  he  may,  by  a  proper 
notice,  and  directions  as  to  the  application,  have  the  withdrawal  or  holding 
value  of  the  shares  borrowed  upon,  applied  in  payment  or  part  payment,  as 
the  by-laws  shall  determine.  Should  there  at  any  time  be  money  in  the 
treasury  not  called  for  by  the  borrowing  or  withdrawing  members,  the  board 
of  directors  may  make  temporary  loans  to  members  out  of  the  same,  at  such 
rate  of  interest  not  exceeding  six  per  cent.,  and  under  such  provisions  and 
restrictions  as  the  by-laws  may  prescribe.  Such  temporary  loans  shall  not 
run  more  than  ninety  days  and  shall  be  secured  by  the  personal  note  of  the 
borrower,  and  also  by  a  pledge  of  shares  to  the  association,  the  withdrawal 
value  of  which  shares  shall  be  at  least  ten  per  centum  more  than  the  amount 
of  the  loan  and  the  interest  thereon  to  its  maturity.  It  at  any  time  there  is 
money  in  the  treasury  as  above  in  excess  of  the  amount  needed  to  meet  the 


818  APPENDIX   IV. 

demand  for  such  temporary  loans,  it  may  be  invested  in  the  same  kind  of  securi- 
ties and  under  the  same  restrictions  as  allowed  to  savings  banks  by  section 
116  of  this  chapter. 

Sec.  180. — Whenever  any  member  shall  be  six  months  in  arrears  in  the 
payment  of  his  dues  upon  free  shares,  the  secretary  shall  give  him  notice 
thereof  in  writing,  and  a  statement  of  his  arrearages  by  mailing  the  same  to 
him  at  the  last  postoffice  address  given  by  him  to  the  association,  and  if  he 
shall  not  pay  the  same  within  two  months  thereafter,  the  board  of  directors 
may,  at  their  option,  declare  his  shares  forfeited  ;  and  at  the  time  of  such 
forfeiture  the  withdrawal  value  thereof  shall  be  determined  and  stated,  and 
the  defaulting  member  shall  be  entitled  to  withdraw  the  same  without  interest, 
within  one  year,  upon  such  notice  as  shall  be  required  of  a  withdrawing 
shareholder,  and  upon  failure  to  so  withdraw  the  same,  then,  and  in  that  case, 
it  may  revert  to  the  association. 

Sec.  181. — Whenever  a  borrowing  shareholder  shall  be  in  arrears  in  the 
payment  of  his  dues,  interest  or  premium  two  months,  the  whole  loan  shall 
become  due  at  the  option  of  the  board  of  directors,  and  they  may  proceed  to 
enforce  collection  upon  the  securities  held  by  the  association.  The  with- 
drawal value  at  the  time  of  the  commencement  of  the  action,  of  all  shares 
pledged  as  collateral  security  for  the  loan,  shall  be  applied  upon  the  loan  and 
arrearages  of  interest,  premium  and  fines  thereon,  and  the  shares  deemed  sur- 
rendered to  the  association. 

Sec.  182. — Any  association  may  purchase  at  any  sale,  public  or  *  judg- 
ment, lien  or  other  incumbrance,  or  in  which  it  may  have  an  interest ;  and 
may  sell,  convey,  lease  or  mortgage  the  same  at  pleasure  to  any  person  or 
persons  :  it  may  also  hold  and  own  real  estate  for  the  purpose  of  occupying 
the  same  with  its  own  business  office. 

Sec.  183. — Any  association  organized  in  pursuance  of  the  provisions  of  this 
act  may  borrow  money  for  the  purpose  of  making  loans  or  paying  with- 
drawals, not  exceeding,  however,  two  thousand  dollars,  so  long  as  its  accu- 
mulated capital  shall  not  exceed  twenty  thousand  dollars,  and  when  its 
accumulated  capital  exceeds  that  sum,  not  exceeding  ten  per  cent,  thereof. 
No  money  borrowed  shall  be  for  a  longer  term  than  one  year.  Any  asso- 
ciation having  a  surplus  in  its  treasury  for  which  there  is  no  demand  for 
loans,  withdrawing  stockholders,  matured  or  paid-up  stock,  may  loan  the 
same  to  another  association,  organized  under  the  provisions  of  this  act,  sub- 
ject to  the  provisions  of  this  section,  on  the  part  of  the  borrowing  associa- 
tion. No  association  shall  borrow  or  make  loans  in  this  section  authorized, 
except  by  a  majority  vote  of  all  the  members  of  its  board  of  directors.  The 
vote  to  be  recorded  by  ayes  and  nays  in  its  regular  minutes. 

Sec.  184. — Profits  and  losses  shall  be  ascertained  at  least  annually,  and  shall 
be  distributed  to  all  shares  outstanding  at  the  time  of  such  distribution,  in  the 
manner  provided  by  the  by-laws  of  the  association.  At  each  periodical  dis- 
tribution of  profits,  the  board  of  directors  may  reserve  and  carry  as  undivided 
profits,  in  the  nature  of  a  contingent  fund,  any  sum  from  the  net  profits  that 
m  their  discretion  seems  wise. 

Sec.  185. — No  transfer  of  shares  shall  be  binding  upon  the  association  until 
the  same  have  been  made  upon  the  books  of  the  association  ;  and  the  trans- 
feree thereof  shall  take  the  same  charged  with  all  the  liabilities  and  condi- 
tions attaching  thereto  in  the  hands  of  the  one  transferring  the  same.  The 
association  may  require  a  "  transfer  fee,"  not  exceeding  twenty-five  cents  per 
share,  or,  in  lieu  thereof,  a  total  fee  not  exceeding  one  dollar  on  each  transfer. 

Six.  [86. — The  board  of  directors  shall  have  the  power  to  appoint  and 
remove,  at  pleasure,  an  attornev-at-law  for  the  association.  The  by-laws  of 
the  association  may  provide  for  the  election  of  auditors,  and  prescribe  their 
duties  and  compensation,  and  shall  provide  in  what  manner  the  by-laws  them- 
selves may  be  amended.  At  the  time  of  the  adoption  of  by-laws  on  the  forma- 
tion of  an  association,  only  those  members  who  have  joined  in  the  certificate 
of  incorporation  are  entitled  to  vote,  and  each  incorporator  shall  have  only 
ote, 

SEC,  [87. — Any  person  of  full  age  and  sound  mind  may  become  a  member 
of  the  1  01  iation  by  taking  one  or  more  shares  therein  and  subscribing  to 
the  bv  laws,  and  annexing  to  his  signature  his  postoffice  address  ;  and  when- 
liis  postoffice  address  changed  he  shall  give  written  notice 
thereof  to  the  secretary  of  the  association  ;  and  for  the  purpose  of  giving  any 
member  notice,   by  mail,  tin-  last   postoffice  address  given  by  him  shall  be 


liginal  :  "private,  any  real  estate  upon  which  it  may  have   a   mortgage,"  omitted  by 
lake. 


GENERAL   LEGISLATION.  819 

deemed  the  proper  one.  A  minor  may  hold  shares  in  the  name  of  a  parent, 
guardian  or  next  friend,  as  trustee  for  him,  but  the  association  shall  not  be 
responsible  to  said  infant  for  any  moneys  received  by  said  trustees  on  account 
of  said  shares  from  the  association.  All  accumulations  upon  shares  in  said 
association  held  by  any  person  shall  be  exempt  from  execution  and  proceed- 
ings supplementary  thereto  to  the  amount  of  six  hundred  dollars  ;  and  the 
association  itself  shall  be  deemed  an  institution  for  savings,  and  not  taxable 
under  any  tax  law  which  shall  exempt  savings  banks  or  institutions  for  sav- 
ings from  taxation,  ami  shall  not  be  subject  to  the  provisions  of  Chapter  143 
of  the  laws  of  [886,  nor  shall  any  law  passed  hereafter,  taxing  corporations  in 
any  form,  be  deemed  to  include  associations  formed  under  this  act,  unless 
they  are  specifically  named  in  such  law. 

Sec.  188. — Every  association  organized  under  the  provisions  of  this  act  or 
under  the  provisions  of  Chapter  122  of  the  laws  of  1851  and  the  acts  amenda- 
tory thereof,  or  under  Chapter  $16  of  the  laws  of  1887,^01-  under  Articles  5  and 
6  of  Chapter  6S9  of  the  laws  of  1892,  shall,  annually,  on  or  before  the  thirtieth 
day  of  January,  make  a  full  report  in  writing  of  the  affairs  and  condition  of 
such  corporation  on  the  thirty-first  day  of  December  of  the  next  preceding 
year  to  the  superintendent  of  banks,  in  such  form  and  by  such  officers  of  the 
corporation  as  the  said  superintendent  may  designate.  Every  payment  made 
to  an  officer  or  agent  of  the  association,  by  authority  of  the  association,  or  by 
virtue  of  any  provision  of  its  by-laws  or  articles  of  association,  shall,  for  the 
purposes  of  this  section,  be  deemed  a  payment  to  the  association  and  ac- 
counted for  by  it.  Such  report  shall  be  verified  by  the  oath  of  the  officers 
making  the  same,  and  shall  include  the  receipts  of  such  association  from  all 
sources,  including  membership  or  share  fees,  and  all  other  compensation 
paid  to  officers  or  agents  by  members  or  persons  expecting  to  become  mem- 
bers. Such  report  shall  also  include  all  expenditures  made  by  such  associa- 
tion, and  for  what  purpose  expended.  Every  association  shall  make  any 
further  reports  which  said  superintendent  of  banks  shall  require,  and  in  such 
form  and  as  to  such  matters  relating  to  the  condition  and  conducting  of  the 
business  of  the  association,  as  such  superintendent  shall  designate.  Any  wil- 
ful and  false  swearing  in  making  and  verifying  any  such  report  shall  be 
deemed  perjury. 

Sec.  189. — If  any  such  association  shall  fail  to  furnish  to  the  superintendent 
of  banks  any  report  required  by  this  act  at  the  time  so  required,  it  shall  for- 
feit the  sum  of  ten  dollars  per  day  for  every  day  such  report  shall  be  delayed 
or  withheld  ;  and  the  superintendent  of  banks  may  maintain  an  action  in  his 
name  of  office  to  recover  such  penalty  and  the  same  shall  be  paid  into  the 
treasury  of  the  state,  and  applied  to  the  expense  of  the  said  department  ;  or 
report  the  facts  to  the  attorney-general,  who  may  bring  an  action  for  recovery 
in  the  name  of  the  people  of  the  state  of  New  York  ;  Provided,  however,  that 
the  superintendent  may,  for  good  cause  shown,  extend  the  time  within  which 
such  report  is  to  be  filed  not  exceeding  twenty  days.  He  shall  also  annually 
publish  a  full  report  of  the  condition  of  all  associations  formed  under  the  pro- 
visions of  this  act,  or  under  the  provisions  of  any  act  repealed  by  this  act. 

Sec.  190. — All  associations  organized  under  the  provisions  of  this  act  or 
under  the  acts  specified  in  Section  188  of  this  article,  shall,  at  all  times,  be 
subject  to  visitation  and  examination  by  the  superintendent  of  banks,  his 
deputies  or  duly  authorized  agents  ;  and  he  shall  examine  each  of  said  asso- 
ciations at  least  once  in  each  year.  It  shall  also  be  the  duty  of  said  superin- 
tendent, by  himself,  his  deputies  or  duly  authorized  agents  to  make  examina- 
tion of  the  affairs  of  any  of  said  associations  whenever,  in  the  judgment  or 
discretion  of  said  superintendent,  the  annual  or  any  other  report  made  to 
said  department  as  required  in  this  act  shall,  in  any  manner,  indicate  or  reveal 
that  its  business  is  being  conducted  in  a  manner  not  authorized  by  its  articles 
of  association  or  by-law's  or  by  the  laws  of  the  state  of  New  York  under  which 
it  is  organized  or  in  an  irregular  or  unsafe  manner,  and  when  any  association 
shall  fail  wholly  to  make  the  reports  required  by  the  provisions  of  this  act, 
all  expenses  incurred  in  making  such  examination  or  investigation  herein 
authorized  shall  be  paid  from  the  funds  provided  by  Section  25  of  this  act, 
except  the  annual  examination  herein  provided  for  and  also  excepting  exami- 
nations made  by  reason  of  the  business  being  conducted  in  a  manner  not 
authorized  by  articles  of  association  or  in  violation  of  law  or  in  an  irregular  or 
unsafe  manner  as  hereinbefore  provided  ;  but  no  charge  shall  be  made  there- 
for when  the  examination  is  made  by  said  superintendent  personally  or  bv 
one  of  the  salaried  employees  of  his  department,  except  for  travelling  or  other 
necessary  expenses,  but  when  made  by  some  person  dulv  appointed  bv  said 
superintendent  other  than  a  salaried  "officer  of  his  department,  the  amount 


820  APPENDIX   IV. 

charged  snail  not  exceed  the  sum  of  ten  dollars  per  day  for  the  time  actually 
expended  in  making  the  examination  and  reports  of  same  and  in  getting  to 
and  from  place  of  examination  and  the  actual  necessary  expenses  incurred. 

Sec.  191. — Each  association  shall  at  least  annually  publish  and  deliver  to 
each  shareholder  on  application  a  complete  and  detailed  statement  of  the 
financial  situation  and  the  business  conducted  since  the  issuing  of  its  last 
prior  statement. 

Sec.  192. — Chapter  122  of  the  laws  of  1851,  Chapter  564  of  the  laws  of  1875, 
Chapter  96  of  the  laws  of  1878,  and  Chapter  556  of  the  laws  of  1887,  and  Article 
6  of  Chapter  689  of  the  laws  of  1892  are  hereby  repealed,  except  as  to  associa- 
tions not  organized  under  either  of  said  acts,  but  such  associations  shall  be 
subject  to  the  provisions  of  Sections  188,  189,  190  and  194  of  this  act. 

Sec.  193. — Any  association  now  existing  and  heretofore  incorporated  under 
the  provisions  of  Chapter  122  of  the  laws  of  1851,  and  of  the  acts  amendatory 
thereof,  or  Chapter  556  of  the  laws  of  1887,  and  Articles  5  and  6  of  Chapter  689 
of  the  laws  of  1892,  may  become  entitled  to  the  benefits  of  this  act  and  re-in- 
corporate under  the  provisions  in  the  following  manner  : 

First.  Upon  a  majority  vote  of  all  the  directors  so  requesting,  the  presi- 
dent and  secretary  of  the  association  shall  call  a  special  meeting  of  the  share- 
holders to  consider  and  determine  the  question  whether  the  association  shall 
re-incorporate  under  the  provisions  of  this  act.  Such  notice  shall  specify  the 
object  of  such  meeting,  and  be  mailed,  postage  prepaid,  not  less  than  thirty 
days  prior  to  the  date  fixed  for  the  meeting,  to  every  shareholder  at  his  last 
postoffice  address  known  to  the  association. 

Second.  At  such  meeting  a  majority  vote  of  those  in  attendance  shall 
decide  all  questions  considered  at  the  meeting,  the  vote  being  by  member  or 
by  shares,  according  to  the  rule  already  existing  in  the  association.  The 
meeting  may  be  adjourned  from  time  to  time  if  deemed  advisable. 

Third.  If  the  shareholders  decide  not  to  re-incorporate,  another  meeting 
for  such  purpose  shall  not  be  called  until  one  year  has  passed. 

Fourth.  If  the  shareholders  decide  to  re-incorporate,  they  shall  proceed 
to  adopt  by-laws  for  the  association  when  re-incorporated,  the  voting  thereon 
to  be  the  same  as  provided  in  the  foregoing  subdivision  two,  and  such  by- 
laws shall  be  in  conformity  with  the  provisions  of  this  act. 

Fifth.  The  shareholders  having  decided  to  re-incorporate,  and  having 
adopted  by-laws,  shall  next  designate  the  fifteen  or  more  persons  who  may 
make  and  file  the  certificate,  and  have  the  certificate  recorded,  as  provided 
in  the  third  [172]  section  of  this  act. 

Sixth.  Upon  the  said  fifteen  or  more  persons  complying  with  the  provi- 
sions (if  said  Section  3  [172],  and  filing  said  by-laws  with  the  superintendent 
of  banks,  the  association  shall  become  fully  incorporated  under  this  act. 

All  obligations  in  favor  of  the  old  association  at  the  time  of  such  change 
shall  belong  to  the  new  association,  and  be  enforceable  by  it  and  in  its  name 
as  fully  and  completely  as  the  old  association  might  have  enforced  them  if  no 
change  had  been  made,  and  all  demands,  claims  and  rights  of  action  against 
the  old  corporation  may  beenforced  against  the  new  corporation  as  fully  and 
completely  as  though  no  change  had  been  made. 

Skc.  104. — Superintendent  of  banks  is  hereby  empowered  to  levy  an  assess- 
ment upon  each  association  incorporated  hereunder  or  under  chapter  122  of  the 
laws  of  [851  and  acts  amendatory  thereof,  or  chapter  556  of  thelawsof  iSNjand 
articles  5  and  6  of  chapter  689  of  the  laws  of  1892,  for  the  purpose  of  defraying 
the  necessary  expenses  of  his  department  in  the  supervision  of  said  associa- 
,  examination  and  publication  of  reports  as  follows,  vi/.  :  Said  assessment 
shall  be  levied  upon  said  associations  in  proportion  to  their  assets  as  shown 
by  the  lasl  t  receding  annual  report,  and  said  associations  shall  pay  the  same 
within  ten  davs  after  notice  is  given  by  said  superintendent ;  and  in  no  event 
shall  any  portion  of  said  expen  1   I"-  borne  by  the  state. 

105.  -Whenever  refereni  e  is  made  in  anv  of  the  statutes  of  the  state  of 
New  York  to  article  5  or  6,  and  to  articles  5and6ol  chapter689of  the  laws 
ol  r8Q2,  the  said  reference  shall  be  construed  to  mean  and  refer  to  this  article  5 
substituted  in  place  of  said  articles  5  and  f>. 

(This  at  1  tool;  effect  May  15,  [894.) 

\(  rs  [898.— Chapter  348. 

SECTION  195a,  \  CO-operative  savings  and  loan  association,  or  a  building 
and  loan  assoi  iation.  Incorporated  under  and  doing  business  pursuant  to  the 
li       of  thi      tate,  ma  deposits  and  the  income  derived  therefrom  in 

th<     .iiue  n  which   savin-shank-,  are,  by  section   one  hundred  and 


GENERAL   LEGISLATION.  821 

sixteen  of  this  chapter,  authorized  to  invest  their  deposits  and  the  income 
derived  therefrom. 

In  force  April  20,  1898. 

LAWS  OF  1851.— Chapter  122.* 

Section  i. — Any  number  of  persons,  not  less  than  nine,  may  associate  and 
form  an  incorporated  company  for  the  purpose  of  accumulating  a  fund  for  the 
purchase  of  real  estate,  the  erection  of  buildings,  or  the  making  of  other  im- 
provements on  lands,  or  to  pay  off  incumbrances  thereon,  or  to  aid  its 
members  in  acquiring  real  estate,  making  improvements  thereon,  and  re-mov- 
ing incumbrances  therefrom  ;  and  for  the  further  purpose  of  accumulating  a 
fund  to  be  returned  to  its  members,  who  do  not  obtain  advances  as  above 
mentioned,  when  the  funds  of  such  association  shall  amount  to  a  certain  sum 
per  share,  to  be  specified  in  the  articles  of  association. 

Sec.  2. — Such  persons  shall  severally  subscribe  articles  of  association,  in 
which  shall  be  set  forth  the  name  of  the  corporation,  the  time  of  its  regular 
meetings,  and  how  special  meetings  may  be  called,  and  what  shall  constitute 
a  quorum  to  transact  business  at  meetings  ;  the  qualification  of  members,  and 
how  constituted  ;  what  officers,  trustees  and  attorney  there  shall  be,  and  how 
and  when  chosen,  and  their  duties,  and  how  removed  or  suspended  from 
office  ;  the  entrance  fee  of  new  members  and  new  shares,  the  monthly  or 
weekly  dues  per  share,  the  redemption  fee  on  shares  on  which  advances  shall 
be  made,  and  fees  to  be  paid  on  the  transfer  of  shares  ;  the  fines  and  penalties 
for  non-payment  of  dues  or  fees,  or  other  violation  of  the  article  of  associa- 
tion ;  the  manner  of  redemption  of  shares  by  advances  made  thereon,  the 
mortgages  security  to  be  taken  on  such  advances,  and  how  the  same  may  be 
redeemed  or  changed  ;  the  manner  of  the  transfer  or  withdrawal  of  shares  ; 
the  manner  of  investing  funds  not  required  for  advances  on  shares  ;  the  quali- 
fications of  voters  at  the  meetings,  and  the  mode  of  voting;  the  ultimate 
amount  to  be  paid  to  the  owners  of  unredeemed  shares  ;  the  manner  of  alter- 
ing or  amending  the  articles  of  association,  and  such  other  provisions  as  shall 
be  necessary  for  the  convenient  and  effective  transaction  of  the  business  there- 
of ;  provided  that  the  same  shall  not,  in  any  respect,  contravene  the  constitu- 
tion or  laws  of  this  state. 

Sec.  3. — A  true  copy  of  such  articles,  signed  by  the  officers  of  the  associa- 
tion, together  with  a  statement  showing  when  the  association  was  organized, 
and  the  place  of  the  transaction  of  its  business  and  the  names  of  the  officers 
and  trustees  at  the  time  of  the  making  of  such  statement,  which  shall  be 
verified  by  oath  or  affirmation  before  any  officer  authorized  to  take  affidavits, 
to  be  used  in  courts  of  justice,  shall  be  filed  in  the  office  of  the  clerk  of  the 
county  in  which  such  association  shall  transact  its  business  ;  and  thereupon 
the  persons  who  have  subscribed  the  articles  of  association  as  aforesaid,  and 
such  other  persons  as  shall  become  members  of  such  association  and  their 
successors,  shall  be  a  body  corporate  by  the  name  specified  in  such  articles  of 
association,  and  shall  possess  the  powers  and  privileges,  and  be  subject  to  the 
provisions  of  title  third  of  chapter  18  of  the  first  part  of  the  revised  statutes, 
so  far  as  those  provisions  are  consistent  with  the  provisions  of  this  act,  and 
thev  shall  by  their  corporate  name  be  capable  in  law  of  purchasing,  holding 
and  conveving  any  real  and  personal  estate  whatever,  which  may  be  neces- 
sary to  enable  such  company  to  carry  on  their  operation  named  in  such  certi- 
ficate. 

Sec.  4. — It  shall  be  lawful  for  the  trustees  to  call  in  and  demand  from  the 
stockholders,  respectively,  all  such  sums  of  money  by  them  subscribed,  at 
such  times  and  in  such  payments  or  instalments  as  the  articles  of  association 
shall  prescribe,  under  the  penalty  of  forfeiting  the  shares  of  stock  subscribed 
for  and  all  previous  payments  made  thereon,  if  payment  shall  not  be  made  by 
the  stockholder  within  sixty  days  after  a  personal  demand  or  notice  requiring 
such  payment  shall  have  been  published  for  six  successive  weeks  in  the  news- 
paper nearest  the  place  where  the  business  of  the  company  shall  be  carried 
on  as  aforesaid. 

Sec.  5.— All  corporations  formed  under  this  act  shall  have  power  to  borrow 
money  for  temporary  purposes  not  inconsistent  with  the  objects  of  their 
organization  ;  but  no  loan  for  such  purposes  shall  have  a  longer  duration  than 
two  years,  nor  shall  such  indebtedness  exceed  at  any  one  time  one-fourth  of 
the  aggregate  amount  of  the  shares  and  parts  of  shares,  and  the  income 
thereof  actually  paid  in  and  received. 

Sec.  6.— Parents  and  guardians  may  take  and  hold  shares  in  such  associa- 

*  Applies  only  to  associations  incorporated  prior  to  June  17,  1892. 


822  APPENDIX   IV. 

tion  in  behalf  and  for  the  use  of  their  minor  children  or  wards,  provided  the 
cost  of  such  shares  be  defrayed  from  the  personal  earnings  of  such  minor 
children  or  wards,  or  by  gifts  from  persons  other  than  their  male  parents. 
Married  women  may  take  and  hold  shares  in  such  associations,  provided  the 
cost  of  such  shares  be  defrayed  from  their  personal  earnings,  the  personal 
earin^s  of  their  children  voluntarily  bestowed  for  this  purpose,  or  from  pro- 
pert  v'bequeathed  or  given  to  them  by  persons  other  than  their  husbands. 

Sec.  j_ — The  trustees  of  any  association  formed  under  the  provisions  of  this 
act  may,  from  time  to  time,  declare  dividends  from  the  earnings  of  the  asso- 
ciationpayable  in  such  manner  as  may  be  provided  in  the  articles  of  associa- 
tion ;  but  no  dividend  shall  be  declared  except  from  the  earnings  of  the  asso- 
ciation, and  if  the  trustees  of  any  such  association  shall  declare  and  pay  any 
dividend  when  the  company  is  insolvent,  or  any  dividend  the  payment  of 
which  would  render  it  insolvent,  they  shall  be  jointly  and  severally  liable  to 
the  extent  of  the  dividend  so  declared  and  paid,  for  all  the  debts  of  the  asso- 
ciation then  existing  or  that  shall  be  thereafter  contracted  while  they  shall 
respectively  continue  in  office  ;  provided,  that  if  any  of  the  trustees  shall 
object  to  the  declaring  of  such  dividend  or  to  the  payment  of  the  same,  and 
shall,  at  any  time  before  the  time  fixed  for  the  payment  thereof,  file  a  certifi- 
cate of  his  objection  in  writing  with  the  clerk  of  the  company,  and  with  the 
clerk  of  the  county,  he  shall  be  exempt  from  the  said  liability.  But  no  trustee 
who  shall  be  present  at  any  meeting  when  such  dividend  is  declared,  shall  be 
exempt  from  such  liability  unless  he  shall  then  and  there  object  to  the  decla- 
ration or  payment  of  such  dividend,  and  shall  also  procure  his  objection  to  be 
noted  in  the  book  of  minutes  of  such  association.  No  holder  of  redeemed 
shares  shall  claim  to  be  exempt  from  making  the  monthly  or  other  stated 
payments  provided  in  the  artictes  of  association  upon  the  ground  that,  by 
reason  of  losses  or  otherwise,  the  association  has  continued  longer  than  was 
originally  anticipated,  whereby  the  payments  made  on  such  shares  may 
amount  to  more  than  the  amount  originally  advanced,  with  legal  interest 
thereon  ;  nor  shall  the  imposition  of  fines  for  the  non-payment  of  dues  or 
fees,  or  other  violation  of  the  articles  of  association,  nor  "shall  the  making 
of  any  monthly  payment  required  by  the  articles  of  association,  or  of  any 
premium  for  loans  made  to  members,  be  deemed  a  violation  of  the  provisions 
of  any  statute  against  usury. 

Sec.  io. — Each  association  formed  under  the  provisions  of  this  act  shall,  at 
the  close  of  its  first  year"s  operations,  and  annually  at  the  same  period  in  each 
year  thereafter,  publish  in  at  least  two  newspapers  published  in  the  place 
where  their  business  may  be  located,  or  if  no  newspaper  shall  be  published 
in  such  place,  then  in  any  two  newspapers  published  nearest  such  place,  a 
concise  statement,  verified  on  the  oaths  of  its  president  and  secretary,  show- 
ing the  actual  financial  condition  of  the  association,  and  the  amount  of  its 
property  and  liabilities,  specifying  the  same  particularly. 

SEC.  ii. — All  the  shareholders  of  any  association  formed  under  this  act, 
shall  be  individually  liable  to  the  creditors  of  said  association,  to  an  amount 
equal  to  the  amount  of  stock  held  by  them  respectively,  for  all  debts  con- 
tracted by  such  association.  The  directors  or  other  officers  of  every  associa- 
tion formed  under  this  act,  shall  be  personally  liable  for  any  fraudulent  use, 
disposition  or  investment  of  any  moneys  or  property  belonging  to  such  asso- 
ciation, or  for  any  loss  which  shall  be  incurred  by  any  investment  made  by 
such  directors  or  other  officers  other  than  such  as  are  mentioned  in  and  author- 
ized by  this  act  ;  but  no  director  or  other  officer  of  any  such  association  shall 
be  liable  as  aforesaid  except  he  authorized,  sanctioned,  approved  or  made 
such  fraudulent  use,  disposition  or  investment  as  aforesaid. 

Sec.  12. — No  person  holding  stock  in  any  such  company,  or  as  executor, 
administrator,  guardian  or  trustee,  and  no  person  holding  such  stock  as  col- 
lateral ecurity,  shall  be  personally  subjeel  to  any  liability  as  stockholder  of 
company,  but  the  person    pledging  such    stock  shall    be    considered   as 

tiei  ime,  and  shall  be  liable  as  a  stockholder  accordingly;  and  the 

e  i  it-  and  funds  in  the  hands  ol  such  executor,  administrator,  guardian  or 
trustee  shall  be  liable  ill  like  manner  and  to  the  same  extent  as  the  testator  or 

n  the  ward  or  person  interested  in  such  trust  fund  would  have  been 
ii  he  had  been  living  and  competent  to  .1.1,  and  hold  the  same  stock  in  his 
own  n  • 

Every  such  exe<  utor,  administrator,  guardian  or  trustee  shall  rep- 

tocl   in   in    hands  at  all  meetings  of  the  company,  and 

tccordingly  as  a  stockholder  ;  and  every  person  who  shall  pledge 

1    afon   aid  may  neverthele   1  represent  the  same  at  all  such  meet- 

1     rote  accordingly  a-,  a  stockholder. 


GENERAL   LEGISLATION.  823 

Sec.  14. — In  case  it  shall  happen  at  any  time  that  an  election  of  officers 
shall  not  be  made  on  the  day  designated  by  the  by-laws  of  said  company 
when  it  ought  to  have  been  made,  the  company  for  that  reason  shall  nol   be 

dissolved  ;  but  it  shall  be  lawful  on  any  other  day  to  hold  an  election  for  trus- 
tees in  such  manner  as  shall  he  provided  for  byfhe  said  by-laws  ;  and  all  at  is 
of  trustees  shall  be  valid  and  binding  as  against  such  company  until  their  suc- 
cessors shall  be  elected. 

SEC.  15. — The  legislature  may  at  any  time  alter,  amend  or  repeal  this  act,  or 
may  annul  or  repeal  any  incorporation  formed  or  created  under  this  act  ;  but 
such  amendment  or  repeal  shall  not  nor  shall  the  dissolution  of  any  such 
company  take  away  or  impair  any  remedy  given  against  any  such  corpora- 
tion, its  stockholders  or  officers  for  any  liability  which  shall  have  been  pre- 
viously incurred. 

Sec.  16. — Any  company  which  may  be  formed  under  this  act  may  increase 
or  diminish  its  capital  stock  by  complying  with  the  provisions  of  this  act,  to 
any  amount  which  may  be  deemed  sufficient  and  proper  for  the  purposes  of 
the  corporation.  But  before  any  corporation  shall  be  entitled  to  dimmish  the 
amount  of  iis  capital  stock,  if  the  amount  of  its  debts  and  liabilities  shall  ex- 
ceed the  amount  of  capital  to  which  it  is  proposed  to  be  reduced,  such  amount 
of  debts  and  liabilities  shall  be  satisfied  and  reduced  so  as  not  to  exceed  such 
diminished  amount  of  capital.     See  Sections  44,45,  Stock  Corporation  Law. 

Sec.  17. — Whenever  any  company  shall  desire  to  call  a  meeting  of  the 
stockholders  for  the  purpose  of  increasing  or  diminishing  the  amount  of  its 
capital  stock,  it  shall  be  the  duty  of  the  trustees  topublish'a  notice  signed  by 
at  k-ast  a  majority  of  them  in  a  newspaper  in  the  county,  it  any  shall  he  pub- 
lished therein,  at  least  three  successive  weeks,  and  to  deposit  a  written  or 
printed  copy  thereof  in  the  postofhee  addressed  to  each  stockholder  at  his 
usual  place  of  residence,  at  least  three  weeks  previous  to  the  day  fixed  upon 
for  holding  such  meeting,  specifying  the  object  of  the  meeting,  the  time  and 
place  when  and  where  such  meeting  shall  beheld,  and  the  amount  to  which 
it  shall  be  proposed  to  increase  or  diminish  the  capital,  and  a  vote  of  at  least 
two-thirds  of  all  the  shares  of  stock  shall  be  necessary  to  an  increase  or  dim- 
inution of  the  amount  of  its  capital  stock. 

Sec.  18. — If,  at  any  time  and  place  specified  in  the  notice  provided  for  in 
the  preceding  section  of  this  act,  stockholders  shall  appear  in  person  or  by 
proxy  in  numbers  representing  not  less  than  two-thirds  of  all  the  shares  of 
stock  of  the  corporation,  they  shall  organize  by  choosing  one  of  the  trustees 
chairman  of  the  meeting  and  also  a  suitable  person  for  secretary,  and  proceed 
to  a  vote  of  those  present  in  person  or  by  proxy  ;  and  if,  on  canvassing  the 
votes,  it  shall  appear  that  a  sufficient  number  of  votes  has  been  given  in  favor 
of  increasing  or  diminishing  the  amount  of  capital,  a  certificate  of  the  pro- 
ceedings showing  a  compliance  with  the  provisions  of  this  act;  the  amount 
of  capital  actually  paid  in,  the  whole  amount  of  debts  and  liabilities  of  the 
company,  and  the  amount  to  which  the  capital  stock  shall  be  increased  or 
diminished,  shall  be  made  out,  signed  and  verified  by  the  affidavit  of  the  chair- 
man and  be  countersigned  by  the  secretary  ;  and  such  certificate  shall  be 
acknowledged  by  the  chairman  and  filed  as  required  by  the  first  section  of 
this  act  ;  and  when  so  filed,  the  capital  stock  of  such  corporation  shall  be  in- 
creased or  diminished  to  the  amount  specified  in  such  certificate. 

Sec.  19. — The  shares  held  by  the  members  of  all  associations  incorporated 
under  the  provisions  of  this  act  shall  be  exempt  from  sale  on  execution  for 
debt,  to  an  extent  not  exceeding  six  hundred  dollars  in  such  shares  at  their 
par  value. 

Sec.  20. — \To  loan  made  by  any  such  association  to  any  of  its  members  may 
exceed  in  amount  the  par  value  of  the  capital  stock  for  which  such  member 
may  have  subscribed. 

Sec.  21.— The  copy  of  any  certificate  of  incorporation  filed  in  pursuance  of 
this  act,  certified  by  the  county  cleric  or  his  deputy  to  be  a  true  copy,  and  of 
the  whole  of  such  certificate,  shall  be  received  in  all  courts  and  places  as  pre- 
sumptive legal  evidence  of  the  acts  therein  stated. 

LAWS  OF  1887— Chapter  556.* 

Section  I. — Any  fifteen  or  more  persons,  being  of  full  age,  may  form  an 
association  as  provided  in  this  act.  All  associations  formed  under  the  pro- 
visions hereof  shall  be  known  as  co-operative  savings  and  loan  associations  ; 

*  Only  twenty-four  associations  are  operating  under  this  law;  and  these  were  organized  prior 
to  June  17,  1S92. 


824  APPENDIX   IV. 

and  the  name  of  every  association,  as  formed,  shall  contain,  as  a  part  thereof, 
the  words  Co-operative  Savings  and  Loan  Association. 

Sec.  2. — The  object  and  purpose  of  such  associations  shall  be  to  encourage 
industry,  frugality,  home  building  and  savings  among  its  members  ;  the  ac- 
cumulation of  savings,  the  loaning  of  such  accumulations  to  its  members,  and 
the  repavment  to  each  member  of  his  savings  when  they  have  accumulated 
to  a  certain  sum,  or  at  any  time  when  he  shall  desire  the  same,  or  the  associa- 
tion shall  desire  to  repay  the  same. 

Sec.  3. — Said  association  shall  become  incorporated  by  the  said  fifteen  or 
more  persons  making,  signing  and  acknowledging,  in  the  manner  and  form 
prescribed  for  the  acknowledgment  of  deeds  in  this  state,  a  certificate,  where- 
in shall  be  stated  the  name  of  said  association  ;  that  the  association  is  formed 
under  and  for  the  purposes  prescribed  in  this  act ;  the  town,  village  or  city 
where  the  association  is  located  within  this  state  ;  and  the  limit  of  the  number 
of  shares  of  stock  it  shall  have  outstanding  at  any  one  time.  When  made  as 
aforesaid,  said  certificate  shall  be  filed  and  recorded  in  the  office  of  the  secre- 
tary of  state,  and  upon  said  certificate  being  so  filed  and  recorded,  the  secre- 
tary of  state  shall  issue  a  certificate  in  proper  and  suitable  form,  declaring 
the  facts  contained  in  said  original  certificate,  and  the  filing  and  recording 
thereof  in  his  office,  and  which  latter  certificate  shall  thereupon  be  recorded 
in  the  county  clerk's  office  of  the  county  where  said  association  is  located  ; 
and  upon  the  same  being  so  recorded,  the  persons  named  in  the  certificate 
first  above  mentioned,  their  associates  and  successors,  shall  become  a  corpo- 
rate body. 

Sec.  4. — The  officers  of  the  association  shall  consist  of  a  president,  vice-pres- 
ident, treasurer  and  secretary,  who  shall  be  ex  officio  members  of  the  board  of 
directors,which  shall  consist'of  nine  members,  exclusive  of  said  ex-officio  mem- 
bers. Other  officers  may  be  authorized  by  the  by-laws.  The  duties  and  com- 
pensation of  the  officers,  their  terms  of  office,  the  time  of  their  election,  and  time 
of  periodical  meetings  of  the  officers  and  shareholders,  shall  be  determined 
by  the  by-laws  ;  except  that  the  board  of  directors  shall  determine  each  year 
the  compensation  of  the  treasurer  and  secretary.  Special  meetings  of  the 
officers  and  shareholders  shall  be  called  and  held  as  provided  by  the  by-laws. 
Each  shareholder  shall  be  entitled  to  one  vote,  at  all  meetings  of  the  share- 
holders, for  each  share  owned  by  him  or  held  by  him  as  trustee,  not  in  arrears 
for  dues.  All  officers  shall  hold  office  until  their  successors  are  duly  elected 
and  assume  the  duties  of  their  office.  No  association  shall  expire  from 
neglect  on  its  part  to  elect  officers  at  the  time  prescribed  by  the  by-laws. 

Sec.  5. — The  capital  of  said  association  shall  consist  of  the  accumulated  sav- 
ings of  its  members,  which  it  holds,  and  shall  not  exceed  at  any  time  one 
million  dollars,  and  shall  be  divided  into  shares  of  the  matured  value  of  two 
hundred  dollars  each.  The  total  number  of  shares  outstanding  at  any  time 
shall  not  exceed  ten  thousand.  The  shares  shall  be  issued  in  yearly  or  half- 
yearly  series,  in  such  amounts  in  each  series,  and  at  such  times  as  shall  be  de- 
termined by  the  by-laws  of  the  association.  No  share  of  a  prior  series  shall 
be  issued  after  the  issuing  of  shares  in  a  new  series.  Shares  which  have 
not  been  pledged  as  a  collateral  security  for  the  repayment  of  a  loan  shall  be 
called  unpledged  shares.  Shares  that  have  been  so  pledged  shall  be  called 
pledged  shares.  No  person  shall  hold  more  than  ten  unpledged  shares  in 
any  one  series,  nor  more  than  twenty  pledged  shares  in  one  series. 

Sice.  6. — Savings  paid  to  the  association  upon  shares  shall  be  called  dues. 
At  or  before  each  staled  monthly  or  semi-monthly  meeting  of  the  board  of 
directors,  each  shareholder  shall  pay  to  the  board  or  a  committee  thereof,  one 
dollar  dues  upon  each  share  of  stock  held  by  him  until  the  share  reaches  the 
value  of  two  hundred  dollars,  or  is  withdrawn,  cancelled  or  forfeited.  Pay- 
ment "i  dues  on  shares  of  each  series  shall  commence  from  its  issue.  The 
:i  1 1<  iation  shall  have  power  to  impose  and  collect  a  fine,  not  exceeding  ten  per 
cent,  for  each  month  in  arrears,  for  every  dollar  of  dues  or  interest  which  a 
shareholder  shall  refuse  or  neglect  to  pay  at  the  time  it  isdue.  They  shall  also 
power  lo  charge  an  entrance  fee,  of  not  exceeding  twenty-five  cents  on 
every  share  of  stock  issued  by  the  association. 

Sec  7. — The  accumulations  upon  unpledged  shares  may  be  withdrawn  and 

cancelled aftei  one  month's  written  notice  of  such  intention  filed 

with  th(     '<  retary  al  01  before  a  slated   monthly  meeting  of  the  board.     If 

tiled  before  BUCh  meeting,  the  one  month's  notice  shall  not  be  deemed  to  have 

iem  '--I  until  the  in  t  regular  meeting  after  the  tiling.    The  withdrawing 

Idei     hall  be  paid  the  amount  ol  the  withdrawal  value  of  his  accumu- 

latii  rmined  under  the  by-laws,  al  the  last  distribution  of  profits  be- 

fore  the  notice  of  withdrawal,  together  with  all  dues  paid  since  such  distribu- 


GENERAL   LEGISLATION.  825 

tion,  and  such  interest  on  the  value  of  the  shares  at  the  time  of  the  last  dis- 
tribution and  on  the  dues  thereafter  paid,  as  the  by-laws  shall  determine,  less 
any  fines  unpaid,  and  the  proportionate  share  of  any  unadjusted  loss  ;  Provided, 
that  at  no  time  shall  more  than  one-half  the  receipts  of  the  association,  and 
when  the  association  is  indebted  upon  matured  shares,  no  more  than  one- 
third  shall  be  applicable  to  the  payment  of  withdrawing  shareholders,  with- 
out the  consent  of  the  board  of  directors;  and  when  the  demands  of  with- 
drawing shareholders  exceed  the  moneys  applicable  to  their  payment,  they 
shall  be  paid  in  the  order  in  which  their  notices  of  withdrawal"  were  tiled 
with  the  secretary.  The  board  of  directors  may,  at  their  discretion,  under 
rules  made  by  them,  retire  the  unpledged  shares  of  any  series  at  any  time 
after  four  years  from  the  date  of  their  issue,  by  enforcing  withdrawals  of 
same  ;  Provided,  that  the  shareholders  whose  shares  are  to  be  retired  shall 
be  determined  by  lot,  and  that  they  shall  be  paid  the  lull  value  of  their  shares, 
less  all  fines  and  proportionate  part  of  any  unadjusted  loss. 

Sec.  8. — When  each  unpledged  share  of  a  given  series  reaches  the  value  of 
two  hundred  dollars,  all  payment  of  dues  thereon  shall  cease,  and  the  holder 
thereof  shall  be  paid  out  of  the  funds  of  the  association  two  hundred  dollars 
therefor  with  such  rate  of  interest  as  shall  be  determined  by  the  by-laws, 
from  the  time  the  board  of  directors  shall  declare  such  shares  to  have  ma- 
tured, until  paid  ;  but  at  no  time  shall  more  than  one-third  of  the  receipts  of 
the  association  be  applicable  to  the  payment  of  matured  shares,  without  the 
consent  of  the  board  of  directors.  The  order  of  payment  of  the  matured 
shares  shall  be  determined  by  the  board  of  directors. 

Sec.  9. — At  each  monthly  stated  meeting,  immediately  following  the 
receipt  of  dues  and  interest,  the  board  of  directors  shall  offer  to  members  of 
the  association  desiring  to  borrow,  all  accumulations  applicable  to  that  pur- 
pose ;  the  same  shall  be  loaned  in  sums  of  two  hundred  dollars,  the  value 
of  a  matured  share,  or  a  multiple  thereof,  or  the  fractional  parts  of  one-fourth 
or  one-half  thereof.  If  there  shall  be  more  than  one  member  desiring  to 
borrow,  their  right  to  a  loan  shall  be  determined  by  an  open  bidding  of  a 
premium  per  share  ;  the  member  bidding  the  highest  premium  shall  be  en- 
titled to  the  loan,  upon  giving  proper  security.  From  the  sum  loaned  shall 
be  deducted  at  the  time  of  loaning  the  amount  of  the  premium  bid.  The  re- 
ceiving of  such  premium  or  interest  paid  on  the  loan  shall  not  be  deemed  a 
violation  of  the  usury  laws.  No  member  or  members  can  borrow  a  larger  sum 
than  shall  be  equal  to  the  matured  value  of  the  shares  held  by  him  or  them. 
A  borrowing  member,  for  each  share  or  fractional  part  thereof  borrowed 
upon,  shall,  in  addition  to  the  dues  on  his  shares,  pay  monthly  interest  on  his 
loan  at  the  rate  of  six  per  cent,  per  annum,  or  such  lower  rate  as  the  by-laws 
shall  name,  until  the  shares  borrowed  upon  reach  the  matured  value  of 
two  hundred  dollars  each,  or  the  loan  is  repaid,  and  when  such  matured  value 
is  reached  the  share  shall  cancel  the  loan  upon  it,  and  the  proper  surrenders 
and  acquittances  be  made. 

Sec.  10. — For  every  loan  made,  a  bond  secured  by  a  first  mortgage  upon 
unincumbered  real  estate  shall  be  given,  accompanied  by  a  transfer  and 
pledge  to  the  association  of  the  shares  borrowed  upon,  and  all  accumulations 
that  have  or  shall  accrue  thereon,  as  a  collateral  security  for  the  repayment 
of  the  loan  ;  or  in  lieu  of  the  mortgage,  the  borrower,  or  another,  may  trans- 
fer and  pledge  to  the  association,  for  the  payment  of  the  loan,  unpledged 
shares,  the  withdrawal  value  of  which  under  the  by-laws,  at  the  time  of  such 
borrowing,  shall  exceed  the  amount  borrowed  and  interest  thereon  for  six 
months.  If  the  borrower  neglects  to  offer  security  satisfactory  to  the  board  of 
directors,  within  the  time  provided  by  the  by-laws,  his  right  to  the  loan  shall 
be  forfeited,  and  he  shall  be  charged  with  one  month's  interest,  and  all  neces- 
sary expenses  incurred,  if  any,  under  the  by-laws,  in  reference  to  his  proposed 
loan.  All  bonds  and  mortgages  given  to  the  association  shall  be  deemed  con- 
ditioned upon  the  performance  of  the  provisions  of  this  act  relating  to  the 
repayment  of  loans  and  interest  thereon  and  the  by-laws  of  the  association, 
although  the  same  may  not  be  fully  expressed  therein.  A  borrower  may  re- 
pay a  loan,  and  all  arrears  of  interest  and  fines  thereon,  or  one  share  thereof, 
that  is,  the  sum  of  two  hundred  dollars,  at  any  stated  monthly  meeting,  or  at 
any  other  time,  but  when  not  made  at  a  stated  meeting,  he  shall  pay  interest 
up  to  the  first  monthlv  meeting  after  such  payment.  He  may  repay  his  loan 
in  full,  thereby  relieving  his  shares  from  liability  upon  the  pledge  thereof, 
made  to  the  association,  or  he  may,  by  a  proper  notice  and  direction  as  to  the 
application,  have  the  withdrawal  value  of  the  shares  borrowed  upon  applied 
in  payment  or  part  payment  of  his  loan. 

Sec.  11. — Whenever  any  member  shall  be  six  months  in  arrears  in  the  pay- 


826  APPENDIX   IV. 

ment  of  his  dues  upon  unpledged  shares,  the  secretary  shall  give  him  notice 
thereof  in  writing,  and  a  statement  of  his  arrearages,  by  mailing  the  same  to 
him  at  the  last  postoffice  address  given  by  him  to  the  association,  and  if  he 
shall  not  pay  the  same  at  the  next  or  second  stated  monthly  meeting  there- 
after, the  board  of  directors  may,  at  their  option,  declare  his  shares  forfeited  ; 
and  at  the  time  of  such  forfeiture,  the  withdrawal  value  thereof  shall  be  deter- 
mined and  stated,  and  the  defaulting  member  shall  be  entitled  to  withdraw 
the  same  without  interest,  within  one  year  upon  such  notice  as  shall  be 
required  of  a  withdrawing  shareholder. 

Sec.  12. — Whenever  a  borrowing  member  shall  be  six  months  in  arrears  in 
the  payment  of  his  dues  and  interest,  or  either,  the  whole  loan  shall  become 
due  at  the  option  of  the  board  of  directors  ;  and  they  may  proceed  to  enforce 
collection  upon  the  securities  held  by  the  association.  The  withdrawal  value 
at  the  time  of  the  commencement  of  the  action,  of  all  shares  pledged  as  col- 
lateral security  for  the  loan,  shall  be  applied  upon  the  loan  and  arrearages  of 
interest  and  fines  thereon,  and  the  shares  deemed  surrendered  to  the  associa- 
tion. 

Sec.  13. — Any  association  may  purchase  at  any  sale,  public  or  private,  any 
real  estate  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  other 
incumbrance,  or  in  which  it  may  have  any  interest ;  and  may  sell,  convey, 
lease  or  mortgage  the  same  at  pleasure  to  any  person  or  persons. 

Sec.  14. — Any  association  organized  in  pursuance  of  the  provisions  of  this 
act,  may  borrow  money  for  the  purpose  of  making  loans  or  paying  with- 
drawals, not  exceeding  however  two  thousand  dollars,  so  long  as  its  accu- 
mulated capital  does  not  exceed  ten  thousand  dollars  :  and  not  exceeding  six 
thousand  dollars,  so  long  as  its  accumulated  capital  shall  be  over  ten  thousand, 
and  does  not  exceed  sixty  thousand  dollars  ;  and  whenever  its  accumulated 
capital  exceeds  sixty  thousand  dollars,  it  may  borrow  money  for  the  pur- 
poses aforesaid  not  exceeding  ten  per  cent,  of  its  accumulated  capital.  No 
money  borrowed  shall  be  for  a  longer  term  than  one  year.  Any  association 
having  a  surplus  in  its  treasury,  for  which  there  is  no  demand  for  loans,  with- 
drawing shareholders  or  matured  stock,  may  loan  the  same  to  another  asso- 
ciation, organized  under  the  provisions  of  this  act,  subject  to  the  provisions 
of  this  section,  on  the  part  of  the  borrowing  association.  No  association 
shall  borrow  or  make  loans  herein  authorized,  except  by  a  two-thirds  vote 
of  its  board  of  directors.  The  vote  to  be  recorded  by  ayes  and  nays  in  its 
regular  minutes. 

Sec.  15. — Profits  and  losses  shall  be  distributed  at  least  annually,  and  always 
before  issuing  a  new  series  of  stock  to  the  shares  then  outstanding.  Profits 
and  losses  shall  be  distributed  to  all  shares,  in  all  series  outstanding  at  the 
time  of  such  distribution,  in  proportion  to  their  holding  value,  as  distinguished 
from  their  withdrawing  value,  except  that  in  addition  thereto  a  distribution  of 
not  exceeding  the  amount  of  the  entrance  fee,  in  the  discretion  of  the  board  of 
directors,  may  be  made  to  each  share  outstanding  in  the  last  series  issued 
prior  to  the  distribution.  At  each  periodical  distribution  of  profits,  the  board 
of  directors  may  reserve  and  carry  as  undistributed  profits,  in  the  nature  of  a 
guaranty  fund,  any  sum  from  the"  net  profits  that  in  their  discretion  seems 
wise,  to  be  applied  upon  any  future  losses  that  may  occur  from  any  cause 
whal  i  iever. 

SEC.  [6. — No  transfers  of  shares  shall  be  binding  upon  the  association  until 
the  same  have  been  made  upon  the  books  of  the  association  ;  and  the  trans- 
feree thereol  h;  11  take  the  same,  charged  with  all  the  liabilities  and  condi- 
tions attaching  thereto  in  the  hands  of  the  one  transferring  the  same.  The 
iation  111. iv  require  a  "transfer  fee,"  not  exceeding  twenty-five  cents  per 
share. 

Sec.  17.—  Tin  tion,  as  soon  as  duly  incorporated,  shall  possess  power 

lo  .( '!o|  :  by-laws,  noi  inconsistent  with  the  provisions  of  this  act,  regulating 
the  due  conduct  of  the  business  of  the    association,  defining  the  duties  of 
and  committees,  times  of  meetings,  mode  of  determining  and  declar- 
ing 1  in-  withdrawing  value  oi    hares,  and  in  relation  to  all  other  matters  hav- 
ing i'  conducl  "i  the  business,  although   not  specifically  men- 
tioned in  Hi     act.     rhe  board  of  directors  shall  have  power  to  appoint  and 
ire,  an  atti  irney  for  the  association. 
Vny  person  ol  full  age  and  sound  mind  may  become  a  member  of 
the  a   iociation  by  taking  one  or  more  shares  therein,  and  subscribing  the  by* 
to  his  signature  his  postoffice  address;    .iud  whenever 
re     changed,  he  shall  give  written  notice  thereof 
ociation:  and  for  the  purpose  of  giving  any  mem- 
bei  tiotio   bj  mail,  the  la  1  postoffice  address  given  by  him  shall  be  deemed 


GENERAL   LEGISLATION.  827 

the  proper  one.  A  minor  may  hold  shares  in  the  name  of  a  parent,  guardian, 
or  next  friend,  as  trustee  for  him.  All  accumulations  upon  shares  in  said 
association  held  by  any  person  shall  be  exempt  from  execution  and  proceed- 
ings supplementary  thereto,  to  the  amount  of  six  hundred  dollars ;  and  Ihe 
association  itself  shall  be  deemed  an  institution  for  savings,  and  not  taxable 
under  any  corporation  tax  law  which  shall  exempt  savings  banks  or  institu- 
tions for  savings  from  taxation. 

SEC.  22. — Any  association  now  existing  and  heretofore  incorporated  under 
the  provisions  of  said  chapter  \22  of  the  laws  of  1851,  may  be  entitled  to  the 
benefits  of  this  act,  on  the  majority  vote  of  the  shareholders  of  said  associa- 
tion, directing  the  making  and  tiling  of  the  certificate  mentioned  in  the  third 
section  of  this  act,  and  conforming  the  transaction  of  their  business  to  the  pro- 
visions of  this  act. 

Sec.  23. — Associations  organized  under  this  act  shall  not  be  subject  to  the 
provisions  of  chapter  143  of  the  laws  of  1886. 

BANKING  LAWS  OF  1892,  AS  AMENDED,  ACTS  1898.— Chapter  193. 

ARTICLE  VI. 

INCORPORATION   OF  BUILDING  AND   LOT  ASSOCIATIONS. 

Sec.  196. — Five  or  more  persons  may  become  a  corporation  for  the  purpose 
of  accumulating  a  fund  for  the  purchase  of  real  property,  to  pay  off  incum- 
brances thereon,  to  aid  its  members  in  acquiring  a  building  lot  or  lots,  and 
making  improvements  thereon  in  a  manner  and  form  specified  in  the  certifi- 
cate of  incorporation,  or  for  all  or  any  of  such  purposes,  by  making,  acknowl- 
edging and  filing  a  certificate  of  incorporation  setting  forth  : 

1.  The  name  of  the  corporation. 

2.  The  location  of  its  principal  business  office. 

3.  When  its  regular  meetings  shall  be  held  and  how  special  meetings  may 
be  called. 

4.  What  shall  be  a  quorum  to  transact  business  at  its  meetings. 
k.  How  members  shall  be  admitted,  and  their  qualifications. 

6.  What  officers,  directors  or  attorneys  of  the  corporation  there  shall  be  and 
how  and  when  chosen. 

7.  The  duties  of  such  officers,  directors  or  attorneys,  and  how  removed  or 
suspended  trom  office. 

8.  The  names  of  the  persons  who  shall  be  such  officers  and  directors  for 
its  first  year  and  until  others  are  chosen  or  appointed  in  their  places. 

9.  The  amount  of  each  share  and  how  ascertained. 

10.  The  monthly  or  weekly  dues  per  share. 

11.  The  fees  to  be  paid  on  the  transfer  of  shares. 

12.  The  penalties  for  non-payment  of  dues  or  fees,  or  other  violation  of  the 
provisions  of  the  certificate. 

13.  The  qualification  of  voters  at  its  meetings  and  the  mode  of  voting. 

14.  The  manner  of  dividing  land  and  selecting  or  alloting  the  lots. 

15.  The  manner  of  altering  or  amending  the  certificate  of  incorporation. 

16.  Such  other  provisions  not  inconsistent  with  law  as  shall  be  necessary 
for  the  convenient  and  effective  transaction  of  its  business. 

Such  certificate  must  be  approved  by  the  superintendent  of  banks  and  filed 
in  the  office  of  the  clerk  of  the  county  in  which  such  corporation  shall  have 
its  principal  business  office,  and  a  certified  copy  thereof  shall  be  filed  in  the 
office  of  the  superintendent  of  banks.  Thereupon  the  persons  who  have  sub- 
scribed such  certificate  and  such  other  persons  as  shall  become  members  of 
the  corporation  and  their  successors  shall  be  a  corporation  by  the  name  spec- 
ified in  such  certificate. 

Sec  ic/m. — The  directors  of  evervsuch  corporation  may  call  in  and  demand 
from  the  members  and  stockholders  thereof,  all  sums  of  money  by  them  sub- 
scribed, at  such  times  and  in  such  payments  or  instalments  as  the  certificate 
of  incorporation  shall  prescribe,  under  the  penalty  of  forfeiting  the  shares  of 
stock  subscribed  for  and  all  previous  payments  made  thereon,  if  payment  shall 
not  be  made  by  the  member  or  stockholder  within  sixty  days  after  a  personal 
demand  made  or  notice  requiring  such  payment  shall  have  been  published 
for  six  successive  weeks  in  the  newspaper  nearest  to  the  principal  place  of 
business  of  the  corporation.  But  no  corporation  organized  under  this  article 
shall  purchase  or  deal  in  or  take  security  upon  real  estate  situate  more  than 
fifty  miles  from  its  principal  office  for  the  transaction  of  its  business. 


828  APPENDIX   IV. 

Sec.  196&. — Every  such  corporation  shall  have  power  to  borrow  money  for 
temporary  purposes  not  inconsistent  with  the  objects  of  its  organization,  but 
no  such  loan  shall  have  a  longer  duration  than  three  years,  nor  shall  its 
indebtedness  for  money  so  borrowed  exceed  at  any  one  time  one-fourth  of 
the  aggregate  amount  of  its  shares  and  parts  of  shares  and  the  income  thereof 
actually  paid  in  and  received. 

Sec.  196c. — Dividends  declared  from  the  earnings  of  the  corporation  shall 
be  payable  in  such  manner  as  may  be  provided  in  the  certificate  of  incorpora- 
tion. 

Sec.  ioorf. — No  holder  of  shares  shall  be  exempt  from  making  the  monthly 
or  other  stated  payments  provided  in  the  certificate  of  incorporation  on  the 
ground  that  by  reason  of  losses  or  otherwise,  the  corporation  has  continued 
longer  than  was  originally  anticipated,  whereby  the  payments  made  on  such 
shares  have  amounted  to  more  than  the  amount  originally  intended,  with  legal 
interest  thereon.  The  imposition  of  fines  for  non-payment  of  dues  or  fees  or 
for  other  violation  of  the  certificate  of  incorporation,  or  the  making  of  any 
monthly  payment  required  by  the  certificate  of  incorporation,  shall  not  be 
deemed  a  violation  of  the  provisions  of  any  statute  against  usury. 

Sec.  196c — A  stockholder  of  such  corporation  shall  be  liable  to  the  creditors 
for  the  amount  unpaid  on  the  stock  held  or  subscribed  for  by  him.  The 
directors  or  other  officers  of  every  such  corporation  shall  be  personally  liable 
for  any  fraudulent  use,  disposition  or  investment  of  any  moneys  or  property 
belonging  to  it,  or  for  any  loss  which  shall  be  incurred  by  any  investment 
made  by  any  such  directors  or  officers  other  than  such  as  are  mentioned  in 
and  authorized  by  this  article  ;  but  no  director  or  other  officer  shall  be  so 
liable  unless  he  authorized,  sanctioned,  approved  of  or  made  such  fraudulent 
use,  disposition  or  investment. 

Sec.  196/. — The  shares  held  by  the  members  and  stockholders  of  every  such 
corporation  shall  be  exempt  from  sale  on  execution  for  debt  to  an  extent  not 
exceeding  six  hundred  dollars  in  such  shares  at  their  par  value. 

Sec.  igbg. — On  the  first  day  of  January  of  each  year  every  such  corporation 
shall  make  a  written  report  to  the  superintendent  of  banks,  in  such  form  and 
containing  such  matters  as  he  shall  prescribe.  Such  reports  shall  give  the 
condition  of  such  corporation  at  the  close  of  business  on  the  thirty-first  day  of 
December  in  each  year  ;  and  such  corporation  shall  also  make  reports  to  the 
superintendent  of  banks  whenever  required  by  him  and  as  of  the  day  desig- 
nated by  him. 

Sec.  196/2. — A  corporation  organized  under  this  article  shall  be  subject  to 
the  inspection  and  supervision  of  the  superintendent  of  banks.  He  shall 
either  personally  or  by  some  competent  person  to  be  appointed  by  him  visit 
and  examine  such  corporation  at  least  once  in  each  year  and  whenever,  in 
his  judgment,  its  condition  and  management  is  such  as  to  render  an  examina- 
tion of  its  affairs  necessary  and  expedient.  The  superintendent,  and  every 
such  person  appointed  to  make  such  examination,  shall  have  power  to 
administer  an  oath  to  any  person  whose  testimony  may  be  required  on  such 
examination,  and  to  compel  the  appearance  and  attendance  of  any  such  per- 
son for  the  purpose  of  any  such  examination.  If  the  examination  shall  be 
made  by  the  superintendent,  or  by  one  or  more  of  the  regular  clerks  in  the 
banking  department,  no  charge  shall  be  made  except  for  necessary  travelling 
and  other  actual  expenses.  When  it  shall  appear  to  the  superintendent  from 
an  examination  made  or  reported  to  him,  or  irom  a  report  made  by  any  such 
corporation  pursuant  to  the  provisions  of  this  article,  that  it  has  committed  any 
violation  of  its  charter  or  of  law,  or  is  conducting  its  business  and  affairs  in  an 
unsafe  or  unauthorized  manner,  he  shall  by  an  order  under  his  hand  and 
Official  seal  direct  a  discontinuance  of  such  illegal,  unsafe  or  unauthorized 
practices  and  strict  conformity  with  the  requirements  of  the  lawand 
with  safety  and  security  in  its  transactions.  If  any  such  corporation  shall 
refuse  or  neglect  to  make  any  report  required  by  law  or  to  comply  with 
any  iui  h  order,  oi  ii  it  shall  appear  to  the  superintendent  that  it  is  unsafe 
01  inexpedient  for  it  to  continue  to  transact  business,  the  superintendent 
shall  reporl  the  facts  in  writing  t<>  the  attorney  general,  who  may  thereupon 
bring  an  a<  tion  or  institute  proceedings  for  the  dissolution  of  the  corporation. 
li  from  any  Hi  li  examination  or  report  the  superintendent  shall  conclude  that 
any  in  h  corporation  is  insolvent  because  of  the  value  of  the  assets  of  said 
ration  being  insufficient  to  pay  and  discharge  the  amount  due  to  the 
toi  1  thereof,  including  the  amounl  paid  in  by  the  stockholders  thereof  for 
and  on  account  of  the  purchase  of  01  subscriptions  for  the  capital  stock  of  such 
corporation  without  any  scaling  thereof,  or  is  in  an  unsafe  condition  to  trans- 
iisiness,  he  may  forthwith  take  possession  of  its  property  and  business 


GENERAL   LEGISLATION.  829 

and  retain  such  possession  until  the  termination  of  the  action  or  proceeding 
instituted  by  the  attorney-general. 
In  force  March  31,  1898. 

ARTICLE  VI.* 

Sf.ction  180.— Fifteen  or  more  persons  may  become  a  corporation  for  the 
purpose  of  encouraging  industry,  frugality,  home  building  and  savings  among 
its  members,  the  accumulation  of  savings,  the  loaning  of  such  savings  to  its 
members,  and  the  repayment  to  each  member  of  his  savings  when  they  have 
accumulated  to  a  certain  sum,  or  at  any  time  when  he  shall  desire  the' same, 
or  the  corporation  shall  desire  to  repay  the  same,  or  for  any  or  all  of  such 
purposes,  by  making,  acknowledging  and  filing  a  certificate,  stating  the  name 
of  the  corporation,  which  shall  contain  as  a  part  thereof  the  words  "co-opera- 
tive savings  and  loan  association,"  the  purpose  or  purposes  for  which  it  is 
formed,  the  town,  city  or  village  where  its  principal  place  of  business  is 
located  within  this  state,  and  the  minimum  number  of  shares  of  stock  it  shall 
have  outstanding  at  anyone  time. 

Such  certificate  must  be  approved  by  the  superintendent  of  banks  and  filed 
and  recorded  in  his  office,  and  a  certified  copy  thereof  filed  in  the  office  of  the 
clerk  of  the  county  where  its  principal  business  office  is  to  be  located,  and 
upon  the  filing  of  such  certificate  and  the  certified  copy  thereof,  the  persons 
named  therein,  their  associates  and  successors,  shall  become  and  be  a  cor- 
poration by  the  name  specified  therein. 

R.  S.,  1592,  L.  1887,  ch.  556,  §§  1,  2,  3. 

Sec.  181. — The  officers  of  the  corporation  shall  be  a  president,  vice-president, 
treasurer  and  secretary,  who  shall  be  cx-officio  members  of  the  board  of 
directors,  which  shall  consist  of  nine  members,  exclusive  of  such  cx-officio 
members,  and  such  other  officers  as  may  be  authorized  by  the  by-laws.  By- 
laws shall  be  adopted  prescribing  the  terms  of  office,  duties  and  compensation 
of  the  officers,  the  time  of  their  election  and  of  periodical  meetings  of  the 
officers  and  shareholders,  how  special  meetings  may  be  called,  regulating  the 
due  conduct  of  the  business  of  the  corporation,  defining  the  duties  of  its 
officers  and  committees,  the  mode  of  determining  and  declaring  the  with- 
drawing value  of  shares,  and  making  such  other  regulations  in  regard  to  the 
transaction  of  the  business  of  the  corporation  as  are  not  inconsistent  with  law. 
The  board  of  directors  shall  each  year  determine  the  compensation  of  the 
treasurer  and  secretary,  and  they  may  appoint  and  remove  at  pleasure  an 
attorn  ev  for  the  corporation. 

R.  S.,  1592,  L.  1887,  ch.  556,  §  4. 
Id.,  1595,  L.  1887,  ch.  556,  §  17. 

Sec.  182. — The  capital  of  every  such  corporation  shall  consist  of  the  accumu- 
lated savings  of  its  members,  which  it  holds,  and  shall  not  exceed  at  any  time 
one  million  dollars  ;  and  shall  be  divided  into  shares  of  the  matured  value  of 
two  hundred  dollars  each. 

The  total  number  of  shares  outstanding  at  any  time  shall  not  exceed  ten  thou- 
sand. The  shares  shall  be  issued  in  yearly  or  half-yearly  series  in  such  amounts 
in  each  series  and  at  such  times  as  shall  be  prescribed  by  the  by-laws.  No 
shares  of  a  prior  series  shall  be  issued  after  the  issuing  or  shares  in  a  new 
series.  Shares  which  have  not  been  pledged  as  a  collateral  security  for  the 
repayment  of  a  loan  shall  be  called  unpledged  shares.  Shares  which  have 
been  so  pledged  shall  be  called  pledged  shares.  No  person  shall  hold  more 
than  ten  unpledged  or  twenty  pledged  shares  in  any  one  series.  Each  share- 
holder shall  be  entitled  to  one  vote  at  all  meetings  of  the  shareholders  for 
each  share  owned  by  him  or  held  bv  him  as  trustee,  not  in  arrears  for  dues. 
R.  S.,  1592,  L.  1887,  ch.556,  §§  4,  5. 

Sec.  183. — Savings  paid  to  the  corporation  upon  shares  shall  be  called  dues. 
At  or  before  each  stated  monthly  or  semi-monthly  meeting  of  the  board  of 
directors,  each  shareholder  shall  pay  to  the  board  or  a  committee  thereof,  one 
dollar  dues  upon  each  share  of  stock  held  by  him  until  the  share  reaches  the 
value  of  two  hundred  dollars,  or  is  withdrawn,  cancelled  or  forfeited.  Pay- 
ment of  dues  on  shares  of  each  series  shall  commence  from  its  issue.  Fines 
may  be  imposed  and  collected,  not  exceeding  ten  per  cent,  for  each  month 
in  arrears,  for  every  dollar  of  dues  or  interest  which  a  shareholder  shall  refuse 

*  Applies  only  to  corporations  organized  prior  to  May  15,  1894. 


830  APPENDIX   IV. 

or  neglect  to  pay  at  the  time  it  is  due.  An  entrance  fee  may  also  be  charged 
not  exceeding  twenty-rive  cents  on  every  share  of  stock  issued  by  the  cor- 
poration. 

R.  S.,  1593,  L.  1887,  ch.  556,  §  6. 

Sec.  184. — The  accumulations  upon  unpledged  shares  mny  be  withdrawn 
and  the  shares  cancelled,  after  one  month's  written  notice  of  such  intention 
filed  with  the  secretary  at  or  before  a  stated  monthly  meeting  of  the  board. 
If  tiled  before  such  meeting,  the  one  month's  notice  shall  not  be  deemed  to 
have  commenced  until  the  first  regular  meeting  afcer  filing.  The  withdraw- 
ing shareholder  shall  be  paid  the  amount  of  the  withdrawal  value  of  his 
accumulations  as  determined  under  the  by-laws  at  the  last  distribution  of 
profits  before  the  notice  of  withdrawal,  together  with  all  dues  paid  since  such 
distribution,  and  such  interest  on  the  value  of  the  shares  at  the  time  of  the 
last  distribution  and  on  the  dues  thereafter  paid  as  the  by-laws  shall  deter- 
mine less  any  fines  unpaid  and  a  proportionate  share  of  any  unadjusted  loss  ; 
but  not  more  than  one-half  of  the  receipts  of  the  corporation,  and  when  the 
corporation  is  indebted  on  matured  shares,  not  more  than  one-third  of  such 
receipts  shall  be  applicable  to  the  payment  of  withdrawing  shareholders 
without  the  consent  of  the  board  of  directors.  When  the  demands  of  with- 
drawing shareholders  exceed  the  moneys  applicable  to  their  payment,  they 
shall  be  paid  in  the  order  in  which  their  notices  of  withdrawal  were  filed  with 
the  secretary.  The  board  of  directors  may,  in  their  discretion,  under  rules  made 
by  them,  retire  the  unpledged  shares  of  any  series  at  any  time  after  four  years 
from  the  date  of  their  issue  by  enforcing  withdrawals  of  the  same  ;  but  the 
shareholders  whose  shares  are  to  be  retired  shall  be  determined  by  lot.  and 
they  shall  be  paid  the  full  value  of  their  shares,  less  all  fines  and  proportionate 
part  of  any  unadjusted  loss. 

R.  S.,  1593,  L.  1887,  ch.  556,  §  7. 

Sec.  185. — When  each  unpledged  share  of  a  given  series  reaches  the  value  of 
two  hundred  dollars,  all  payments  of  dues  thereon  shall  cease,  and  the  holder 
thereof  shall  be  paid  out  of  the  funds  of  the  corporation,  two  hundred  dollars 
therefor,  with  such  rate  of  interest  as  shall  be  determined  by  the  by-laws  from 
the  time  the  board  of  directors  shall  have  declared  such  shares  to  be  matured 
until  paid  ;  but  at  no  time  shall  more  than  one-third  of  the  receipts  of  the  cor- 
poration be  applicable  to  the  payment  of  matured  shares  without  the  consent 
of  the  board  of  directors.  The  order  of  the  payment  of  matured  shares  shall 
be  determined  by  the  board  of  directors. 

R.  S.,  1593,  L.  1887,  ch.  556,  §  8. 

Sec.  186. — At  each  monthly  stated  meeting,  immediately  following  the  re- 
ceipt of  dues  and  interest,  the  board  of  directors  shall  offer  to  members  of  the 
corporation,  desiring  to  borrow,  all  accumulations  applicable  to  that  purpose, 
in  sums  of  two  hundred  dollars,  the  value  of  a  matured  share,  or  a  multiple 
thereof,  or  the  fractional  parts  of  one-fourth  or  one-half  thereof.  If  more 
than  one  member  desires  to  borrow,  the  right  to  the  loan  shall  be  determined 
by  an  open  bidding  of  a  premium  per  share,  and  the  member  bidding  the 
highest  premium  shall  be  entitled  to  the  loan  upon  giving  proper  security  ; 
and  the  amount  of  the  premium  paid  shall  he  deducted  from  the  sum  loaned 
at  the  time  of  loaning,  and  the  receipt  thereof  shall  not  be  deemed  a  violation 
of  the  usury  laws.  \To  member  can  borrow  a  larger  sum  than  shall  be  equal 
to  the  matured  value  of  the  shares  held  by  him.  A  borrowing  member,  for 
line  01  fractional  part  thereof  borrowed  upon,  shall,  in  addition  to  the 
dues  on  his  shares,  pay  monthly  interest   on   his   loan    at   the   rate  of   six  per 

1  1  .11 1  or  such  lower  rate  as  the  by-laws  shall  name,  until  the  shares 

borrqwi  d  upon  reach  the  matured  value  ol"  two  hundred  dollars  each,  or  the 
loan  is  repaid  ;  and  when  such  matured  value  is  reached,  the  loan  upon  it 
shall  be  paid  out  of  the  share,  and  the  proper  surrender  and  acquittance  be 
made. 

R,  s.,  [593,  L.  1887,  ch  556,  §9. 

Si  c.  [87.— Every  loan  made  shall  be  secured  by  a  bond  and  a  first  mortgage 
upon  1  in  in.  umbered  real  property,  with  a  transfer  and  pledge  to  the  corpora- 
tion   ol    thi  borrowed  upon,  and  all   accumulations  that  have  or  shall 

accrui  thereon;  but  in  lieu  ol  the  mortgage,  the  borrower,  or  another,  may 

to  the  corporation,  f 01  the  payment  of  the  loan,  unpledged 

.  the  withdrawal  value  ol  whi<  h,  under  the  by-laws,  at  the  time  ol  such 

lex  the   amounl    borrowed  and   interest  thereon   for   six 


GENERAL   LEGISLATION.  831 

months.  The  right  to  the  loan  shall  be  forfeited  if  the  borrower  neglects  to 
offer  security  satisfactory- to  the  board  of  directors  within  the  time  provided 

by  the  by-laws,  and  he  shall  be  charged  with  one  month's  interest  and  all  nec- 
essary expenses  incurred,  if  any,  under  the  by-laws,  in  reference  lo  his  pro- 
posed loan.  All  bonds  and  mortgages  given  to  the  corpi  nation  shall  be  deemed 
Conditioned  upon  the  performance  of  the  provisions  of  this  chapter  relating  to 
the  repayment  of  loans  and  interest  thereon,  and  the  by-laws  of  the  corpora- 
tion, although  not  fully  expressed  therein.  A  borrower  may  repay  the  loan 
and  all  arrears  of  interest  and  lines  theron,  or  one  share  thereof,  at  any  slated 
monthly  meeting,  or  at  any  other  time,  but  when  not  made  at  a  stated  meeting 
he  shall  pay  interest  up  to  the  first  monthly  meeting  after  such  payment.  He 
may  repayhis  loan  in  full  and  release  the  shares  from  liability  upon  the  pledge 
thereof,  or  he  may,  by  a  proper  notice  and  direction  as  to  the  application,  have 
the  withdrawal  value  of  the  shares  borrowed  upon  applied  in  payment  or  part 
payment  of  his  loan. 

R.  S.,  1594,  L.  1887,  ch.  556,  §  10. 

Sec.  188. — Whin  any  member  shall  be  six  months  in  arrears  in  thepayrment 
of  dues  upon  unpledged  shares,  the  secretary  shall  give  him  notice  thereof  in 
writing,  a  statement  of  his  arrearages,  by  mailing  the  same  to  him  at  the 
last  postoffice  address  given  by  him  to  the  corporation,  and  if  he  shall  not  pay 
the  same  on  or  before  the  second  stated  monthly  meeting  thereafter,  the  board 
of  directors  may,  at  their  discretion,  declare  his  shares  forfeited  ;  ami  at  the 
time  of  such  forfeiture,  the  withdrawal  value  thereof  shall  be  determined  and 
stated,  and  the  defaulting  member  shall  be  entitled  to  withdraw  the  same 
without  interest  within  one  year,  upon  such  notice  as  shall  be  required  of  a 
withdrawing  shareholder.  If  a  borrowing  member  shall  be  six  months  in 
arrears  in  the  payment  of  his  dues  and  interest,  or  either,  the  whole  loan  shall 
become  due  at  the  option  of  the  board  of  directors,  and  they  may  proceed  to 
enforce  the  collection  upon  the  securities  held  by  the  corporation.  The  with- 
drawal value  at  the  time  of  the  commencement  of  the  action,  of  all  shares 
pledged  as  collateral  security  for  the  loan,  shall  be  applied  upon  the  loan  and 
arrearages  of  interest  and  fines  thereon,  and  the  shares  deemed  surrendered 
to  the  corporation. 

R.  S.,  1594,  L.  1887,  ch.  556,  §§  11,  12. 

Sec.  189. — Any  such  corporation  may  purchase  at  any  sale,  public  or  private, 
any  real  property  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  any 
other  incumbrance,  or  in  which  it  may  have  any  interest,  and  may  sell,  con- 
vey, lease  or  mortgage  the  same  at  pleasure  to  any  person  or  persons.  It  may 
also  borrow  money,  but  not  for  a  longer  period  than  one  year,  for  the  purpose 
of  making  loans  or  paying  withdrawals,  not  exceeding  two  thousand  dollars, 
when  its  accumulated  capital  is  less  than  ten  thousand  dollars  ;  and  not  exceed- 
ing six  thousand  dollars  when  its  accumulated  capital  shall  be  ten  thousand  dol- 
lars and  over,  and  not  more  than  sixty  thousand  dollars  ;  and  if  its  accumulated 
capital  exceeds  sixty  thousand  dollars,  it  may  borrow  money  for  such  purposes 
not  exceeding  ten  per  cent,  of  its  accumulated  capital. 

If  any  such  corporation  has  a  surplus  in  its  treasury  for  which  there  is  no 
demand  for  loans,  withdrawing  shareholders  or  matured  stock,  it  may  loan 
the  same  to  any  other  corporation  organized  under  the  provisions  of  this 
article,  subject  to  the  provisions  of  this  section  on  the  part  of  the  borrowing 
corporation.  No  corporation  shall  borrow  or  make  loans  authorized  by  this 
section  except  by  a  two-thirds  vote  of  its  board  of  directors,  which  shall  be  re- 
corded by  ayes  and  nays  in  its  regular  minutes. 

"R.  S.,  1594,  L.  1887,  ch.  556,  §  13. 
Id.,  1595,  L.  1887,  ch.  556,  §  14. 

Sec.  190. — Profits  and  losses  shall  be  distributed  at  least  annually  and  always 
before  issuing  a  new  series  of  stock  to  all  shares  in  all  series  outstanding  at  the 
time  of  such  distribution,  in  proportion  to  their  holding  value  as  distinguished 
from  their  withdrawing  value,  except  that,  in  addition  thereto,  a  distribution 
of  not  exceeding  the  amount  of  the  entrance  fee,  in  the  discretion  of  the  board 
of  directors,  may  be  made  to  each  share  outstanding  in  the  last  series  issued 
prior  to  the  distribution.  At  each  periodical  distribution  of  profits,  the  board 
of  directors  may  reserve  and  carry  as  undistributed  profits,  in  the  nature  of  a 
guaranty  fund,  any  sum  from  the  net  profits  that  in  their  discretion  seems  wise, 
to  be  applied  upon  any  future  losses  that  may  occur  from  any  cause  what- 
ever. 

R.  S.,  1594,  L.  1887,  ch.  556,  §  15. 


832  APPENDIX    IV. 

Sec.  191. — Any  person  of  full  age  and  sound  mind  may  become  a  member 
of  the  corporation  by  taking  one  or  more  shares  therein  and  subscribing  the 
by-laws,  and  annexing  to  the  signature  his  post-office  address  ;  and  when  he 
desires  his  post-office  address  changed,  he  shall  give  written  notice  thereof  to 
the  secretary  of  the  corporation  ;  and  for  the  purpose  of  giving  any  member 
notice  by  mail,  the  last  post-office  address  given  by  him  shall  oe  deemed  the 
proper  one.  A  minor  may  hold  shares  in  the  name  of  a  parent,  guardian  or 
next  friend  as  trustee  for  him. 

No  transfer  of  shares  shall  be  binding  upon  the  corporation  until  the  same 
has  been  made  upon  its  books  ;  and  the  transferee  thereof  shall  take  the  same 
charged  with  all  the  liabilities  and  conditions  attaching  thereto  in  the  hands 
of  the  person  transferring  the  same  ;  and  the  corporation  may  require  a 
transfer  fee  not  exceeding  twenty-five  cents  per  share. 

All  accumulations  upon  shares  held  by  any  person  shall  be  exempt  from 
execution  and  proceedings  supplementary  thereto  to  the  amount  of  six  hundred 
dollars  ;  and  the  corporation  shall  be  deemed  an  institution  for  savings  and 
not  taxable  under  any  corporation  tax  law,  which  shall  exempt  savings  banks 
or  institutions  for  savings  from  taxation  ;  and  no  such  corporation  shall  be 
liable  to  pay  any  tax  upon  its  organization  or  as  a  condition  thereof. 
R.  S.,  159=;,  L.  1837,  ch.  556,  §§  16,  18. 
Id.,  1596,  L.  1887,  ch.  556,  §  23. 

REPORTS. 

ACTS  1898,— Chapter  333. 

Section  20. — Every  corporation  and  individual  banker  subject  to  the  pro- 
visions of  this  chapter  shall  make  a  written  report  to  the  superintendent  of 
banks,  in  such  form  and  containing  such  matters  as  he  shall  prescribe.  In 
the  case  of  a  bank  or  individual  banker,  the  superintendent  shall,  at  least  once 
in  every  three  months,  designate  some  day  therein  in  respect  to  which  the 
report  shall  be  made.  If  a  savings  bank,  trust  company  or  safe  deposit  com- 
pany, such  report  shall  be  made  semi-annually  on  or  before  the  twentieth  day 
of  January  and  July  in  each  year,  and  shall  contain  a  statement  of  its  condition 
on  the  mornings  of  the  first  days  of  January  and  July  preceding.  If  a  savings 
bank,  such  report  shall  state  the  amount  loaned  upon  bond  and  mortgage, 
together  with  a  list  of  such  bonds  and  mortgages  and  the  location  of  the 
mortgaged  premises,  as  have  not  been  previously  reported,  and  also  a  list  of 
such  "previously  reported  as  have  been  since  paid  wholly  or  in  part,  or  have 
been  foreclosed,  and  the  amount  of  such  payments  respectively  ;  the  cost,  par 
value  and  estimated  market  value  of  all  stock  investments,  designating  each 
particular  kind  of  stock  ;  the  amount  loaned  upon  the  pledge  of  securities, 
with  a  statement  of  the  securities  held  as  collateral  for  such  loans  ;  the  amount 
invested  in  real  estate,  giving  the  cost  of  the  same,  the  amount  of  cash  on 
hand  and  on  deposit  in  banks  or  trust  companies,  and  the  amount  deposited 
in  each  ;  and  such  other  information  as  the  superintendent  may  require. 
Such  report  shall  also  state  all  the  liabilities  of  such  savings  corporation  on 
the  morning  of  the  said  first  day  of  January  and  July;  the  amount  due  to 
depositors,  which  shall  include  any  dividend  to  be  credited  to  them  for  the  six 
months  ending  on  that  day,  and  any  other  debts  or  claims  against  such  cor- 
poration which  are  or  may  be  a  charge  upon  its  assets.  Such  report  shall  also 
state  the  amount  deposited  during  the  year  previous,  and  the  amount  with- 
drawn during  the  same  period;  the   whole   amount   of   interest   or   profits 

ived  1  (reamed  and  the  amount  of  dividends  credited  to  depositors,  together 
with  the  amount  of  each  semi-annual  credit  of  interest,  and  the  amount  of 
thai  may  have  been  credited  at  other  than  semi-annual  periods,  the 
numbei  oi  accounts  opened  or  reopened,  the  number  closed  during  the  year, 
and  the  number  of  open  accounts  at  the  end  of  flic  year,  and  such  other 
information  as  may  be  required  by  the  superintendent.    If  a  trust  company  or 

depo  11  company,  such  report  shall  contain  such  particulars  as  the  super- 
intended may  prescribe.  If  a  co-operative  loan  association,  or  a  building  and 
mutual  loan  corporation  or  a  mortgage,  loan  or  investment  corpotation,  such 

1  shall  be  made  annually  on  or  before  February  first  in  each  year,  ana  shall 
contain  n  statement  0)  its  condition  on  the  first  </>iy  of  January  preceding.  The 
mperintendeni  may,  foi  good  cause  shown,  extend  the  time  for  making  any 
men  reporl  not  exceeding  thirty  days.  Every  such  report  shall  lie  verified  by 
the  oath  ol  the  pre  idenl  and  ca  hier  or  treasurer  of  such  corporation  or  by 
Buch  individual  banker,  to  the  effect  that  the  same  is  true  and  correct  in  all 
cts  to  the  In    I  oi  In  ,  knowledge  and  belief  and  that  the  usual  business  of 


GENERAL   LEGISLATION.  S.0,:) 

such  corporation  or  banker  has  been  transacted  at  the  location  required  by 
this  Chapter,  and  not  elsewhere.  The  superintendent  shall  serve  a  notice 
designating  the  day  in  each  quarter  when  a  report  shall  be  made  upon  each 
bank  and  individual  banker  required  to  report  to  him  by  delivering  the  same 
to  some  officer  or  clerk  thereof  at  their  respective  places  of  business  or  by 
depositing  the  same  in  the  post-office  inclosed  in  a  postpaid  wrapper  and 
properly  directed  to  each  of  them,  or  some  officer  thereof,  at  their  places  of 
business  respectively. 
In  force  April  20,  180S. 

NORTH    CAROLINA. 

CODE  OF  1883. 

Section  2204.— It  shall  be  lawful  for  any  individuals  or  persons  in  any  city 
or  county  in  this  state,  under  any  name  by  them  to  be  assumed,  to  associate 
for  the  purpose  of  organizing  and  establishing  homestead  and  building  asso- 
ciations, and  being  so  associated  shall,  on  complying  with  this  chapter,  be  a 
body  politic  and  corporate,  and  as  such  shall  be  capable  in  law  to  hold  and 
dispose  of  property,  both  real  and  personal,  may  have  and  use  a  common 
seal,  may  choose  a  presiding  and  other  officers,  may  enact  by-laws  for  the  reg- 
ulation of  the  affairs  of  such  corporation,  and  compel  the  due  observance  of 
the  same  by  fines  and  penalties,  may  sue  and  be  sued,  plead  and  be  impleaded, 
answer  and  be  answered  in  any  court  in  this  state,  and  do  all  acts  necessary 
for  the  well  ordering  and  good  government  of  the  affairs  of  such  corporation, 
and  shall  exercise  all  and  singular  the  powers  incident  to  bodies  politic  or 
corporate  ;  Provided,  that  before  any  such  corporation  shall  be  entitled  to  the 
privileges  of  this  chapter,  they  shall  lodge  with  the  clerk  of  the  superior  court 
of  the  county  where  such  corporation  is  designed  to  act,  a  copy  of  the  articles 
of  association  of  such  corporation,  signed  by  at  least  seven  members  and 
certified  by  the  secretary  thereof,  to  be  recorded  in  the  office  of  such  clerk, 
and  shall  pay  a  tax  of  "twenty-five  dollars  to  said  clerk,  which  tax  shall  be 
paid  over  by  the  clerk  to  the  treasurer  of  the  county,  to  the  use  of  the  school 
fund  of  the  county. 

Sec.  2295. — Any  addition,  alteration  or  amendment  of  the  articles  of  asso- 
ciation of  any  such  corporation  shall  be  signed,  certified  and  recorded  as  is 
provided  in  the  preceding  section  of  this  chapter. 

Sec.  2296. — Any  corporation  created  under  and  by  virtue  of  this  chapter, 
shall  have  power  to  declare  in  their  articles  of  association  the  number  of 
shares  of  which  the  capital  stock  of  such  corporation  shall  consist,  the  par 
value  of  the  same,  to  limit  the  number  which  each  stockholder  may  be  allowed 
to  hold,  to  prescribe  the  entrance  fee  to  be  paid  by  each  stockholder  at  the 
time  of  subscribing,  to  regulate  the  instalments  to  be  paid  on  each  share,  and 
the  times  at  which  the  same  shall  be  paid  and  payable. 

Sec.  2297. — Any  such  corporation  shall  have  power  to  issue  to  each  member 
of  such  corporation  a  certificate  of  the  shares  of  stock  held  by  him,  and  to  en- 
force the  payment  of  all  instalments  and  other  dues  due  to  said  corporations 
from  the  members  or  stockholders  by  such  fines  and  forfeitures  as  the  cor- 
poration may,  from  time  to  time,  provide  in  the  by-laws  or  articles  of  associa- 
tion of  such  corporation. 

Sec.  2298. — Any  person  applying  for  membership  or  stock  in  any  such  cor- 
poration after  the  end  of  a  month  from  the  date  of  its  incorporation,  may  be 
required  to  pay,  on  subscribing,  such  sums  or  assessments  as  may  from  time 
to  time  be  fixed,  and  assessed  in  manner  as  may  be  provided  by  said  corpora- 
tion, in  order  to  place  such  new  member  or  stockholder  on  like  footing  with 
the  original  members  and  others  holding  stock  at  the  time  of  such  application  ; 
Provided,  that  any  association  that  has  been  or  may  be  organized  under  this 
chapter  shall  be  authorized  and  empowered  to  establish  one  or  more  addi- 
tional class  or  classes  of  shares,  under  such  rules,  regulations  and  restrictions 
for  issuing,  paying  and  redeeming  the  same  as  to  them  shall  appear  expedient 
and  proper,  not  inconsistent  with  this  chapter,  or  laws  of  this  state. 

Sec.  2299  (as  amended  Acts  1895,  p.  468).— It  shall  be  lawful  for  any  such 
corporation  at  anytime  in  advance  of  the  time  at  which  such  corporation  shall 
cease  to  exist,  according  to  the  plan  contained  in  the  articles  of  association 
thereof,  to  advance  to  any  member  thereof  for  such  premium  as  may  be 
agreed  upon,  the  sum  which  he  would  be  entitled  to  receive  upon  the  dissolu- 
tion thereof,  for  any  number  of  shares  therein  held  by  him,  or  to  purchase 
from  any  member  the  share  or  shares  of  stock  held  by  him  at  such  price  or 
sum  as,  according  to  the  articles  of  association,  such  member  may  agree  to 
receive,  and  on  payment  of  said  sum  of  money,  to  receive  from  such  member 


834  APPENDIX   IV. 

security  as  is  hereinafter  mentioned  for  the  payment  of  such  members  to  said 
corporation  of  the  unpaid  instalments,  to  be  paid  on  the  share  or  shares  of 
stock  so  sold  or  redeemed,  together  with  interest  at  the  rate  of  six  per  cent, 
per  annum,  on  the  sum  of  money  so  paid  or  advanced  to  such  member  at  such 
times,  and  under  and  subject  to  such  fines  and  penalties  for  non-payment 
thereof  as  may  be  prescribed  by  the  articles  of  association  of  such  corpora- 
tion. 

Sec.  2300. — The  payment  of  the  unpaid  instalments  on  the  share  or  shares 
so  purchased  or  redeemed,  with  interest  upon  the  sum  of  money  paid  therefor 
as  aforesaid,  at  the  rate  heretofore  mentioned,  and  all  fines  and  penalties  in- 
curred in  respect  thereof  by  any  such  member,  shall  be  secured  to  such  cor- 
poration by  way  of  mortgage  on  real  or  leasehold  property,  or  by  hypotheca- 
tion of  stock  of  such  corporation  held  by  such  member  as  may  be  provided  in 
the  articles  of  association  of  any  such  corporation  ;  Provided,  in  case  of  hypoth- 
ecation of  stock,  no  greater  sum  of  money  shall  at  any  time  be  drawn  out  by 
any  member  than  shall  have  already  been  paid  in  by  him  on  all  his  shares  at 
the  time  of  such  hypothecation. 

Sec.  23001?  (added  by  chapter  434,  public  laws  of  1893). — Every  non-res- 
ident building  and  loan  association  doing  business  in  this  state  shall  appoint 
a  general  agent  or  attorney,  who  shall  be  a  citizen  and  resident  of  this  state,  and 
file  a  certificate  of  such  appointment  with  the  auditor  of  state,  and  copies  of 
such  certificates  of  appointment,  certified  by  the  said  auditor,  shall  be  received 
as  sufficient  evidences  of  such  appointment  before  any  court  in  this  state,  and 
such  certificate  shall  contain  a  stipulation  agreeing  that  so  long  as  there  may 
be  any  liability  on  the  part  of  the  applicant  under  any  contract  entered 
into  in  pursuance  of  any  law  of  this  state,  process  may  be  served  in  the  ab- 
sence of  the  principal  upon  such  general  agent  or  attorney  ;  Provided,  that 
service  may  be  made  upon  the  auditor  of  state,  and  it  shall  be  his  duty  in  such 
case  to  transmit  at  once  a  copy  of  the  process  to  the  home  office  of  the  asso- 
ciation. 

Sec.  23006  (added  by  chapter  434,  public  laws  of  1893). — Every  associa- 
tion doing  business  under  this  chapter  shall  file  in  the  office  of  the  auditor  of 
state,  on  or  before  the  first  day  of  March  in  each  year,  in  such  form  as  he  shall 
prescribe,  a  statement  of  the  business  standing  and  financial  condition  of  the 
applicant  on  the  preceding  thirty-first  day  of  December,  signed  and  sworn  to 
by  said  principal  or  by  the  chief  managing  agent,  attorney  or  officer  thereof 
before  the  auditor  of  state,  or  before  a  commissioner  of  affidavits  for  North 
Carolina,  or  before  some  notary  public. 

Sec.  2300c  (added  by  chapter  434,  public  laws  of  18931. — Every  associa- 
tion doing  business  under  this  act  shall  file  in  the  office  of  the  auditor  of  state 
a  copy  of  the  charter,  articles  of  association,  or  other  statement,  showing  the 
mode  in  which  the  applicant  proposes  to  do  business. 

Sec.  2300c/  (added  by  chapter  434,  public  laws  of  1893). — It  shall  be  the 
duty  of  the  auditor  of  state  to  receive  and  thoroughly  examine  each  annual 
statement  required  by  this  act,  and  if  made  in  compliance  with  the  require- 
ments of  this  act  to  publish  an  abstract  of  the  same  in  one  of  the  newspapers  of 
the  state,  to  be  selected  by  the  general  agent  or  attorney  making  such  state- 
ment, and  at  the  expense  of  his  principal.  The  auditor  of  state  shall  be  en- 
titled to  a  fee  of  five  dollars,  to  be  paid  by  the  association  filing  such  state- 
ment. 

SEC.  2300c  (added  by  chapter  434,  public  laws  of  1893). — If  the  auditor  of 
state  shall  become  satisfied  at  any  time  that  any  statements  made  by  any  asso- 
ciation licensed  under  this  act  shall  be  untrue,  or  in  case  a  general  agent  shall 
fail  or  refuse  to  obey  the  provisions  of  this  act,  the  auditor  of  state  shall  notify 
the  state  treasurer  of  such  default,  and  the  state  treasurer  shall  thereupon  have 
er  to  revoke  and  cancel  such  license. 

SEC.  -'300/  'added  by  chapter  434,  public  laws  of  1893). — It  shall  be  the 
duty  of  any  person  having  in  his  possession  or  control  any  books,  accounts  or 
papersol  any  as  ociation  licensed  under  this  act  to  exhibit  the  same  to  the 
auditor  of  stale  on  demand,  and  on  refusing  so  to  do,  or  knowingly  or  wilfully 
making  any  false  statement  in  regard  to  the  same,  such  persons  shall  be  deemed 
guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  lined  or  im- 
led,  or  both,  at  the  discretion  oi  the  court 

Sec.  23001*     added    by  chapter  434,  public  laws  of  1893). — Every  general 

agent  oi  attorney  who  shall  fail  01   refuse  to  perform  any  dutv  required  of 

him  by  this  act  shall  forfeit  and  pay  to  the  auditor  of  state  fifty  dollars  for  every 

kIu  ial,  to  be  ret  overed  before   any    justice  of  the  peace-  at  the  suit  of  the 

:,aid  auditoi , 

-•300/1  (added  by  chapter  434,  public  laws  of   1893).— Any  person   who 


GENERAL   LEGISLATION.  835 

shall  solicit  or  transact  any  business  for  or  concerning  any  association  not 
duly  licensed  as  in  this  act  provided  shall  be  guilty  oFa  misdemeanor,  and 
upon  conviction  thereof  shall  be  lined  or  imprisoned,  or  both,  in  the  discre- 
tion of  the  court. 

ACTS  1895,  p.  468. 

Section  2300  (i).— That  every  building  and  loan  association  doing  business 
in  this  state  shall  be  authorized  to  issue  as  many  classes  or  series  and  kinds  of 
stock  including  instalment  and  paid-up  stock  as  maybe  provided  for  in  its 
charter  or  by-laws. 

Sec.  2300  (j ).— That  any  member  of  such  association  who  shall  borrow  from 
it  shall  have  the  right  at  any  time  to  pay  off  and  discharge  his  loan  by  paving 
the  amount  received  by  him  including  the  cost  and  expenses  ol  making  the 
loan  if  the  same  shall  have  been  deducted  therefrom  with  interest  at  the  rate 
of  six  per  cent,  per  annum  on  the  whole  sum  received  by  him  to  the  date  of 
settlement  and  all  premiums,  fines  and  dues  then  remaining  unpaid.  Upon 
such  settlement  he  shall  be  credited  with  only  the  withdrawal  value  as  fixed 
by  the  charter  or  by-laws  of  such  association  of  his  shares  of  stock  which 
have  not  been  transferred  or  assigned  to  the  association  by  way  of  or  in  lieu 
of  premium  on  the  loan.  That  in  case  of  default  by  a  stockholder  who  has 
borrowed  from  the  association  and  a  foreclosure  of  his  mortgage,  the  amount 
of  his  indebtedness  to  such  association  shall  be  ascertained  in  the  manner 
provided  by  this  act. 

Sec.  2300  (k). — That  in  the  settlement  provided  for  in  the  foregoing  sections 
no  account  shall  be  taken  of  the  premiums  paid  by  the  borrowing  member, 
but  the  same  shall  be  deemed  the  consideration  of  his  being  allowed  to  antic- 
ipate the  ultimate  or  par  value  of  his  stock  by  his  present  use  and  possession 
thereof  in  preference  to  the  other  stockholders. 

Sec.  2300  (1). — That  every  such  association  shall  have  power  to  charge  its 
shareholders  upon  the  loans  to  them  premiums  thereon  to  be  in  gross  or  by 
instalments  or  on  its  stock  or  by  requiring  them  to  carry  additional  shares  of 
stock  as  may  be  provided  in  its  charter  and  by-laws. 

Sec.  2300  (m). — That  nothing  herein  contained  shall  prevent  the  associa- 
tions from  contracting  with  its  borrowing  members  for  the  restoration  or  re- 
instatement of  their  stock  upon  such  terms  as  may  be  agreed  upon. 

Sec.  2300  (n). — That  any  contract  made  by  any  foreign  association  with 
any  citizen  of  this  state  shall  be  deemed  and  considered  a  North  Carolina 
contract  and  shall  be  [so]  constructed  [construed]  by  all  the  courts  of  this 
state  according  to  the  laws  thereof. 

Sec.  2300  (o). — Every  such  association  may  borrow  money  for  the  purpose 
of  making  loans  and  advances  to  its  members. 

Sec.  2300  ( p  i. — That  all  laws  and  clauses  of  laws  in  conflict  with  this  act  are 
hereby  repealed  only  so  far  as  they  are  in  conflict  therewith. 

Sec.  2300  (q). — If  at  any  time  the  state  auditor  shall  have  good  reason  to 
think  that  the  standing  and  responsibility  of  any  building  and  loan  associa- 
tion or  company  doing  this  business  in  this  state  of  a  doubtful  character  it 
shall  be  his  duty  to  examine  and  investigate  everything  relating  to  the 
business  of  such  company  and  to  that  end  he  is  hereby  authorized  to  appoint 
a  suitable  and  competent  person  to  make  such  investigation  who  shall  file 
with  the  auditor  a  full  report  of  his  rinding  in  such  case. 

Sec.  2300  (r). — The  expenses  and  cost  of  examination  provided  for  in  the 
preceding  section  shall  be  defrayed  by  the  company  or  association  subjected 
to  investigation  and  each  company  or  association  doing  business  in  this  state 
shall  stipulate  in  writing  to  be  filed  with  the  state  auditor  that  it  will  pay  all 
reasonable  cost  and  expenses  of  such  examination  when  it  shall  become  nec- 
essary. 

Sec.  2300  (s). — It  shall  be  unlawful  for  any  person  to  solicit  business  or  act 
as  agent  for  any  building  and  loan  association  or  company  in  the  state 
without  having  procured  from  the  state  auditor  a  certificate  that  such  associa- 
tion or  company  for  which  he  offers  to  act  is  duly  licensed  by  the  state  to  do 
business  for  the  current  year  in  which  such  person  solicits  business  or  offers 
to  act  as  agent.  The  state  auditor  shall  be  entitled  to  a  fee  of  fifty  cents  for 
issuing  each  such  certificate  to  be  paid  by  the  company  for  which  the  same  is 
issued.     Any  person  violating  this  section  shall  be  guilty  of  a  misdemeanor. 

PUBLIC  LAWS,  1893— Chapter  294. 

Sec.  30.  *  *  *  Every  building  and  loan  association  conducting  busi- 
ness in  the  state  shall  pay  annually  to  the  state  treasurer  a  tax  according  to 


836  APPENDIX  IV. 

the  paid-in  capital  as  follows  :  A  paid-in  capital  of  two  hundred  thousand 
dollars  ($200,000)  or  more,  one  hundred  dollars  ($100)  ;  on  paid-in  capital  of 
fiftv  thousand  dollars  .850,000)  and  less  than  two  hundred  thousand  dallars 
(Sjoo.ooo),  fifty  dollars  1850);  on  a  paid-in  capital  of  twenty-five  thousand 
dollars  1825,060)  and  less  than  fifty  thousand  dollars  (850,000),  twenty-five 
dollar--  ($25)  ;  on  a  paid-in  capital  of  five  thousand  dollars  (85,000)  and  less 
than  twenty-five  thousand  dollars  (825.0001,  ten  dollars  ($10)  ;  on  a  paid-in 
capital  of  less  than  five  thousand  dollars  (.85,000),  five  dollars  ($5)  ;  Provided, 
that  no  counties  or  corporation  shall  be  aliowed  to  add  any  additional  tax, 
license  or  other  fee.  Any  building  and  loan  association  which  does  business 
in  this  state  without  paying  such  tax  shall  be  guilty  of  a  misdemeanor. 

Chapter  434. 

Section  2. — No  building  and  loan  association  shall  be  required  to  pay  any 
tax  or  license  except  such  as  are  specified  in  the  "act  to  raise  revenue" 
[chapter  294,  public  laws  of  1893],  passed  at  this  session  of  the  general 
assembly. 

NORTH  DAKOTA. 

REVISED  CODE,  1895. 

Section  3203. — Any  ten  or  more  persons  may  form  a  corporation  for  the 
purpose  of  doing  business  as  a  building  and  loan  association  in  the  manner 
provided  in  this  chapter  and,  except  as  otherwise  provided,  the  provisions  of 
articles  1  to  11  inclusive  of  Chapter  II.  shall  be  applicable  to  such  corpora- 
tion. Such  corporation  may  do  business  outside  of  this  state  if  it  shall  have 
expressed  its  intention  so  to  do  in  its  articles  of  incorporation. 

Sec.  3204. — The  capital  stock  of  any  such  corporation  formed  pursuant  to 
this  chapter  shall  be  paid  in  at  such  times,  and  in  such  amounts  and  at  such 
places  as  the  by-laws  shall  appoint ;  every  share  of  stock  shall  be  subject  to  a 
lien  for  the  payment  of  unpaid  instalments  and  other  charges  incurred 
thereon  under  the  provisions  of  the  by-laws,  and  the  by-laws  may  prescribe 
the  form  and  manner  of  enforcing  such  hen  ;  new  shares  of  stock  may  be 
issued  in  lieu  of  the  shares  withdrawn  or  forfeited.  The  stock  may  be  issued 
in  one  or  more  successive  series  in  such  amounts  as  the  board  of  directors  or 
stockholders  may  determine,  and  any  stockholder  wishing  to  withdraw  from  the 
corporation  shall  have  power  to  do  so  by  giving  thirty  days'  notice  of  his  in- 
tention to  withdraw,  when  he  shall  be  entitled  to  receive  the  amount  paid  in 
by  him  and  such  proportion  of  the  profit  as  the  by-laws  may  determine,  less  all 
fines  and  other  charges  ;  Provided,  that  at  no  time  shall  there  be  more  than 
one-half  of  the  funds  in  the  treasury  of  the  corporation  be  applicable  to  the 
demands  of  withdrawing  stockholders  without  the  consent  of  the  board  of 
directors  ;  and  that  no  stockholder  shall  be  entitled  to  withdraw  whose  stock 
is  held  in  pledge  for  security.  Upon  the  death  of  the  stockholder,  his  legal 
representative  shall  be  entitled  to  receive  the  full  amount  paid  in  by  him 
and  legal  interest  thereon  after  deducting  all  charges  that  may  be  due  on 
stock.  No  fine  shall  be  charged  to  a  deceased  member's  account  after  his 
decease,  unless  the  legal  representative  of  such  decedent  assume  the  future 
payment  on  the  stock. 

Sec.  3205. — The  officers  shall  hold  stated  meetings  at  which  the  money  in 
the  treasury,  if  equal  to  the  amounl  of  one  share  in  stock  in  such  corporation, 
shall  be  offered  for  loan  in  open  meeting  and  the  stockholder  who  shall  bid 
the  highest  premium  for  the  preference  or  priority  of  loan  shall  be  entitled  to 
receive  a  loan  of  (he  amount  of  the  par  value  of  one  share  of  stock  for  each 
share  of  stock  held  by  him. 

SEC.  3206. — For  every  loan  made  a  note  secured  by  first  mortgage  of  real 

ill  be  given,  accompanied  by  transfer  and  pledge  of  the  shares  of 

the  borrower.     The  shares  so  pledged  shall  be  held  by  the  corporation  as 

collateral  For  the  performance  of   the  conditions  of  such   note   and 

1  I     note  and  mortgage    tiall  recite  the  number  of  shares  pledged 

and  the  amount  oi  money  advanced  t  hereon,  and  shall  he  conditioned  for  the 

eni  of  the  dues  on  such  shares  and  the  interest  and  premium  upon  the 

loan,  together  with  all  lines  and  payments  in  arrears  until  such  shares  reach 

the  nit i mate  par  value  of  the  share    "i     to<  I  "i  the  corporation,  or  the  loan  is 

otherwise  cancelled land  di  charged  ;  Provided,  that  the  shares  without  other 

may  in  disi  retion  ■  >!  the  dir<  ctoi  i  be  pledged  as  security  for  loans 

n  amounl  not  exceeding  their  value  as  adjusted  at  the  last  adjustment 

and  valuation  ol  Bhares  before  the  time  of  the  loan.    If  the  borrower  neg- 


GENERAL   LEGISLATION.  837 

lects  to  offer  security  satisfactory  to  the  directors  within  the  time  prescribed 
by  the  by-laws  his  right  to  the  loan  shall  be  forfeited  and  he  shall  be  i  barged 
with  one  month's  interest  and  one  month's  premium  at  the  rate  bid  by  him, 
together  with  all  expenses,  if  any,  incurred  ;  and  the  money  appropriated  for 
such  loan  may  be  reloaned  at  the  next  or  any  subsequent  meeting. 

SEC.  3207.— A  borrower  may  repay  a  loan  at  any  time  upon  application 
to  the  corporation,  whereupon,  on  settlement  of  his  account,  he  shall  he 
charged  with  the  full  amount  oi  the  original  loan  together  with  all  instal- 
ments of  interest,  premiums  and  lines  in  arrears,  and  shall  be  given  credil  for 
the  withdrawing  value  of  his  shares  pledged  and  transferred  as  security, 
and  the  balance  shall  be  received  by  the  corporation  in  full  satisfaction  and 
discharge  of  such  loan  ;  Provided,  that  a  borrower  desiring  to  retain  Ins  shares 
and  membership  may,  at  his  option,  repay  his  loan  without  claiming  credil  for 
such  shares,  whereupon  the  shares  shall  be  retransferred  to  him,  and  shall 
be  free  from  any  claim  by  reason  of  such  cancelled  loan.  If,  however,  the 
by-laws  of  the  corporation  prescribe  a  different  manner  and  different  terms 
upon  which  a  loan  may  be  repaid  the  repayment  can  only  be  made  in  ac- 
cordance with  such  by-laws. 

Sec.  1208.— No  premiums,  fines  or  interest  on  premiums  that  may  accrue  to 
the  corporation  according  to  the  provisions  of  this  chapter  shall  be  deemed 
usurious. 

Sec.  3209.— Every  corporation  may  purchase  at  any  sale,  public  or  private, 
any  real  estate  upon  which  it  may  have  a  mortgage,  judgment  hen  or 
other  incumbrance  or  ground  rent  or  in  which  it  may  have  any  interest 
and  may  sell,  convey,  lease  or  mortgage  at  pleasure  real  estate  so  purchased. 

Sec.  3210.— Such  corporation  may,  in  its  by-laws,  fix  a  per  cent,  premium 
at  less  than  which  it  will  not  be  obliged  to  accept  loans. 

Sec  321 1. — Not  less  than  83  per  cent,  of  all  monthly  dues  collected  from  the 
shareholders  of  such  corporation  shall  be  put  into  a  fund  to  be  known  as  the 
loan  fund,  no  part  of  which  shall  be  used  bv  the  corporation  for  the  pur- 
pose of  paying  its  expenses,  or  the  expense  of  carrying  on  its  business,  ex- 
cepting interest,  taxes  and  insurance. 

Sec.  3212.— Any  funds  of  such  corporation,  which  shall  remain  unloaned  for 
a  period  of  more  than  thirty  days  and  for  which  there  is  no  sufficient  demand, 
may  be  loaned  or  invested  by  the  corporation  under  the  provisions  of  its  by- 
laws at  any  rate  of  interest  allowed  by  law  upon  any  security  approved  and 
accepted  by  the  board  of  directors. 

Sec.  3213.— Such  corporation  shall  have  power  to  borrow  money  under  such 
restrictions  and  regulations  as  its  by-laws  may  provide. 

Sec.  3214.— The  board  of  directors  of  such  corporation  shall  have  power  in 
its  discretion  to  retire  the  unpledged  shares  of  stock  of  such  corporation  at 
any  time  after  the  third  year  from  the  date  of  the  issue  of  such  stock  and  to 
enforce  the  withdrawal  of  the  same  in  such  manner  and  under  such  regula- 
tions as  it  may  deem  best  for  the  interest  of  the  corporation.  It  shall  deter- 
mine bv  lot  or  in  any  other  impartial  manner  which  shares  shall  be  thus  re- 
tired, but  no  unmatured  stock  shall  be  retired  while  any  matured  stock  re- 
mains in  force. 

Sec.  3215. — The  by-laws  of  such  corporation  may  provide  for  the  voluntary 
withdrawal  and  cancellation  at  or  before  maturity  of  shares  of  stock  not  bor- 
rowed on  ;  Provided,  that  such  withdrawal  and  cancellation  shall  be  pro  rata 
among  the  shares  of  the  same  series  of  stock. 

Sec.  3216— All  building  and  loan  associations  doing  business  in  this  state 
shall  annually  make  a  true  and  correct  statement,  verified  by  the  oath  of  its 
president  or  secretary,  setting  forth  its  actual  financial  condition  on  the  30th 
day  of  June  of  the  current  year,  which  shall  be  forwarded  to  the  state  exam- 
iner not  later  than  the  first  day  of  August  of  the  same  year  and  shall  contain 
the  following  information  : 

1.  The  amount  of  authorized  capital  and  the  par  value  of  each  share  of 
stock. 

2.  The  number  of  shares  sold  during  the  year. 

3.  The  number  of  shares  cancelled  and  withdrawn  during  the  year. 

4.  The  number  of  shares  in  force  at  the  end  of  the  year. 

5.  A  detailed  statement  of  the  receipts  and  disbursements  during  the  year. 

6.  A  detailed  statement  of  the  assets  and  liabilities  at  the  end  of  the  year. 
Such  report  shall  also  show   the   total  amount  received  as  dues  on   stock 

under  each  separate  class  or  kind  or  stock  and  all  deductions  therefrom  or 
expenses,  withdrawals,  cancellations,  forfeitures,  refunded  or  otherwise,  and 
the  amounts,  if  any,  of  profits  credited  to  stock  or  subject  to  such  credit,  the 
number  of  shares  in  force  of  each  issue  or  series  and  the  amount  expended 

54 


838  APPENDIX  IV. 

during  the  year  in  payment  of  salaries  of  officers,  clerks,  agents  and  all  other 
employees,  the  amount  expended  for  travelling  expenses,  rent,  postage, 
including  telegraph  and  express  charges,  printing,  books  and  stationery, office 
supplies,  office  furniture,  advertising,  commissions  paid  agents  or  other  persons 
and  all  other  items  of  expense. 

In  addition  such  annual  report  shall  contain  a  statement  of  the  business  of 
the  corporation  for  the  preceding  year,  showing  the  amount  of  resources 
included  in  mortgage  loans,  the  amount  of  loans  on  stock  of  the  association, 
the  amount  of  loans  on  other  securities  specifying  the  kind  of  such  securities, 
the  amount  of  unpaid  dues,  fines,  premiums  and  interest,  the  amount  due  from 
agents,  the  amount  due  from  banks,  the  amount  invested  in  real  estate  and 
obtained  on  foreclosure,  the  amount  invested  in  furniture  and  fixtures,  the 
amount  of  cash  on  hand  and  the  amount  of  all  other  resources  of  the  associa- 
tion not  enumerated  heretofore  ;  and  shall  state  as  its  liabilities  the  amount 
received  from  stock  subscriptions,  the  amount  due  from  stock  delinquent  in 
each  class  or  kind  of  stock  and  the  unpaid  fines  on  such  stock,  the  amount  of 
undivided  profits  at  the  beginning  of  the  year,  the  amount  received  as  interest, 
premiums,  fees,  fines  or  other  sources  as  profits  during  the  year,  the  amount 
of  such  interest  and  interest  delinquent  at  the  end  of  the  year,  the  amount  of 
all  bills  payable  and  the  amount  of  all  other  liabilities  at  the  close  of  the  year. 
Within  thirty  days  from  the  filing  of  the  report  a  statement  of  the  assets  and 
liabilities  shall  be  published  at  least  once  in  some  newspaper  in  the  city  or 
town  in  which  the  association  has  its  principal  place  of  business.  All  state- 
ments herein  required  to  be  made  shall  be  uniform  and  in  accordance  with  a 
form  to  be  prescribed  by  the  state  examiner,  and  shall  correctly  show  the 
proportion  which  the  entire  expenses  of  the  association  for  the  term  reported 
bear  to  its  gross  earnings  for  the  term.  All  reports  required  of  building  and 
loan  associations  organized  under  the  laws  of  this  state  are  also  required  of 
all  foreign  building  and  loan  associations  doing  business  in  this  state,  and  all 
the  provisions  of  this  chapter  relating  to  such  reports,  the  filing  thereof  and 
the  fees  therefor  shall  apply  to  such  foreign  building  and  loan  associations. 

Sec.  3217. — If  any  such  association  shall  fail  to  furnish  to  the  state  examiner 
the  report  required  by  this  chapter  at  the  time  required,  it  shall  forfeit  the  sum 
of  twenty-five  dollars  for  every  day  such  report  shall  be  delayed  or  withheld 
and  the  attorney-general  on  the  application  of  the  state  examiner  shall  bring 
an  action  to  recover  such  penalty.  After  receiving  such  annual  report  the 
state  examiner,  if  satisfied  that  such  corporation  has  complied  with  all  the 
provisions  of  this  chapter  and  is  entitled  to  do  business  in  this  state,  shall  issue 
his  certificate,  stating  the  compliance  to  such  provisions,  and  that  such  cor- 
poration is  entitled  to  do  business  in  this  state,  which  certificate  shall  be  in 
force  for  the  period  of  one  year,  unless  sooner  rescinded  as  provided  in  this 
chapter.  The  state  examiner  shall  also  issue  such  certificate  to  a  domestic 
corporation,  which  commenced  business  at  some  intervening  period  in  any 
year  which  has  complied  with  the  law  in  regard  to  its  articles  of  incorporation 
and  in  all  other  respects  except  the  filing  of  such  report. 

Sec  3218. — It  shall  be  the  duly  of  the  state  examiner  as  often  as  he  may 
deem  necessary  and  at  least  once  in  each  year  to  examine  every  building  and 
loan  association  incorporated  under  the  laws  of  this  state,  and  for  that  purpose 
he  shall  have  and  exercise  over  such  corporation,  its  business,  officers,  direc- 
tors and  employees  all  the  power  and  authority  conferred  upon  him  by  the 
laws  of  this  state  over  banks  and  other  moneyed  corporations  ;  Provided,  that 
he  shall  not  have  the  power  to  suspend  the  operation  of  any  such  corporation, 
except  in  the  manner  provided  in  this  chapter.  The  state  examiner  shall 
the  upervision  and  control  over  the  business  within  this  state  of  foreign 
•  1  "i  like  kind,  doing  business  in  this  state.  Upon  the  completion 
of  any  examination  of  any  association  made  by  the  stale  examiner,  or  under 
his  direc  lion,  the  .iss,„  iation  so  examined  shall  pay  to  (he  examiner  a  fee  to  be 
determined  as  follows,  viz.  :  For  the  first  one  hundred  thousand  dollars  of 
I  ten  dollars  and  for  each  additional  one  hundred  thousand 
dollai  ■  ol  assets,  or  major  portion  thereof,  an  additional  lee  of  five  dollars. 

SEC.  ;.'ii|.      If  it   -hall   appeal    I"  the  state  examiner  from   any  examination 

made  by  him.  or  from  the  annual  report  aforesaid,  that  any  such  corporation 
<  d  undei  the  laws  of  this  state  is  violating  the  law,  or  that  it  is  conduct- 
ing bu  m 11  afe,  unauthorized  or  dishonest   manner,  he  shall,  by  an 

ordei  iinif  1  in  hand  and  seal  of  office  addressed  to  such  corporation,  direct 
<  ompliam  e  with  the  requirements  of  the  law.  And  whenever  such  corpora- 
tion hall  refu  e  01  neglect  to  make  such  report  or  aco  tunl  as  may  be  lawfully 
comply  with  such  order  as  aforesaid,  the  state  examiner  shall 
file  a  statement   in  writing  with  the  attorney  general,  setting  forth  the  facts 


GENEKAL   LEGISLATION.  839 

or  particulars  in  which  such  alleged  violation  or  refusal  consists,  which  state- 
ment shall  be  prima  facie  evidence  of  such  violation  or  refusal,  whereupon 

the  attorney  general  shall  institute  such  proceedings  against  such  corpora 
tion  as  are  provided  by  law  in  the  case  oi  insolvent  corporations,  or  such  other 
proceedings  as  the  occasion  may  require. 

Skc.  3220. — No  foreign  building  and  loan  association  or  corporation  shall 
do  business  in  this  slate,  until  : 

1.  It  shall  have  first  complied  with  the  provisions  of  sections  3261  and  3263. 

2.  It  shall  have  obtained  from  the  state  examiner  a  certificate,  authorizing 
it  to  do  business  in  this  stale. 

Upon  application  by  any  foreign  building  and  loan  corporation  or  associa- 
tion to  do  business  in  this  state,  and  thereafter  whenever  the  state  examiner 
shall  deem  it  prudent  for  the  public  interest,  he  shall  examine  into  its  financial 
condition  and  method  of  doing  business,  and  for  that  purpose,  if  he  deems  it 
necessary,  he  may  visit  such  corporation,  or  cause  the  same  to  be  visited  by  a 
competent  person  appointed  by  him,  and  he  may  demand  from  such  corpora- 
tion or  association  in  advance,  his  lees  and  necessary  expenses  lor  making 
such  examination  and  may  refuse  to  make  the  same  or  to  issue  any  certificate 
unless  such  fees  and  expenses  are  paid,  and  if  a  certificate  lias  already  been 
issued  may  rescind  the  same.  For  the  purpose  of  making  such  examination 
the  person  making  the  sameshall  have  free  access  to  all  the  books  and  pai  ers 
of  the  corporation  that  relate  to  its  business  and  to  the  books  and  pa]  ers  Kepi 
by  any  of  its  agents,  and  may  summon  as  witnesses  and  examine  under  oath 
the  directors,  officers,  agents  and  trustees  of  any  such  corporation  and  any 
other  person  in  relation  to  its  affairs,  transactions  and  condition. 

Sec.  3221. — If  he  is  satisfied  from  such  examination  that  such  corporation  is 
solvent  and  its  method  of  doing  business  is  such  as  is  likely  to  be  beneficial  to 
all  of  its  members  alike,  he  shall  issue  a  certificate,  authorizing  it  to  do  business 
in  this  state,  if  one  is  not  already  in  force,  which  certificate  shall  be  in  force, 
for  one  year,  or  until  the  time  required  for  the  filing  of  the  annual  report, 
unless  sooner  rescinded. 

Sec.  3222. — If  the  state  examiner  is  of  the  opinion  upon  examination  or 
other  evidence  that  a  foreign  building  and  loan  association  doing  business  in 
this  state  is  in  an  unsound  condition,  or  if  it  has  failed  to  comply  with  the  law, 
or  if  it,  its  officers  or  agents,  refuse  to  submit  to  examination,  or  to  perform 
any  legal  obligation  in  relation  thereto,  he  shall  revoke  or  suspend  its  cer- 
tificate of  authority  and  shall  cause  notification  thereof  to  be  published  three 
times,  once  in  each  week,  for  three  successive  weeks,  in  some  newspaper 
published  at  the  seat  of  government  and  shall  mail  a  copy  to  such  association 
or  corporation  at  its  home  office,  and  no  new  business  shall  thereafter  be  d<  me 
by  it,  or  its  agents  in  this  state  while  such  default  or  disability  continues,  nor 
until  its  authority  to  do  business  is  restored  by  the  examiner. 

Sec.  3223. — Any  officer,  director  or  agent  of  any  foreign  building  and  loan 
association,  or  any  person  whatever,  who  shall  in  this  state  solicit  subscrip- 
tions to  the  stock  of  such  association,  or  who  shall  sell  or  issue,  or  knowingly 
cause  to  be  sold  or  issued  to  a  resident  of  this  state  any  stock  of  such  associa- 
tion, while  such  association  shall  not  hold  the  certificate  of  the  state  examiner, 
authorizing  it  to  do  business  in  this  state  as  herein  described,  or  before  such 
association  has  complied  with  all  the  provisions  of  this  chapter,  or  when  such 
association  shall  have  been  notified  that  its  authority  to  do  business  in  this 
state  has  been  revoked,  as  hereinbefore  provided,  shall  be  guilty  of  a  mis- 
demeanor and  upon  conviction  thereof  shall  be  punished  by  fine  of  not  less 
than  $100,  nor  more  than  $500,  or  by  imprisonment  of  not  less  than  ten  days 
nor  more  than  six  months,  or  by  both  such  line  and  imprisonment  in  the 
discretion  of  the  court. 

Sec.  3224. — Any  officer,  director  or  agent  of  any  building  and  loan  associa- 
tion incorporated  under  the  laws  of  this  state,  or  any  other  person  whatever, 
who  shall  sell  or  issue,  or  knowingly  cause  to  be  sold  or  issued  t<>  any  person 
any  stock  of  such  association,  while  such  association  shall  nol  have  a  certifi- 
cate of  the  state  examiner  authorizing  it  to  do  business  as  herein  prescribed 
shall  be  guilty  of  a  misdemeanor  and  upon  conviction  thereof  shall  be 
punished  by  fine  of  not  less  than  one  hundred  dollars  and  not  more  than  live 
hundred  dollars,  or  by  imprisonment  of  not  less  than  ten  days  nor  more  than 
six  months,  or  by  both  such  fine  and  imprisonment  in  the  discretion  of  the 
court. 

Sec  3225. — All  corporations  heretofore  organized  in  this  state  and  doing 
business  as  building  and  loan  associations  shall  comply  with  and  be  subject 
to  all  the  provisions  of  this  chapter  and  shall  be  entitled  to  all  the  privileges 
and  benefits  thereof  without  reincorporating. 


840  APPENDIX   IV. 

Sec.  3261. — Xo  foreign  corporation,  association  or  joint  stock  company, 
except  an  insurance  company,  shall  transact  any  business  within  this  state,  or 
acquire,  hold  or  dispose  of  property,  real  or  personal,  within  this  state,  until 
such  corporation  shall  have  filed  in  the  office  of  the  secretary  ©f  state  a  duly 
authenticated  copy  of  its  charter  or  articles  of  incorporation  and  shall  have 
complied  with  the  provisions  of  this  chapter;  Provided,  that  the  provisions  of 
this  chapter  shall  not  apply  to  corporations  created  for  religious  or  charitable 
purposes  solely. 

Sec.  3262. — Such  charter  or  articles  of  incorporation  shall  be  recorded  in  a 
book  to  be  kept  by  the  secretary  of  this  state  for  that  purpose. 

Sec.  3263. — Such  corporation,  association  or  joint  stock  company  shall  by 
duly  executed  instrument  filed  in  the  office  of  the  secretary  of  state  consti- 
tute and  appoint  the  secretary  of  state  and  his  successors  its  true  and  lawful 
attorney  upon  whom  all  process  in  any  action  or  proceeding  against  it  may 
be  served,  and  therein  shall  agree  that  any  process  which  may  be  served 
upon  its  said  attorney  shall  be  of  the  same  force  and  validity  as  if  served 
upon  it  personally  in  this  state  and  that  such  appointment  shall  continue  in 
force  irrevocable  so  long  as  any  liability  of  incorporation,  association  or  joint 
stock  company  remains  outstanding  in  this  state.  Service  upon  such  attorney 
shall  be  deemed  service  upon  the  corporation,  association  or  joint  stock  com- 
pany. Whenever  process  against  any  foreign  corporation,  association  or 
joint  stock  company,  doing  business  in  this  state,  shall  be  served  upon  the 
secretary  of  state  he  shall  forthwith  mail  a  copy  of  such  process,  postage  pre- 
paid, and  directed  to  such  corporation,  association  or  joint  stock  company,  at 
its  principal  place  of  business,  or  if  it  is  a  corporation,  association  or  joint 
stock  company  of  a  foreign  country,  to  its  resident  manager  in  the  United 
States,  or  to  such  other  person  as  may  have  been  previously  designated  by  it 
by  written  notice  filed  in  the  office  of  the  secretary  of  state.  As  a  condition 
of  valid  and  effectual  service  the  plaintiff  should  pay  to  the  secretary  of  state 
at  the  time  of  the  service  the  sum  of  two  dollars  which  the  plaintiff  shall 
recover  as  taxable  costs  if  he  prevails  in  his  action.  The  secretary  of  state 
shall  keep  a  record  of  all  such  process  which  shall  show  the  time  and  hour  of 
service. 

OHIO. 

ACT  1891,  p.  469. 

Section  i. — A  corporation  for  the  purpose  of  raising  money  to  be  loaned 
among  its  members  shall  be  known  in  this  act  as  a  budding  and  loan  associa- 
tion. Associations  organized  under  the  laws  of  this  state  shall  be  known  in 
this  act  as  "  domestic  '  associations,  and  those  organized  under  the  laws  of 
other  states  or  territories,  as  "foreign"  associations.  Associations  may  be 
organized  and  conducted  under  the  general  laws  of  Ohio  relating  to  corpora- 
tion-, excel  t  as  otherwise  provided  in  this  act. 

SEC.  2. — The  capital  stock  named  in  the  articles  of  incorporation  shall  be 
deemed  to  refer  to  the  authorized  capital,  and  the  organization  may  be  com- 

Bleted  and  business  commenced  when  five  per  cent,  thereof  is  subscribed. 
•irectors  may  be  elected  for  any  term  not  less  than  one  year  nor  longer  than 
three  years,  but  if  such  term  be  longer  than  one  year,  it  shall  be  so  arranged 
that  the  term  of  office  of  an  equal  number  of  directors,  as  nearly  as  may  be, 
will  expire  each  year. 

;.     Su«  li  corporation  shall  have  power:  To  receive  money  on  deposit 
from  time  to  time  to  the  extent  necessary  to  meet  the  demands  made  on  it  by 

its  members  and  depositors",  but  shall  not  pay  interest  thereon,  exceeding  the 
legal  rate.    To  issue  stock  to   members  on  such  terms  and  conditions  as  the 
titution  and  by-laws  may  provide;  but   no  person  shall  vote  more  than 
twenl  in  any   such   corporation   in  his  own    right.     To  assess   and 

collect  from  members  and  depositors  such  dues,  lines,  interest  and  premium 
on  loan  made,  or  other  assessments,  as  may  be  provided  for  in  the  constitu- 
tion and  l>\  laws.  Such  dues,  inies,  premiums  or  other  assessments  shall  not 
bedeemed  u  iiry,  although  in  excess  of  the  legal  rate  of  interest.  To  permit 
membei  1  to  withdraw  all  or  pari  of  their  stock  deposits  at  such  times  and 
luch  terms  as  the  constitution  and  by-laws  may  provide.    Any  member, 

however,  who  withdraws   his  entire  si.  ick    or  whose  slock  has   matured,  shall 

be  entitled  to  receive  all  dues  paid  in  and  dividends  declared,  less  all  fines  or 

othei  a    1     men!  .  ind  l'      a  fro  rata  share  of  all  losses,  if  any  have  occurred. 

icel    hare    ol   itock  upon  which  all  payments  have  been  withdrawn,  or 

upon  whi(  h  loan,  have  been  I  am  vied,  and   reissue  them   as   new  stock.     To 


GENERAL   LEGISLATION.  841 

issue  stock  to  minors  and  permit  the  same  to  be  withdrawn  as  other  stock,  and 
the  receipt  of  such  minor  shall  be  a  valid  acquittance,  if  his  rights  have  been 
fully  secured  to  him.  To  acquire,  hold,  encumber  and  convey  such  real  estate 
and  personal  properly  as  may  be  necessary  for  the  transaction  of  its  business 
or  necessary  to  enforce  or  protect  its  securities.  To  borrow  money,  not  ex- 
ceeding twenty  per  cent,  of  the  assets,  and  issue  its  evidences  of  indebtedness 
therefor.  To  make  loans  to  members  and  depositors  on  such  terms,  condi- 
tions and  securities  as  may  be  provided  in  the  constitution  and  by-laws.  To 
cancel  such  loans  and  release  the  securities  on  such  terms  as  the  board  of 
directors  may  provide.  Butanymember  may  have  his  loan  cancelled  upon 
the  following  terms,  to  wit :  After  the  premium  for  one  year  has  been  paid, 
and  also  the  interest  and  premium  up  to  the  date  of  cancellation,  the  borrower 
shall  pay  the  sum  actually  borrowed,  less  the  dues  paid  and  dividends  credited. 
He  shall  pay  also  any  lines  or  other  assessments  required  by  the  constitution 
or  by-laws.  To  accumulate  from  the  earnings  and  invest  as  the  board  of 
directors  may  determine,  a  reserve  fund  for  the  payment  of  contingent  losses. 
To  make  such  annual  or  semi-annual  distributions  of  the  earnings  (after 
paying  expenses  and  setting  aside  a  sum  for  the  reserve  fund  as  hereinafter 
provided  t,  as  the  constitution  and  by-laws  may  prescribe.  To  increase  or 
decrease  its  authorized  capital  or  the  face  value  of  its  shares  at  any  time,  by  a 
maj(  nity  V(  ite  of  its  board  of  directors  ;  and  a  certificate  of  such  action  shall  be 
made  by  the  president  and  secretary,  and  duly  filed  with  the  secretary  of 
state.  To  dissolve  the  corporation  when  its  continuance  shall  be  deemed,  by 
a  majority  vole  of  its  members,  to  be  no  longer  desirable,  subject,  however,  to 
the  vested  rights  of  members.  To  provide,  by  constitution  adopted  by  its 
members,  and  by-laws  adopted  by  its  board  of  directors,  for  the  proper  exer- 
cise of  the  powers  herein  granted,  and  the  conduct  and  management  of  its 
affairs.  All  such  other  powers  as  are  necessary  and  proper  to  enable  such 
corporation  to  carry  out  the  purpose  of  its  organization. 

Sec.  4. — The  board  of  directors  shall  designate  a  bank  or  banks  in  which 
the  treasurer  shall  deposit  all  funds  in  the  name  of  such  corporation.  Such 
funds  can  then  be  withdrawn  only  by  check  signed  by  the  president  and 
financial  secretary,  or  such  other  officers  as  the  board  of  directors  may  des- 
ignate. The  treasurer's  bank  book  shall  be  open  to  the  inspection  of  any 
director  at  any  time.  No  president  or  secretary  or  other  officer  shall  sign  any 
check  unless  the  expenditure  has  been  authorized  by  the  board  of  directors. 
All  officers  of  such  association  who  have  charge  or  possession  of  money, 
securities  or  property,  shall  give  b<  md  before  entering  upon  their  duties  to  the 
satisfaction  of  the  board  of  directors,  for  the  faithful  performance  of  the  same, 
and  the  safekeeping  and  proper  application  of  all  moneys  or  property  coming 
into  their  hands.  All  officers  of  such  corporations  on  being  re-elected  to  office 
shall  renew  their  bonds.  The  bond  may  be  increased  or  additional  sureties 
required  at  any  time  by  the  board  of  directors.  Directors  shall  not  be  eligible 
as  bondsmen,  and  shall  be  individually  liable  for  any  loss  to  members,  caused 
by  their  neglect  to  comply  with  the  provisions  of  this  section. 

CONTINGENT  FUND. 

Sec.  5. — The  amount  .0  be  set  aside  to  the  fund  for  contingent  losses  shall 
be  determined  by  the  board  of  directors,  but  in  all  permanent  or  perpetual 
associations,  at  least  five  per  cent,  of  the  net  earnings  shall  be  set  aside  each 
year  to  such  fund  until  it  reaches  at  least  five  per  cent,  of  the  outstanding 
loans.  All  losses  shall  be  paid  out  of  such  fund  until  the  same  is  exhausted, 
and  whenever  the  amount  in  said  fund  falls  below  five  per  cent,  of  the  loans 
as  aforesaid,  it  shall  be  replenished  by  annual  appropriations  of  at  least  five 
per  cent  of  the  net  earnings  as  hereinbefore  provided  until  it  again  reaches 
said  amount. 

Sec.  6. — All  expenses  of  such  associations  shall  be  paid  out  of  the  earnings 
only,  and  so  much  of  the  earnings  as  may  be  necessary  shall  be  set  aside  each 
year  for  such  purpose.  But  charges  incident  to  a  loan,  if  paid  by  the  bor- 
rower, shall  not  be  deemed  a  part  of  the  current  expenses.  A  portion  of  the 
earnings,  to  be  determined  by  the  board  of  directors,  shall  also  be  reserved 
annually  or  semi-annually,  for  the  payment  of  contingent  losses,  as  provided 
in  section  five  of  this  act,  and  the  residue  of  such  earnings  shall  be  trans- 
ferred as  a  dividend  annually  or  semi-annually,  in  such  proportion  to  the 
credit  of  all  members,  as  the  corporation  bv  its  constitution  and  by-laws  may 
provide,  to  be  paid  to  them  at  such  time  and  in  such  manner  in  conformity 
with  this  act  as  the  corporation  by  its  constitution  and  by-laws  may  provide. 
All  losses  shall  be  assessed  in  the  same  proportion  and  manner  on  all  mem- 


842  APPENDIX   IV. 

bers  after  the  amount  in  the  reserve  fund  has  been  applied  to  the  payment 
of  the  same. 

Sec.  7. — The  shares  and  loans  advanced  to  its  members  shall  be  exempt 
from  taxation,  except  shares  or  stock  upon  which  no  loans  have  been  made 
or  money  advanced  by  the  company,  shall  be  considered  and  held  as  credits, 
and  the  said  members  individually  shall  list  for  taxation  the  number  of  shares 
held  by  them,  and  the  true  value  thereof  in  money,  on  the  day  preceding  the 
second  Monday  in  April  in  each  year,  and  the  same  shall  be  assessed  at  such 
valuation  for  taxation  and  taxes  as  other  property. 

Sec.  8. — There  is  hereby  established  in  the  department  of  insurance  a 
bureau  to  be  known  as  the  bureau  of  building  and  loan  associations,  which 
shall  be  charged  with  the  execution  of  the  laws  of  this  state  relating  to 
building  and  loan  associations. 

Sec.  9. — The  chief  officer  of  said  bureau  shall  be  known  as  the  inspector 
of  building  and  loan  associations  ;  the  superintendent  of  insurance  shall,  ex 
officio,  be  also  the  inspector  of  building  and  loan  associations,  and  as  compen- 
sation for  his  services  as  such  inspector  he  shall  be  entitled  to  receive  the  sum 
of  one  thousand  dollars  per  annum.  Before  entering  upon  his  duties,  he  shall 
give  bond  to  the  state  of  Ohio  in  the  sum  of  ten  thousand  dollars,  to  be  ap- 
proved by  the  governor,  conditioned  for  the  faithful  discharge  of  his  duties, 
and  the  bond,  with  his  oath  of  office  and  the  approval  of  the  governor  in- 
dorsed thereon,  shall  be  filed  with  the  secretary  of  state. 

The  inspector  may  appoint  a  deputy,  who  shall  be  authorized  to  perform 
the  duties  attached  by  law  to  the  office  of  inspector,  during  his  absence  or 
disability,  and  shall  receive  a  salary  of  eighteen  hundred  dollars  per  year. 
He  shall  also  appoint  such  other  clerks  or  examiners  as  may  be  provided  for 
by  law. 

Sec  10. — The  adjutant-general  shall  provide  suitable  accommodations  for 
the  conduct  of  the  business  of  the  bureau  in  the  office  of  the  superintendent 
of  insurance,  and  furnish  the  necessary  furniture,  etc.,  and  the  expense  for 
the  same  shall  be  paid  out  of  the  state  "treasury,  on  the  certificate  of  the  in- 
spector and  the  warrant  of  the  adjutant-general". 

Sec.  11.— It  shall  be  the  duty  of  the  inspector  to  see  that  all  the  laws  of  this 
state  relating  to  building  and  loan  associations  are  faithfully  executed. 

Sec.  12.-— Foreign  building  and  loan  associations  doing  business  in  this 
.  shall  conduct  the  same  in  accordance  with  the  laws  of  the  state  govern- 
ing domestic  associations,  and  no  such  association  shall  do  any  business  in 
this  state  until  it  procures  from  the  inspector  a  certificate  of  authority  to  do 
so.  To  procure  such  authority,  such  association  shall  comply  with  the  fol- 
lowing provisions  : 

First.  It  shall  deposit  with  the  inspector  one  hundred  thousand  dollars, 
either  in  cash  or  bonds  of  the  United  States  or  of  the  state  of  Ohio,  or  of  any 
county  or  municipal  corporation  in  the  state  of  Ohio,  satisfactory  to  the 
inspect  1  >r. 

Second.  It  shall  file  with  the  inspector  a  certified  copy  of  its  charter,  con- 
stitution and  by-laws,  and  other  rules  and  regulations  showing  its  manner  of 
conducting  business,  together  with  a  statement  such  as  is  required  annually 
from  all  .1    1 «  iations. 

Third.  It  shall  also  file  with  the  inspector  a  written  instrument,  duly  exe- 
cuted, agreeing  that  a  summons  may  issue  against  ii   from  any  county  in  this 
:  1  the  sheriff  of  the  county  in  which  the  office  of  inspector  is 
.  ite,  commanding  him  to  serve  the  same  by  certified  copy  personally  upon 
the  inspector  or  by  leaving  a  copy  thereoi  at  his  office.    The  inspector  shall, 
however,  mail  a  copy  oi  any  papers  served  on  him,  postage  prepaid,  to  the 
i    iociation. 
Si    .  [3.     Whenever  such  association  has  complied  with  the  provisions  of 
this  act,  and  tin  01  is  satisfied  that   such  association  is  doing  business 

toll       1       ol  this  state,  and  is  in  sound  financial  condition,  he  shall 
his  certificate  ol  authority  to  such  association  to  do  business  in  this  state. 
Ann  r,  upon  the  filing  oi  the  annual  statement  herein  provided 

hall  be  satisfied  as  aforesaid,  he  shall  issue  a  renewal  oi 
1   ol  authi  M  ii  v. 
1     Such  foreign  a    ociation  may  collect  and  use  the  interest  on  any 
o  deposited     olongasil   fulfils  its  obligations  and  complies  with 
ion    "i  thi   act.     II  may  also  exchange  them  for  other  securities  of 
ind     i     factory  to  the  in  pector. 

I   n   d{    n  il  made  with  the  inspectoi   shall  be  held  as  a  security 

dents  ol  Ihis  state  against  said  association,  and  shall  be 

:  f Ol  all   judgmei  n,  and  subjected  to  the  payment  of 


GENERAL   LEGISLATION.  843 

the  same  in  the  same  manner  as  the  property  of  other  non-residents.  Should 
any  association  cease  to  do  business  in  this  state,  the  inspector  may  release 
securities  in  his  discretion,  retaining  sufficient  to  satisfy  all  outstanding 
liabilities. 

Skc.  [6. — Every  building  and  loan  association  doing  business  in  this  state 
shall,  annually,  at  the  end  of  each  fiscal  year,  or  within  forty  clays  thereafter, 
make  a  full  and  detailed  report  in  writing  of  the  affairs  and  business  of  the 
association  for  the  preceding  year,  and  showing  its  financial  condition  .it  the 
end  of  said  fiscal  year.  With  the  lust  report  made  by  any  association  it  shall 
also  file  a  certified  copy  of  its  constitution  and  by-laws  or  other  rules  and 
regulations,  showing  its  manner  of  doing  business. 

Sec.  17. — The  statement  shall  be  in  such  form  and  contain  such  information 
as  may  be  prescribed  by  the  inspector  of  building  associations.  It  shall  be 
sworn  toby  the  secretary,  and  its  correctness  attested  by  at  least  three  direc- 
tors, or  an  auditing  committee  appointed  by  the  board.  The  original  shall  be 
filed  with  the  inspector  of  building  associations  within  forty  days  alter  the 
close  of  the  fiscal  year,  and  such  an  abstract  thereoi  as  the  inspector  may 
require  shall  be  posted  for  sixty  days  in  the  office  or  meeting  place  of  such 
association,  and  also  published  in  some  paper  regularly  issued  in  the  county 
in  which  said  association  is  located. 

Skc.  18. — The  inspector,  when  he  has  reason  to  suspect  the  correctness 
of  any  statement  of  an  association  doing  business  in  this  state,  or  that  its 
affairs  are  in  an  unsound  condition,  or  that  it  is  not  conducting  its  business  in 
accordance  with  law,  may  make  or  cause  to  be  made  by  some  person  by  him 
appointed  for  that  purpose,  an  examination  into  the  affairs  of  such  associa- 
tion. The  expense  of  all  examinations  shall  be  paid  by  the  associations 
examined,  except  that  the  actual  expense  of  the  examination  of  an  association 
organized  under  the  laws  of  this  state,  shall  be  paid  out  of  the  fees  paid  by 
such  associations  to  the  inspector  as  hereinbefore  provided. 

Should  the  inspector,  upon  examination,  find  any  domestic  association  con- 
ducting its  business  in  whole  or  in  part  contrary  to  law,  or  failing  to  comply 
with  the  law,  he  shall  so  notify  the  board  of  directors  of  such  association  in 
writing,  and  if  after  thirty  days,  such  illegal  practices  or  failure  continue,  he 
shall  communicate  the  facts  to  the  attorney-general,  who  shall  cause  proceed- 
ings to  be  instituted  in  the  proper  court  to  revoke  the  charter  of  such  associa- 
tion. 

Should  the  inspector  find,  upon  examination  that  the  affairs  of  any  such 
association  are  in  an  unsound  condition,  and  that  the  interests  of  the  public 
demand  the  dissolution  of  such  association,  and  the  winding  up  of  its  busi- 
ness, he  shall  so  report  to  the  attorney-general,  who  shall  institute  the  proper 
proceedings  for  that  purpose. 

Sec.  19. — Such  examiners  shall  have  access  to  and  may  compel  the  produc- 
tion of  all  the  books,  papers,  securities  and  moneys,  etc.,  of  the  association 
under  examination.  They  shall  have  power  to  administer  oaths  to,  and 
examine  the  officers  and  agents  of  such  association  as  to  its  affairs. 

Sec.  20. — When  the  inspector  deems  it  to  the  interest  of  the  public,  he  may 
publish  the  results  of  such  examination  in  some  newspaper  of  general  circu- 
lation in  the  county  in  which  such  association  is  located,  if  it  be  a  domestic 
association,  and  in  some  newspaper  in  the  city  of  Columbus,  Ohio,  if  it  be  a 
foreign  association. 

SEC.  21. — Should  the  inspector  find,  upon  examination,  that  any  foreign 
association  does  not  conduct  its  business  in  accordance  with  the  law,  or  1l1.it 
the  affairs  of  any  such  association  are  in  an  unsound  condition,  or  if  such 
association  refuses  to  permit  examination  to  be  made,  he  may  cancel  the 
authority  of  such  association  to  do  business  in  this  state,  and  cause  a  notice 
thereof  to  be  mailed  to  the  home  office  of  the  association,  and  to  be  published 
in  at  least  one  newspaper  published  in  the  city  of  Columbus.  After  the  pub- 
lication of  such  notice,  it  shall  be  unlawful  for  any  agent  of  said  association 
to  receive  any  further  stock  deposits  from  members  residing  in  this  state, 
exce   t  pavments  on  stock  on  which  a  loan  has  been  taken. 

Sec.  22. — Foreign  building  and  loan  associations  shall  pay  to  the  inspector 
the  foil  »wing  fees,  which  shall  be  paid  into  the  state  treasury  to  wit  :  For  til- 
ing each  application  for  admission  to  do  business  in  this  state,  one  hundred 
dollars.  For  each  certificate  of  authority  and  annual  renewal  ql  same,  fifty 
dollars  ;  both  foreign  and  domestic  associations  shall  pay  to  the  inspector  for 
filing  each  annual  statement  as  follows  :  If  the  assets  of  the  association,  as 
shown  by  the  statement  tiled,  amount  to  8 50,000. 00  or  less  S3.00  ;  it  more  than 
$50,000.00  and  less  than  $100,000.00,  $5.00  ;  if  more  than  S  100.000.00  and  less 
than  $250,000.00,  $10.00  ;  if  more  than  $250,000.00  and  less  than   §500,000.00, 


844  APPENDIX   IV. 

$20.00  ;  if  more  than  $500,000.00  and  less  than  $1,000,000.00,  $30.00 ;  and  if 
more  than  81,000,000.00,  $50.00.  For  each  copy  of  a  paper  hied  in  his  oihce, 
twenty-live  cents  per  folio.  For  affixing  the  seal  of  oftice  and  certifying  any 
paper,  one  dollar  ;  Provided,  however,  that  the  inspector  may  retain  from  the 
fees  so  received  by  him  up  to  the  close  of  the  fiscal  year  ending  November  15, 
1892,  a  sum  sufficient  to  pay  the  salaries  and  necessary  expenses  of  the  bureau 
of  building  and  loan  associations  up  to  said  time,  which  sum  is  hereby  ap- 
propriated for  that  purpose. 

Sec.  2$. — All  securities  of  cash  deposited  with  the  inspector  shall  be  im- 
mediately deposited  with  the  treasurer  of  state,  who,  with  his  sureties,  shall 
be  responsible  for  the  safekeeping  thereof.  The  treasurer  shall  deliver  such 
securities  only  upon  the  written  order  of  the  inspector  of  building  associa- 
tions. 

Sec.  24. — It  shall  be  unlawful  for  any  building  and  loan  association  to  do 
business  in  this  state  without  having  first  complied  with  the  provisions  of  this 
act,  and  any  association  violating  any  of  the  provisions  of  this  act,  or  failing 
to  comply  with  any  of  its  provisions,  shall  be  fined  not  less  than  fifty  nor 
more  than  one  thousand  dollars,  to  be  recovered  by  an  action  in  the  name  of 
the  state,  and  on  collection  paid  into  the  state  treasury  ;  Provided,  that  build- 
ing and  loan  associations  organized  in  other  states,  having  heretofore  trans- 
acted business  in  this  state,  which  shall  not  have  complied  with  the  provi- 
sions of  this  act,  shall  have  the  right  to  close  up  their  business,  and  fulfil  their 
contracts  heretofore  entered  into  with  citizens  of  this  state,  through  their  duly 
authorized  agents,  without  being  subject  to  the  penalties  prescribed  by  this 
act. 

Sec.  25. — Every  president,  director,  trustee,  member  of  any  committee,  se- 
cretary, treasurer,  attorney  or  any  other  officer  at  any  time  created  or  agent 
of  any  such  corporation,  who  embezzles,  abstracts  or  wilfully  misapplies  any 
of  the  monevs,  funds  or  credits  of  such  corporations,  or  who  issues  or  puts 
into  circulation  any  warrant  or  other  order,  or  who  assigns,  transfers,  cancels 
or  delivers  up  anv  note,  bond,  draft,  mortgage,  judgment,  decree,  or  any  other 
written  instrument  belonging  to  such  corporation,  or  raises  money  otherwise, 
or  receives  money  from  anv  member  or  oilier  person  for  and  in  the  name  of 
such  corporation,  "unless  duly  authorized  by  the  board  of  directors  of  such 
corporation  ;  or  who  shall  sign  the  name  of  any  person  to  any  order  or  war- 
rant lor  the  payment  of  money  without  proper  power  of  attorney  or  written 
order  from  such  person  to  whose  order  such  warrant  or  order  is  made  payable  ; 
or  any  member  or  members  <  if  the  board  of  directors  who  shall  vote  to  declare, 
or  any  financial  or  first  secretary  of  such  corporation  who  shall  declare  or 
advise  the  board  of  directors  of  such  corporation  to  declare  a  greater  dividend 
than  what  has  been  actually  earned  by  the  corporation,  for  the  purpose  of  de- 
ceiving the  people  or  defrauding  the  members  of  such  corporation;  or  who 
certifies  to  or  makes  any  false  entry  on  any  book,  report  or  statement  of  or  to 
such  corporation,  with  intent  in  either  case  to  deceive,  injure  or  defraud  the 
corporation  or  anv  other  company,  bodypolitic  or  corporate,  or  any  individual 
person,  or  to  deceive  jany  one  appointed  to  examine  the  affairs  of  such  cor- 
poration ;  and  every  person  who  with  like  intent  aids  or  abets  any  president, 
secretary,  treasurer,  committee  or  other  officer  or  person  in  any  violation  to 
this  section  shall  be  deemed  guilty  of  a  felony,  and  shall  lie  imprisoned  not 
k-s^  than  one  year  nor  more  than'  ten  years,  and  shall  be  liable  civilly  to  the 
party  injured,  to  the  extent  of  such  damage  thereby  incurred,  and  suit  may 
ought  again  t  such  persons  and  the  sureties  on  his  bond  given  to  such 
11  the  faithful  performance  of  his  duty.  Any  officer  whose  duty 
ii  i>  failing  to  make  the  reports  required  by  this  act,  and  anv  officer,  employee, 
or  other  person,  who  solicits  business  for,  aids  or  assists  anv  building  and 
loan  associations  to  do  business  contrary  to  the  provisions  of  this  act,  or  with- 
out having  complied  with  iis  provisions,  shall  be  guilty  of  a  misdemeanor, 
and  on  conviction  thereof  shall  be  lined  not  more  than  five  hundred  dollars 
pri  med  noi  more  than  six  months  or  both.  Such  fines,  when  collected, 
I  no  into  the  state  treat  urj 

si  '  .  26.— The  inspector  shall  keep  and  preserve  in  permanent  form  a  full 

dol  his  proceedings, including  a  concise  statement  of  each  association 

'         hall,  annually,  make  a  report  to  the  legislature  of  the  gen- 

icl  ind  condition  of  the  building  and  loan  associations  doing  business 

ite,  with  such  sugge  lions  as  he  may  deem  expedient.    Such  report 

elude  the  information  contained  in  the  statements  required  ol  the 

d  in  tabulated  form.     He  shall  also  report  the  names, 

ompen  ations  ol  tin-  clerks  employed  by  him,  the  whole  amount  of  the 

nci   derived, and  the  1    penses  in  detail,  during  the  vcar 

ending  on  tin-  ihirty-fii  t daj  ol  December. 


GENERAL   LEGISLATION.  845 

Sec.  27.— Sections  3833, 3834  and  3836  as  amended,  and  supplemental  sections 
3835«.  :Ao/',  3835c,  3835d.  3835«.  3835/.  3«35Ar.  3*35''.  ^5',  and  3835;',  of  the 
Revised  Statutes  as  amended,  or  otherwise,  arc  hereby  repealed. 

Sec.  28.— This  act  shall  take  effect  and  be  in  force  from  and  after  its  passage. 

1'assed  May  I,  1891. 

ACT  1893,  p.  315. 

Section.  i.—Be  it  enacted  by  the  General  Assembly  of  the  Slate  of  Ohio,  That 
building  and  loan  associations  shall  be  authorized  to  provide  in  their  constitu- 
tions and  by-laws  for  the  time  and  terms  of  the  dissolutions  of  such  corpora- 
tions ;  also  for  the  consolidation  of  two  or  more  of  such  corporations  into  one. 
upon  such  terms  and  conditions  as  may  be  determined  upon  by  their  boards  of 
directors  ;  also,  in  the  case  of  dissolution  ol  such  corporation,  its  board  ol  direc- 
tors may,  by  a  majority  vote,  be  authorized  to  sell  and  transfer  its  mortgage  se- 
curities or  other  property,  or  both,  to  another  corporation,  person  or  persons, 
subject  alwavs  to  the  vested  and  accrued  rights  of  the  mortgagors. 

Skc.  2.— This  act  shall  take  effect  and  be  in  force  from  and  after  its  pas- 
sage. 

Massed  April  27,  1893. 

OKLAHOMA. 

STATUTES  OF  1893,  pp.  282-287. 

Paragraph  1143. — At  any  time  when  ten  or  more  persons  may  desire  to 
form  a  building  and  loan  association  under  the  provisions  of  this  act,  they 
shall  make  application  to  the  secretary  of  the  territory  in  the  manner  pre- 
scribed by  section  1229  [1152].  The  said  secretary  is  hereby  fully  empowered 
to  grant  charters  to  said  associations,  provided  that  no  charter  granted  under 
or  by  virtue  of  the  provisions  of  this  act  shall  be  for  a  longer  period  than 
twenty  years. 

Par.  1144. — The  capital  stock  of  any  corporation  created  by  virtue  of  this 
act  shall  at  no  time  consist  of  more  than  two  thousand  five  hundred  shares,  of 
two  hundred  dollars  each,  or  five  thousand  shares  of  one  hundred  dollars  each, 
the  instalments  on  which  stock  are  to  be  paid  at  such  time  and  place  as  the 
by-laws  shall  appoint,  no  periodical  payment  to  be  made  exceeding  two  dol- 
lars on  each  share.  Every  share  of  stock  shall  be  subject  to  a  lien  for  the 
payment  of  unpaid  instalments  and  other  charges  incurred  thereon,  under 
the  provisions  of  the  charter  and  by-laws,  and  the  by-laws  may  prescribe  the 
form  and  manner  of  enforcing  such  lien.  New  shares  of  stock  may  be  issued 
in  lieu  of  the  shares  withdrawn  or  forfeited.  The  stock  may  be  issued  in  one 
or  more  successive  series,  in  such  amount  as  the  board  of  directors  or  stock- 
holders may  determine,  and  any  stockholder  wishing  to  withdraw  from  the 
said  corporation  shall  have  power  to  do  so  by  giving  thirty  days  notice  of 
his  or  her  intention  to  withdraw,  when  he  or  she  "shall  be  entitled  to  receive 
the  amount  paid  in  by  him  or  her,  and  such  proportion  of  the  profits  as  the 
by-laws  may  determine,  less  all  fines  and  other  charges  ;  Provided,  that  at  no 
time  shall  more  than  one-half  of  the  funds  in  the  treasury  of  the  corporation 
be  applicable  to  the  demands  of  withdrawing  stockholders  without  the  con- 
sent of  the  board  of  directors,  and  that  no  stockholder  shall  be  entitled  to 
withdraw  whose  stock  is  held  in  pledge  for  security.  Upon  the  death  of  a 
stockholder,  his  or  her  legal  representative  shall  be  entitled  to  receive  the  full 
amount  paid  in  by  him  or  her  and  legal  interest  thereon,  first  deducting  all 
charges  that  may  be  due  on  the  stock.  No  fines  shall  be  charged  to  a  deceased 
member's  account  from  or  after  his  or  her  decease,  unless  the  legal  represen- 
tatives of  such  decedent  assume  the  future  payments  of  the  stock. 

Par.  1145. — The  number,  titles,  functions  and  compensation  of  the  officers 
of  any  corporation  created  by  virtue  of  this  act,  their  terms  of  office,  the  times 
of  their  election,  as  well  as  the  qualifications  of  electors,  and  the  votes  and 
maimer  of  voting,  and  the  periodical  meetings  of  said  corporation,  and  the 
manner  aid  terms  upon  which  loans  shall  be  made  and  repaid  shall  be  de- 
termined by  the  by-laws. 

Par.  1146.— The  said  officers  shall  hold  stated  meetings  at  which  the  money 
in  the  treasury,  if  equal  to  the  amount  of  one  share  of  stock  in  such  corpora- 
tion, shall  be  offered  for  loan  in  open  meeting  and  the  stockholder  who  shall 
bid  the  highest  premium  for  the  preference  or  priority  of  loan  shall  be  en- 
titled to  receive  a  loan  of  the  full  amount  for  each  share  of  stock  held  by  such 
stockholder;  Provided,  that  good  and  ample  security  shall  be  given  by  the 
borrower  to  secure  the  repayment  of  the  loan.     In  case  the  borrower  "shall 


846  APPENDIX   IV. 

neglect  to  offer  security  that  is  approved  by  the  board  of  directors  by  such 
time  as  the  by-laws  may  prescribe,  he  or  she  shall  be  charged  with  one 
month's  interest  at  the  rate  charged  by  the  association  on  loans,  and  a  fine 
not  to  exceed  one  dollar  per  share,  together  with  any  expenses  incurred,  and 
the  money  shall  be  resold  at  the  next  stated  meeting.  In  case  of  non-pay- 
ment of  instalments,  or  interest  or  premium  by  borrowing  stockholders,  for 
the  space  of  six  months,  payment  of  principal  and  interest,  without  deducting 
the  premium  paid  or  interest  thereon,  may  be  enforced  by  proceeding  on  their 
securities  according  to  law. 

Par.  1147. — A  borrower  may  repay  a  loan  at  anytime  by  the  payment  to 
the  corporation  of  the  principal  sum  borrowed,  together  with  interest,  not  to 
exceed  twelve  per  cent,  per  annum,  together  with  such  per  cent,  of  premium 
per  annum  as  may  have  been  bid  for  the  preferences  or  priority  of  such  loan 
and  any  fines  or  charges  that  may  be  imposed  upon  such  stockholder  at  the 
time  of  such  repayment  ;  or  in  case  the  amount  of  premium  bid  for  he 
priority  of  such  loan  be  deducted  in  advance,  and  the  repayment  thereof  is 
made  before  the  expiration  of  the  eighth  year  after  the  organization  of  the 
corporation,  there  shall  be  refunded  to  such  borrower  one-eighth  of  the  pre- 
mium paid  for  every  year  of  the  said  eight  years  unexpired  ;  Provided,  that 
when  the  stock  is  issued  in  separate  series,  the  time  shall  be  computed  from 
the  date  of  the  issuing  of  the  shares  of  stock  on  which  the  loan  was  made  ; 
Provided  further,  that  when  the  series  of  stock  has  a  less  period  than  eight 
years  to  complete  full  payment  thereof,  there  shall  be  refunded  only  fro  rata  for 
the  unexpired  term  of  the  series  ;  And,  provided  further,  when  the  by-laws  of 
the  corporation  prescribe  a  different  manner  and  terms  upon  which  a  loan 
may  be  repaid,  then  the  repayment  can  only  be  made  in  accordance  with  the 
by-laws  of  such  corporation. 

Par.  1 148. — No  premiums,  fines,  or  interest  on  such  premiums  that  may  ac- 
crue to  the  said  corporation  according  to  the  provisions  of  this  act  shall  be 
deemed  usurious  ;  and  the  some  [same]  may  be  collected  as  debts  of  like 
amount  are  now  by  law  collected  in  this  territory. 

Par.  1140. — No  corporation  created  under  this  act  shall  cease  or  expire  from 
neglect  on  the  part  of  the  corporation  to  elect  officers  at  the  time  mentioned  in 
their  charter  or  by-laws,  and  all  officers  elected  by  such  corporation  shall 
hold  their  offices  until  their  successors  are  duly  elected  and  qualified. 

Par.  1150. — Any  building  and  loan  association  incorporated  by  or  under 
the  provisions  of  this  act,  or  any  one  heretofore  or  hereafter  incorporated,  ac- 
cepting of  the  provisions  of  the  same,  is  hereby  authorized  and  empowered 
to  purchase  at  the  sheriff's  or  other  judicial  sale,  or  at  any  other  sale,  public 
or  private,  any  real  estate  upon  which  such  association  may  have  or  hold  any 
mortgage,  judgment,  lien  or  other  incumbrance,  or  in  which  said  association 
may  nave  an  interest,  and  the  real  estate  so  purchased,  or  any  other  that  such 
association  may  hold  or  be  entitled  to  at  the  passage  of  this  act  to  sell,  con- 
vey, lease  or  mortgage  at  pleasure  to  any  person  or  persons  whatsoever,  and 
all  sales  of  real  estate  heretofore  made  bv  such  association  to  any  person  or 
persons  not  members  of  the  association  so  selling  are  hereby  confirmed  and 
made  valid. 

Par  i  1  tI.— All  mortgages  heretofore  given  to  the  building  and  loan  asso- 
ciations organized  under Ihe  laws  of  this  territory  before  the  passage  of  this 
act  or  subsequent  hereto,  but  such  associations  subsequently  accepting  the 
provisions  hereof,  be  and  the  same  are  hereby  declared  good  and  valid  to 
all  intents  and  purposes,  as  though  they  had  been  made  to  corporations  under 
the  provisions  of  this  act. 

PAR  i  [5Z — The  charter  of  an  intended  corporation  under  the  provisions  of 
this  acl  musl  be  subscribed  by  ten  or  more  persons,  a  majority  of  whom  must 
be  citizens  of  tliis  territory,  and  set  forth  : 

1.  'I'll'-  name  "I  the  corporation. 

2.  'I'll'-  pill  i"  1  e  Foi  which  it  is  formed. 

3.  The  place  where  its  principal  office,  or  the  business  is  to  be  transacted. 

4.  The  time  for  which  it  is  to  exist. 

5.  The  names  and  residences  of  the  subscribers,  and  the  number  of  shares 
sub'  •  each. 

(>.  The  number  of  its  directors,  and  the  names  and  residences  of  those  who 


GENERAL   LEGISLATION.  847 

are  selected  as  directors,  and  who  shall  hold  their  office  until  the  next  annual 
election  or  until  their  successors  are  elected  and  qualified. 

7.  The  amount  of  its  capital  stock  and  the  number  and  par  value  of  its 
shares. 

Par.  1153. — Notice  of  the  intention  to  apply  for  any  such  charter  shall  be  in- 
serted into  two  newspapers  of  general  circulation  printed  in  the  proper 
county  for  three  weeks,  setting  forth  briefly  the  character  and  object  of  t he 
corporation  to  be  formed,  and  the  intention  to  make  application  therefor.  The 
certificate  of  a  corporation  under  the  provisions  of  this  act,  shall  set  forth  all 
that  is  hereinbefore  required  to  be  set  forth,  the  same  shall  be  acknowledged 
by  at  least  five  of  the  subscribers  thereto  before  a  notary  public  or  other 
officer  authorized  to  administer  oaths,  and  they  shall  also  make  and  subscribe 
an  oath  or  affirmation  before  him,  to  be  indorsed  on  said  certificate  that  the 
statements  contained  therein  are  true.  The  said  certificate,  accompanied 
with  proof  of  publication  of  the  notice  as  hereinbefore  provided,  shall  then 
be  produced  to  the  secretary  of  the  territory,  who  shall  examine  the  same  and  if 
he  find  it  to  be  in  proper  form,  as  specified  in  the  foregoing  sections,  he  shall 
approve  thereof,  and  indorse  his  approval  thereon,  and  issue  letters  patent  in 
the  usual  form  incorporating  the  subscribers  and  their  associates  and  suc- 
cessors into  a  body  politic  and  corporate  in  deed  and  in  law,  by  the  man- 
ner chosen  ;  and  and  the  said  certificate  shall  be  recorded  in  the  office  of  the 
secretary  of  the  territory,  in  a  book  to  be  by  him  kept  for  that  purpose,  and  a 
certified  copy  of  the  said  certificate  shall  be  recorded  in  the  office  of  the 
register  of  deeds  of  the  county  where  the  principal  business  of  the  association 
is  transacted.  Certified  copies  of  the  records  thereof  shall  be  competent  evi- 
dence for  all  purposes  in  the  several  courts  of  this  territory. 

Par.  1154. — The  by-laws  of  every  corporation  created  under  the  provisions 
of  this  act,  or  of  those  accepting  the  provisions  of  the  same,  shall  be  deemed 
and  taken  as  its  law,  subordinate  to  this  statute.  They  shall  be  made  by  the 
stockholders  or  the  board  of  directors,  at  their  annual  meeting  or  at  any 
stated  meeting  of  the  board  of  directors.  They  shall  prescribe  the  time  and 
place  of  meeting  of  the  corporation,  and  the  power  and  duty  of  its  officers, 
the  fines  and  penalties  to  be  imposed  upon  delinquents  and  borrowers  for 
the  non-payment  of  dues,  interest  and  premiums,  and  such  other  matters  as 
may  be  pertinent  and  necessary  for  the  business  to  be  transacted. 

Par.  1 155. — The  business  of  every  corporation  created  hereunder,  or  of 
those  accepting  the  provisions  of  the  same,  shall  be  managed  and  conducted 
by  a  president,  a  board  of  directors  or  trustees,  a  secretary  and  treasurer, 
and  such  other  officers  or  agents  as  the  by-laws  may  provide.  The  directors 
or  trustees  shall  be  elected  annually  by  the  stockholders  or  members,  at  the 
time  fixed  by  the  by-laws,  and  shall  hold  their  office  until  others  are  chosen 
and  qualified  in  their  stead  ;  the  manner  of  such  choice,  and  of  the  choice  or 
appointment  of  all  other  agents  or  officers,  shall  be  prescribed  by  the  by- 
laws. The  number  of  directors  or  trustees  shall  not  be  less  than  five,  one  of 
whom  shall  be  chosen  president  by  the  directors,  or  by  the  members  of  the 
corporation,  as  the  by-laws  may  direct  ;  the  members  of  said  corporation 
may,  at  a  meeting  called  for  that  purpose,  determine,  fix  or  change  the  num- 
ber of  directors  or  trustees  that  shall  thereafter  govern  its  officers,  and  a  ma- 
jority of  the  whole  number  of  such  directors  or  trustees  shall  be  necessary  to 
constitute  a  quorum.  The  treasurer  shall  give  bond  in  such  sum,  and  with 
such  sureties  as  shall  be  required  by  the  by-laws,  for  the  faithful  discharge 
of  his  duties,  and  he  shall  keep  the  moneys  of  the  corporation  in  a  separate 
bank  account,  to  his  credit  as  treasurer,  and  if  he  shall  neglect  or  refuse  so  to 
do,  he  shall  be  liable  to  a  penalty  of  fifty  dollars  for  every  day  he  shall  fail  so 
to  do,  to  be  recovered  at  the  suit  of  any  informer  in  an  action  of  debt. 

Par.  1 156. — The  directors  of  such  corporation  shall  procure  certificates  of 
evidence  of  stock,  and  shall  deliver  them  signed  by  the  president  and  secre- 
tary and  sealed  with  the  common  seal  of  the  corporation  to  each  person  or 
party  entitled  to  receive  the  same  according  to  the  number  of  shares  by  him, 
her  or  them  respectively  held,  which  certificate  or  evidence  of  stock  shall  be 
transferable  at  the  pleasure  of  the  holder  in  person  or  by  attorney  duly 
authorized  as  the  by-laws  may  prescribe,  subject,  however,  to  all  payments 
due  or  to  become  due  thereon,  and  the  assignee  or  party  to  whom  the  same 
shall  have  been  so  transferred  shall  be  a  member  said  corporation,  and  have 


848  APPENDIX   IV. 

and  enjoy  all  the  immunities,  privileges  and  franchises,  and  be  subject  to  all 
th  [e]  liabilities,  conditions  and  penalties  incident  thereto,  in  the  same  man- 
ner as  the  original  subscriber  or  holder  would  have  been,  but  no  certificate 
shall  be  transferred  so  long  as  the  holder  is  indebted  to  said  company,  unless 
the  board  of  directors  shall  consent  thereto. 

Par.  i  157. — No  person  acting  as  judge  or  officer  for  holding  an  election 
for  any  such  corporation  shall  enter  upon  the  duties  of  his  appointment  until 
he  take  and  subscribe  an  oath  or  affirmation  before  a  notary  public  or  other 
person  qualified  by  law  to  administer  oaths,  that  he  will  discharge  the  duties 
of  his  office  with  fidelity,  that  he  will  not  receive  any  rate  but  such  as  he  really 
believes  to  be  legal,  and  if  any  such  judge  or  officer  shall  knowingly  or  wil- 
fully violate  his  oath  or  affirmation  he  shall  be  subject  to  all  the  penalties 
imposed  by  law  upon  the  officers  of  the  general  election  of  this  territory  for 
violating  their  duties,  and  shall  be  proceeded  against  in  like  manner  and  with 
like  effect. 

Par.  1 158. — In  case  of  the  death,  removal  or  resignation  of  the  president, 
or  any  of  the  directors,  secretary,  treasurer  or  other  officer  of  such  company, 
the  remaining  directors  may  supply  the  vacancy  thus  created  until  the  next 
general  election. 

Par.  1159. — It  shall  be  lawful  for  any  building  and  loan  association  now 
incorporated  under  the  general  laws  of  this  territory  and  accepting  the  pro- 
visions of  this  act,  or  that  may  hereafter  be  incorporated,  in  addition  to  dues 
and  interest  to  charge  and  receive  the  premiums  or  bonus  bid  by  a  stock- 
holder for  preference  or  priority  of  right  to  a  loan  in  periodical  instalments, 
and  such  premium  or  bonus  so  paid  in  instalments  shall  not  be  deemed  usuri- 
ous but  shall  be  taken  to  be  a  payment  as  it  falls  due,  in  contradiction  [con- 
tradistinction] to  a  premium  charged  and  paid  in  advance,  in  so  far  as  said 
premium  or  bonus  so  charged  and  paid,  in  addition  to  dues  and  interest,  shall 
be  in  excess  of  two  dollars  for  each  periodical  payment,  the  same  shall  be 
lawful,  any  law,  usage  or  custom  to  the  contrary  notwithstanding  ;  Provided, 
that  the  certificate  of  incorporation  of  each  association  hereafter  to  be  incor- 
porated, and  the  certificate  provided  in  section  1238  [1161],  for  those  heretofore 
incorporated,  shall  set  forth  whether  the  premium  or  bonus  bid  for  the  prior 
rights  to  a  loan  shall  be  deducted  therefrom  in  advance  or  paid  in  periodical 
instalments. 

Par.  1162. — Any  company  heretofore  incorporated  under  any  general  law  of 
this  territory,  or  by  virtue  "of  any  special  charter  heretofore  granted  by  the 
legislature  thereof,  incorporating  any  company  for  the  purpose  of  doing  a 
banking,  loan  or  other  business  provided  for  in  chapter  18  [chapter  17]  ;  or 
any  building  or  loan  association  heretofore  incorporated,  and  having  accepted 
the  provisions  of  article  16  [article  17]  of  said  chapter,  as  therein  provided, 
shall  be  entitled  to  all  the  privileges,  immunities,  franchises  and  powers  men- 
tioned in  said  chapter  18  [chapter  17],  and  the  privileges,  immunities  and 
powers  recited  in  said  article  10  [article  17],  upon  filing  with  the  secretary  of 
the  territory  a  certificate  to  be  by  him  recorded,  which  certificate  shall' be 
under  the  duly  authenticated  seal  of  such  corporation,  and  shall  set  forth  such 
corporation's  acceptance  of  the  provisions  of  section  957  [932]. 

Par.  11 63. — Upon  the  acceptance  and  approval  of  said  certificate,  by  the 
tar\  "i  the  territory,  such  corporation  shall  henceforth  be  entitled  to  all 
the  privileges,  immunities,  franchises  and  powers  conferred  by  section  957 
[932],  in  the  ^anie  manner  as  if  incorporated  under  the  provisions  thereof. 

PAR.   1  [64. — And  it  is  further  provided,  that  all  the  acts  of  such  incorporations 
n  ly  done  under  and  by  virtue  of  their  then  existing  charters  shall 
be  and  are  hereby  ratified  and  made  legal. 


ACTS   [895,  p.  77. 

ion   1. — Any  building  and  loan  association  may  issue  shares  of  stock  in 
01  "ii  what  is  known  as  the  perpetual  oi   permanent  plan,  when  each 
1  run  from  date  ol  issue  ;  Provided,  thac  the  by-laws  of  said  associa- 
tati   upon  which  plan  the  a    ociation  issues  snares. 


GENERAL   LEGISLATION.  849 

Sec.  2. — Any  building  and  loan  association  may  elect  directors  or  trustees 
for  a  longer  term  than  one  year  if  such  term  be  set  forth  in  the  by-laws  :  Pro- 
vided, that  no  director  or  trustee  shall  be  elected  for  a  period  longer  than  three 
years,  and  the  terms  of  at  least  two  of  such  directors  or  trustees  shall  expire 
each  year. 

Sec.  3. — Every  such  corporation  may  extend  the  time  of  its  duration  so  as  to 
make  the  entire  period  of  its  corporate  existence  not  to  exceed  lifty  years  by 
vote  ot  three-fourths  of  its  stockholders  at  any  meeting  called  for  this  purpose, 
thirty  days'  notice  having  first  been  given  each  stockholder  by  postal  card  or 
letter  and  by  paying  to  the  territorial  secretary  a  fee  of  two  dollars. 

Sec.  4. — Every  such  corporation  doing  business  in  the  territory  shall,  semi- 
annually in  the  months  of  January  and  July,  publish  in  one  or  more  news- 
papers in  the  city  or  county  where  such  corporation  is  located,  a  statement, 
verified  by  the  oath  of  its  president  or  secretary  setting  forth  its  actual  finan- 
cial condition  and  the  amount  of  its  property  and  liabilities,  under  a  penalty 
of  two  hundred  dollars  to  the  territory,  to  be  recovered  by  civil  action  for  the 
benefit  of  the  association,  against  the  president,  secretary  or  directors  on  the 
relation  of  any  stockholder.  It  shall  also  deposit  a  copy  of  said  statement, 
verified  as  aforesaid,  in  the  office  of  the  territorial  secretary. 

Sec.  5. — Every  such  corporation  shall  lend  its  funds  only  on  real  estate 
security,  or  on  the  security  of  its  own  shares  of  stock,  such  loans  being  made 
upon  the  terms  and  conditions  and  in  the  manner  which  shall  be  specified  by 
its  by-laws.  No  loans  shall  be  made  on  shares  of  stock  to  an  amount  exceed- 
ing the  instalments  actually  paid  in  on  such  shares.  Such  corporation  may, 
however,  employ  a  portion  of  its  capital  stock  in  the  purchase  of  real  estate 
and  the  erection  of  buildings  thereon,  for  rent  or  otherwise.  If  at  any  time 
it  shall  happen  that  there  is  no  demand  by  the  shareholders  for  the  funds  of 
such  corporation,  then  such  funds  may  be  loaned  to  others  who  are  not  share- 
holders, at  such  rate  of  interest  and  premium  as  the  directors  may  fix.  No 
loans  shall  be  made  to  members  or  others  on  personal  security  or  on  lease- 
hold. 

Sec.  6. — When  any  unpledged  shares  of  stock  shall  reach  the  maturity  value 
thereof,  all  payments  of  dues  thereon  shall  cease,  and  the  holders  thereof  shall 
be  entitled  to  receive,  and  shall  then  be  paid  out  of  the  fund  of  such  corpora- 
tion, the  maturity  value  thereof  for  each  share  so  matured  and  held  ;  Provided, 
however,  that  if  there  are  not  such  funds  then  on  hand  sufficient  and  appli- 
cable to  the  payment  and  redemption  of  said  shares,  then  such  shareholders 
shall  be  entitled  to  receive  interest  on  the  sum  then  due  them,  from  the  matu- 
rity of  said  shares  to  the  date  of  redemption,  at  a  rate  of  not  less  than  six  nor 
to  exceed  eight  per  cent,  interest  per  annum,  as  may  be  provided  by  the  by- 
laws of  said  association  ;  And,  provided  further,  that  at  no  time  shall  more 
than  half  of  the  funds  in  the  treasury,  be  applicable  to  the  payment  or  redemp- 
tion of  such  matured  shares,  unless  by  consent  of  the  board  of  directors. 

Sec.  7. — It  shall  be  lawful  for  any  minor  above  the  age  of  fourteen,  or  a 
married  woman  to  take  and  hold  shares  in  such  corporation,  and  forsuch  cor- 
poration to  pay  any  minor  any  money  that  may  be  due  him  in  respect  to  any 
share,  and  his  receipt  therefor  shall  be  valid  ;  but  no  minor  shall  be  eligible  to 
hold  any  office  in  said  corporation. 

Skc.  8. — As  building  and  loan  associations  are  aggregations  of  laborers, 
mechanics,  workingmen,  working  women  and  tradesmen  which  start  without 
any  paid  up  capital,  and  as  these  members  only  pay  in  on  their  stocks  small 
weekly  or  monthly  assessments,  and  said  assessments  are  immediately  loaned 
to  one  of  the  members  of  the  association  for  the  purpose  of  furnishing  him  a 
home,  and  he  immediately  begins  to  pay  taxes  on  the  same,  while  the  associa- 
tion as  a  whole  pays  taxes  on  the  obligation  which  he  gives  for  said  loan, 
it  would  be  unjust  to  tax  this,  same  money  still  a  third  time  ;  therefore,  the 
shares  iesued  by  n.  building  and  loan  association  organized  under  the  laws 
of  this  territory,  and  loaning  all  its  funds  to  members  within  the  territory,  are 
hereby  declared  exempt  from  taxation. 

Sec.  9. — Any  building  and  loan  association  which  has  made  and  filed  its 
articles  of  incorporation  under  the  laws  of  the  territory  and  received  its  certi- 
ficate of  incorporation,  and  whose  principal  place  of  business  is  within  the 
territory,  shall  be  entitled  to  all  the  benefits  of  this  act  and  all  other  acts  now 
in  force  relating  to  building  and  loan  associations,  and  have  all  the  powers, 
rights  and  privileges  by  such  acts  conferred,  upon  accepting  the  same  by 
unanimous  vote  of  its  board  of  directors  at  a  regular  meeting  thereof,  and 
filing  with  the  secretary  of  the  territory  a  certificate  of  such  acceptance  in 
writing  under  the  duly  authenticated  seal  of  said  association,  to  be  by  him 
recorded  as  provided  in  paragraph  1 153,  of  the  statutes  of  1893.    Said  certifi- 


850  APPENDIX   IV. 

cate  shall  set  forth  the  mode  or  plan  of  said  association  in  charging  premiums 
or  bonus  for  priority  of  loan,  and  upon  its  acceptance  and  approval  by  the 
secretary  of  the  territory,  he  shall  issue  his  certificate  to  said  corporation 
reciting  the  same,  and  thereafter  said  association  shall  be  conclusively  deemed 
to  have  been  duly  and  legally  incorporated  at  and  from  the  time  of  the  issue 
of  its  original  certificate  of  incorporation,  and  the  acts  of  such  association  not 
in  violation  of  law  are  hereby  ratified  and  made  legal. 

Sec.  10. — Sections  18  and  19  of  article  17  of  chapter  17  of  the  statutes  of  1893 
are  hereby  repealed. 

Approved  and  in  force  March  5th,  1895. 

OREGON. 

LAWS  OF  1891,  p.  131. 

Section  i. — It  shall  be  lawful  for  co-operative  corporations,  engaged  in  the 
business  of  loaning  their  own  money  only  to  their  own  stockholders  and  only 
in  proportion  to  the  amount  of  stock  held  by  such  stockholders  in  case  there 
are  two  or  more  applicants  for  the  money  offered  for  loan,  to  make  the  loan 
to  such  stockholder  or  stockholders  as  shall  offer  the  highest  premium  of  any 
nature  for  such  loan,  and  the  giving  and  receiving  of  such  premium  shall  not 
be  regarded  as  contrary  to  the  laws  of  the  state  in  regard  to  the  rate  of  interest 
on  money,  but  only  the  means  of  determining  which  of  two  or  more  stock- 
holders, equally  entitled  to  such  loan,  shall  receive  the  same. 

ACTS  1895,  p.  103. 

Section  i. — Whenever  any  number  of  persons,  not  less  than  five,  shall 
desire  to  incorporate  a  building  and  loan  or  savings  and  loan  association, 
having  for  its  object  the  business  of  receiving  and  accumulating  the  contribu- 
tions or  deposits,  or  both,  of  its  incubus,  and  lending  the  same,  but  only  to  its 
members,  thejr  shall  make  a  written  declaration  to  that  effect,  such  declara- 
tion shall  be  signed,  sealed  and  acknowledged  in  the  form  now  provided  by 
the  statutes  of  this  state  for  the  conveyances  of  real  estate,  and  shall  include 
the  following: 

1.  The  name  of  the  association.  The  name  shall  not  be  the  same  as,  nor 
too  closely  resemble,  that  in  use  by  any  existing  corporation  established  under 
the  laws  Of  this  state.  The  words  "  building  and  loan  association,"  or 
"  savings  and  loan  association,"  shall  form  a  part  of  the  name,  and  no  corpo- 
ration not  organized  under  this  act  shall  be  entitled  to  use  a  name  embodying 
either  said  combinations  of  words  ;  Provided,  that  associations  now  existing 
may  continue  their  present  names. 

2.  The  principal  office  or  place  of  business  of  the  association,  which  shall 
be  within  this  state. 

3.  The  amount  of  its  capital  stock  and  the  number  of  shares  into  which  the 
same  shall  be  divided;  Provided,  that  no  shares  shall  be  of  a  less  par  value 
than  one  hundred  dollars  each. 

4.  The  time  of  its  duration. 

5.  A  provision  that  such  association  is  organized  under  this  act  for  the  pur- 
poses herein  expressed. 

6.  The  names  and  residences  of  the  persons  who  shall  make,  subscribe  and 
acknowledge  the  said  declaration,  a  majority  of  whom  shall  be  citizens  of 

ile,  and  who  shall  thereafter  be  called  incorporators. 
SEC.  2. — When  so  signed,  sealed,  and  acknowledged,  the  declaration  shall 
be  Bled  in  the  office  of  the  secretary  of  state,  who  shall  file  and  record  the 
same.  Thereupon,  the  secretary  of  state  shall  make  and  issue  a  copy  of  said 
declaration,  with  his  certificate  attached,  setting  forth  the  facts  of  the  tiling 
and  recording  of  such  declaration  in  his  office.  The  copy  of  the  declaration 
-  rtified  shall  forthwith  be  recorded  in  the  office  of  ihe  county  recorder  of 
con  ■'  the  county  where  the  principal  place  of  business  of  such  cor- 

poration  shall  1"  ituated,  and  in  those  counties  where  there  is  no  county  re- 
<  older  oi  con  eyances  then  in  the  office  of  Ihe  county  clerk  of  such  county. 
Upon  compliance  with  the  foregoing  requirements,  the  corporators  so  execut- 
ing ration  their  a  sociates,  successors  and  assigns,  shall  become 
and  1 1.  a  corporate  body,  bearing  the  name  sel  f<  »rth  in  such  declaration,  with 
powerto  ue  and  be  sued,  to  contract  and  be  contracted  will),  to  have  and 
l  corporate  eal  and  to  <  hange  the  same  al  pleasure,  to  purchase,  possess, 
hold,  di  pose  of  or  1  II  uch  real  or  personal  property  as  maybe  necessary 
enient  to  can  yon  its  business,  and  in  the  effectual  furtherance  of 


GENERAL  LEGISLATION.  851 

the  purposes  of  such  association  ;  to  borrow  money  for  the  purpose  of  making 
loans  and  paying  withdrawals,  and  to  appoint  or  elect  such  directors,  officers, 
and  agents  as  the  business  of  the  association  may  require,  and  prescribe  their 
duties  and  fix  their  compensation. 

Sec.  3. — The  conduct  and  management  of  the  affairs  and  business  of  such 
association  shall  be  vested  in  a  board  of  directors,  which  shall  consist  of  not 
less  than  five  nor  more  than  ten  members.  The  corporators  of  the  associa- 
tion shall  serve  as  directors  until  the  first  meeting  of  the  stockholders,  to  be 
held  at  the  time  provided  for  by  this  act,  or  until  their  successors  are  elected 
and  qualified,  after  which  the  directors  shall  be  elected  by  the  stockholders  of 
the  association,  who  shall  he  entitled  to  cast  one  vote  for  each  director  to  be 
elected  for  each  share  in  good  standing  in  his  or  her  name.  The  directors, 
unless  it  be  otherwise  provided  by  the  by-laws  of  the  association,  shall  elect 
or  appoint  all  the  other  officers  of  the  association  ;  not  more  than  four  of  the 
officers  of  any  such  association  incorporated  under  the  laws  of  this  state  shall 
be  members  of  the  board  of  directors  of  such  association. 

Sec.  4. — Within  sixty  days  alter  recording  such  declaration  in  the  records 
of  the  county  wherein  the  principal  place  of  business  is  situated  the  incorpo- 
rators then  acting  in  the  capacity  of  directors  shall  adopt  appropriate  by-laws 
to  govern  and  prescribe  the  methods  and  the  officers  by  whom  the  business 
of  the  association  shall  be  conducted.  The  by-laws  shall  be  in  conformity 
with  the  provisions  of  this  act  and  the  laws  of  this  state,  and  at  all  times  during 
the  regular  hours  of  business  shall  be  open  to  the  inspection  of  the  members 
at  its  principal  place  of  business.  The  by-laws,  among  other  things,  shall 
especially  provide  for  the  character  and  methods  of  conducting  the  business 
of  the  association,  with  rules  governing  the  admission  of  members,  the  sale 
of  its  shares,  the  amount  of  admission  fee,  the  amount  of  and  the  periods  when 
dues  shall  be  paid  by  the  members  to  the  association,  the  deposition  and  in- 
vestment of  the  funds  of  the  association,  including  loans,  the  amount  of 
premiums  to  be  paid  for  and  the  rate  of  interest  on  loans,  the  charges  of 
management  providing  for  the  annual  meeting  of  the  shareholders  of  the  as- 
sociation, for  the  election  of  directors  and  the  appointment  of  the  subordinate 
officers  ;  for  the  adoption,  ratification  and  amendment  of  the  by-laws  ;  for  the 
method  of  voting  at  such  annual  meeting,  and  for  the  periodical  investigation 
of  the  business  and  condition  of  such  association. 

Sec.  5. — At  least  thirty  days  prior  to  any  annual  or  special  meeting  of  any 
such  association,  a  notice  stating  the  time  and  place  of  such  meeting  shall  be 
deposited  in  the  postoffice  at  the  headquarters  of  such  association,  directed  to 
each  member  at  his  address  as  the  same  appears  at  the  time  on  the  books  of 
the  association  ;  and  when  so  deposited,  postage  prepaid,  shall  be  deemed  a 
legal  and  sufficient  notice  of  any  such  meeting  ,  Provided,  also,  that  notice 
may  be  given  by  weekly  publication  in  a  daily  newspaper  for  a  period  of  not 
less  than  two  weeks.  And  there  shall  be  attached  to  and  accompany  such 
notice  and  any  proposed  amendment  or  amendments  to  the  articles  of  asso- 
ciation or  by-laws  of  such  association,  and  a  statement  of  any  officer  to  be 
elected  at  such  meeting.  All  members  of  such  association  shall  be  entitled 
to  vote  at  such  meetings  in  person  or  by  proxy. 

Sec.  6. — All  the  moneys  received  by  the  association  from  whatever  source, 
after  deducting  the  fixed  charges  for  management,  shall  be  loaned  to  the 
shareholders  of  the  association,  and  to  them  only,  and  in  all  cases  shall  be 
secured  by  first  mortgage  on  real  estate.  The  amount  of  such  loan  shall 
in  no  case  exceed  fifty  (50)  per  cent,  of  the  appraised  value  of  such  real 
estate.  The  execution  of  the  mortgage  papers  shall  be  accompanied  by  a 
transfer  pledge  of  the  shares  of  the  borrower  to  the  association.  The  shares 
so  pledged  shall  be  held  by  the  corporation,  on  the  terms  to  be  prescribed 
by  the  by-laws,  as  collateral  security  for  the  performance  of  the  conditions  of 
the  mortgage  ;  Provided,  that  the  shares  of  the  association  without  other 
security,  may,  in  the  discretion  of  the  directors,  be  accepted  as  securities  for 
loans  for  an  amount  not  exceeding  their  withdrawal  value  as  provided  by 
this  act.  The  by-laws  shall  provide  for  the  mode  in  which  applications  or 
bids  for  loans  shall  be  made  and  received,  and  who  shall  be  entitled  to 
preference  in  allotting  the  same.  All  loans  shall  be  made  and  considered  by 
the  directors  upon  such  applications  or  bids,  and  in  no  other  way.  Every 
such  association  shall  provide  in  its  by-laws  in  what  manner  applications 
or  bids  for  loans  shall  be  received  and  who  shall  be  entitled  to  loans  there- 
under ;  such  applications  or  bids  shall  be  opened  at  stated  times,  and  all  the 
money  in  the  loan  fund  applicable  to  loans,  shall  be  loaned  upon  such  ap- 
plication or  bid  ;  Provided,  that  the  provisions  of  this  section,  relating  to 
bidding  for  loans,  shall  not  apply  to  associations  which  fix  the  rate  of  in- 


852  APPENDIX   IV. 

terest  and  premium  in  its  by-laws  or  annually,  by  resolution  of  the  board 
of  directors,  at  a  rate  which  will  keep  the  money  of  such  association  at 
all  times  safely  invested  and  in  which  the  system  of  bidding  is  not  allowed. 
The  minimum  amount  and  nature  of  premiums  to  be  bid  or  asked  for  loans 
shall  be  fixed  and  described  in  the  by-laws,  but  the  same  may  from  time 
to  time  be  changed  by  a  two-thirds  vote  of  all  the  members  of  the  board 
of  directors. 

Sec.  7. — Any  premium  which  has  heretofore  or  which  shall  hereafter  be 
taken  for  loans  or  fines  imposed  for  the  non-payment  of  dues,  made  by  any 
association  governed  by  this  act,  shall  not  be  considered  or  treated  as  in- 
terest, nor  render  such  association  amenable  to  the  laws  relating  to  usury. 

Sec.  8. — No  association  governed  by  this  act  shall  set  apart  as  an  expense 
fund,  exclusive  of  admission  fees,  to  exceed  ten  (10)  cents  per  month  upon 
each  share  of  its  stock,  or  assess  any  fines  for  non-payment  of  monthly  instal- 
ment, or  otherwise,  in  excess  of  ten  (10)  cents  per  share  for  the  first  month 
that  the  same  shall  be  in  arrears,  and  fifteen  (15)  cents  per  share  per  month 
for  every  month  thereafter. 

Sec.  9. — Any  shareholder  whose  stock  is  not  delinquent  and  has  not  been 
declared  forfeited  in  such  association,  and  whose  share  or  shares  are  not 
pledged  upon  a  loan,  may  withdraw  such  share  or  shares  from  the  association 
at  any  time  after  one  year  by  giving  at  least  sixty  days'  notice  in  writing  to 
the  secretary  of  his  intention  to  do  so  ;  at  the  end  of  said  sixty  days  the  asso- 
ciation shall  pay  to  the  members  so  surrendering  as  follows  :  If  said  stock  is 
not  more  than  two  years  old,  all  amounts  paid  in  by  such  members  upon  such 
stock,  except  the  sums  paid  as  membership  fees  and  fines,  and  the  amount  of 
such  payments  set  apart  by  said  association  as  an  expense  fund,  which  expense 
fund,  however,  shall  not  exceed  the  amount  fixed  in  this  act.  If  said  stock  is 
more  than  two  years  old,  the  members  upon  such  surrender  shall  receive,  in 
addition  to  the  amount  above  specified,  at  least  three-fourths  of  all  profits 
standing  to  the  credit  of  such  shares  ;  Provided,  that  not  more  than  one  half 
of  the  monthly  instalments  received  by  such  association  for  any  month  shall 
be  used  to  pay  withdrawals  without  consent  of  the  board  of  directors. 

Sec.  10. — Any  such  association  may  purchase  at  any  sale,  public  or  private, 
any  real  estate  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  other 
incumbrance,  or  in  which  it  may  have  any  interest,  and  may  lease,  sell,  convey 
or  mortgage  the  same  at  pleasure  to  any  person  or  persons,  but  shall  not 
otherwise  acquire  or  deal  in  real  estate  ;  Provided,  that  any  such  association 
may  acquire  any  leasehold  interest  necessary  or  convenient  for  the  transac- 
tion of  its  business. 

Sec.  11. — All  such  associations  heretofore  organized  under  the  laws  of  this 
state  or  incorporated  under  this  act,  are  hereby  prohibited  from  hereafter 
creating  or  issuing  any  non-contributing  stock.  But  this  section  shall  not 
prevent  the  issue  of  different  classes  of  stock. 

Sec.  12. — Every  building  and  loan  association  heretofore  or  hereafter  incor- 
porated under  the  laws  of  this  state,  and  governed  by  this  act,  shall  deposit 
and  keep  with  the  secretary  of  slate,  or  with  a  duly  chartered  and  responsible 
trust  company  of  this  state,  in  trust  for  all  its  members  and  creditors,  all  mort- 
gages or  other  securities  received  by  it  in  the  usual  course  of  business.  When 
ited  with  a  trust  company,  such  company  shall  certify  to  the  secretary 
of  state  I  lie  possession  of  such  securities,  and  the  same  si  i. ill  not  be  surrendered 
without  the  authority  or  sanction  of  the  secretary  of  state  ;  Provided,  that  every 
such  corporation  heretofore  organized,  not  having  or  owning  mortgage  or  other 
to  the  amount  of  twenty-five  thousand  ($25,000.00)  dollars,  shall 
it  with  the  secretary  of  state  additional  securities,  to  make,  with  the 
0  /ned  and  deposited,  equal  in  value  to  said  sum  of  twenty-five 
thou  -   000.00)  dollars  ;  and  every  such  corporation  hereafter  organized 

under  this  acl  shall  deposit  and  keep  with  the  secretary  of  state  in  trust,  as 
jcurities  of  the  value  of  twenty-live  thousand  ($25,000.00)  dollars, 
m  ing  to  do  business.  The  securities  mentioned  in  this  proviso 
1  oi  bonds  or  treasury  notes  oi  the  United  States  or  national  bank 
01  bond  ol  this  stale,  or  any  other  stale  of  the  United  States,  or  of  any 
mnl  01  town  of  this  state,  or  any  other  slate  of  the  United 
State    having  a  legal  authority  to  issue  the  same,  and  such  securities  may  be 

withdrawn  from  time  to  time,  when  mortgage  securities  of  corresponding 
value  dial!  be  deposited  as   provided  in  this   ail,  or  when  other  securities   of 

haractei  are  ub  titutea  therefor;  Provided,  further,  that  whenever  re- 
quired by  the  laws  of  any  other  state,  territory  or  nation,  all  securities  taken 
in  m  h  tate,  territory  or  nation  by  any  assoi  iation  organized  under  the  laws 
ol  this  state,  and  subject  to  the  provisions  oi  this  act,  may  be  deposited  with 


GENERAL   LEGISLATION.  853 

the  properly  authorized  officer  of  such  state.  The  annual  certificate  of  such 
officer  certifying  to  such  deposit  filed  with  the  secretary  of  state  of  this  state 

shall  constitute  a  compliance  with  the  provisions  of  this  section,  as  to  the 
securities  taken  in  such  other  state. 

SEC.  i 3 . — 1 1  shall  be  the  duty  of  the  secretary  of  state  annually  to  examine 
said  associations  to  ascertain  whether  all  its  securities  are  deposited  as 
required  by  this  act,  and  as  compensation  the  secretary  of  state  shall  receive 
twenty  ($20)  dollars. 

SEC.  14.— All  interest,  dividends,  premiums  an  1  payments  which  may 
accrue  or  be  paid  on  securities  held  by  the  secretary  of  state  or  such  trusl 
company  as  provided  for  herein,  and  all  dues  or  monthly  payments  which 
may  become  payable  on  stock  pledged  as  security  lor  loans,  the  mortgages 
for  "which  are  so  deposited  in  accordance  with  the  provisions  of  this  act,  may 
be  collected  and  retained  by  the  association  depositing  such  securities  or 
mortgages  so  long  as  such  association  remains  solvent,  and  faithfully  per- 
forms all  contracts  with  its  members.  Any  mortgage,  upon  which  default 
has  been  made,  may  be  surrendered  upon  presentation  of  an  affidavit  sworn 
to  bv  the  president  or  secretary  of  the  association  owing  the  same,  stating 
that  such  mortgage  is  in  default,  and  that  it  is  withdrawn  for  the  purpose  of 
foreclosure.  Any  note  and  mortgage  shall  be  surrendered  to  said  association 
upon  affidavit  of  two  officers  of  said  association  that  the  same  has  been 
repaid  in  full. 

SEC.  15 — No  building  and  loan  association,  or  savings  and  loan  association, 
organized  under  the  laws  of  any  other  state,  territory  or  nation,  shall  do 
business  in  this  state  unless  such  association  shall  have  securities  of  the  value 
of  one  hundred  thousand  c?  100,000)  dollars,  and  of  the  character  mentioned 
in  this  act,  on  deposit  intrust  for  all  its  members  and  creditors,  with  some 
responsible  trust  company,  duly  incorporated  under  the  laws  of  such  slate  or 
territory  in  the  United  States,  or  with  some  authorized  officer  of  this  or  some 
other  state  of  the  United  States  ;  a  certificate  of  such  deposit  shall  be  filed  w  ith 
the  secretary  of  state  of  this  state,  certifying  the  possession  of  such  securities, 
the  amount  of  which  securities  shall  not  thereafter  be  reduced  without  au- 
thority or  consent  of  the  secretary  of  state. 

Sec.  16. — Every  building  and  loan  association,  or  savings  and  loan  associa- 
tion, organized  under  the  laws  of  any  other  state,  territory  or  nation,  shall 
before  commencing  to  do  business  in  this  state  file  with  the  secretary  of  state 
of  this  state  a  duly  authenticated  copy  of  its  charter  or  articles  of  incorporation 
and  by-laws  ;  second,  file  with  the  secretary  of  state  of  this  state  a  duly  au- 
thenticated copy  of  a  resolution  adopted  by  the  board  of  directors  of  such 
association,  appointing  an  attorney  for  such  association,  resident  in  this  state, 
upon  whom  legal  process  may  be  served  and  whose  name  and  residence 
shall  be  stated  in  said  resolutions,  and  also  an  agreement  that  said  association 
will  pay  every  judgment  that  may  be  taken  against  it  upon  any  such  action 
within  sixty  (60)  days  after  the  final  judgment  shall  have  been  entered  ;  third, 
file  with  the  secretary  of  state  a  certificate  of  the  authorized  officer  of  such 
other  state,  showing  "that  securities  of  the  value  of  one  hundred  thousand 
(.$100,000)  dollars  are  on  deposit  with  such  state  officer  or  duly  incorporated 
trust  company,  in  trust  for  all  the  members  and  creditors  of  such  building 
and  loan  association  ;  fourth,  pay  the  secretary  of  state  five  ($5)  dollars  as  fees 
for  filing  the  papers  mentioned  in  this  act. 

Sec.  17.— The  word  "process"  in  this  act  shall  include  any  writ,  declara- 
tion, summons  or  order  whereby  any  action,  writ  or  proceedings  shall  be 
commenced,  or  which  shall  be  issued  in  or  during  any  action,  suit  or  pro- 
ceeding authorized  by  law  in  this  state. 

Sec  18.—  When,  by  the  laws  of  any  other  state,  territory  or  nation,  any 
taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money  or  securities,  or  other 
obligations  or  prohibitions  are  imposed  on  building  and  loan  associations  of 
this'state,  doing  business  in  such  other  state,  territory  or  nation,  or  upon 
other  agents  therein,  so  long  as  such  laws  continue  in  force,  the  same  obliga- 
tions and  prohibitions  of  whatever  kind  may  be  imposed  upon  all  building 
and  loan  associations  or  savings  and  loan  associations  of  such  state,  territory 
or  nation,  doing  business  in  this  state  and  upon  their  agents  here. 

Sec  19.— Any  building  and  loan  association,  or  savings  and  loan  associa- 
tion, organized  under  the  laws  of  any  other  state  or  territory  that  shall  fail  to 
pay  any  judgment  rendered  against  it  upon  a  suit  in  any  court  of  this  state 
wi'thinsixtv  (60)  davs  after  the  rendering  of  final  judgment  in  such  case,  if 
110  appeal  be  taken,  "or  if  an  appeal  be  taken,  then  within  sixty  (60)  days  after 
rendition  of  judgment  on  appeal,  or  shall  fail  to  make  yearly  statements  to 
the  secretary  of  state,  as  hereafter  mentioned  and  required,  or  to  pay  the  fees 


854  APPENDIX   IV. 

of  the  secretary  of  state  as  provided  in  this  act,  or  to  do  any  other  act  required 
in  this  act  to  be  done  and  performed,  shall,  upon  failure  or  violation  of  the 
provisions  of  this  act,  have  no  right  or  authority  to  do  or  transact  any  further 
business  within  the  limits  of  this  state,  and  the  secretary  of  state  shall  there- 
upon cause  notice  of  the  termination  of  such  authority  to  do  business  to  be 
mailed  to  such  corporation  and  to  be  published  in  some  newspaper  of  gen- 
eral circulation  at  the  capital  of  the  state,  and  shall  communicate  the  facts  to 
the  attorney  general  of  this  state,  who  shall  institute  such  proceedings  in  the 
matter  as  the  case  may  require  ;  Provided,  any  such  corporation  may  be  again 
authorized  to  commence  business  in  this  state  upon  such  terms  as  the  secre- 
tary  of  state  may  deem  just  and  proper  and  upon  full  compliance  with  the 
provisions  of  this  act. 

Sec.  20. — All  building  and  loan  associations  or  savings  and  loan  associations 
hereafter  incorporated  in  this  state  shall  have  an  authorized  capital  of  at  least 
one  million  181,000,000)  dollars  at  the  time  of  the  incorporation  ;  Provided, that 
ten  thousand  ^$10,000)  dollars'  worth  of  stock  must  be  subscribed  before 
organization. 

Sec.  21. — Any  building  and  loan  or  savings  and  loan  association  heretofore 
or  hereafter  incorporated  under  the  laws  of  this  state  may  at  any  time  in- 
crease the  amount  of  its  capital  stock,  or  amend  its  articles  of  incorporation  in 
anv  other  respect  or  its  by-laws,  by  a  vote  of  at  least  three-fourths  of  its  share- 
holders, cast  at  the  annual  meeting  or  at  a  special  meeting  called  for  that 
purpose. 

Sec.  22. — Whenever  any  building  and  loan  association  or  savings  and  loan 
association  shall  increase  its  capital  stock,  or  amend  its  articles  of  incorpora- 
tion, as  provided  in  this  act,  a  certificate  of  such  increase  or  change,  or  both, 
duly  verified  by  oath  of  the  president  and  secretary  of  such  association,  shall 
be  filed  in  the  office  of  the  county  clerk  of  the  county  in  which  the  home 
office  of  said  association  is  located,  and  in  the  office  of  the  secretary  of  state. 

Sec.  23. — On  or  before  the  first  day  of  September  in  each  year,  every  build- 
ing and  loan  association  and  savings  and  loan  association  doing  business  in 
this  state  shall  deposit  with  the  secretary  of  state  a  report  of  its  affairs  and 
operation  for  the  year  ending  on  the  thirtieth  day  of  June  immediately  pre- 
ceding. Such  report  shall  be  verified  upon  oath  by  the  president  and  secre- 
tary, or  by  three  directors  of  the  association,  and  shall  contain  answers  to  the 
following  questions : — 

1.  The  amount  of  authorized  capital,  and  the  par  value  of  each  share  of 
stock. 

2.  The  number  of  shares  sold  during  the  year. 

3.  The  number  of  shares  cancelled  and  withdrawn  during  the  year. 

4.  The  number  of  shares  in  force  at  the  end  of  the  year. 

5.  A  statement  of  receipts  and  disbursements  during  the  year. 

?i.  A  detailed  statement  of  the  assets  and  liabilities  at  the  end  of  the  year. 

And  shall  pay  to  the  secretary  of  state  a  fee  of  five  ($5)  dollars  on  filing 
such  report.  If  any  such  association  shall  fail  to  furnish  to  the  secretary  of 
state  any  report  required  by  this  act  at  the  time  so  required,  it  shall  forfeit 
the  sum  of  twenty-five  $25)  dollars  per  day  for  every  day  such  report  shall 
be  delayed  or  withheld  ;  and  the  secretary  of  state  may  maintain  an  action  in 
his  name  of  office  to  recover  such  penalty,  and  the  same  shall  he  paid  into  the 
treasury  of  the  state  and  applied  to  the  expenses  of  the  department  of  said 
secretary  of  stale.  After  receiving  such  report,  the  secretary  of  state,  if  satis- 
fied that  such  corporation  has  complied  with  all  the  provisions  of  this  act  and 
is  entitled  to  <lo  business  in  this  slate,  shall  issue  his  certificate,  stating  the 
compliance  with  such  provisions,  and  that  the  corporation  is  entitled  to  do 
business  in  this  state,  which  certificate  shall  he  in  force  for  the  period  of  one 
inless  sooner  rescinded, as  provided  in  this  act. 

Sec.  24. — The  name  building  and  loan  association,  as  used  in  this  act,  shall 
include  all  corporations,  societies  <>r  organizations  or  associations  doing  a 
savings  and  loan  or  investment  business  on  the  building  society  plan,  whether 
mutu  .  and  whether  issuing  certificates  of  stock  which  mature 

at  a  time  fixed  in  a<l   an<  e  or  not. 

Sei  .  2",.  An-.'  officer,  din  ■  toi  agi  nl  or  solicitor  of  any  foreign  building  and 
loan  or  savings  and  loan  association,  or  any  person  whomsoever,  who  shall 

in   this  si  ale  solicit  subs<  riptions  to  the  stock  of  such  association,  or  who  shall 

in  tin  late  sell  01  i  me, or  knowingly  cause  to  be  sold  or  issued  to  a  resident 
oi  thi  tate  any  stock  of  such  association  while  such  association  shall  not 
the  1  ertifii  ate  of  the  se<  retary  ol  tate  authorizing  it  to  do  business  in 
tin.  '.it'  .  .1  herein  prescribed,  or  has  not  deposited,  as  required  by  this  act. 
Securities   of   the   value  and   at  the   times  herein   prescribed    or   before   said 


GENERAL   LEGISLATION.  855 

association  lias  complied  with  all  the-  provisions  of  this  act,  shall  be  guilty  of 
a  misdemeanor,  and  upon  conviction  thereoi   shall  be  punished  byafin 
not  less  than  one  hundred  ($ioo)  dollars  nor  more  than   five  hundred  ¥500) 
dollars,  or  by  imprisonment  ol   not  less  than  ten  days  nor  more  than  six 
months,  or  both  such  fine  and  imprisonment,  in  tl  tion  of  the  court. 

Sec.  26.— Any  officer,  director,  agenl  or  solicitor  oi  any  building  and  loan 
association  incorporated  under  the  laws  of  this  state,  or  any  other  person, 
who  shall  sell,  or  issue,  or  knowingly  cause-  to  be  sold  1  ir  issued,  to  any  person 
nut  a  resident  of  the  county  in  which  the  hom<  ii   said  associatiot 

located,  or  in  the  counties  immediately  adjacenl  thereto,  ami 
association  while  said  association  does  not  have  on  deposit  with  the  seen 
of  the  state,  or  trust  company,  as  required  by  this  act,  securities  of  the  value 
and  at  the  lime  herein  prescribed,  or  while  such  association  shall  not  have 
the  certificate  of  the  secretary  oi  state  authorizing  it  to  do  business  as  herein 
prescribed,  shall  be  guilty  of  a  misdemeanor  and  upon  conviction  thereof 
shall  be  punished  by  a  fine  of  nol  less  than  one  hundred  $100)  dollars  and 
not  more  than  five  hundred  ($500)  dollars,  or  by  imprisonment  of  not  less  than 
ten  days  nor  more  than  six  months,  or  by  both  such  line  and  imprisonment, 
in  the  discretion  of  the  court. 

Sec.  27.— All  corporations  organized  in  this  state,  and  doing  business  in  this 
or  any  other  state,  as  building  and  loan  associations,  shall  comply  with  and 
be  subject  to  all  the  provisions  of  this  act  within  ninety  (90)  days  after  its 
passage,  and  shall  be  entitled  to  all  the  privileges  and  benefits  thereof  without 
reincorporating;  Provided,  that  all  such  companies  or  associations  incorpo- 
rated prior  to  the  passage  of  this  act  not  having  at  the  time  thereof  securities 
to  the  amount  of  twenty-five  thousand  ($23,000)  dollars  may  have  until  August 
first,  eighteen  hundred  and  ninety-five,  ni  which  to  make  a  full  deposit  of 
said  sum,  as  provided  in  section  12  of  this  act. 

Sec.  28.— This  act  shall  not  apply  to  any  association  organized  under  the 
laws  of  this  state  which  confines  its  loaning  and  business  operations  wholly 
to  the  county  wherein  it  is  located  and  the  counties  immediately  adjacent 
thereto  ;  Provided,  that  any  such  association  heretofore  or  hereafter  incorpo- 
rated which  desires  hereafter  to  confine  its  business  to  adjacent  counties,  as 
aforesaid,  may  file  with  the  secretary  of  state  a  statement  to  that  effect,  and 
also  containing  the  names  of  those  holding  and  the  amount  held  by  them  of 
the  stock  of  said  association  outside  such  counties,  and  so  long  as  such  asso- 
ciation thereafter  confines  its  sales  of  stock  within  the  limits  aforesaid.it 
shall  not  be  subject  to  the  provisions  hereof,  and  any  sales  of  stock  outside 
the  limits  of  said  counties  made  after  filing  all  such  statements  by  any  officers, 
director  or  agent  of  any  such  association  shall  subject  such  persons  to  all  the 
penalties  prescribed  in  section  26  of  this  act;  Provided,  further,  thai  nothing 
in  this  act  shall  be  so  construed  to  prevent  the  bona  fide  sale  or  transfer  of  the 
individual  stock  of  any  member  of  such  association. 

PENNSYLVANIA. 

ACTS  1874,  p.  73. 

Section  1. — Buildingand  loan  associations  incorporated  under  the  provi- 
sions of  this  act,  shall  have  the  powers,  and  from  the  date  of  the  letters  patent 
creating  the  same,  when  not  otherwise  provided  in  this  act,  be  governed, 
managed  and  controlled  as  follows  : 

Sec.  2.  I. — They  shall  have  the  power  and  franchise  of  loaning  or  advancing 
to  the  stockholders  thereof  the  moneys  accumulated  ,fr<  mi  time  to  time,  and  the 
power  and  right  to  secure  the  repayment  of  such  moneys, and  the  performance 
of  the  other  conditions  upon  which  the  loans  are  to  be  made,  by  bond  and  mi  >rt- 
gage  or  other  security,  as  well  as  the  power  and  right  to  purchase  or  erect 
nouses,  and  to  sell,  convey,  lease  or  mortgage  the  same- at  pleasure  to  their 
stockholders,  or  others  for  the  benefit  cf  their  stockholders,  in  such  manner 
also  that  the  premiums  taken  by  the  said  associations  for  the  preference  or 
priorty  of  such  loans,  shall  not  be  deemed  usurious  ;  and  so  also  that  in  case 
of  non-payment  of  instalments,  premiums  orinterest  byborrowing  stock- 
holders, for  six  months,  payment  of  principal,  premiums  and  interest, 
without  deducting  the  premium  paid,  or  interest  thereon,  may  be  enforced  by 
proceeding  on  their  securities  according  to  law. 

Sec.  3.  II. — The  capital  stock  of  any  corporation  created  for  such  purposes. by 
virtue  of  this  act,  shall  at  no  time  consist  in  the  aggregate  of  more  than  one 
million  dollars,  to  be  divided  into  shares  of  such  denomination,  not  exceeding 


856  APPENDIX  IV. 

five  hundred  dollars  each,  and  in  such  numbers  as  the  corporators  may,  in  the 
application  for  their  charter,  specify  ;  Provided,  That  the  capital  stock  may  be 
issued  in  series,  but  no  such  series  shall  at  any  issue  exceed  in  the  aggregate 
five  hundred  thousand  dollars,  the  instalments  on  which  stock  are  to  be  paid 
at  such  time  and  place  as  the  by-laws  shall  appoint  ;  no  periodical  payment 
of  such  instalments  to  be  made  exceeding  two  dollars  on  each  share,  and  said 
stock  may  be  paid  off  and  retired  as  the  by-laws  shall  direct  ;  every  share  of 
stock  shall  be  subject  to  a  lien  for  the  payment  of  unpaid  instalments  and 
other  charges  incurred  thereon  under  the  provisions  of  the  charter  and 
by-laws,  and  the  by-laws  may  prescribe  the  form  and  manner  of  enforcing 
such  lien  ;  new  shares  of  stock  may  be  issued  in  lieu  of  the  shares  withdrawn 
or  forfeited  ;  the  stock  may  be  issued  in  one  or  in  successive  series,  in  such 
amount  as  the  board  of  directors  or  the  stockholders  may  determine  ;  and 
any  stockholder  wishing  to  withdraw  from  the  said  corporation,  shall  have 
the  power  to  do  so,  by  giving  thirty  days'  notice  of  his  or  her  intention  to 
withdraw,  when  he  or  she  shall  be  entitled  to  receive  the  amount  paid  in  by 
him  or  her,  less  all  fines  and  other  charges  ;  but  after  the  expiration  of  one 
year  from  the  issuing  of  the  series,  such  stockholder  shall  be  entitled,  in  addi- 
tion thereto,  to  legal  interest  thereon  ;  Provided,  That  at  no  time  shall  more 
than  one-half  of  the  funds  in  the  treasury  of  the  corporation  be  applicable  to 
the  demands  of  withdrawing  stockholders,  without  the  consent  of  the  board 
of  directors,  and  that  no  stockholder  shall  be  entitled  to  withdraw,  whose 
stock  is  held  in  pledge  for  security.  Upon  the  death  of  a  stockholder,  his  or 
her  legal  representatives  shall  be  entitled  to  receive  the  full  amount  paid  in  by 
him  or  her,  and  legal  interest  thereon,  first  deducting  all  charges  that  may  be 
due  on  the  stock  ;  no  fines  shall  be  charged  to  a  deceased  member's  account, 
from  and  after  his  or  her  decease,  unless  his  legal  representatives  of  such 
decedent  assume  the  future  payments  on  the  stock. 

Sec.  4. — Stockholders  withdrawing  voluntarily,  shall  receive  such  proportion 
of  the  profits  of  the  association  or  such  rate  of  interest  as  may  be  prescribed  by 
the  by-laws,  any  law  or  usage  to  the  contrary  notwithstanding  ;  but  payment 
of  the  value  of  stock,  so  withdrawn,  shall  only  be  due  when  the  funds  now  by 
law  applicable  to  the  demand  of  withdrawing  stockholders  are  sufficient  to 
meet  and  liquidate  the  same,  and  then  only  in  the  order  of  the  respective 
times  of  presentation  of  the  notices  of  such  withdrawals,  which  must  have 
been  presented  in  writing  at  a  previous  stated  meeting,  and  have  been  then 
and  there  endorsed  as  to  times  of  presentation  by  the  officer  designated  by  the 
by-laws  of. the  association,    (As  amended  1879  p.  16.) 

Sec.  5. — The  by-laws  may  provide  for  the  involuntary  withdrawal  and  can- 
cellation at  or  before  maturity  of  shares  of  stock  not  borrowed  on  ;  Provided, 
That  such  withdrawal  and  cancellation  shall  be  pro  rafoamong  the  shares  of 
the  same  series  of  stock  ;  And  provided  further,  That  not  less  than  legal  in- 
terest shall  be  credited  and  allowed  to  each  share  so  withdrawn  and  can- 
celled.    (As  amended  1879,  p.  [&) 

Sec.  6.  III. — The  number,titles,  functions  and  compensation  of  the  officers  of 
any  such  corporation,  their  terms  of  office,  the  times  of  their  elections,  as  well 
as  the  qualifications  of  electors,  and  the  ratio  and  manner  of  voting,  and  the 
periodical  meetings  of  the  said  corporation,  shall  be  determined  by  the  by- 
laws, when  not  provided  by  this  act. 

Skc.  7.  IV.— The  said  officers  shall  hold  stated  meetings,  at  which  the  money 

in  the  treasury,  if  over  the  amount  fixed  by  charter  as  the  full  value  of  a  share, 

shall  be  offered  for  loan,  in  openmeeting,  and  the  stockholder  who  shall  bid 

the  highest   premium  for  the  preference  or  priority  of  loan,  shall  be  entitled  to 

receive  a  loan  of  not  more  than  the  amount  fixed  by  charter  as  the  full  value 

of  a  share,  for  each  share  of  stock  held  by  such  stockholder  ;    Provided,   That 

a    loekholder may  borrow  such  fractional  part  of  the  amount  fixed  by  charter 

e  lull  value  of  a  share  as  the  by-laws   may  provide  ;  good  and  ample  se- 

curity,  as    prescribed  by  the  by-laws  of  the  corporation,  shall  be   given  by  the 

borrower,  to  secure  the  repayment  of  the  loan;   in  case  the  borrower  shall 

neglect  to  off ei  security,  or  snail  off er  security  that   is  not  approved  by  the 

d  ol  direi  tors,  by  such  time  as  the  by-laws  may  prescribe,  he  or  she  shall 

1m    1  harged  with  legal  interest,  together  with  any  expenses  incurred,  and  the 

I       in  premium,  if  any,  on  a  resale,  and  the  money  may  be  resold  at  the  next 

stated  meeting  ;  in  1  1  -<■  of  non-payment  of  instalments  or  interest  by  borrow- 

holdei  ,  for  the  space  of  six  months,  payment  of  principal  and  interest, 

without  dedu<  ting  the  premium  paid  or  interest  thereon,  may  be  enforced,  by 

1  ding  on  Hull  Bei  in  ities  a<  1 1  irding  to  law. 

Stiles'  Appeal,  95  Pa.  122,  [880. 

Sec  8.— A  borrower  may  repay  a  loan  at  any  time,  and  in  caseof  therepay- 


GENERAL   LEGISLATION.  857 

merit  thereof  before  the  maturity  of  the  shares  pledged  for  said  loan,  there  shall 
be  refunded  to  such  borrower  (if  the  premiums,  bonus  of  interest  shall  have 
been  deducted  in  advance  i  such  proportions  of  the  premiums, bonus  or  advance 
interest  bid  as  the  by-laws  may  determine ;  Provided,  That  in  no  case  shall 

the  association  retain  more  than  one  one-hundredth  of  said  premiums  or 
bonus  for  each  calendar  month  that  has  expired  since  the  date  Ol  the  meeting 
upon  which  the  loan  was  made,  or  if  interest  inadvance.it  shall  retain  only 
the  interest  due  on  the  loan  up  to  the  time  of  settlement;  And  further  pro- 
vided, that  such  borrower  shall  receive  the  withdrawing  value  of  the  shares 
pledged  for  said  loan,  and  the  shares  shall  revert  back  to  the  association.  (.As 
amended  1879,  p.  16.) 

Sec  9. — V.  Xopremiums,  fines  or  interest  on  such  premiums,  that  may 
to  the  said  corporation,  according  to  the  provisions  of  this  act,  shall  be  deemed 
usurious;  and  the   same  maybe  collected  as  debts    of  like  amount  are  now 
by  law  collected  in  this  commonwealth. 

Sec.  10.  Fines  or  penalties  for  the  non-payment  of  instalments  of  dues,  interest 
and  bonus  or  premium,  shall  not  exceed  two  per  centum  per  month  on  all  ar- 
rearages.    (As  amended  lNjo,  p.  16.) 

Sec  11. — VI.  Xo  corporation  or  association  created  under  this  act  shall  cease 
or  expire,  from  neglect  on  the  part  of  the  corporators  to  elect  officers  al  the  time 
mentioned  in  their  charter  or  by-laws  ;  and  all  officers  elected  by  such  cor- 
poration shall  hold  their  offices  until  their  successors  are  duly  elected. 

Sec.  12. — VII.  Any  loan  or  building  association  incorporated  by  or  under  this 
act,  is  hereby  authorized  and  empowered  to  purchase  at  any  sheriff's  or  other 
judicial  sale,  or  at  any  other  sale,  publicor  private,  any  real  estate  upon 
which  such  association  may  have  or  hold  any  mortgage,  judgment,  lien  or 
other  incumbrance,  or  ground  rent,  or  in  which  said  association  may  have  an 
interest,  and  the  real  estate  so  purchased,  or  any  other  that  such  association 
may  hold  or  be  entitled  to  at  the  passage  of  this  act,  to  sell,  convey,  lease  or 
mortgage,  at  pleasure  to  any  person  or  persons  whatsoever,  and  all  sales  of 
real  estate  heretofore  made  by  such  associations  to  any  person  or  persons  not 
members  of  the  association  so  selling,  are  hereby  confirmed  and  made  valid, 

Sec.  13. — VIII.  All  such  corporations  shall  have  full  power  to  purchase  lands 
and  to  sell  and  convey  the  same,  or  any  part  thereof,  to  their  stockholders  or 
others  in  fee  simple,  with  or  without  the  reservation  of  ground  rents,  but  the 
quantity  of  ground  purchased  by  any  one  of  said  associations  hereafter  incor- 
porated, shall  not,  in  the  whole,  exceed  fifty  acres ;  and  in  all  cases  the  lands 
shall  be  disposed  of  within  ten  years  from  the  date  of  the  incorporation  of 
such  associations  respectively. 

Sec  14. — IX.  All  land  and  building  associations  are  hereby  authorized  to 
make  sale  of,  and  assign  or  extinguish,  to  any  person  or  persons,  the  ground 
rents  created  as  aforesaid. 

Sec  15. — All  deeds  of  conveyance  of  lands  situate  within  this  commonwealth 
made  by  any  savings  fund,  building  or  loan  association  after  the  term  for 
which  it  was  incorporated  shall  have  expired,  shall  be  as  good  and  effect- 
ual, and  have  the  same  force  and  effect  for  passing  title  to  the  lands  so  con- 
veyed as  though  executed  during  the  period  of  its  chartered  existence.  (As 
amended  1876,  p.  41.) 

Sec.  16. — All  purchases  of  land  heretofore  made  by  building  and  loan  as-*,  icia- 
tions,  incorporated  by  virtue  of  any  law  of  this  commonwealth,  and  also  all 
sales  of  the  same  made  by  them  to  their  stockholders  or  others  are  hereby 
confirmed,  and  the  titles  of  said  associations  and  their  vendees  are  herein- 
declared  good  and  valid,  to  all  intents  and  purposes;  and  the  said  associa- 
tions, their  successors  or  assigns,  may  sell,  convey  or  lease,  at  pleasure,  at 
anytime  within  five  years  from  the  passage  of  this  act,  the  undisposed  of 
portions  of  real  estate  so  hereto  purchased.     (Acts  187s,  p.  214. ) 

Sec  17. — It  shall  be  lawful  for  any  mutual  savings  fund,  or  building  and  loan 
association  now  incorporated,  or  hereafter  to  be  incorporated,  in  addition  to 
dues  and  interest,  to  charge  and  receive  the  premium  or  bonus  bid  by  a  stock- 
holder for  preference  or  priority  of  right  to  a  loan  in  periodical  instalments  ; 
and  such  premium  or  bonus  so  paid  in  instalments  shall  not  be  deemed 
usurious,  but  shall  be  taken  to  be  a  payment  as  it  falls  due,  in  contradistinc- 
tion to  a  premium  charged  and  paid  in  advance  ;  and  in  so  far  as  said  pre- 
mium or  bonus  so  charged  and  paid,  in  addition  to  dues  and  interest,  shall  be 
in  excess  of  two  dollars  for  each  periodical  pavment,  the  same  shall  be  lawful, 
any  law,  usage  or  custom  to  the  contrary  notwithstanding.  It  shall  also  be 
lawful  for  any  mutual  savings  fund  or  building  and  loan  association  to  charge 
and  deduct  interest  in  advance,  in  lieu  of  premiums  for  preference  or  priority 


858  APPENDIX   IV. 

of  right  to  a  loan  ;  Provided,  that  the  certificate  of  incorporation  of  each  asso- 
ciation hereafter  to  be  incorporated,  and  the  certificate  to  be  provided  in  sec 
tion  nine  of  this  act  for  those  heretofore  incorporated,  shall  set  forth  whether 
the  premium  or  bonus  bid  for  the  prior  right  to  a  loan  shall  be  deducted 
therefrom  in  advance  or  paid  in  periodical  instalments,  or  whether  interest  in 
advance  shall  be  deducted  from  the  loan  in  lieu  of  premium  or  bonus.  (As 
amended  1879,  p.  16.) 

Sec.  18. — In  case  of  non-payment  of  instalments  of  stock,  premiums,  dues  or 
interest,  by  borrowing  stockholders,  for  the  space  of  six  months,  payment  of 
the  same,  together  with  the  full  principal  of  the  loan,  may  be  enforced  by 
proceeding  on  their  securities  according  to  law  ;  and  the  moneys  so  recov- 
ered shall  oe  paid  into  the  treasury  of  the  association  for  such  uses  (loans  or 
otherwise  i  as  may  be  deemed  proper  by  the  association  ;  and  if  the  said 
moneys  so  recovered,  together  with  the  withdrawal  value  of  the  shares  of 
such  defaulting  borrower  shall  exceed  the  amount  it  would  have  required 
according  to  the  preceding  section,  to  have  voluntarily  repaid  the  loan, 
together  with  all  the  expenses  incurred  by  the  association,  such  excess  shall 
be  repaid  to  such  defaulting  borrower.    (Acts  1879,  p.  16.) 

Sec.  19. — It  shall  be  lawful  for  any  married  woman  of  full  age  to  hold 
stock  in  any  of  said  saving  funds,  building  or  loan  associations  ;  and  as  such 
stockholder,  she  shall  have  all  the  rights  and  privileges  of  other  members, 
including  the  including  the  right  to  borrow  money  from  said  associations  and 
bid  premiums  therefor,  and  shall  also  have  the  right  and  power  to  secure  such 
loan  by  transferring  her  said  stock  or  other  securities  to  said  association,  from 
which  the  same  was  borrowed,  or  by  executing  bond  and  mortgage  upon 
her  separate  real  estate  to  secure  said  loan  ;  Provided,  however,  That  the 
husband  of  such  married  woman  join  in  the  execution  of  such  bond  and 
mortgage  ;  and  such  married  woman  shall  also  have  the  right  to  sell,  assign 
and  transfer  her  said  stock  or  withdraw  the  same,  without  joining  the  husband 
in  such  transfer  or  withdrawal  :  and  it  shall  be  lawful  for  any  such  savings 
fund,  building  or  loan  association  to  collect  such  loan  made  to  such  married 
woman,  including  the  dues,  interest,  premium  and  fines,  as  loans  made  by  such 
associations  to  other  members  are  now  by  law  collected,  and  such  stock  or 
interest  in  such  stock,  shall  not  be  liable  for  the  debts  of  any  husband  of  such 
married  woman.     (Acts  1879,  p.  16.) 

Sec.  20. — Mutual  savings  fund,  or  building  and  loan  associations,  heretofore 
incorporated  under  the  provisions  of  any  law,  shall  be  entitled  to  all  the  priv- 
ileges, immunities,  franchises  and  powers  conferred  by  this  act,  upon  filing 
with  the  secretary  of  the  commonwealth  a  certificate  of  their  acceptance  of  the 
same  in  writing,  under  the  duly  authenticated  seal  of  said  association,  which 
certificate  shall  also  prescribe  their  mode  or  plan  of  charging  premiums,  bonus 
or  advance  interest,  as  set  forth  in  the  first  section  of  this  act ;  and  upon  such 
acceptance  and  approval  thereof  by  the  governor,  he  shall  issue  letters 
patent  to  said  corporation  reciting  the  same.     (Acts  1879,  p.  16.) 

Sec.  21. — The  act  relative  to  investments  by  building  associations,  approved 
May  eight,  one  thousand  eight  hundred  and  fifty-five,  shall  be  so  construed  as 
to  extend  lo  savings  fund  associations  incorporated  by  the  courts  of  common 
pleas,  under  an  act  entitled  "A  supplement  to  an  act  to  prevent  waste  in 
certain  cases  wilhin  this  commonwealth,"  passed  the  twenty-ninth  day  of 
Man  h,  one  thousand  eight  hundred  and  twenty-two,  to  land  and  building 
iations,  etc.,  approved  April  twenty-second,  one  thousand  eight  hundred 
and  fifty  ;  Provided,  That  no  company,  incorporated  under  the  last  recited  act, 
or  any  supplements  thereto,  shall  invest  its  capital  stock,  assets  or  money  in 
the  purchase  or  discount  of  any  promissory  note,  bill  of  exchange  or  other 
negotiable  paper,  nor  the  stock  of  any  incorporated  company,  nor  receive 
moneys  on  deposit  other  than  the  regular  contributions  of  the  members  thereof. 

'*57.  P-  437-' 
SEC.  22. — Mutual  loan  and  building  associations  shall  be  exempt  from  the 
provisions  of  each  and  every  law  imposing  taxes  for  state  purposes  on  their 

al  lock  or  mortgages,  and  other  securities  for  moneys  loaned  to  their 
own  members  ;  but  the  real  estate  owned  by  said  ass.  iciation  shall  be  subject 
to  the  ami  rates  of  taxation  as  the  real  estate  <>f  other  corporations  and 
pei  "ii.  ;  Provided,  however,Th?A  tin-  right  of  the  commonwealth  to  collect 
rued  is  hereby  reserved.  (Acts  C883,  p.  1.) 
Si  1  23.— In  addition  to  the  corporate  powers  conferred  on  building  and 
loan  . 1  ociations  by  the  thirty-seventh  section  of  tin-  act  of  April  twenty- 
iiinih.  on'  11 101 1  in.  1  eight  hundred  and  seventy  four,  they  shall  have  the  right, 
when  applications  for  loans  by  the  stockholders  thereof  shall  exceed  the 


GENERAL   LEGISLATION.  859 

accumulations  in  the  treasury,  to  make  temporary  loans  of  such  sum  or  sums 
of  money  to  meet,  such  demands,  not  exceeding  in  the  aggregate  of  such  loan 
at  any  time  fifteen  thousand  dollars  ($15,000),  at  a  less  rate  of  interest  than  six 
per  centum,  and  secure  the  payment  <>i  thesame  by  note, bond  or  assignment 
of  its  judgments  and  mortgages  as  collateral  ;  said  loans  to  be  repaid  out  of 
the  accumulations  in  the  treasury,  as  soon  as  sufficient  is  paid  in  and  there  is 
no  demand  therefor  by  borrowing  stockholders.     (Acts  1891,  p.  174.) 

Sec.  24. — On  the  petition  of  any  twelve  or  more  citizens  of  Pennsylvania, 
the  court  of  common  pleas  of  the  county  of  Philadelphia  shall  have  all  powers 
conferred  by  the  acts  relating  to  loan  and  building  associations,  to  incorporate 
them  and  their  associates  as  a  perpetual  corporation,  for  the  purposes  following, 
to  wit  :  to  purchase,  hold  and  build  upon  and  sell  in  fee-simple,  houses  and 
lots  in  the  city  of  Philadelphia,  and  also  to  make  loans  on  bonds  and  mort- 

gages  to  others  to  build  and  improve,  and  the  same  to  sell  and  assign,  and  to 
orrow  moneys  upon  bonds  and  mortgages  or  otherwise  for  said  purposes  ; 
and  in  making  sales  or  leases  or  loans  on  mortgages,  it  shall  be  lawful  for 
such  corporation,  and  borrowers  of  them,  to  agree  upon,  and  insert  in  the 
deeds  of  conveyance,  a  condition  against  the  use  of  any  granted  or  leased 
premises  for  the  sale  of  any  intoxicating  liquors,  or  unlawful  immoral  purposes, 
the  carrying  on  any  noxious  or  unhealthful  business,  with  right  of  re-entry  for 
breach  of  such  condition  ;  Provided,  That  no  corporation  chartered  under  tin's 
act  shall  have  a  greater  capital  than  one-half  million  of  dollars,  and  shall 
stipulate  by  their  articles  to  devote  their  capital  to  improve  or  promote  the 
improvement  of  parts  of  said  city  most  needing  physical,  healthful  and  moral 
reform,  which  shall  be  defined  and  prescribed  in  its  charter  and  not  exceed 
eight  main  squares,  and  shall  apply  all  their  profits,  over  their  expenses  ;  And 
a  return  of  eight  per  centum  per  annum  to  the  shareholders  to  and  tor  the 
construction  of  substantial  stone,  or  brick  or  iron  habitations  for  homes  for 
respectable  persons  of  limited  means,  either  as  lessees  or  purchasers  :  And 
Provided,  That  the  said  court  shall  be  satisfied  of  the  benevolent  purposes  of 
the  petitioners  ;  and  that  the  legislature  may  at  any  time  repeal  this  act,  and 
such  charters,  if  the  powers  hereby  granted  should  be  found  prejudicial  to  the 
community,  but  in  manner  to  do  no  injustice  to  the  corporators.  (Acts  1869,  p. 
201.) 

Sec  25. — All  buildings,  saving  and  loan  associations  may  bring  and  maintain 
suits,  and  carry  on  those  already  brought,  in  their  corporate  names,  on  all  judg- 
ments, bonds,  mortgages,  notes  or  other  evidences  of  debt  or  obligations  due 
them,  or  for  monthly  dues,  interest  or  any  demand  owing  to  them,  and  proceed 
to  judgment  and  execution,  notwithstanding  their  charter  may  have  expired  ; 
and  the  officers  last  elected,  or  the  survivors  of  them,  shall  be  the  officers  to 
represent  said  corporations  for  such  purpose  ;  and  if  no  officers  survive,  the 
stockholders  may  elect  others  under  their  by-laws.  (Acts  1869,  p.  1223.) 

Sec.  26. — This  act  shall  only  be  construed  so  as  to  enable  said  associations  to 
collect  up  and  divide  their  assets  and  wind  up  their  affairs,  and  not  to  allow 
them  to  transact  new  business  ;  Provided,  that  this  act  shall  only  apply  to  the 
city  of  Philadelphia.     (Acts  1869,  p.  1223.) 

Sec.  27. — Should  any  of  the  associations  now  or  hereafter  incorporated  deem 
it  necessary  or  expedient  to  purchase  adjoining  lands,  for  the  purpose  of  squar- 
ing their  grounds  in  conformity  with  the  streets  running  through  or  touching 
their  lands,  they  are  hereby  fully  authorized  to  make  such  purchases,  and  are 
invested  with  all  the  powers  as  regards  the  sale  and  conveyance  in  fee-simple 
of  the  same  given  by  this  act,  over  the  grounds  squared  by  such  purchases. 
(Acts  1853,  p.  155.) 

Sec.  28. — The  bonus  or  tax  due  to  the  commonwealth  upon  the  capital  stock  of 
corporations,  as  provided  for  by  act  of  first  of  May,  one  thousand  eight  hun- 
dred and  sixty-eight,  or  by  any  other  act,  shall  not  apply  to  or  be  clue  from 
mutual  savings  fund,  or  building  and  loan  associations  ;  nor  shall  the  registry 
for  corporations,  prescribed  by  the  first  section  of  the  act  of  first  of  May,  one 
thousand  eight  hundred  and  sixty-eight,  the  first  section  of  the  act  of  twenty- 
fourth  of  April,  one  thousand  eight  hundred  and  seventy-four,  and  the  twenty- 
sixth  section  of  the  act  of  twenty-ninth  of  April,  one  thousand  eight  hundred 
and  seventy-four,  apply  to  or  be  required  of  mutual  savings  fund,  or  building 
and  loan  associations.     (Acts  1879,  p.  16.) 

Sec.  29. — In  addition  to  the  corporate  powers  conferred  on  building  and  loan 
associations  by  the  thirty-seventh  section  of  the  act  of  twenty-ninth  April,  one 
thousand  eight  hundred  and  seventy-four,  they  shall  have  the  right,  when  a 
series  of  stock  has  matured,  or  when  applicati*  ms  f<  >r  loans  by  the  stockholders 
thereof  shall  exceed  the  accumulations  in  the  treasury,  to  make  temporary 


860  APPENDIX   IV. 

loans  of  such  sum  or  sums  of  money  to  meet  such  demands,  not  exceeding  in 
the  aggregate  of  such  loan  at  any  onetime  twenty-five  per  centum  of  the  with- 
drawal value  of  the  stock  issued  by  said  association  at  a  rate  of  interest  less  than 
six  per  centum,  and  secure  the  payment  of  the  same  by  interest-bearing  order, 
note  or  bond  as  collateral  ;  said  loans  to  be  repaid  out  of  the  accumulations 
in  the  treasury  as  soon  as  sufficient  is  paid  in  and  there  is  no  demand  therefor 
by  borrowing  stockholders.     (Acts  1895,  p.  303.) 

ACTS  1895,  pp.  4, 233. 

Section  I. — There  is  hereby  established  a  separate  and  distinct  department  to 
be  known  as  the  banking  department,  the  commissioners  of  which  said  depart- 
ment shall  take  care  that  the  law  of  this  commonwealth  in  relation  to  *  *  * 
building  and  loan  associations  *  *  *  incorporated,  or  which  may  hereafter  be- 
come incorporated,  under  the  laws  of  this  state,  or  incorporated  under  the 
laws  of  any  foreign  state,  and  authorized  under  the  laws  of  this  state  to  tran- 
sact business  herein,  shall  be  faithfully  executed.  *  *  * 

Sec.  11. — And  in  case  of  neglect  or  refusal  of  any  corporation  aforesaid  to  pay 
said  sums  into  the  state  treasury  at  the  times  aforesaid,  the  auditor  general 
shall  settle  an  account  against  such  corporation  for  the  amounts  due  and  pay- 
able under  this  act,  and  shall  proceed  to  collect  the  same  in  the  same  way  and 
manner  and  under  the  same  penalties  as  are  provided  for  the  collecting  of  taxes 
and  penalties  under  the  existing  laws  ;  Provided,  however,  That  nothing  here- 
in contained  shall  impose  upon  building  and  loan  associations,  doing  busi- 
ness exclusively  within  this  state,  the  payment  of  any  sum  or  sums  of  money 
whatsoever. 

Sec.  12. — Every  corporation,  subject  to  the  supervision  of  the  banking  depart- 
ment, as  hereinbefore  provided,  shall  make  to  the  commissioner  of  banking, 
not  less  than  two  reports  of  its  condition  during  each  year,  according  to  the 
form  and  in  the  manner  prescribed  by  the  said  commissioner,  which  report 
shall  be  verified  by  the  oath  or  affirmation  of  the  president,  cashier  or  treas- 
urer or  other  managing  officer  of  such  corporation,  and  attested  as  correct  by 
the  signature  of  at  ieast  three  of  the  directors,  trustees  or  other  managers  of 
such  corporation. 

Sec.  13. — Each  such  report  of  condition  shall  exhibit,  in  detail  and  under  ap- 
propriate heads,  the  resources  and  liabilities  of  the  corporation  at  the  close  of 
business  on  any  past  day  by  the  commissioner  specified,  and  shall  be  trans- 
mitted to  the  commissioner  within  five  days  (which  time  in  the  discretion  of 
the  commissioner  of  banking  may  be  extended)  after  the  receipt  of  a  request 
or  requisition  therefor  from  him,  and  an  abstract  summary  thereof  shall 
forthwith  be  published  by  such  corporation  in  a  newspaper  published  in  the 
place  where  such  corporation  is  located,  at  least  three  times,  and  if  there  is 
no  newspaper  published  in  such  place,  then  in  the  newspaper  published 
nearest  thereto  in  the  same  county  ;  and  upon  completion  thereof  proof  of 
such  publication  shall  be  furnished  to  the  said  commissioner  by  such  corpora- 
tion. 

Sec.  14. — The  commissioner  of  banking  shall  also  have  power  to  call  for  spe- 
cial report  from  any  corporation  whenever,  in  his  judgment,  the  same  may 
be  necessary  to  a  full  and  complete  knowledge  of  its  condition. 

Sec.  1%. — The  reports  of  condition  and  publication  thereof  provided  for  and 
required  in  this  section  shall  be  in  lieu  of  all  reports  and  of  all  publication 
for  similar  purposes  heretofore  required  by  law  to  be  made  by  such  corpora- 
tions. 

Skc.  16. — In  case  any  such  corporation  shall  fail  to  make  and  transmitany  of 
the  reports,  or  furnish  such  proof  of  publication  required  by  this  act, such  cor- 
poration shall  be  subject,  at  the  discretion  of  the  commissioner  of  banking,  to 
a  penalty  of  twenty  dollars  for  each  day  after  the  time  mentioned  above,  or 
the  extension  thereof  by  the  commissioner  of  banking,  for  making  such  report 
or  said  publication.     Whenever  any  such  corporation  shall  delay  or  refuse  to 
pay  the  penalty  herein  imposed  for  a  failure  to  make  and  transmit  a  report  or 
furnish   prool   "I   publication,  the  attorney  general,  upon  request  of  the  com- 
mi    lionet  "I  banking,  is  hereby  authorized  to  maintain  an  action  in  the  name 
ol   the  commonwealth  against  the  delinquent  corporation  for  the  recovery  of 
SUi  li  penalty,  and    ill  sums  collected  by  such  action  shall  be  paid  into  the 
ury  and  applied  upon  the  expenses  of  the  banking  department, 
lint  one  repi  >i  t  eai  h  year  shall  be  required  from  building  and  loan 
a    o<  iationa  doing  business  exclusively  within  this  state  j  And  provided  further, 
1  annual  report  by  such  building  and  loan  associations  need  not  be 
provided  foi  by  this  section. 


GENERAL   LEGISLATION.  8G1 

ACTS  1897,  p.  178. 

Section  i. — Upon  all  full  paid,  prepaid  and  fully  matured,  or  partly  matured 
stock  in  any  building  and  loan  association  incorporated  under  the  laws  of  this 
state,  or  incorporated  under  the  laws  of  any  other  state  and  doing  business 

within  this  state,  and  upon  which  annual,  semi-annual,  quarterly  or  monthly 
cash  dividends  or  interest  shall  be  paid,  there  shall  be  paid  a  state  tax  equal 
to  that  required  to  be  paid  upon  money  at  interest  by  the  general  tax 
laws  of  this  state  ;  and  such  tax  shall  be  deducted  from  the  cash  dividend  i  ir  in- 
terest so  provided  for  by  the  secretary  or  treasurer  of  such  corporation,  and  be 
paid  to  the  state  treasurer.  And  every  such  domestic  corporation  shall  an- 
nually make  return  to  the  auditor  general,  at  the  time  other  returns  for  taxa- 
tion are  required  to  be  made,  of  the  amount  of  its  stock  outstanding  entitled 
to  receive  cash  dividends  or  interest,  and  every  such  foreign  corporation  shall, 
in  the  reports  required  to  be  made  by  them  to  the  bank  department,  make 
report  of  the  amount  of  its  stock  held  by  residents  of  this  state,  entitled  to  re- 
ceive cash  dividends  or  interest,  and  said  banking  department  shall,  at  the 
time  other  returns  for  taxation  are  required  to  be  made,  certify  to  the  auditor 
general  the  amount  of  such  stock  each  of  said  foreign  corporations  had  out- 
standing at  the  time  of  its  last  report  to  said  banking  department  ;  and  upon 
said  sum  such  foreign  corporation  shall  pay  the  tax  above  required  to  be  paid 
to  the  state  treasurer,  upon  demand,  and  failure  to  make  such  payment  within 
thirty  days  after  such  demand  shall  have  been  made  shall  subject  such  cor- 
poration to  the  forfeiture  of  its  right  to  transact  business  in  this  state  ;  Pro- 
vided, however,tha.\.  nothing  in  this  act  shall  be  taken  to  require  the  payment 
of  any 'tax  upon  any  unmatured  stock  of  building  and  loan  association  upon 
which  periodical  payments  are  required  to  be  made,  or  upon  any  such  stock 
after  it  has  matured  and  is  in  process  of  payment. 

Sec.  2. — All  laws  or  parts  of  laws  inconsistent  herewith  or  supplied  hereby 
are  hereby  repealed. 

Approved  June  22d,  1897. 

ACT  OF  1893,  p.  89. 
CO-OPERATIVE  BANKING  ASSOCIATIONS. 

Section  i. — Co-operative  banking  associations  may  be  incorporated  under 
this  act  upon  compliance  with  the  requirements  of  section  eleven,  article  six- 
teen, state  constitution,  when  ten  or  more  persons  of  lawful  age,  citizens  of  this 
commonwealth,  who  shall  have  associated  themselves  together  by  written 
articles  of  association  for  the  purpose  of  carrying  on  a  co-operative  banking 
business  where  the  profits  derived  from  the  business  shall,  after  paying  all 
legitimate  expenses,  be  divided  pro  rata  among  the  depositors  and  borrowers 
of  the  bank  in  proportion  to  their  deposits  or  loans  to  each  class,  one-half  of 
the  net  profits,  and  a  dividend  not  to  exceed  six  per  centum  per  annum  on 
original  subscribed  stock  may  be  considered  legitimate  expenses. 

Sec.  2. — Such  persons  so  associating  may  adopt  any  corporate  name  indi- 
cating their  co-operative  character  and  which  has  not  been  previously  adopted 
by  any  other  corporation  formed  under  this  act  ;  Provided,  the  fas!  three 
words  of  such  name  shall  be  co-operative  banking  association,  and  it  shall  not 
be  lawful  to  use  in  such  name  either  of  the  words  "society"  or  "company," 
and  that  any  violation  of  this  proviso  by  any  corporation  formed  under  this 
act  shall  render  each  member  thereof  personally  liable  for  all  its  debts. 

SEC.  3. — Before  any  company  formed  under  this  act  shall  commence  its 
business  its  articles  of  association  shall  be  filed  and  recorded  in  the  office  1  >f 
'the  secretary  of  the  commonwealth,  and  two  copies  of  said  articles  shall  be 
made  which  the  said  secretary  of  the  commonwealth  shall  certify  by  his 
official  signature  and  the  seal  of  this  commonwealth  as  being  correct  copies 
of  said  articles  so  filed  and  recorded  ;  one  of  said  certified  copies  shall  be  tiled 
and  recorded  in  the  office  of  the  clerk  of  the  county  in  which  the  office  ol  the 
association  shall  be  located  and  the  said  clerk  shall  certify  by  his  official 
signature  and  seal  of  his  office  that  the  said  certified  copy  of  said  articles  has 
been  filed  and  recorded  in  his  office,  and  the  other  certified  copy  oi  said 
articles  shall  be  held  by  the  association  named  therein,  and  the  said  articles 
or  copies  thereof,  duly  certified  by  either  of  the  aforesaid  officers,  may  be  used 
as  evidence  in  all  courts  and  places  of  the  incorporation  of  as  well  as  tor  or 
against  such  association,  and  the  said  secretary  of  the  commonwealth  and  the 
said  county  clerk  shall  be  paid  for  said  tiling  and  recording  and  certifying  at 
the  rate  of  ten  cents  for  each  hundred  words  contained  in  said  articles,  and 
after  such  articles  of  association  shall  have  been  made,  tiled  and  recorded  as 


862  APPENDIX  IV. 

herein  required,  the  person  signing  the  same  and  such  other  persons,  part- 
nerships or  corporations  who  shall,  from  time  to  time,  own  or  possess  any 
share  in  the  stock  capital  of  such  association,  and  their  several  successors  and 
assigns,  shall  be  deemed  and  taken  to  be  a  body  corporate,  and  by  the  name 
and  for  the  purposes  mentioned  in  such  articles  of  association. 

Sec.  4. — The  articles  of  association  shall  be  signed  by  the  persons  originally 
associating  themselves  together  and  shall  be  acknowledged  by  at  least  rive  of 
them  before  a  notary  public,  and  shall  state  distinctly,  (a)  the  name  by  which 
this  association  shall  be  known  (b)  the  place  in  this  state  where  its  principal 
office  is  to  be  located,  (c)  the  purpose  or  object  for  which  it  is  formed, 
{d)  amount  of  its  stock  capital,  (e)  the  amount  of  each  share  of  stock  of  such 
capital,  such  shares  not  to  exceed  ten  dollars  per  share,  and  how  such  share 
may  be  paid  for,  (f)  the  amount  of  capital  that  will  be  actually  paid  in  before 
commencing  business  ;  also  amount  of  preferred  stock  to  be  assigned  to 
stockholders  who  may  hereafter  earn  stock  from  custom  dividends,  (g) 
whether,  and  if  so,  to  what  extent,  loans  or  deposits  of  money  are  to  be 
received  for  use  in  its  business,  (h),  the  terms  upon  which  persons  may 
become  members,  (i)  on  what  days  in  January  regular  annual  meetings  of  the 
members  are  to  be  held,  (j)  such  other  matters  not  repugnant  to  this  act,  as 
may  be  deemed  proper  and  necessary,  (k)  the  term  of  its  existence  not  to 
exceed  twenty  years,  (1)  and  names  of  first  associates,  their  respective  resi- 
dences and  the  number  of  shares  held  by  each  of  them.  No  such  association 
shall  commence  business  until  the  financial  standing,  responsibility  and 
character  of  the  original  stockholders  shall  have  been  approved  and  certified 
by  the  superintendent  of  the  banking  department  of  the  commonwealth. 

Sec.  5. — Any  such  association  may  take,  hold,  lease  and  convey  such  real 
estate  as  may  be  necessary  for  purpose  of  its  organization,  and  may  sue  and 
be  sued  in  its  corporate  name,  and  may  submit  any  matter  in  dispute  to 
arbitration,  and  shall  have  a  common  seal,  which  shall  not  be  altered  or 
imitated,  and  shall  bear  the  corporate  name  of,  together  with  such  device  or 
motto  as  may  be  adopted  by  such  association,  and  such  seal  shall  be  impressed 
•upon  the  articles  of  association. 

Sec.  6. — Any  association  may  alter  or  amend  its  articles  of  association  and 
may  alter  or  rescind  any  by-laws,  or  make  any  additional  by-laws  with  the 
consent  of  the  majority  of  its  members  present  at  a  special  meeting  convened 
for  such  purpose,  but  the  notice  calling  such  meeting  shall  set  forth  fully  and 
clearly  the  proposed  alterations,  amendment,  recision  or  addition  ;  and  any 
alteration  or  amendment  of  the  articles  of  association  shall  be  approved,  filed, 
recorded  and  certified  in  the  same  manner  as  the  original  articles  of  associa- 
tion. 

Sec.  7. — The  stock  capital  of  any  such  association  shall  consist  of  the 
amounts  standing  to  the  credit  of  the  members  on  account  of  the  shares 
allotted  to  them,  certificates  of  which  shall  be  issued  from  time  to  time  as 
shares  shall  be  fully  paid  up  or  earned. 

Sec.  8. — It  shall  be  lawful,  if  the  by-laws  so  provide,  for  any  minor  to  take 
and  hold  shares  in,  or  to  make  loans  or  deposits  of  money  to  or  with  any  such 
corporation,  and  for  such  association  to  pay  any  minor  any  moneys  that  may 
be  due  to  him  in  respect  of  any  shares,  loans  or  "deposits  standing  in  his  name, 
and  his  receipt  therefor  shall  be  in  all  respects  valid  in  law,  but  such  minor 
shall  not  he  eligible  to  hold  any  office  in  such  association  though  he  may  be 
subject  to  its  by-laws  and  vote  at  any  meeting  of  its  members. 

SEC.  ().— It  shall  be  the  duty  of  such  company  to  exhibit  in  some  conspicuous 

place  in  its  principal  office,  at  all  limes,  a  list  of  stockholders  and  the  amount 

tock  held  by  each  stockholder,  the  amount  of  slock  subscribed  or  earned 

at  the  lime  oi  eai  h  la  1  annual  meeting  ;  also  the  amount  of   preferred  stock 

which  shall  not  be  a  liability  stock,  only  as  it  becomes  assigned  to  individual 

SEC.  10.— The  members  shall  be  severally  and  jointly  liable  for  all  deposits, 

debts  for  |ab<  >r,  or  sen  iceol  any  kind  pei  formed  for  such  association,  and  for 

an  v  other  debts  lawfully  incurred  under  the  provisions  of  (his  act  ;  each  of  the 

kill  Ik-  liable  to  twice  the  amount  of  his  subscribed  or  earned  stock 

al,  and  no  more,  but  no  suit  shall  be  brought,  or  any  execution  issued 

again  t  any  member  individually  until  a   judgment  be  first  obtained  for  such 

iei    i''     or  other  lawful  debts  against  such  association,  and 

utionthen be  returned  unsatisfied,  in  whole  or  in  part,  and  in  case  any 

member  shall  be  compelled  to  pay  any  such  judgment,  or  any  part  thereof 
beyond  his  pro  rata  liability  therefor,  he  shall  have  the  right  to  call  upon  all 
the  membei  1  to  pay  their  fro  rata  share  ol  the  same,  or  up  to  their  prorata 
liability  therefor,  and  may  sue  them  jointly,  or  severally,  or  any  number  of 


GENERAL   LEGISLATION.  *•'»:} 

them,  and  recover  in  such  action  the  ratable  amounts  due. from  the  member 
or  members  so  sued. 

Sec.  II. — The  first  meeting  of  any  such  association  may  be  called  by  a  i  ml  Re- 
signed by  any  two  of  the  associates  who  signed  its  articles  of  association,  set- 
ting forth  the  time  and  place  and  objects  oi  such  meetings,  such  notice  to  be 
mailed  to  the  address  of  each  associate,  at  least  four  days  clear  prior  to  such 
meeting,  and  a  majority  of  such  associates  at  such  meeting  shall  be  competent 
to  make  all  such  by-laws  as  they  may  deem  necessary  for  the  proper  manage- 
ment of  the  association,  so  that  any  such  by-laws  are  not  repugnant  to  or 
inconsistent  with  (he  provisions  oi  this  act,  or  any  law  of  the  state  or  Tinted 
Stales,  and  to  elect  such  officers  as  are  heretofore  provided  by  this  act,  and 
such  officers  shall  hold  office  until  their  successors  shall  have  been  elected  and 
installed. 

SEC.  12.— No  profits  shall  be  paid  out  to  any  stockholder  until  the  total 
registered  amount  of  stock  shall  be  fully  paid  in  cash,  or  earned  from  the  net 
profits  of  the  company. 

Sec.  13. — Depositors  and  borrowers  to  whom  dividends  are  due  shall  not 
withdraw  the  same,  but  shall  take  full  paid  stock  in  lieu  thereof,  until  the 
registered  and  preferred  stock  of  the  company  becomes  fully  paid  up.  and  as 
each  share  of  stock  becomes  fully  paid  up,  this  class  of  stockholders  may  have 
become  voting  members,  but  each  shareholder  shall  be  entitled  to  but  one 
vote  on  each  share  of  stock. 

Sec.  14. — The  company  shall  be  controlled  by  a  board  of  six  directors  who 
shall  serve  for  three  years,  two  of  which  shall  be  elected  annually,  and  pro- 
vision shall  be  made  at  the  first  election  to  elect  two  to  serve  one  year,  two  to 
serve  two  years,  and  two  for  three  years.  Said  directors  shall  elect  a  pres- 
ident and  secretary  from  their  number,  and  said  directors  shall  have  full 
control  of  all  employees  and  business  of  this  association,  subject  to  the  by- 
laws, but  no  employee  shall  be  a  director.  The  by- laws  shall  provide  rules 
and  regulations  for  the  loaning  and  discounting  of  the  capital  and  deposits  of 
the  association  and  the  nature  of  its  securities,  and  no  loan  shall  be  made  to 
any  individual,  hnn  or  company,  either  singly  or  collectively,  in  excess  of  ten 
per  centum  of  the  deposits  of  the  association  at  the  time  of  making  such  loan, 
and  any  violation  of  this  provision  will  render  the  person  or  cashier  so  making, 
liable  upon  his  bond,  and  the  directors  sanctioning  such  a  loan  will  render 
them  individually  liable,  unless  a  protest  be  entered  at  the  first  monthly  meet- 
ing subsequent  to  the  making  of  such  loan. 

Sec.  15.— Two  auditors  shall  be  elected  annually  by  the  stockholders  from 
their  number  at  their  annual  meeting  in  January,  and  one  auditor  shall  be 
elected  by  the  depositors  from  their  number  on  the  first  Monday  of  each 
December,  notice  of  which  election  shall  be  posted  conspicuously,  in  the  bank 
room  for  at  least  three  weeks  prior  to  the  election  of  such  auditor,  allot"  which 
shall  serve  for  one  year. 

Sec.  16.— It  shall  be  the  duty  of  the  auditors  to  audit  all  books,  papers  and 
vouchers  of  the  company  annually,  or  at  any  time  when  called  upon  in  writing 
so  to  do  bv  the  president  or  any  fen  of  the  stockholders,  or  twenty  of  the  de- 
positors when  joined  by  at  least  live  of  the  stockholders,  and  each  of  these 
audits  shall  be  rendered  in  writing  which  shall  give  a  statement  of  the  assets 
and  liabilities  of  said  company  ;  also  a  detailed  statement  of  the  character  and 
nature  of  all  the  notes  and  securities  held  by  the  association,  and  such  state- 
ment shall  be  posted  conspicuously  in  the  office. 

Sec.  17. — Any  person  appointed  to  any  position  in  any  such  assi  >ci ati  11  re- 
quiring the  receipt,  payment,  management  or  use  of  money  beL  mging  to  such 
association,  shall,  before  entering  upon  the  discharge  of  his  duties,  become 
bound  with  two  or  more  good  and  sufficient  sureties,  or  insurance  bonds,  in 
such  sum  and  form  as  the'directors  shall  require  and  approve;  and  di- 
rectors may  also  require  from  any  other  empli  lyees  of  such  associate  m,  bonds 
with  good  and  sufficient  securities  for  the  faithful  discharge  of  duties. 

RHODE  ISLAND. 

GENERAL  LAWS,  1S96,  p.  609. 

OF   DOMESTIC  BUILDING-LOAN  ASSOCIATIONS. 

Section  l— Every  building-loan  association  hereafter  incorporated  in  this 
state  shall  be  created  bv  special  act,  and  shall  have  the  powers  and  be  subject 
to  the  provisions  of  this  chapter,  and  shall  have  all  the  powers  and  privileges 
and  be  subject  to  all  the  duties  and  liabilities  set  forth  in  chapter  one  hundred 
seventy-seven  ;  but  nothing  herein  shall  be  construed  to  authorize  such  a  cor- 


864  APPENDIX   IV. 

poration  to  do  a  banking  business.  The  words  "  building-loan  association  " 
as  used  in  this  chapter  shall  include  all  corporations,  societies,  organizations- 
and  associations  hereafter  created  by  special  act  and  doing  a  savings  and  loan 
or  investment  business  on  the  building  society  plan,  whether  mutual  or  other- 
wise, and  whether  issuing  certificates  of  stock  which  mature  at  a  fixed  time  in 
advance  or  not. 

Sec.  2. — Every  such  building-loan  association  shall  have  included  in  its 
name  the  words  "  Savings-Fund,"  "  Building-Loan,"  "  Co-operative  Savings," 
"  Savings  and  Loan  "  or  "  Co-operative  Bank,"  and  no  corporation  or  associa- 
tion not  doing  the  business  specified  in  section  one  shall  be  entitled  to  use  a 
name  embodying  either  of  said  combinations  of  words. 

Sec.  3. — Every  such  association  shall  have  a  board  of  directors  of  not  less 
than  five  persons,  and  shall  adopt  and  be  governed  by  by-laws,  which  by- 
laws shall  describe  the  manner  in  which  its  business  shall  be  transacted,  and 
shall  be  conformable  to  the  provisions  of  this  chapter  and  the  laws  of  this 
state.  A  copy  of  the  by-laws  and  of  any  amendment  thereof,  certified  by  the 
president  and  secretary  of  such  association,  shall  immediately  upon  their 
adoption  be  hied  in  the  office  of  the  insurance  commissioner.  Such  associa- 
tion shall  also  file  in  said  office  a  copy  of  its  charter  and  any  amendment 
thereof  duly  certified  by  the  secretary  of  state. 

Sec.  4. — Every  such  building-loan  association  shall  take  for  every  loan 
made,  a  non-negotiable  note  or  bond  secured  by  first  mortgage  on  real  estate, 
which  security  shall  be  satisfactory  to  the  board  of  directors  of  such  associa- 
tion and  shall  be  accompanied  by  a  transfer  and  pledge  of  the  shares  of  the 
borrowing  member  of  the  association.  The  shares  so  pledged  shall  be  held 
as  collateral  security  for  the  performance  of  the  terms  and  conditions  of  said 
note  and  mortgage  ;  Provided,  that  the  shares  without  other  security  may  be 
accepted  as  security  for  loans  for  an  amount  not  exceeding  their  withdrawal- 
value  as  provided  by  this  chapter. 

Sec.  5. — Any  such  building-loan  association  shall  not  buy  or  sell  real  estate 
except  as  follows  :  It  may  purchase  at  any  sale,  public  or  private,  any  real 
estate  or  other  security  upon  which  it  has  a  mortgage,  lien  or  other  incum- 
brance, or  in  which  it  has  any  interest,  and  may  sell,  convey,  lease,  improve 
or  mortgage  the  same  to  any  person  or  persons,  and  may  acquire  and  hold  a 
lot  or  lots  whereon  to  erect  a  building  or  buildings  for  the  transaction  of  its 
business  and  from  portions  of  which,  not  required  for  its  own  use,  a  revenue 
maybe  derived,  the  cost  of  such  building  or  buildings  and  lot  or  lots  in  no 
case  to  exceed  ten  per  centum  of  its  accumulated  capital  ;  Provided,  that  any 
such  association  may  acquire  any  lease  or  interest  necessary  for  the  transac- 
tion of  its  business. 

Si'X.  6. — The  limitation  of  the  capital  stock  of  any  such  association  shall  be 
held  to  apply  to  the  capital  actually  paid  in,  and  any  such  association  may 
issue  its  shares  so  long  as  the  capital  actually  paid  in  "on  its  shares  is  not  in 
excess  of  its  authorized  capital. 

Sec.  7. — Any  such  association  may  issue  different  series  and  classes  of 
stock  ;  instalment  stock,  to  be  paid  in  periodical  sums ;  prepaid  stock,  upon 
which  a  gross  sum  shall  be  paid  in  advance  ;  and  which  instalment  and 
prepaid  stock  shall  mature  when  the  amount  so  paid,  together  with  the 
dividends  declared  upon  the  same,  shall  equal  the  par  valueof  such  stock; 
and  a  dividend-bearing  prepaid  slock,  upon  which  a  larger  sum  is  paid  than 
upon  the  prepaid  stock,  and  upon  which  an  annual  partial  dividend  maybe 
paid  out  of  the  full  dividend  apportioned  thereto  ;  and  a  full  paid  stock,  upon 
which  the  par  value  thereof  shall  be  paid  in  advance,  and  upon  which  full- 
paid  stock  a  definite  dividend  max1  be  paid,  which  dividend  shall  in  no  case 
exceed  the  per  centum  earned  by  all  the  classes  or  series  of  stock  at  the 
time  said  dividend  is  declared  ;  and  may  also  issue  shares  of  guaranty  or  per- 
manent stock,  for  which  the  full  par  value  shall  be  paid  at  the  time  of  issue. 
1  guaranty  or  permanent  stock  shall  not  be  withdrawn  until  all  lawful 
clain  other  class  of  stock  shall  have  been  fully  liquidated  and  paid 

ation,  and  shall  only  receive  dividends  from  theearnings  of 
ociation  in  excess  of  such  rate  as  mav  he  specified  in  the  by-laws  to 
I"-  paideai  h  other  class  of  stock.  But  no  building-loan  association  shall  issue 
any  certificate  of  shares  until  the  terms  and  conditions  thereof  shall  have 
been  firs)  submitted  to  and  approved  by  the  insurance  commissioner,  and 
s  the  same  shall  have  plainly  printed  therein,  or  on  the  back  thereof, 
the  cash  withdrawal-value  oi  such  certificate. 

Sec.  8.-  Any  shareholder  whose  instalment-shares  are  not  in  arrears  or 
pledged  upon  a  loan,  shall  lie  entitled  to  withdraw  such  share  or  shares  at 
any  time  alter  twelve  months  from  the  date  of  the  first  payment  on  the  same, 


GENERAL   LEGISLATION.  865 

upon  giving  thirty  days  written  notice.  Any  such  shareholder  may  give  notice 
or  withdrawal  in  writing  to  the  secretary  of  said  association,  and  the  liability 
of  said  shareholder  to  pay  further  instalments,  and  right  to  share  in  furl 

prolits,  shall  cease  with  said  notice.  Such  withdrawing  shareholder  shall  he 
entitled  to  receive,  after  one  year  from  the  date  of  nis  first  payment,  ail 
monthly  payments  made  on  account  of  such  share  or  shares,  not  including 
membership  premiums  or  tmes,  less  a  withdrawal-fee  nol  to  exceed  one  per 
centum  of  the  maturity-value  of  each  instalment-share,  and,  during  the  in  i 
three  years  from  the  date  oi  said  first  payment,  less  the  amount  deducted  for 
expenses  and  the  accumulation  ol  a  guaranty-fund  a-  authorized  by  section 
eleven.  All  stockholders  who  do  not  give  the  notice  as  herein  provided,  tail- 
ing to  make  payments,  shall  be  subjeel  to  a  fine,  to  be  fixed  by  the  by- 
laws, not  exceeding  live  cents  per  share  per  month,  for  each  month  or 
fraction  thereof  such  payments  are  in  arrears,  for  a  period  ol  six  months 
after  the  last  payment  made,  such  lines  in  the  aggregate  not  to  exceed  the 
sum  of  thirty  cents  per  share,  and  at  the  end  of  any  period  of  six  months,  if 
arrearages  and  lines  remain  unpaid,  the  balance  remaining  of  the  monthly 
payments  made  shall  be  transferred  to  a  suspense  account,  and  shall  be  with- 
drawable after  one  and  within  ten  years  with  interest  at  the  rate  ol  three  per 
centum  per  annum.  If  not  called  for  within  this  period,  the  amount  shall  be 
transferred  to  a  guaranty-fund  and  the  delinquent  shareholder  shall,  from  the 
time  of  such  transfer,  be  barred  from  prosecuting  any  claim  against  the 
association  on  account  of  such  share  or  shares  or  the  payments  made  there- 
on ;  Provided,  that  such  shares  which  may  have  been  pledged  as  a  collateral 
for  a  loan  and  become  delinquent,  shall  be  adjusted  in  such  manner  as  shall 
be  provided  by  the  by-laws  of  such  association.  If  such  withdrawing  mem- 
bers shares  are  thirty-six  and  less  than  forty-eight  months  old  he  shall  be 
entitled  to  receive  the  amounts  paid,  less  said  withdrawal-fee  hereinbefore 
provided  for,  together  with  interest  on  such  amount,  at  the  rate  of  live  per 
centum  per  annum,  for  the  actual  time  the  association  has  had  the  payments, 
and  if  such  withdrawing  member's  shares  are  forty-eight  or  more  months 
old  he  shall  be  entitled  to  receive  the  amount  paid  in,  less  said  withdrawal- 
fee,  and  the  interest  on  such  amount  at  the  rate  of  six  per  centum  per  annum 
for  the  actual  time  the  association  has  had  the  payments  ;  if  such  withdrawing 
member's  shares  are  one  hundred  or  more  months  old,  if  not  previously 
matured,  he  shall  be  entitled  to  receive  the  amount  paid  in,  less  said  with- 
drawal-fee, together  with  at  least  seventy-five  per  centum  of  the  prolits  ap- 
portioned his  share  or  shares  ;  Provided,  that  the  net  profits  of  the  associa- 
tion for  the  time  the  association  has  had  the  use  of  all  the  funds  shall  respect- 
ively amount  to  the  sum  of  three,  five  and  six  per  centum  per  annum,  com- 
puted on  the  amounts  paid  in  on  all  the  shares  in  force  at  the  time  such 
withdrawals  are  made  ;  and  if  such  profits  are  not  sufficient  when  so  com- 
puted, then  the  stock  so  withdrawn  shall  be  entitled  to  a  rate  per  centum 
found  to  be  earned  as  net  profits  during  said  period,  such  interest  payments 
to  be  in  all  cases  in  lieu  of  such  profits;  Provided  further,  that  if  by  reason 
of  extraordinary  losses  the  entire  net  profit  is  exhausted,  the  withdrawing 
member  shall  not  be  entitled  to  the  interest  herein  named  ;  and  if  by  reason 
of  extraordinary  losses  the  association  is  compelled  to  charge  such  losses 
against  its  capital  already  paid  in,  all  withdrawing  shares  shall  be  subject  to 
a  pro  rata  charge  of  such  losses  with  those  remaining  undrawn,  and  in  such 
case  the  withdrawing  member  shall  only  be  entitled  to  such  sums  as  may  be 
found  due  him  after  the  adjustment  of  such  losses  among  all  shareholders; 
And  provided  further,  that  whenever  the  capital  of  an  association  has  been 
impaired  by  losses  in  excess  of  its  guaranty-fund  and  the  profits  earned,  and 
in  excess  of  the  full  amount  of  its 'guaranty  or  permanent  stock  should  any 
such  association  issue  such  stock,  it  shall  be  the  duty  of  the  directors  to 
suspend  sales  of  all  classes  of  stock  until  such  losses  have  been  adjusted  and 
distributed  pro  rata  as  a  charge  upon  the  book-value  of  the  shares  of  stock  in 
force,  the  liability  of  any  shareholder  being  hereby  limited  to  such  book- 
value;  Ami  provided  further,  that  no  more  than  one-half  of  the  amount 
received  in  payment  on  stock  by  such  association  in  any  month  shall  be 
used  to  pay  withdrawals,  without  the  consent  oi  the  board  of  directors. 

Sec.  o.— Upon  the  death  of  a  stockholder  in  any  such  association,  liability  for 
further  payment  on  his  shares  shall  thereupon  cease  and  his  legal  represent- 
atives, upon  given  thirty  days'  notice  to  the  association  within  six  months  after 
his  decease,  may  withdraw  his  share  or  shares  at  the  full  book-value  thereof 
as  determined  at  the  last  apportionment  of  earnings,  and  any  payments  which 
may  have  been  made  on  said  shares  thereafter,  less  said  withdrawal-lee  here- 
inbefore provided. 


866  APPENDIX   IV. 

Sec.  io. — Every  such  association  shall  provide  in  its  by-laws  in  what  man- 
ner applications  and  bids  for  loans  shall  be  received  and  who  shall  be  entitled 
to  loans  thereunder,  and  all  applications  shall  be  acted  upon  in  the  order  re- 
ceived ;  Provided,  that  the  provisions  of  this  section  relating  to  bidding  for 
loans  shall  not  apply  to  associations  which  fix  the  rate  of  interest  and  premium 
or  payments  in  any  other  manner. 

Sec.  ii. — Every  such  association  in  payment  of  its  expenses  and  the  accu- 
mulation of  a  guaranty-fund,  may  use  all  fees  and  deduct  an  amount  from 
their  receipts  each  month  not  to  exceed  one-tenth  of  one  per  centum  on  the 
par  or  maturity  value  of  each  instalment  share  then  in  force,  and  a  propor- 
tionate amount  on  other  classes  of  shares. 

Sec.  12. — At  least  thirty  days  prior  to  any  annual  or  special  meeting  of  the 
stockholders  of  any  such  association,  a  notice  stating  the  time  and  place  of 
such  meeting  shall  be  deposited  in  the  postoffice  in  the  town  or  city  where 
such  association  is  required  by  its  charter  to  have  an  office  or  place  of  business, 
directed  to  each  member  to  his  address  as  the  same  appears  at  such  time  on 
the  books  of  the  association  ;  and  when  so  deposited,  postage  prepaid,  shall 
be  deemed  a  legal  and  sufficient  notice  of  any  such  meeting  ;  and  there  shall 
be  included  in  such  notice  any  proposed  amendment  or  amendments  to  the 
charter  or  by-laws  of  any  such  association  and  a  statement  of  any  officers  to 
be  elected  at  such  meeting.  Each  member  of  such  association  shall  be  en- 
titled to  one  vote  either  in  person  or  by  proxy.  Upon  all  questions  to  be 
voted  upon  at  such  meetings,  the  vote  shall  be  taken  by  calling  the  roll  of 
persons  entitled  to  vote  thereat,  and  the  votes  shall  be  by  ballot,  if  demanded 
by  any  shareholder. 

Sec.  13. — All  the  officers  of  any  such  association  who  sign  or  indorse 
checks  or  handle  any  funds  of  such  association,  shall  give  bonds  or  fidelity 
insurance  for  the  faithful  performance  of  their  duties  as  the  board  of  directors 
may  require,  and  no  such  officer  shall  be  deemed  qualified  to  enter  upon  the 
duties  of  his  office  until  his  bond  is  approved  by  the  board  of  directors  and  the 
insurance  commissioner,  with  whom  the  bond  shall  be  filed  ;  Provided,  that 
the  insurance  commissioner  may  require  of  any  such  association,  at  anytime, 
such  increase  of  said  bond  or  insurance  as  he  may  deem  necessary  for  the 
protection  of  the  members.  If  any  such  association  shall  fail  to  file  and 
maintain  the  bonds  or  fidelity  insurance  required  by  this  section  it  shall  for- 
feit twenty-five  dollars  for  each  day  of  such  default,  to  be  recovered  by  the 
insurance  commissioner  in  the  manner  provided  in  section  fifteen  of  this 
chapter. 

Sec.  14. — The  insurance  commissioner  shall  retain  the  fees  received  for 
examining  associations  and  filing  reports  provided  for  by  this  chapter  to 
cover  the  expense  of  such  examination  and  the  extra  labor  made  necessary 
by  this  chapter. 

Sec.  15. — Every  such  association  shall,  on  or  before  February  first  of  each 
year,  file  with  the  insurance  commissioner  an  annual  report  of  its  affairs  and 
operations  for  the  preceding  calendar  year  ;  such  report  shall  be  certified  by 
oath  of  the  president  and  secretary  or  three  directors  of  the  association,  and 
shall  be  in  the  form  prescribed  and  on  blanks  furnished  by  the  insurance 
commissioner.  The  insurance  commissioner  may  at  any  other  time  call  for 
reports  showing  the  business-condition  of  the  association  at  the  close  of  any 
calendar  month,  and  such  reports  shall  be  furnished  within  thirty  days  there- 
after. If  any  such  association  shall  fail  to  furnish  to  the  insurance  commis- 
sioner any  report  required  by  this  chapter  at  the  time  required,  it  shall  for- 
feit the  sum  of  twenty-live  dollars  for  every  day  such  report  shall  be  delayed 
or  withheld,  and  if  not  forthwith  paid  the  insurance  commissioner  may 
maintain  an  action  of  the  case  in  his  name  of  office  to  recover  such  penalty, 
and  when  recovered  the  same  shall  be  paid  over  to  the  general  treasurer. 

SEC.  16. —  It  shall  be  the  duty  of  the  insurance  commissioner  at  such  time  or 
as  he  may  see  lit.  but  at  least  once  a  year,  to  make  an  examination  of 
the  financial  condition  and  methods  of  doing  business  of  every  such  associa- 
tion, and  publish,  in  the  annual  report  in  relation  to  banks  and  trust  com- 
panii  1  itemenl  of  the  financial  condition  of  every  such  association 
n  d  ;  and  the  expense  of  such  examination  and  publication  shall  be 
paid  ition,  bul  shall  not  exceed  fifty  dollars  per  year. 

Sec,  17 — If  it  shall  appear  to  the  insurance  commissioner  from  any  exami- 
nation made  by  him  or  from  anv  report  made  as  herein  required,  that  such 
»n  is  violating  its  chartei  or  the  law,  or  that  it  is  conducting  its  busi- 
ii'  man  mi  afe,  unauthorized  or  dishonest  manner,  he  shall,  by  an  order 
under  In-,  hand,  addre  ised  to  tut  h  a  isociation,  direct  such  association  to  dis- 
1        nue  such   unsafe  or  illegal  practices  and  to  conform  with  the  require- 


GENERAL   LEGISLATION.  867 

ments  of  its  charter  and  the  law  ;  and  whenever  such  association  shall  refuse 
or  neglect  to  comply  with  such  order  as  aforesaid,  or  to  hie  the  reports  here- 
in required,  or  shall  fail  to  pay  any  final  judgment  recovered  against  it  in  any 
court  of  this  state  within  sixty  days  after  the  rendition  thereof,  or  to  pay  the 
fees  or  forfeitures,  or  to  do  any  other  act  required  under  the  provisions  here- 
of, the  insurance  commissioner  shall  thereupon  give  notice  to  such  association 
to  show  cause  why  its  right  to  do  business  should  not  be  suspended,  by  de- 
positing such  notice  in  the  general  postolhce  in  the  city  of  Providence,  pre- 
paid, addressed  to  such  association  at  the  town  or  city  in  this  state  where 
it  is  required  by  its  charter  to  have  an  office  or  place  of  business  ;  and  if 
it  shall  appear  to  the  insurance  commissioner,  alter  giving  such  association 
an  opportunity  to  be  heard  as  aforesaid,  that  it  is  in  an  insolvent  condition 
or  is  violating  the  law,  he  shall  give  notice  to  such  association  that  it  is  no 
longer  authorized  to  do  business,  by  depositing  such  notice  in  the  |  ostoffice 
addressed  to  such  association  as  herein  provided;  Provided,  thai  any  such 
association,  not  in  an  insolvent  condition,  shall  be  authorized  by  the  in- 
surance commissioner  to  resume  its  business  upon  full  performance  of  its 
duties  and  compliance  with  the  provisions  of  this  chapter,  and  presentation 
to  the  insurance  commissioner  of  satisfactory  proof  of  the  same.  Any  such 
association  aggrieved  by  any  such  order  of  suspension  may  appeal  within 
thirty  days  from  the  time  it  is  notified  as  aforesaid  of  such  suspension,  to  the 
appellate  division  of  the  supreme  court  sitting  in  Providence.  Said  division 
shall  proceed  as  soon  as  may  be  to  hear  such  appeal  after  the  manner  of 
equitable  causes  ;  and  if  such  appellant  shall  show  to  the  satisfaction  of  said 
court  that  it  is  entitled  under  the  provisions  of  this  chapter  to  be  allowed 
to  do  business,  said  court  shall  sustain  such  appeal,  and  shall  vacate  such 
order  of  the  insurance  commissioner,  or,  upon  failure  to  show  ern  n  in  the 
action  of  the  insurance  commissioner,  shall  affirm  such  order.  After  any 
such  association  shall  be  suspended  from  doing  business  as  aforesaid,  the 
insurance  commissioner  shall  cause  notice  thereof  to  the  published  in  one  or 
more  newspapers  in  this  state  for  the  period  of  two  weeks. 

Sec.  18. — After  the  right  of  any  such  association  to  do  business  shall  be  sus- 
pended as  provided  in  (he  preceding  section,  any  such  association  affected 
thereby  shall  cease  to  have  anv  right  to  continue  in  business,  except  for  the 
purpose  of  winding  up  the  affairs  of  the  association  ;  and  any  officer,  director 
or  agent  of  such  association  thereafter  selling  shares  of  such  association,  or 
soliciting  business  for  such  association,  shall  be  guilty  of  a  misdemeanor,  and 
upon  conviction  thereof  shall  be  fined  not  less  than  one  hundred  dollars  or 
more  than  one  thousand  dollars  for  each  offence. 

GENERAL  LAWS,  1896,  p.  616. 

OF   FOREIGN   BUTLDING-LOANS  ASSOCIATIONS. 

Section  i. — The  name  "  building-loan  association  "  used  in  this  chapter 
shall  include  all  corporations,  societies,  organizations  or  associations  organ- 
ized or  incorporated  under  the  laws  of  any  foreign  country,  or  of  any  state  or 
territory  of  the  United  States  other  than  the  stateof  Rhode  Island,  which  do  a 
saving  and  loan  or  investment  business  on  the  building-society  plan,  whether 
mutual  or  otherwise,  and  whether  issuing  certificates  of  stock  which  mature 
at  a  fixed  time  in  advance  or  not. 

Sec.  2. — No  building-loan  association  included  under  the  definition  in 
section  one  of  this  chapter  shall  directly  or  indirectly  transact  any  business 
in  this  state  until  it  shall  have  : 

First-  Appointed  in  writing  the  insurance  commissioner  of  this  state  to  be 
its  true  and  lawful  attorney  for  the  service  of  process  upon  it  and  upon  whom 
all  lawful  process  in  any  action  or  proceeding  against  it  may  be  served  with  the 
same  legal  force  and  validity  as  if  served  on  it,  which  authority  shall  continue 
in  force  as  long  as  any  liability  remains  outstanding  against  it  in  this  state  ; 
which  said  power  of  attorney  shall  be  deposited  in  the  office  of  the  insurance 
commissioner  and  a  copy  of  said  power  of  attorney  duly  certified  by  him  shall 
be  received  in  evidence  in  all  courts  of  this  state  ;  and  service  upon  said  at- 
torney shall  be  deemed  sufficient  service  upon  the  principal. 

Second.  File  with  said  insurance  commissioner  an  application  to  transact 
business  in  this  state  under  the  provisions  of  this  chapter,  with  a  certified  copy 
of  its  charter,  constitution  and  by-laws,  showing  its  method  of  doing  business, 
and  a  statement  of  its  financial  condition,  sworn  to  by  its  president  and  sec- 
retary, which  must  show  that  it  is  possessed  of  actual  paid-in,  unimpaired  and 
well-invested  assets  of  at  least  one  hundred  thousand  dollars  ;  and 


868  APPENDIX   IV. 

Thud.  Received  a  license  from  said  insurance  commissioner  to  transact 
business  in  this  state  as  is  hereinafter  provided. 

Sec.  3. — It  shall  be  the  duty  of  the  insurance  commissioner  upon  the  receipt 
of  an  application  from  any  building-loan  association  to  do  business  in  this 
state,  to  receive  and  hie  the  papers  required  by  this  chapter,  and  to  thoroughly 
examine  the  financial  condition  of  such  building-loan  association  and  its 
methods  of  doing  business  ;  and  tor  making  such  examination  he  shall  re- 
ceive compensation  from  such  building  loan-association  as  follows  :  for  the 
first  one  hundred  thousand  dollars  of  net  assets,  a  fee  of  fifty  dollars,  and  for 
each  additional  one  hundred  thousand  dollars  of  net  assets,  or  the  major  por- 
tion thereof,  an  additional  fee  of  five  dollars,  but  in  no  event  shall  such  com- 
pensation exceed  one  hundred  dollars. 

Six.  4. — If  the  insurance  commissioner  becomes  satisfied  after  an  examina- 
tion, that  the  building-loan  association  applying  to  do  business  in  this  state  is 
solvent  and  possessed  of  sufficient  assets  as  provided  by  section  two  of  this 
chapter  and  is  conducting  its  business  according  to  law,  he  shall  issue  to  such 
building-loan  association' a  license  to  do  business  in  this  state,  for  which  said 
license  said  building-loan  association  shall  pay  a  fee  of  twenty-five  dollars  ; 
but  if  said  examination  so  made  by  said  insurance  commissioner  shall  show 
said  building-loan  association  to  be  insolvent  or  not  possessed  of  sufficient 
assets  as  provided  by  this  chapter,  the  said  insurance  commissioner  shall  re- 
fuse to  issue  the  license  aforesaid,  and  forthwith  notify  said  building-loan  asso- 
ciation of  his  refusal,  with  the  reasons  therefor,  and  upon  such  refusal  said 
building  loan  association  applying  for  said  license  may  appeal,  within  ninety 
days  from  the  time  it  is  notified  of  such  refusal,  to  the  appellate  division  of 
the  supreme  court  sitting  in  Providence.  Upon  the  filing  of  said  appeal  said 
appellant  shall  give  bond  in  a  sum  not  less  than  two  hundred  dollars  to  the 
state  of  Rhode  Island,  with  surety  satisfactory  to  the  clerk  of  said  court,  con- 
ditioned that  if  said  appeal  is  not  sustained  to  pay  all  lawful  costs  to  be  taxed 
by  said  clerk.  Said  appellate  division  of  the  supreme  court  shall  proceed  to 
hear  said  appeal  after  the  manner  of  equitable  causes,  and  if  said  appellant 
shall  show  to  the  satisfaction  of  said  court  that  is  entitled  to  be  allowed  to  do 
business  in  this  state  under  the  provisions  of  this  chapter,  the  court  shall 
sustain  said  appeal,  and  it  shall  be  the  dutv  of  said  insurance  commissioner 
to  at  once  issue  the  license  to  said  appellant  in  accordance  with  the  pro- 
visions of  this  chapter. 

Sec.  5.— Every  building-loan  association  admitted  to  do  business  in  this 
state  under  the  provisions  of  this  chapter  shall  file  with  the  insurance  com- 
missioner, on  or  before  the  first  day  of  February  in  each  year,  a  statement  of 
its  financial  condition  on  the  preceding  thirty-first  day  of  December  and  a 
statement  of  the  amount  and  kind  of  business  done  in  this  state  up  to  said 
date  ;  and  if  said  building-loan  association  shall  refuse  and  neglect  to  file  said 
statement,  or  if  such  statement  so  filed  shall  show  said  building-loan  associa- 
tion to  be  insolvent,  or  not  to  be  possessed  of  sufficient  assets  in  accordance 
with  the  provisions  of  this  chapter  to  transact  business  in  Rhode  Island,  it 
shall  be  the  duty  of  said  insurance  commissioner  to  revoke  the  license  granted 
to  said  building-loan  association,  the  said  building-loan  association  to  have  the 
right  to  appeal  to  the  said  appellate  division  of  the  supreme  court  sitting  in 
Providence,  in  the  same  manner  and  with  Hie  same  rights  as  is  provided  in 
section  four  of  this  chapter  ;  Ptovided,  thai  (he  said  insurance  commissioner 
shall  make  an  examination  of  the  financial  condition  of  such  building-loan 
iation  as  of  ten  as  once  in  two  years,  and  may  at  anytime  examine  into 
the  financial  condition  of  any  building-loan  association  doing  business  in  this 
state  under  the  provisions  of  this  chapter,  for  which  examination  he  shall 
receive  the  same  compensation  as  provided  in  section  three  of  this  chapter: 
and  il  such  examination  in  the  opinion  of  the  insurance  commissioner  should 
show  that  the  annual  statement  of  said  building  loan  association  was  false,  or 
1  hit  .11. 1  building-loan  association  is  not  possess(  (1  of  sufficient  assets  to  trans- 
it! Rhode  Island  under  the  provisions  of  this  chapter,  or  that  said 
build  1  a     ociation  is  nol   conducting  its  business  in  accordance  with 

li  ..ii  hall  be  the  duty  of  said  insurance  commissioner  to  revoke  the  license 
[  buil  lin  loan  a  >  iation,  from  which  decision  of  said  insur- 
01  ■  1  ii'  lid  building-loan  association  whose  license  is  so  re- 
II  ha  ■  ih'   right  to  appeal  to  the  appellate  division  of  the  supreme 

e,  in  the  same  111. 1  ami  with  the   same   rights  as 

on  fout  1  1  tin    1  hapter. 
1      oi  .ma    ociation  admitted  to  do  business  under  the 

chapter  shall,  before  the  first  day  oi   February  in  each  year t 

to  the  general  treasurer  of  this  slate  equal  to  one-fourth  of  one  per 


GENERAL   LEGISLATION.  869 

centum  on  the  amount  of  the  capital  actually  paid  in  to  December  thirty-firs 
of  the  preceding  year,  from  residents  of  this  state,  less  the  amount  of  all  cer- 
tificates withdrawn,  and  less,  also,  the  amount  of  its  outstanding  loans  secured 

by  its  shares  on  bond  and  mortgage  on  real  estate  within  this  state  and 
secured  by  its  shares  pledged  by  residents  (if  this  state;  and  said  building- 
loan  association  and  its  shares  shall  be  exempt  from  payment  oi  any  oilier 
tax  whatever,  except  it  shall  be  assessed  for  and  pay  a  tax  on  all  real  estate 
acquired  in  this  state  in  the  course  of  its  business. 

Sec.  7. — Whenever  lawful  process  against  a  building-loan  association  in- 
cluded under  the  provisions  of  this  chapter  shall  be  served  upon  the  insurance 
commissioner,  he  shall  forthwith  forward  a  copy  of  the  process  served  on  him 
by  mail,  post-paid,  ami  directed  to  the  home  office  of  said  building-  oan  asso- 
ciation ;  for  each  copy  of  process  the  commissioner  shall  collect  the  sum  of 
two  dollars,  which  shall  be  paid  by  the  plaintiff  at  the  time  of  such  service, 
the  same  to  be  recovered  by  the  plaintiff  as  part  of  the  taxable  costs  if  he  pre- 
vails in  the  suit. 

Sec.  8.- -All  building-loan  associations  included  under  the  provisions  of 
this  chapter,  doing  business  in  this  state,  shall  comply  with  the  requirements 
of  this  chapter. 

Sec.  9.— Every  person  who  shall  act  as  agent  in  this  state  for,  or  who  shall 
transact  any  business  in  this  state  for,  a  building-loan  association  included 
under  the  provisions  of  this  chapter,  which  has  not  complied  with  the  pro- 
visions of  this  chapter  or  which  shall  not  have  a  license  to  do  business  in  this 
state,  shall  be  fined  not  less  than  one  hundred  dollars  and  not  more  than  one 
thousand  dollars,  except  as  provided  in  the  preceding  section. 

Sec.  10. — Sections  thirty-six  to  forty-one  inclusive,  of  chapter  two  hundred 
and  fifty-three  [Judiciary  Act  of  May  19,  1893,  General  Laws  of  1896,  p.  881], 
shall  not  apply  to  building-loan  associations  included  under  the  provisions  of 
this  act. 

SOUTH  CAROLINA. 

ACTS  1896,  p.  92. 

Section  i. — Two  or  more  persons  desiring  to  form  themselves  into  a  cor- 
poration for  the  purpose  of  carrying  on  any  manufacturing,  mining,  mer- 
cantile, banking,  railroad,  steamboat  or  other  industrial  business  or  businesses, 
or  one  or  more  combined  of  any  character  whatsoever,  except  for  municipal 
purposes,  may  file  with  the  secretary  of  state  a  written  declaration,  signed  by 
themselves,  setting  forth  :  1st.  The  names  and  residences  of  the  petitioners. 
2.  The  name  of  the  proposed  corporation.  3.  The  place  at  which  it  purposes 
to  have  its  principal  place  of  business.  4.  The  general  nature  of  the  business 
which  it  purposes  to  do.  5.  The  amount  of  capital  stock.  6.  The  number  of 
shares  into  which  it  is  to  be  divided,  stating  the  par  value  of  each  share. 
7.  Any  other  matter  which  it  may  be  desirable  to  set  forth. 

Sec.  2. — Upon  the  filing  of  the  petition  as  above,  and  upon  the  payment  of 
a  fee  of  $3  for  the  recording  of  said  petition,  the  secretary  of  state  shall  issue 
to  the  parties  or  to  any  two  or  more  of  them  a  commission,  constituting  them 
a  board  of  corporators,  authorizing  them  to  open  books  of  subscription  to  the 
capital  stock  of  the  proposed  corporation  after  such  public  notice,  not  exceed- 
ing ten  days,  as  he  may  require  in  said  commission. 

Sec  3. — All  subscriptions  to  the  capital  stock  of  any  corporation  organized 
under  this  act  shall  be  payable  in  money,  or  in  labor,  or  in  property  at  its 
money  value,  the  labor  or  the  property  and  the  value  thereof  to  be  named  in 
the  list  of  subscription,  no  subscription  in  labor  or  in  property  to  be  received 
unless  the  value  thereof,  so  to  be  specified  as  aforesaid,  be  approved  by  said 
board  of  corporators  ;  and  in  case  of  failure  to  perform  the  labor  or  to  deliver 
the  property  according  to  the  terms  of  the"  subscription,  the  money  value 
thereof,  as  named  in  the  list  of  subscriptions,  shall  be  paid  bvthe  subscribers. 

Sec.  4.— When  not  less  than  50  per  cent,  of  the  proposed  capital  stock  shall 
have  been  subscribed  by  bona  nde  subscribers,  the  hoard  of  corporators  shall 
call  the  subscribers  together.  At  such  meeting  of  the  subscribers,  a  majority 
of  whom  in  value  being  present  in  person  or  by  proxy,  the  subscribers  shall 
proceed  to  the  organization  of  the  company  by  the  election  from  themselves 
of  a  board  of  directors,  trustees  or  managers,  of  such  number  as  they  may 
deem  proper,  not  to  exceed  nine  in  number,  which  board  shall  manage  the 
affairs  of  the  corporation  until  their  successors  shall  have  been  elected  and 
shall  have  qualified,  according  to  the  constitution  and  by-laws  of  the  corpora- 
tion. The  board  of  directors,  trustees  or  managers  shall  call  for  the  payment 
56 


870  APPENDIX   IV. 

of  the  subscription  to  the  capital  either  in  whole  or  in  such  instalments  as  it 
shall  see  fit.  The  board  of  directors,  trustees  or  managers,  shall  elect  from 
their  number  a  president,  and  they  may  also  elect  such  person  or  persons  as 
they  may  see  tit  as  secretary  and  as  treasurer,  the  latter  of  whom  shall  give 
such  bond  as  they  may  require. 

Sec.  5.— Upon  the  payment  to  the  treasurer  of  the  corporation  or  to  some 
other  officer  designated  for  the  purpose  by  the  subscribers,  of  at  least  20  per 
cent,  of  the  aggregate  amount  of  the  capital  subscribed  payable  in  money 
and  also  upon  the  delivery  to  such  officer  of  at  least  20  per  cent,  of  the  prop- 
erty subscribed  to  the  aggregate  amount  of  the  capital  stock,  or  upon  its 
delivery  being  secured  by  such  obligations  of  the  subscribers  as  the  board  of 
directors,  trustees  or  managers  may  approve,  the  board  of  corporators,  or  a 
majority  of  them  shall,  over  their  signatures  certify  to  the  secretary  of  state 
that  the  requirements  of  this  act  have  been  complied  with.  Such  certificate 
shall  be  known  as  the  return  of  the  corporators.  Upon  the  filing  of  the  return, 
and  the  receipt  of  the  charter  fee  hereinafter  provided  for  and  upon  the  pay- 
ment to  him  of  a  fee  of  $3  for  the  recording  of  the  return,  the  secretary  of 
state  shall  issue  to  the  board  of  corporators  a  certificate  to  be  known  as  the 
charter,  that  the  corporation  has  been  fully  organized  according  to  the  laws  of 
South  Carolina,  under  the  name  and  for  the  purpose  indicated  in  the  written 
declaration  ;  and  that  they  are  fully  authorized  to  commence  business  under 
their  charter,  a  copy  of  which  charter  shall  be  recorded  in  the  office  of  the 
register  of  mesne  conveyance  or  clerk  for  each  county  where  such  corpora- 
tions shall  have  a  business  office  ;  Provided,  that  in  cases  when  by  the  terms 
of  the  declaration  the  capital  stock  of  the  corporation  is  to  be  paid  in  instal- 
ments the  charter  may  be  issued  when  50  per  cent,  of  the  first  instalments  of 
the  capital  stock  has  been  paid  in  and  the  provisions  of  this  act  in  other 
respects  complied  with.  Any  charter  issued  hereunder,  may  wind  up  the 
affairs  of  the  corporation  by  resolution  of  the  stockholders  representing  the 
majority  of  the  capital  stock,  said  resolution  to  be  signed  by  the  president 
and  secretary,  or  other  officers  of  the  corporation,  and  forwarded  to  the  secre- 
tary of  state,  to  be  filed  and  recorded  as  hereinbefore  provided  for  declaration 
and  return  ;  Provided,  that  such  resolution  shall  not  bar  an  action  for  two 
years  thereafter  against  the  corporation  or  any  of  its  members  for  any  liability 
incurred  during  the  existence  of  the  corporate  m. 

Sec.  6. — No  irregularity  in  complying  with  the  provisions  of  this  act  shall 
be  held  to  vitiate  the  incorporation  until  a  direct  proceeding  to  set  aside  and 
annul  the  charter  be  instituted  by  the  proper  authorities  of  the  state  ;  and  all 
acts  done  and  contracts  entered  into  shall  have  the  same  force  and  effect  as  if 
no  irregularity  had  existed. 

Sec.  7. — Upon  the  issuance  of  the  charter  by  the  secretary  of  state,  the 
board  of  corporators  shall  turn  over  to  the  proper  officers  of  the  corporation 
all  subscription  lists  or  other  paoers  they  have  taken  as  corporators  and  all 
such  papers  shall  be  as  valid  as  if  taken  and  made  by  the  corporators. 

Si  1  .  8. — The  declaration,  the  corporators'  commission,  the  corporators'  re- 
turn and  the  charter  shall  be  recorded  by  the  secretary  of  state  in  books  kept 
by  him  for  that  purpose. 

SEC.  9. — The  board  of  corporators,  on  making  their  return  shall  pay  to  the 
secretary  of  statea  charter  fee  graded  as  follows  :  $5.00  fee  for  capital  slock"  of 
$5.0  10,  or  1  --,s  ;  S  10.00  for  capital  stock  of  more  than  $5,000,  up  to  and  including 
|.00 fee  for  capital  slock-  for  more  than  $25,000,  11,1  to  and  including 
$50,000  ;  $20.00  fee  for  capital  stock  for  more  than  $50,000,  up  to  and  including 
$100,000  ;  $25.00  fee  for  caj  ital  stock  for  more  than  $100,000,  up  to  and  includ- 
ing $250,000, and  $1.00  additional  for  each  $io,coo  increase  or  fraction  thereof 
above  $250,000.  All  charter  fees  received  by  the  secretary  of  state  shall  be 
turned  ovi  1  1  [uai  tei  ly  to  the  state  ti  easurer. 

SEC.  10. — Any  corporation  heretofore  created  which  has  not  forfeited  its 
charter,  and  any  corporation  created  by  the  general  assembly  of  [894  may  sur- 

1  he  Iii'  and  secure  a  new  c  1 1 . 1 1  tei    under  this  act  ;  and  any  such  cor- 
poration Or  any  corporation  created  under  this  act  may  have  its  name  changed 
imended   in  any  particular  under  this  act.     Any  corporations 
charl  ious  to  the  approval  of  this  act  desiring  to  increase  its  capital 

fore  such  increase  be  allowed  and  resolutions  be  filed  and  re- 
try oi  state  the  fees  prescribed  in  this  act.     Fees  for 
to  be  paid  a    on  capital  stoek  :  $5.00  for  all  amounts  up  to  and 

1 '    incn  '  in-  a     provided   in  secti )  oi  this  acl  ;  Provided, 

Thai  :n    "i    ii'  h  new  1  hartei  01  su<  h  amendments  shall  not  operate 

in  any  way  to  prejudi  1  th<  cl: ol  1  1  editors  of  such  corporation  or  to  i  elieve 

:.in  i;  m  of  any  liability  already  created  or  assumed  j  but  that  although 


GENERAL   LEGISLATION.  871 

operating  under  a  new  charter  it  shall  be  regarded  as  the  same  corporation.  In 
order  to  obtain  such  new  charter  or  such  amendment  of  charter,  the  board  of 
directors,  trustees  or  managers  shall  call  a  stockholders'  meeting,  giving  al  least 
thirty  days'  notice  of  the  time,  place  and  purpose  of  said  meeting  either  by  the 
mailing  of  written  notice  to  each  stockholder,  or  such  meeting  may  be  called 
by  the  president  of  the  corporation,  or  by  any  stockholder,  owing  in  aggre- 
gate 20  per  cent,  of  the  capital  slock  in  the  manner  above  provided.  If  a 
majority  of  the  stock  of  the  corporation  be  present,  at  such  meeting  in  person 
or  by  proxy  and  a  resolution  asking  for  a  new  charter  or  an  amendment  of 
charter,  be  adopted  by  a  majority  vote  of  the  shares  represented  at  the  meet- 
ing, then  the  board  of  directors,  trustees  or  managers  or  a  majority  of  them, 
shall  certify  such  resolution  over  their  signatures,  to  the  secretary  of  state, 
such  resolution  petitioning  for  such  a  new  charter  or  amendment  shall  set 
forth  the  date  of  the  original  charter  of  the  company  by  reference  to  the  act 
of  the  general  assembly  or  to  the  record  in  the  office  of  the  secretary  of  slate, 
and  shall  in  other  respects  conform  to  the  form  of  the  declaration,  provided 
for  in  section  1  of  this  act.  The  secretary  of  state,  upon  the  tiling  of  such  dec- 
laration and  upon  payment  of  the  charter  fee  in  cases  where  an  increase  of 
capital  stock  is  petitioned  for  and  upon  the  payment  of  a  fee  of  $3.00,  shall 
issue  to  the  corporation  a  new  charter  or  an  amended  charter  in  accordance 
with  the  terms  of  the  petition.  All  papers  connected  with  the  granting  of 
such  new  charters  or  of  such  amendments  shall  be  recorded  as  provided  in 
section  8  of  this  act. 

Sec.  11. — No  expenses  shall  be  attached  to  the  granting  of  charters  or 
amendments  thereto  further  than  the  fees  as  specified  herein. 

Sec.  12. — All  charters  granted  under  the  provisions  of  this  act  shall  continue 
of  force  perpetually  unless  limited  by  the  terms  of  the  petition  ;  Provided,  That 
all  corporations  shall  always  have  the  right  to  go  into  liquidation  and  to  wind 
up  their  affairs,  upon  a  stockholders'  vote  representing  a  majority  of  capital 
stock  had  after  such  notice  as  is  provided  in  section  10. 

Sec.  13. — All  elections  for  board  of  directors,  trustees  or  manager  of  all 
corporations  formed  under  this  act  shall  be  conducted  as  provided  in  article 

g,  section  11  of  the  constitution  of  this  state,  ratified  on  the  4U1  day  of  Decem- 
er,  1895. 

Sec.  14. — Any  corporation  chartered  under  the  provisions  of  this  act  and 
any  corporation  whose  charter  may  be  amended  under  this  act  may  increase 
the  capital  stock  to  any  amount  upon  securing  the  necessary  amendment  lo  its 
charter,  as  provided  in  section  10  hereof  :  Provided,  That  each  stockholder  be 
given  the  preference  of  taking  the  increase  in  proportion  to  the  amount  of  the 
original  stock  he  may  own. 

Sec.  15. — Every  corporation  chartered  under  this  act  shall  have  the  follow- 
ing powers,  to  wit  :  1.  To  have  perpetual  succession.  2.'  To  sue  and  be  sued 
by  the  corporate  name.  3.  To  have  a  common  seal  and  to  alter  the  same  at 
pleasure.  4.  To  prescribe  the  mode  of  transferring  the  shares  of  the  corpora- 
tion. 5.  To  make  contracts,  to  loan  money,  to  acquire  and  to  transfer  property, 
both  real  and  personal  including  shares  of  stock  in  other  corporations,  possess- 
ing the  same  powers  in  such  respects  as  individuals  now  enjoy.  6.  To  make 
by-laws,  and  all  rules  and  regulations  deemed  expedient  for  the  management 
of  its  affairs,  not  inconsistent  with  the  constitution  and  laws  of  this  state  or 
of  the  United  States.  7.  To  have  a  lien  upon  the  shares  of  its  stockholders  to 
enforce  the  payment  of  instalments  due  upon  the  capital  stock,  lo  provide 
and  to  enforce  the  collection  of  such  fines  and  penalties  for  delinquency  in 
payments  of  its  instalments  upon  the  capital  stock  as  its  by-laws  may  fix  not 
to  exceed  10  per  centum  on  account  due.  8.  To  borrow  money  fi  >r  the  purpose 
of  carrying  out  the  objects  of  its  charter,  to  make  notes  bonds  of  other  evidences 
of  debt,  and  upon  a  vote  of  the  stockholders  had  after  such  notice  as  is  pro- 
vided in  section  10  of  this  act  to  secure  the  payments  of  its  obligation  by 
mortgage  or  deed  of  trust  on  all  or  any  of  its  property  and  franchises,  both 
real  and  personal. 

Sec.  10. — At  least  one  meeting  of  the  stockholders  shall  be  held  annually  in 
this  state,  at  such  time  and  place  and  after  such  notice  as  the  by-laws  provide. 
In  all  stockholders'  meetings  each  stockholder  shall  be  entitled  to  one  vote 
for  each  share  of  stock  held  or  owned  by  such  stockholder. 

Sec.  17. — No  stock  shall  be  issued  by  any  corporation  until  fully  paid,  except 
in  cases  of  corporations  when  by  the  terms  of  the  petition,  the  capital  stock  is  to 
be  paid  in  in  installments  ;  and  no  transfers  of  stock  shall  be  valid  except  as 
between  the  parties  thereto,  until  the  same  shall  have  been  regularly  entered 
upon  the  books  of  the  corporation. 

Sec.  18. — Corporations  organized  for  any  purpose  under  the  provisions  of 


872  APPENDIX   IV. 

this  act  shall  have  power  to  construct  and  operate  a  railroad,  electric  railway, 
tramway,  turnpike  or  canal,  for  their  own  use  and  purposes,  and  shall  have 
the  right  to  effect  a  crossing  with  any  existing  railroad  or  public  roads  as  is 
now  provided  bv  law  for  railroad  corporations  ;  but  they  shall  have  no  power 
to  condemn  lands  except  for  crossing  any  existing  railroad  or  public  road,  as 
herein  provided. 

Sec.  19. — Xo  stockholder  in  any  corporation  organized  under  the  provisions 
of  this  act  for  banking  purposes  shall  be  eligible  to  election  as  a  director, 
manager  or  trustee  who  is  not  the  owner  of  at  least  ten  shares  of  stock  in  said 
corporation. 

Sec.  20. — The  books  of  any  corporation  organized  under  this  act  shall  be 
open  to  the  inspection  of  any  stockholder  at  any  and  all  times. 

Sec.  21. — Any  corporation  organized  under  the  provisions  of  this  act  shall 
cease  to  exist  bv  a  non-user  of  its  franchises  for  hve  years  at  any  one  time  ; 
Provided,  That  this  shall  not  relieve  any  stockholder  of  any  liability  incurred 
during  the  existence  of  said  corporation. 

Sec.  22. — A  failure  to  hold  meetings  or  to  elect  directors,  trustees  or  managers 
on  the  day  appointed  by  the  by-laws  shall  not  work  a  forfeiture  of  the  charter 
of  the  company,  but  a  meeting  may  be  called  hereafter  by  the  president  or  by 
the  stockholders  owning  one-fifth  of  the  capital  stock  of  the  corporation  by 
giving  such  notice  as  the  by-laws  may  require  for  annual  meetings. 

Sec.  23. — The  stock  of  any  corporation  organized  under  this  act  shall  be 
deemed  personal  property. 

Sec.  24. — At  all  meetings  of  stockholders  of  corporations  chartered  under  this 
act,  a  majority  of  the  stock  of  such  corporation  shall  be  present,  in  person  or 
by  proxy,  to  constitute  a  quorum,  and  a  majority  vote  of  the  shares  represented 
shall  be  necessary  to  the  adoption  of  any  motion  or  resolution,  unless  the  by- 
laws of  the  corporation  provided  for  a  different  quorum. 

Sec.  25. — Any  officer  or  stockholder  who  shall  knowingly  and  wilfully  make 
or  cause  to  be  made  any  fraudulent  misrepresentation  as  to  either  capital, 
property  or  resources  of  the  corporation  shall  be  held  guilty  of  a  disdemeanor, 
and  upon  conviction  thereof  shall  be  punished  by  a  tine  of  not  more  than 
S2,ooo,  or  bv  imprisonment  for  not  longer  than  two  years,  or  both  at  the  dis- 
cretion of  the  court 

Sec.  26. — The  shares  of  every  corporation  shall  be  numbered  and  every 
stockholder  shall  be  entitled  to  a  certificate  under  the  seal  of  the  corporation, 
and  in  such  form  and  signed  by  such  officers  as  the  corporation  may  deter- 
mine, certifying  his  property  in  such  shares  as  are  expressed  in  the  certificate. 

SEC.  27 — If  any  corporation  fails  to  organize  within  two  years  from  the  date 
of  the  commission  appointing  by  the  board  of  corporators,  the  commission 
shall  be  null  and  void. 

Sec.  2S. — Neither  stock  nor  bonds  shall  be  issued  by  any  corporation,  except 
for  money  paid,  property  delivered,  or  labor  done  ;  and  all  fictitious  increase 
i:  or  indebtedness  shall  be  void. 

SEC.  20.—  Anv  corporation  organized  under  this  act,  engaged  in  the  transpor- 
tation of  freight  or  passengers  by  means  of  steamboats  or  otherwise  upon  any 
of  the  navigable  waters  of  this  state  shall  have  the  authority  to.  exact  reason- 
able tolls  and  fees  for  the  use  of  wharves  or  landings  located  upon  lands  that 
are  the  property  of  such  corporation  or  that  are  under  lease  or  control  of  such 
ttion. 

SEC.  30.— This  act  shall  take  effect  from  and  after  the  date  of  approval  by 
the  governor. 

SEC.  31. — Every  corporation  created  under  the  provisions  of  this  act  shall 
ubject  to  the  liabilities  now  imposed  bv  law,  and  shall  have  all  the  rights, 
powers  and  privileges  now  provided  for  by  law. 

Approved  the  9th  day  of  March,  A.  1).  1  No'). 

SOI  Til  DAKOTA. 

AC'l'S  1893,  p.  60. — Chapter  40. 

SECTION    [. — Any  nine  or  more  persons  being  of  full  age,  two-thirds  of  whom 

shall  1»-  1  itizen    ol  tin     itate,  may  form  an  a-  io<  iation  .1  s  provided  in  this  act. 

All,,  ,  Formed  undei   the  provisions  hereol  <>r  thai  may  hereafter 

ply  with  the   .i:im  ,  a    hereinafter  provided,  shall  he  known  as  co-operative 

I  id  loan  as  ■"  iations,  and  the  name   oi  every  such  association  shall 

1  part  thereof  either,  the  words  "  building  and  loan  association," 

loan  i ation,"  or  "  savings  association." 

ihr  object  andpurpo  les  of  such  associations  shall  be  to  encourage 


GENERAL   LEGISLATION.  873 

industry,  frugality,  home  building  and  savings  among  their  members  ;  the 
accumulation  of  savings  and  the  I  nan  of  such  accumulations  to  their  members, 
the  purchase  of  real  estate,  the  erection  of  buildings  and  the  making  of 
improvements  thereon  and  on  the  lands  of  their  members,  and  removing 
incumbrances  therefrom,  and  the  accumulation  of  a  fund  to  be  returned  to  such 
of  their  members  as  do  not  obtain  loans,  when  they  have  accumulated  a  certain 
sum,  or  at  any  time  when  such  members  shall  desire  the  same  or  the  associa- 
tion shall  desire  to  repay  the  same,  and  such  association  shall  have  power  to 
accomplish  said  purposes. 

Sec.  3. — Such  associations  shall  become  incorporated  by  the  said  nine  or 
more  persons  making,  signing  and  acknowledging  in  the  manner  and  form 
prescribed  for  the  acknowledgment  of  deeds  in  lln>  state,  a  certificate  wherein 
shall  be  stated  the  name  of  said  association,  that  the  association  is  formed  under 
and  for  the  purpose  prescribed  in  this  act,  the  location  within  this  state  of  its 
principal  office  or  place  of  business,  theamount  of  its  authorized  capital  stock, 
the  limit  of  the  number  of  its  shares,  and  the  time  for  which  it  is  to  exist, 
the  names  and  residences  of  the  subscribers  and  the  number  of  shares  of 
its  capital  stock  subscribed  by  each,  the  number  of  its  directors  and  the  names 
and  residences  of  those  who  are  selected  as  directors  who  shall  hold  their 
office  until  the  next  annual  election  or  until  their  successors  are  elected  and 
qualified.  Said  certificate  shall  be  filed  and  recorded  in  the  office  of  the 
secretary  of  state,  and  upon  such  certificate  being  so  filed  the  secretary  of 
state  shall  issue  letters  patent  in  the  usual  form  incorporating  the  subscribers 
into  a  body  corporate  by  the  name  chosen,  which  letters  patent  shall  be 
recorded  in  the  office  of  the  register  of  deeds  of  the  county  where  said  associa- 
tion is  located. 

Sec.  4. — The  officers  of  the  association  shall  consist  of  a  board  of  directors 
or  trustees  of  not  less  than  five  (5)  nor  more  than  thirteen  (13),  who  shall  be 
members  of  the  association,  and  such  board  shall  elect  a  president,  vice- 

E  resident,  secretary  and  treasurer  and  such  other  officers  as  may  be  authorized 
y  the  by-laws.  The  duties  and  compensation  of  the  officers,  their  terms  of 
office,  the  time  and  manner  of  their  election,  and  the  time  of  regular  meetings 
of  the  officers  and  shareholders,  shall  be  determined  by  the  by-laws,  except 
that  the  board  of  directors  may  determine  each  year  the  compensation  of  the 
treasurer  and  secretary.  Special  meetings  of  the  officers  and  shareholders 
may  be  called  and  held  as  provided  by  the  by-laws.  Each  shareholder,  not  in 
arrears  for  dues,  shall  be  entitled  to  one  vote  at  all  meetings  of  the  share- 
holders for  each  share  of  stock  owned  by  him  or  held  by  him  as  trustee,  All 
officers  shall  hold  office  until  their  successors  are  duly  elected  and  assume 
the  duties  of  their  office.  No  association  shall  expire  from  neglect  on  its 
part  to  elect  officers  at  the  time  prescribed  by  the  by-laws. 

Sec.  5. — The  authorized  capital  stock  of  such  association  shall  be  divided 
into  such  number  of  shares  of  such  par  value  as  shall  be  provided  tor  by  the 
articles  of  association  or  the  by-laws,  and  shall  be  paid  in  at  such  times, 
amounts  and  at  such  places  as  the  by-laws  shall  provide.  Every  share  of 
stock  issued  by  such  association  shall  "be  subject  to  a  lien  for  the  payment 
of  unpaid  instalments,  fines,  taxes  and  other  charges  incurred  thereon  under 
the  provisions  of  the  articles  of  association  and  by-laws,  and  the  by-laws  may 
prescribe  the  form  and  manner  of  enforcing  such  lien.  New  shares  of  stock 
may  be  issued  in  lieu  of  shares  withdrawn  or  forfeited.  The  stock  may  be 
issued  in  one  or  more  successive  series  in  such  of  the  board  of  directors  or 
stockholders  may  determine,  and  any  stockholder  wishing  to  withdraw  the 
amount  paid  in  by  him  to  such  association  shall  have  the  right  to  do  so  by 
giving  thirty  (30)  days  notice  of  his  intention  to  so  withdraw,  when  such 
stockholder  shall  be  entitled  to  receive  the  amount  paid  in.  and  such  proportion 
of  the  profits  as  the  by-laws  may  determine,  less  all  tines  and  other  charges  ; 
Provided,  that  at  no  time  shall  more  than  one-half  of  the  funds  in  the  treasury 
of  the  association  be  applicable  to  the  demands  of  withdrawing  stockholders 
without  the  consent  of  the  board  of  directors,  and  also  that  no  stockholder 
shall  be  entitled  to  withdraw  whose  stockis  heldas  security  fora  loan.  Upon 
the  death  of  a  stockholder,  his  legal  representatives  shall  be  entitled  to  receive 
the  full  amount  paid  on  his  stock  and  legal  interest  thereon,  after  deducting 
all  charges  against  said  stock.  No  tines  shall  be  charged  to  a  deceased  mem- 
ber's account  from  and  after  his  decease,  unless  the  legal  representatives  of 
such  member  assume  the  future  payments  on  the  stock.  The  authorized  cap- 
ital stock  of  such  association  may  be  increased  by  a  two-thirds  vote  of  the 
board  of  directors,  a  certified  copy  of  a  resolution  of  the  board  ot  directors 
authorizing  such  increase  being  tiled  with  the  secretary  of  state. 

Sec.  6. — The  officers  of  the  association  shall  hold  stated  meetings  at  which 


874  APPENDIX   IV. 

the  moneys  in  the  treasury  shall  be  offered  for  loan  in  open  meeting,  and  the 
stockholders  who  shall  bid  the  highest  premium  for  the  preference  or  priority 
right  of  loan  shall  be  entitled  to  receive  a  loan  equal  to  the  par  value  of  the 
shares  of  stock  held  by  him  ;  Provided,  that  good  and  ample  security  shall  be 
given  by  the  borrower  to  secure  the  repayment  of  the  loan.  In  case  the  bor- 
rower shall  neglect  to  offer  security  that  is  approved  by  the  board  of  directors 
within  such  time  as  the  by-laws  prescribe,  such  member  may  be  charged  with 
one  month's  interest  upon  the  amount  of  the  loan  so  bid  for,  and  a  tine  not  to 
exceed  one  (Si.oo)  dollar  per  share,  together  with  any  expense  incurred,  and 
the  money  shall  be  resold  at  the  next  regular  meeting.  In  case  of  non- 
payment of  any  instalment  of  dues,  interest,  premiums,  fines,  insurance,  taxes 
or  other  sums  due  from  the  borrower  to  the  association  for  the  space  of  six  (6) 
months  after  such  delinquency  occurs,  the  whole  sum  loaned,  together  with 
the  unpaid  premium  bid  therefor,  and  all  interest,  tines,  insurance,  taxes  and 
dues  on  stock  pledged  for  said  loan,  shall  become  due  and  payable  and  may 
be  at  once  collected  for  the  full  period  for  which  the  same  were  contracted  to 
be  paid. 

Sec.  7. — Any  borrower  may  voluntarily  repay  a  loan  at  any  time  by  the  pay- 
ment of  the  principal  sum  borrowed,  together  with  the  interest  to  the  date  of 
such  repayment,  and  such  per  cent,  of  premium  per  annum  as  may  have  been  ' 
bid  for  the  preference  or  priority  right  to  such  loan,  together  with  any  fines 
or  other  charges  that  may  be  due  by  such  borrower  at  the  time  of  the  repay- 
ment, and  in  case  the  amount  of  premium  bid  for  the  priority  right  to  such 
loan  be  deducted  in  advance,  and  the  repayment  thereof  is  made  before  the 
expiration  of  the  eighth  year  after  the  organization  of  the  association,  there 
shall  be  refunded  to  such  borrower  one-eighth  of  the  premium  bid  for  every 
year  of  the  said  eight  years  unexpired,  providing  that  when  the  stock  is  issued 
in  separate  series  the  time  shall  be  computed  from  the  date  of  issuing  the  shares 
of  stock  on  which  the  loan  was  made,  and  when  the  series  of  stock  has  a  less 
period  than  eight  years  to  complete  the  full  payment  thereof,  or  a  longer 
period  than  eight  years  from  the  date  of  said  series  to  complete  the  full  pay- 
ment thereof,  there  shall  be  refunded  only  pro  rata  for  the  unexpired  term  of 
the  series.  But  the  by-laws  of  such  association  may  prescribe  different  terms 
upon  which  loans  may  be  repaid,  and  the  voluntary  repayment  of  loans  can 
only  be  made  in  accordance  with  the  by-laws  of  the  association.  Loans  made 
in  accordance  with  the  provisions  of  this  act  shall  become  due  and  payable 
upon  the  date  of  the  maturity  of  the  stock  of  the  borrowing  member  pledged 
as  collateral  security  to  such  loans,  but  the  payments  made  by  the  borrowing 
meml  i  the  stock  so  pledged  shall  not  be  considered  as  payments  upon 

the  principal  of  the  loan. 

Sec.  8.— Such  associations  may  contract  for  and  collect  from  their  members 
the  premiu  or  bonus  bid  by  their  stockholders  for  preference  or  priority  right 
to  I  ians  in  periodical  instalments,  and  such  premiums  or  bonus  so  paid  in  in- 
stalments shall  not  be  deemed  usurious,  and  shall  be  taken  to  be  a  paymentas 
it  tails  due  in  contradistinction  to  a  premium  offered  and  paid  in  advance. 

SEC.  9 — Such  associations  shall  have  the  right  to  impose  tines  upon  their 
members  fi  ir  the  non-payment  of  dues,  interest,  premiums,  taxes,  insurance  or 
other  sums  which  may  be  due  such  associations  at  the  times  and  in  the  man- 
ner provided  for  the  payment  of  the  same  by  their  by-laws,  which  lines  shall 
on  the  stock  of  such  defaulting  member,  or  upon  any  other  prop- 
:curity  held  by  the  association  and  belonging  to  such  member,  and 
no  fun-,  premium,  bonus  or  premiums  paid  by  members  for  preference  or 
prioi  to  loans,  fines  or  interest  on  such  premiums  shall  be  deemed  a 

i  ol  any  statute  againsl  the  taking  of  usury,  and  they  may  be  enforced 
hall  be  collectible  from  the  members  of  the  association  in  accordance 
wiih  the  provisions  ol  its  by-laws. 

[0       \i  ciation  incorporated  by  or   under  the  provisions  of  this 

incoi    orated  accepting  of  the  provisions  i  >1  the  same, 

after  provided,  is  hereby  authorized  and  empowered  to  purchase  at 

i  ii  other  judicial  sale,  or  at  any  other  sale,  public  or  private,  any 

on  which  such  associations  may  have  or  hold  any  mortgage, 

j        ment,  lien  or  other  incumbrance  or  in  which  said  association  may  nave 

ind  thi   real  i  urchased,  or  any  other  that  such  association 

may  hold,  they  shall  have  power  to   i   I   ey,  lease  or  mortgage  at  pleasure 

i      oever,  and  all  sales  ol    i  eal  estate  heretofoi  e 
mad  m  to  any  person   or  persons,  are  hereby  confirmed 

and  made  valid. 

na     b    'i :r  by-laws  provide  for  the  retirement 

an    time  by  enforcing  withdrawals  of 


GENERAL   LEGISLATION.  875 

same,  provided  that  the  shares  to  be  so  retired  shall  he  determined  by  lot, 
and  that  the  holders  of  the  same  shall  be  paid  the  full  value  of  their  shares  as 
determined  by  the  last  annual  or  semi-annual  distribution  of  protits,  less  all 
fines  and  a  proportionate  part  of  any  unadjusted  loss. 

Sec.  12. — When  eaeh  unpledged  share  of  a  given  series  reaches  its  par 
value,  all  payments  of  dues  thereon  shall  cease,  and  the  holder  thereof  shall 
be  paid  out  of  the  funds  of  the  association  its  par  value  with  such  rate  of 
interest  as  shall  be  determined  by  the  by-laws,  from  the  time  the  board  of 
directors  have  declared  such  shares  to  have  matured  until  the  time  of  payment  ; 
Provided,  That  at  no  time  shall  more  than  one-half  (2)  the  receipts' of  the 
association  be  applicable  to  the  payment  of  matured  shares  without  the 
consent  of  the  board  of  directors.  The  order  of  payment  of  matured  shares 
shall  be  determined  by  the  board  of  directors. 

Sec.  13. — Whenever  any  member  shall  be  six  (6)  months  in  arrears  for  non- 
payment of  dues  upon  unpledged  shares  the  secretary  of  the  association  shall 
give  him  notice  thereof  in  writing,  with  a  statement  of  his  arrearages,  by 
mailing  the  same  to  him  at  the  last  post-office  address  given  by  him  to  the 
association,  and  if  he  shall  not  pay  the  same  at  the  second  regular  monthly 
meeting  thereafter,  the  board  of  directors  may  at  their  option  declare  his 
shares  forfeited,  and  at  the  time  of  such  forfeiture  the  withdrawal  value  thereof 
shall  be  determined  and  stated,  and  the  defaulting  member  shall  be  entitled 
to  withdraw  the  same  without  interest  within  one  (ij  year,  upon  the  same 
conditions  as  shall  be  required  of  withdrawing  shareholders. 

Sec.  14. — Such  association  may  borrow  money  for  the  purpose  of  making 
loans,  paying  withdrawals  or  refunding  existing  indebtedness,  not  exceeding, 
however,  fifty  '50)  per  cent,  of  its  then  accumulated  assets  and  as  security  for 
the  same  its  board  of  directors  may  pledge  or  mortgage  such  portion  of  its 
mortgage  loans  or  other  assets  as  they  may  deem  expedient.  Any  association 
having  a  surplus  in  its  treasury  for  which  there  is  no  demand  for  loans,  with- 
drawing shareholders,  matured  stock  or  other  obligations,  may  loan  the  same 
to  another  similar  association  organized  under  the  provisions  of  this  act,  or 
having  accepted  of  the  same  as  hereinafter  provided,  subject  to  the  provisions 
of  this  section  on  the  part  of  the  borrowing  association.  No  association  shall 
borrow  or  make  loans  authorized  by  this  section  except  by  a  two-thirds  vote 
of  its  board  of  directors,  such  vote  to  be  recorded  by  ayes  and  nays  in  its 
regular  minutes,  and  such  association  at  any  time  when  it  shall  have  a  surplus 
of  money  in  its  treasury  may  make  loans  to  persons  not  members  of  the  asso- 
ciation upon  real  estate  security  on  such  terms  and  at  such  rates  of  interest, 
not  in  excess  of  twelve  (12)  per  cent,  per  annum,  as  its  board  of  directors  may 
determine. 

Sec.  15. — Profits  and  losses  shall  be  distributed  at  least  annually  to  the  shares 
then  outstanding  in  proportion  to  their  holding  value,  as  distinguished  from 
their  withdrawing  value.  At  each  periodical  distribution  of  profits,  the  board 
of  directors  may  reserve  and  carry  as  undistributed  profits,  in  the  nature  of  a 
guaranty  fund  any  sum  from  the  net  profits  that  in  their  discretion  seems 
wise  to  be  applied  upon  any  future  losses  that  may  occur,  which  fund  shall 
not  be  deemed  a  part  of  the  lull  value  of  stock  in  liquidating,  surrendering  or 
withdrawing  shares. 

Sec.  16. — No  transfer  of  shares  shall  be  binding  upon  the  association  until 
the  same  shall  have  been  made  upon  its  books  ;  and  the  transferee  thereof  shall 
take  the  same  charged  with  and  shall  be  responsible  for  all  the  obligations, 
liabilities  and  conditions  attaching  thereto,  or  secured  by  said  stock. 

Sec  17. — Such  association  shall  have  power  to  adopt  by-laws  not  inconsis- 
tent with  the  provisions  of  this  act,  defining  the  duties  of  officers  and  com- 
mittees, times  of  meetings,  mode  of  determining  and  declaring  the  withdrawal 
value  of  shares,  and  regulating  all  othermatters  pertaining  to  their  business. 
Such  associations  may  in  their  original  by-laws  confer  authority  on  their 
board  of  directors  to  make  amendments  thereto. 

Sec.  iN. — Any  person  of  sound  mind  may  become  a  member  of  such  associa- 
tion by  taking  one  or  more  shares  therein,  and  having  his  name  and  post- 
office  address  recorded  upon  the  books  of  the  association  and  whenever  he 
desires  his  postoffice  address  changed  he  shall  give  written  notice  thereof  to 
the  secretary  of  the  association,  and  in  all  matters  requiring  notice  to  be  given 
to  the  members  of  such  associations  it  shall  be  sufficient  to  mail  such  notice 
or  a  copy  thereof,  prepaid,  and  directed  to  the  member  to  be  notified  at  his 
last  furnished  postoffice  address. 

Sec  iq. — The  filing  by  a  member  of  his  application  for  withdrawal  of  stock 
held  by  him  shall  not  sever  his  relation  to  the  association  as  a  stockholder,  but 
such  relation  shall  continue  and  he  shall  be  subject  to  all  the  duties  and 


876  APPENDIX   IV. 

obligations  of  a  stockholder  until  the  final  payment  to  him  by  the  association 
of  the  withdrawal  value  of  his  stock  ;  and  upon  such  payment  his  obligation 
and  liability  as  a  stockholder  shall  cease,  as  to  the  stock  so  withdrawn. 

Sec.  20. — All  mortgages  given  to  associations  formed  under  this  act  for 
loans  made  or  to  be  made,  shall  have  priority  over  liens  upon  the  mortgaged 
premises,  and  upon  the  buildings  and  improvements  on  such  premises,  which 
shall  be  filed  subsequent  to  the  recording  of  such  mortgage  in  the  office  of  the 
register  of  deeds  of  the  county  where  such  premises  are  situated. 

Sec.  21. — Any  association  shall  have  authority  to  consolidate  with  one  or 
mrue  corporations  organized  under  this  act  or  accepting  of  its  provisions, 
upon  such  terms  as  may  be  agreed  upon,  when  such  consolidation  shall  be 
deemed  advisable  by  the  unanimous  vote  of  the  directors  of  each  of  the  asso- 
ciations so  consolidating,  and  to  transfer  to  such  consolidated  corporations  its 
entire  assets,  subject  to  the  vested  rights  of  its  members. 

Sec.  22. — Such  associations  shall  annually  in  January  of  each  year  make  to 
the  secretary  of  state  a  full  report  in  writing  of  their  affairs  and  financial  con- 
dition, setting  forth  in  detail  their  assets  and  liabilities  as  they  appeared  on 
the  thirty-first  (31st)  day  of  December  preceding.  Such  report  shall  be  filed 
not  later  than  the  fifteenth  day  of  January,  and  be  verified  by  an  officer  of  the 
association.  Every  association  s'hall  make  any  further  reports  which  the 
secretary  of  state  shall  require,  and  in  such  form  and  as  to  such  matters  relat- 
ing to  the  condition  and  conduct  of  the  business  of  the  association,  as  the 
secretary  of  state  shall  designate.  And  it  shall  be  the  duty  of  the  public 
examiner  to  examine  at  least  once  in  each  year  the  financial  condition  of  every 
such  association  and  to  make  such  report  of  said  examination  as  he  is  now 
required  to  make  regarding  the  examination  of  banks.  Any  wilful  false 
swearing  in  making  and  verifying  such  reports  by  the  officers  of  such  associa- 
tion shall  be  deemed  a  perjury. 

Sec.  23. — If  any  such  association  shall  fail  to  furnish  to  the  secretary  of  state 
any  report  required  by  this  act,  at  the  time  so  required,  it  shall  forfeit  the  sum 
of  ten  ( 10)  dollars  per  day  for  every  day  such  report  shall  be  wilfully  delayed 
or  withheld.  The  secretary  of  state  may  maintain  action  in  his  name  of  office 
to  recover  such  penalty,  and  the  same  shaJ  be  paid  into  the  treasury  of  the 
state  and  applied  to  the  expenses  of  his  department. 

Sec.  24. — All  associations  organized  under  the  provisions  of  this  act  shall  be 
subject  to  visitation  and  examination  at  all  times  by  the  public  examiner  or 
his  deputies,  upon  the  application  of  three  (3)  or  more  members  of  said  asso- 
ciation.  If  it  shall  appear  to  said  examiner,  from  the  report  of  any  such  asso- 
ciation, or  from  any  examination  by  him,  that  any  such  association  is  violating 
the  provisions  of  this  act,  or  is  conducting  its  business  in  an  unsafe  or  unau- 
thorized manner,  he  shall  by  an  order  under  his  hand  and  seal  addressed  to 
such  association,  direct  the  discontinuance  of  such  illegal  and  unsafe  prac- 
tices ;  and  whenever  any  association  shall  neglect  or  refuse  to  comply  with 
such  order,  or  make  reports  as  required,  he  shall  communicate  such  facts  to 
the  attorney-general,  who  shall  (hereupon  be  authorized  to  institute  such  pro- 
ceeding as  the  nature  of  the  case  may  require. 

Sec.  25. — All  mortgages,  obligations,  undertakings  or  conveyances  of  real 
property  heretofore  given  to,  or  mortgages,  obligations,  undertakings  or  con- 
veyances of  real  property,  given  by,  and  all  contracts  entered  into  with  any 
building  and  loan  association  heretofore  organized  or  doing  business  under 
the  laws  of  the  territory  of  Dakota  or  state  of  South  Dakota  before  the  passage 
ol  Hi:      1  1  as   ociation   having   first  accepted  the   provisions  of  this  act, 

as  hereinafter  provided,  are  hereby  made  and  declared  to  be  good  and  valid 
lo  all  intents  and  purposes,  the  same  as  though  they  had  been  made  to  asso- 
ciation   01  ganized  under  the  provisions  hereof. 

SEC.  26.— No  such  association  shall  ever  issue  any  preferred  or  non-contrib- 
uting stock  except  fully  paid  debenture  and  deposit   stock. 

S ice.  27.   -Any  building  and   loan   association  which   has  made  and  filed  its 

ol  incorporation  under  the  laws  of  the  territory  of  Dakota,  or  state  of 

South  Dakota,  and  received  its  certificate  oi   incorporation  as  by  such  laws 

provided,  and  whose  principal  place  of  business  is  within  the  state  of  South 

ill  be  entitled  to  all  11k-  benefits  ol"  Ibis  act,  and  have  all  the  righl 

powersandpri  this  ad  conferred,  upon  accepting  the  sam3  by  a 

unanimous  vote  oi  its  board  of  directors  al  .1  regular  meeting  thereof,  and 

filing  with  the  sei  retary  oi    tate  the  certificate  oi  iis  president  and  secretary, 

ptance,  and  thereafter  such  association  so  accepting  shall 

been  duly  incorporated  at    and    From  lite  lime  of  the 

certificate  of  incorporation   under  the  laws  of  the  territory  of 

of  South  Da       1    ind  a  certified  copy  oi  such  certificate  of  its 


GENERAL   LEGISLATION.  877 

president  and  secretary  under  the  hand  of  the  secretary  of  state,  shall  be 
prima  facie  evidence  of  such  acceptance. 

Sec.  28. — Any  corporation,  company  or  association  organized  under  the 
laws  of  any  other  state,  territory  or  nation,  and  having  for  its  title.  01  foi  .1 
part  thereof,  the  words  "  building  association,"  "building  and  loan  associa- 
tion," "  savings  association,"  "  homestead  association,"  or  whose  stock  is  |  ay- 
able  by  an  accumulative  fund  in  regular  or  stated  periodical  instalments,  or 
whose  business  is  done  in  a  manner  similar  to  that  authorized  to  be  done  by 
the  laws  of  this  state  relating  to  building  and  loan  assi  ><  iations,  shall  transact 
no  business  of  any  kind  within  this  state  until  it  shall  have  complied  with  the 
requirements  of  this  act. 

Skc.  29. — Every  such  corporation,  company  or  association  shall  before 
transacting  any  business  within  this  state,  make  and  hie  with  the  secretary  of 
state,  a  statement  verified  by  its  president  or  secretary,  showing  the  asi-cts 
and  liabilities  of  such  corporation,  company  or  association,  its  principal  place 
of  business,  the  names  and  addresses  of  its  officers,  with  a  copy  of  its  articles 
of  incorporation,  and  shall  accompany  the  same  with  an  application  lor  per- 
mission to  transact  business  within  this  state,  and  shall  at  the  lime  of  filing 
such  report  and  application  pay  to  the  secretary  of  state  a  fee  of  twenty-five 
($25. 00)  dollars. 

Sec.  30. — Every  corporation,  company  or  association  described  in  Section 
28  of  this  act  and  organized  or  incorporated  without  the  state  of  South 
Dakota,  before  doing  any  business  within  this  state,  shall  by  an  instrument  in 
writing,  duly  executed,  appoint  the  secretary  of  state  the  true  and  lawful 
attorney  of  such  corporation,  company  or  association  upon  whom  all  lawful 
process  in  any  action  or  proceeding  by  any  resident  of  this  state  against  such 
corporation,  company  or  association,  may  be  served  with  the  same  effect  as 
if  such  corporation,  company  or  association  existed  in  this  state  and  had 
been  lawfully  served  with  process  therein.  A  certificate  of  such  appoint- 
ment, duly  certified  and  authenticated,  shall  be  filed  in  the  office  of  the 
secretary  of  state  and  copies  certified  by  him  or  his  deputy  shall  be  deemed 
sufficient  evidence  in  regard  thereto.  Service  in  favor  of  a  resident  of  this 
state  upon  such  attorney  shall  thereafter  be  deemed  a  personal  service  upon 
such  corporation,  company  or  association. 

Sec.  31. — Whenever  lawful  process  against  such  corporation,  company  or 
association  shall  be  served  upon  the  secretary  of  state,  under  the  provisions 
of  this  act,  he  shall  forthwith  forward  a  copy  of  the  process  served  on  him 
by  mail,  prepaid  and  directed  to  the  secretary  of  the  corporation,  company  or 
association,  at  the  last  known  postoffice  address  of  such  corporation,  com- 
pany or  association.  For  each  copy  of  process,  the  secretary  of  state  shall 
collect  the  sum  of  five  ($5.00)  dollars,  which  shall  be  paid  by  the  plaintiff  or 
moving  party  at  the  time  of  such  service,  the  same  to  be  recovered  by  him 
as  a  part  of  his  taxable  disbursements  if  he  succeeds  in  the  suit  or  proceed- 
ing. 

Sec.  32. — No  such  foreign  association  shall  do  business  in  this  state  unless 
it  has  first  mortgage  securities  of  the  bona  fide  value  of  fifty  thousand  ($50,000) 
dollars;  the  ownership  of  which  amount  of  said  securities,  by  such  foreign 
association,  shall  be  authenticated  by  evidence  satisfactory  to  the  secretary 
of  this  state. 

Sec.  33. — When  any  such  corporation,  company  or  association  shall  have 
complied  with  all  the  requirements  of  this  act,  the  said  secretary  shall  issue 
to  such  corporation,  company  or  association  a  certificate  stating  that  it  has 
complied  with  the  same  and  is  entitled  to  do  business  in  the  state  of  South 
Dakota  until  the  thirty-first  day  of  January  of  the  year  succeeding  ;  Pro- 
vided, however,  That  said  secretary  of  state  may  at  any  time  revoke  such 
license  if  it  shall  by  satisfactory  evidence  appear  either  : 

First.  That  any  statement  or  report,  required  or  authorized  by  this  act  to 
be  made  as  a  condition  of  doing  or  continuing  such  business  in  this  state,  is 
untrue,  or 

Second.  That  such  corporation,  company  or  association  is  insolvent  or  the 
security  of  its  shareholders  in  this  state,  by  mismanagement  or  otherwise  is 
rendered  unsafe  or  insecure,  or 

Third.  That  such  corporation,  company  or  association  has  violated  the 
laws  of  this  state  or  failed  to  comply  therewith.  If  such  license  shall  be 
revoked,  as  aforesaid,  on  notice  thereof,  such  association  shall  cease  to  do 
business  in  this  state,  but  such  revocation  shall  not  effect  any  of  the  provisions 
of  this  act  in  regard  to  the  service  of  process. 

Sec  34. — Such  corporation,  company  or  association  shall  annually  make 


878  APPENDIX   IV. 

and  file  with  the  secretary  of  state  on  or  before  the  twentieth  day  of  January 
of  each  year,  a  statement  verified  by  the  oath  of  its  president  or  secretary, 
showing  in  detail  its  assets  and  liabilities  as  they  existed  on  the  thirty-first 
day  of  December  previous  ;  and  shall  accompany  the  same  with  a  fee  of  ten 
($10.03)  dollars,  and  on  receipt  of  such  report,  it  appearing  that  such  corpora- 
tion is  solvent,  the  secretary  of  state  shall  issue  to  said  company,  a  certificate 
authorizing  it  to  do  business  within  this  state  until  the  thirty-first  day  of  Janu- 
ary of  the  succeeding  year. 

Sec.  35. — When  by  the  laws  of  any  other  state,  territory  or  nation,  any 
taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money  or  securities  or  other 
obligations  or  prohibitions  are  imposed  on  building  and  loan  associations  of 
this  state,  doing  business  in  such  other  state,  territory  or  nation,  or  upon  their 
agents  therein,  so  long  as  such  laws  continue  in  force,  the  same  obligations 
and  prohibitions  of  whatever  kind  shall  be  imposed  on  the  corporations  or 
companies  described  in  section  twenty-eight  of  such  other  stale,  territory  or 
nation  doing  business  in  this  state  and  upon  their  agents  here. 

Sec.  36. — Any  agent  or  other  person  who  shall  solicit  subscriptions  to,  or 
sell  or  advertise  to  be  sold  in  this  state,  shares  of  stock  of  any  corporation, 
company  or  any  association  described  in  section  twenty-eight  (28)  of  this  act, 
or  who  shall  receive  money  or  deposits  for  such  corporation,  company  or  asso- 
ciation, unless  such  corporation,  company  or  association  shall  have  fully  com- 
plied with  the  provisions  of  this  act,  and  shall  hold  uncancelled  the  certificate 
of  authority  provided  for  by  this  act,  shall  be  guilty  of  a  misdemeanor  and 
upon  conviction  shall  be  punished  by  a  fine  not  exceeding  one  thousand 
(Si.oooi  dollars  or  imprisonment  in  the  county  jail  not  exceeding  twelve 
months  or  by  both  such  fine  or  imprisonment,  and  shall  be  also  personally 
liable  in  case  of  loss  for  all  subscriptions  obtained  or  moneys  paid  through  his 
solicitations  or  agency. 

Sec.  37. — All  acts  and  parts  of  acts  in  conflict  with  the  provisions  of  this  act 
are  hereby  repealed. 

Sec.  38. — An  emergency  is  hereby  declared  to  exist  and  this  act  shall  be  in 
force  from  and  after  its  passage  and  approval. 

Approved  March  6,  1893. 

TENNESSEE. 
CODE  OF  1884. 

Section  1742. — The  charter  for  a  building  association  shall  be  in  the  follow- 
ing form  : 

"  State  of  Tennessee — Charter  of  Incorporation. 

"  Be  it  known,  that  (here  copy  the  names  of  five  or  more  corporators  above 
the  age  of  twenty-one  years),  are  hereby  constituted  a  body  politic  and  cor- 
porate by  the  name  and  style  of"  (here  insert  the  name  of  the  corporation). 

Sec.  1743. — The  general  powers  of  said  corporation  are  : 

1.  To  sue  and  be  sued  by  the  corporate  name. 

2.  To  have  and  use  a  common  seal,  which  it  may  alter  at  pleasure  ;  if  no 
common  seal,  then  the  signing  of  the  name  of  the  corporation,  by  any  duly 
authorized  officer,  shall  be  legal  and  binding. 

j.  To  purchase  and  hold,  or  receive  by  gift,  in  addition  to  the  personal 
property  owned  by  said  corporation,  any  real  estate  necessary  for  the  trans- 
action of  the  corporate  business,  ami  also  to  purchase  or  accept  any  real 
in  payment,  or  part  payment,  of  any  debt  due  to  the  corporation,  and  sell 
realty  for  corporation  purposes. 

4.  To  establish  bv-laws,  and  make  all  rules  and  regulations  not  inconsistent 
with  the  laws  and  the  constitution,  deemed  expedient  for  the  management  of 
corporate  affairs. 

>  To  appoint  such  subordinate  officers  and  agents,  in  addition  to  the 
president,  secretary  or  treasurer,  as  the  business  of  the  corporation  may  re- 
quire. 

(\  To  designate  the  name  of  the  office,  and  fix  the  compensation  of  the  offi- 

7.  To  borrow  money,  and   issue   notes  or  bonds  upon  the  faith  of  the  cor- 
operty,  and  also  to  execute  a  mortgage  or  mortgages,  as  further  secu- 
I  r.  iimiiI  oi  money  thus  borrowed 

I'll'-  following   provisions  and   restrictions  arc  coupled  with  said   grant  of 
j.  A  failure  to  elect  officers  at  the  proper  time,  does  not  dissolve  the  cor- 


GENERAL   LEGISLATION.  879 

poration,  but  those  in  office  hold  until  the  election  or  appointment  and  qualifi- 
cations of  their  successors. 

2,  The  term  nf  all  officers  may  he  fixed  by  the  by-laws  of  the  corporal  ion  ; 
the  same  not,  however,  to  exceed  two  years. 

3.  The  corporation  may,  by  by-laws,  make  regulations  concerning  the  sub- 
scription for,  or  transfer  of  stock  ;  hx  upon  the  amount  of  capital  to  be  invested 
in  the  enterprise  ;  the  division  of  the  same  into  shares  ;  the  time  required  for 
payment  thereof  by  the  subscribers  for  stock  ;  the  amount  to  be  called  at  any 
onetime;  and  in  case  of  failure  of  any  stockholder  to  pay  the  amount  thus 
subscribed  by  him  at  the  time  and  in  the  amounts  thus  called,  a  right  of  a(  tion 
shall  exist  in  the  corporation  to  sue  said  defaulting  stockholder  for  the  same. 

SEC.  17.14.  — The  funds  of  said  corporation  may  be  loaned  out  to  the  stock- 
holders in  such  manner,  on  such  terms  and  conditions,  and  under  such  reg- 
ulations as  the  said  corporation,  by  its  constitution  and  by-laws  mav  prescribe  ; 
Provided,  the  same  be  secured  by  real  estate,  and  any  funds  of  the  said  cor- 
poration, which  may  remain  after  the  stockholders  have  borrowed  all  they 
desire,  may  be  loaned  out  to  other  persons,  the  same  being  secured  by  a  lien 
on  real  estate. 

Sec.  1745. — The  members  of  said  corporation  shall  have  the  power  to  adopt 
a  constitution,  and  the  constitution  adopted,  the  by-laws  and  regulations  shall 
have  the  force  and  effect  of  a  legal  enactment  on  the  members  of  said  cor- 
poration ;  Provided,  the  same  are  not  in  conflict  with  the  general  laws  of  the 
land. 

Sec.  1746. — The  corporation  shall  have  the  power  to  take  and  hold  all  such 
real  estate  as  may  be  mortgaged  to  it,  or  conveyed  in  trust,  to  secure  any 
debt  due  to  the  corporation  for  loan  of  its  funds  ;  and  the  said  corporation 
shall  have  power  to  purchase  any  such  real  estate  at  any  sale  thereof,  and  the 
same  to  hold,  sell  or  otherwise  dispose  of,  as  the  said  corporation  may  deem 
expedient. 

Sec.  1747. — The  by-laws  may  prescribe  the  amount  of  shares  and  the  time 
of  payment  thereof  by  instalments,  but  the  monthly  call  for  payment  of  said 
instalments  shall  not  exceed  two  dollars  on  each  and  every  share.  Every 
share  of  stock  shall  be  made  liable  for  and  subject  to  a  lien  for  the  satisfaction 
of  any  unpaid  instalments,  and  the  by-laws  may  prescribe  the  mode  and 
manner  of  enforcing  said  lien. 

Sec.  1748. — New  shares  may  be  issued  in  lieu  of  any  shares  withdrawn  or 
forfeited.  The  shares  may  be  issued  in  one  or  successive  series,  in  such 
amounts  as  the  board  of  directors  may  determine,  and  any  stockholder  wish- 
ing to  withdraw,  as  he  or  she  may  have  the  right,  shall  give  thirty  days'  notice 
thereof,  when  said  withdrawing  stockholder  shall  be  entitled  to  receive  the 
amount  paid  in,  and  such  proportion  of  the  profits  as  may  have  accumulated. 

Sec.  1749. — At  no  time  shall  more  than  one-half  the  funds  in  the  treasury 
be  subject  to  the  demands  of  withdrawing  stockholders,  without  the  consent 
of  the  board  of  directors  ;  nor  shall  any  stockholder  be  entitled  to  withdraw, 
whose  shares  are  pledged  to  the  corporation. 

Sec.  1750. — The  personal  representative,  upon  the  death  of  a  stockholder, 
shall  be  entitled  to  receive  the  full  amount  paid  in  by  the  deceased,  and  all 
profits  which  have  been  realized.  If  said  stock  is  pledged  to  the  company,  the 
same  shall  be  redeemed  by  said  personal  representative. 

Sec.  1751. — The  board  of  directors  shall  hold  stated  meetings,  at  which  the 
money  in  the  treasury,  if  over  two  hundred  dollars,  shall  be  offered  for  loan 
in  open  meeting,  at  a  rate  not  in  conflict  with  the  law  of  the  state,  and  the 
stockholder  who  shall  bid  the  highest  premium  for  the  preference  or  priority, 
shall  be  entitled  to  receive  a  loan  of  two  hundred  dollars  for  each  share  held 
by  such  stockholder. 

Sec.  1752. — A  stockholder  may  borrow  such  fractional  part  of  two  hundred 
dollars  as  the  by-laws  may  provide,  and  good  security  shall  be  given  by  the 
borrower  to  secure  the  repayment  of  the  loan.  In  case  the  borrower  shall 
neglect  to  offer  security,  or  shall  offer  security  that  is  not  approved,  the  pro- 
posed borrower  thus  failing  to  give  security,  shall  be  charged  with  one 
month's  interest,  and  the  money  resold  at  the  next  slated  meeting. 

Sec.  1753. — In  case  of  non-payment  of  instalments  or  interest  by  borrowing 
members  for  the  period  of  six  months,  payment  of  principal  and  interest, 
without  deducting  the  premium  paid,  or  interest  thereon,  may  be  enforced  by 
proceeding  on  their  securities,  according  to  the  terms  of  the  contract  under 
which  the  same  were  pledged. 

Sec.  1754. — The  premium  bid  by  borrowing  stockholders  for  the  preference 
or  priority  of  loan  shall  be  paid  before  the  loan  is  consummated,  not  as  a  part 
of  the  loan,  nor  as  interest,  but  as  a  means  of  determining  which  one  of  the 


880  APPENDIX   IV. 

shareholders  shall  receive  the  loan,  whenever  there  are  a  number  of  stock- 
holders who  may  simultaneously  desire  to  effect  a  loan. 

Sec.  1755. — Said  corporation  may  purchase  at  judicial  or  execution  or  trus- 
tee's sale,  any  real  estate,  mortgaged  or  conveyed  to  it  to  secure  a  debt,  and 
said  real  estate  or  any  other  real  estate  the  corporation  may  be  entitled  to 
hold,  the  said  corporation  shall  have  the  power  to  sell,  convey,  lease  or  mort- 
gage at  pleasure. 

Sec.  1756. — Said  corporation  may  determine  by  an  express  provision  of  by- 
laws, that  when  each  share  of  stock  reaches  a  certain  value,  to  be  specified 
thereby,  not  exceeding  two  hundred  dollars,  the  stockholders  shall  be  paid 
such  value  for  each  share  they  respectively  own,  and  that  upon  such  payment 
the  stock  shall  revert  to  the  corporation. 

Sec.  1757. — Married  women  may  hold  stock  in  such  corporation,  free  from 
the  claims  or  debts  of  their  husbands.  Xo  one  person  shall  hold  mure  than 
fifty  shares. 

ACTS  OF  1889— Chapter  267. 

Section  i. — In  addition  to  the  form  of  charter  for  a  building  association 
given  in  said  section  [1742,  Code  of  1884],  the  charter  for  a  building  associa- 
tion may  be  in  the  following  form  : 

Charter  of  Incorporation. 

Be  it  known  that  (here  copy  the  names  of  five  or  more  corporators  above 
the  age  of  twenty-one  years)  are  hereby  constituted  a  body  politic  and  cor- 
porate by  the  name  and  style  of  (here  insert  the  name  of  the  corporation). 

The  general  powers,  etc.,  of  said  corporation  are  (here  set  forth  the  powers, 
etc.,  as  declared  in  section  5  [1746]  of  the  act  to  which  this  is  amendatory): 
The  funds  of  said  corporation  may  be  loaned  out  to  the  stockholders  in  such 
manner,  on  such  terms  and  conditions,  and  under  such  regulations  as  the  said 
corporation,  by  its  constitution  and  by-laws,  may  prescribe  ;  Provided,  the 
same  be  secured  by  real  estate,  and  any  funds  of  the  said  corporation  which 
may  remain  after  the  stockholders  have  borrowed  all  they  desire  may  be 
loaned  out  to  other  persons,  the  same  being  secured  by  a  lien  on  real  estate. 

The  members  of  said  corporation  shall  have  the  power  to  adopt  a  constitu- 
tion, and  the  constitution  adopted,  the  by-laws  and  regulations  shall  have  the 
force  and  effect  of  a  legal  enactment  on  the  members  of  said  corporation  ; 
Provided,  the  same  are  not  in  conflict  with  the  general  laws  of  the  land. 

The  corporation  shall  have  the  power  to  take  and  hold  all  such  real  estate 
as  maybe  mortgaged  to  it,  or  conveyed  in  trust  to  secure  any  debt  due  to  the 
corporation  for  loan  of  its  funds,  and  the  said  corporation  shall  have  the 

Eower  to  purchase  any  such  real  estate  at  any  sale  thereof,  and  the  same  to 
old,  sell,  or  otherwise  dispose  of,  as  the  said  corporation  may  deem  expedient. 
The  by-laws  may  prescribe  the  amount  of  shares  and  the  time  of  payment 
thereof  by  instalments,  but  the  monthly  call  for  payment  of  said  instalments 
shall  not  exceed  two  dollars  on  each  and  every  share.  Every  share  of  stock 
shall  be  liable  for,  and  subject  to  a  lien  for  the  satisfaction  of  any  unpaid 
instalments,  and  the  by-laws  may  prescribe  the  mode  and  manner  of  en- 
forcing said  lien.  New  shares  may  be  issued  in  lieu  of  any  shares  withdrawn 
or  forfeited.  The  shares  may  be  issued  in  one  or  successive  series  in  such 
manner  and  in  such  amounts  as  the  board  of  directors  may  determine,  and 
any  stockholder  wishing  to  withdraw,  as  he  or  she  may  have  the  right,  shall 
give  thirty  days' notice  thereof,  when  said  withdrawing  stockholder  shall  be 
entitled  to  receive  the  amount  paid  in,  and  such  proportion  of  the  1  rotits  as 
has  been  accumulated  ;  Provided,  thai  at  m  1  time  shall  mi  ire  than  one-half  the 
funds  in  tin-  treasury  be  subject  to  the  demands  of  withdrawing  stockholders 
withi  t  of  the  board  of  directi  irs.  Stockholders  who  are  borrow- 
ind  who  desire  to  have  their  mortgages  or  deeds  of  trust  can- 
celled     d  lea         lation  before  their  stock  matures,  may  do  so  on  the 

Jul;  terms,  to  wit :  If  a  loan  is  repaid  within  < me  year   from  (he  date  on 

which  it  i-.  made  the  borrowers  must  pay  the  premiums  for  one  year  and  pay 

to  tin-  association  an  amounl  which.wnen  added  to  the  due--  and  earnings 

will  aggregate  the  sum  actually  borrowed,  together  with 

the  1  0  tne  date  of  repayment  and  all  delinquent  assess- 

[f,  aftet  the  expiration  of  one  year,  a  borrowing  member  desire  to  re] 
hi   loin  1m-  v  ill  only  be  (  om  pel  led  to  pay  premiums  and  interest  up  [to]  the 
lime  ol  repayment,  and  the  cancellation  of  his  mortgage  or  deed  of  trust  will 
be  adju  11  ive    tated, 


GENERAL    LEGISLATION.  881 

The  personal  representatives,  upon  the  death  of  a  stockholder,  shall  be  en- 
titled to  receive  the  full  amount  paid  in  by  the  deceased,  and  any  profits  which 
have  been  realized  ;  Provided,  that  if  said  stock  is  pledged  to  the  company 
the  same  shall  be  redeemed  by  said  personal  representative. 

The  board  of  directors  shall  hold  stated  meetings,  at  which  the  money  in 
the  treasury,  if  over  two  hundred  dollars,  shall  be  offered  for  loan  in  open 
meeting,  at  a  rate  not  in  conflict  with  the  law  of  the  state,  and  the  stock- 
holder who  shall  bid  the  highest  premium  (payable  in  the  regular  weekly  or 
monthly  rates  or  instalments)  for  the  preference  shall  be  entitled  to  receive 
a  loan  of  two  hundred  dollars  for  each  share  held  by  such  stockholder, 
Provided,  that  a  stockholder  may  borrow  such  fractional  part  of  two  hundred 
dollars  as  the  by-laws  may  provide,  and  good  security  shall  be  given  by  the 
borrower  to  secure  the  repayment  of  the  loan. 

In  case  the  borrower  shall  neglect  to  offer  security,  or  shall  offer  security 
that  is  not  approved,  the  proposed  borrower  thus  failing  to  give  security  shall 
be  charged  with  one  month's  interest,  and  the  money  resold  at  the  next  stated 
meeting. 

In  case  of  non-payment  of  instalments  or  interest  by  borrowing  members 
for  the  period  of  six  months,  payment  of  principal  and  interest,  without  de- 
ducting the  premium  paid,  or  interest  thereon,  may  be  enforced  by  proceed- 
ing on  their  securities,  according  to  the  terms  of  the  contract  under  which  the 
same  are  pledged. 

The  premium  bid  by  borrowing  stockholders  for  the  preference  or  priority 
of  loan  may  be  paid  in  regular  weekly  or  monthly  instalments,  not  as  a  part 
of  the  loan,  not  as  interest,  but  as  a  means  of  determining  which  one  of  the 
shareholders  shall  receive  the  loan,  whenever  there  are  a  number  of  stock- 
holders who  may  simultaneously  desire  to  effect  a  loan.  Said  corporation 
may  purchase  at  judicial,  or  execution,  or  trustee's  sale,  any  real  estate  mort- 
gaged or  conveyed  to  it  to  secure  a  debt,  and  said  real  es'tate,  or  any  other 
real  estate,  the  corporation  may  be  entitled  to  hold,  the  said  corporation  shall 
have  the  power  to  sell,  convey,  lease,  or  mortgage  at  pleasure.  Said  corpora- 
tion may  determine  by  an  express  provision  of  by-laws  that  when  each  share  of 
stock  reaches  a  certain  value,  to  be  specified  thereby,  not  exceeding  two 
hundred  dollars,  the  stockholders  shall  be  paid  such  value  for  each  share  thev 
respectively  own,  and  that  upon  such  payment  the  stock  shall  revert  to  the 
corporation. 

Married  women  may  hold  stock  in  said  corporation  free  from  the  claims  or 
debts  of  their  husbands.     No  one  person  shall  hold  more  than  fifty  shares. 

Sec.  2. — Building  associations  operating  under  any  other  form  of  charter 
may  be  permitted  to  be  operated  in  accordance  with  the  terms  of  the  fore- 
going charter  after  the  adoption  by  a  vote  of  the  stockholders  owning  two- 
thirds  of  the  stock  of  a  resolution  to  that  effect,  and  the  procuring  of  a  new 
charter  containing  the  provisions  above  set  forth.  Such  stockholders  as  do  not 
favor  the  change  may  be  permitted  to  withdraw  on  the  terms  set  forth  in  the 
act  to  which  this  is  amendatory,  for  settlements  between  the  corporation  and 
the  personal  representatives  of  deceased  stockholders. 

ACTS  1895,  p. 

Sec.  2  Cas  Amended,  Acts  1897,  p.  298).— The  name  of  "  Building  and  Loan 
Association  "  used  in  this  act  shall  include  all  corporations,  societies,  organi- 
zations or  associations  doing  business  in  this  state  under  a  building  and  loan 
charter,  or  engaged  in  a  building  and  loan  business,  or  engaged  in  seeking 
investments  from  citizens  of  the  state  by  selling  forms  of  stock,  debentures, 
certificates,  etc.,  on  plans  similar  to  building  and  loan  associations,  but  which 
need  not  necessarily  be  mutual. 

Sec.  3  (as  Amended,  Acts  1897,  p.  298).— On  or  before  the  first  day  of 
August  in  each  year,  every  building  and  loan  association  doing  business  in 
this  state  and  governed  by  this  act,  shall  file  with  the  treasurer  of  the  state  a 
detailed  report  of  its  affairs  and  operations  for  the  vear  ending  the  30th  of 
June  immediately  preceding,  and  such  report  shall  be  verified  under  oath  by 
the  president  and  secretary,  or  by  three  directors  of  the  association,  and  such 
report  shall  show  in  detail  the  assets,  liabilities,  income  and  expenditures  of 
the  association,  and  such  other  matters  of  information  as  the  treasurer  of  the 
state  may  deem  it  necessary  to  require,  and  shall  also  file  copies  of  its  by-laws 
and  published  literature,  which  shall  be  free  from  ambiguity  and  not  mislead- 
ing in  its  nature. 

Sec.  4. — Each  association  shall  pay  to  the  treasurer  of  the  state  ten  ($10)  on 
filing  of  such  report.   If  any  association  shall  wilfully  fail  to  furnish  to  the  treas- 


882  APPENDIX  IV. 

urer  of  the  state  any  report  required  by  this  act,  at  the  time  so  required,  it 
shall  in  the  discretion  of  the  state  treasurer,  forfeit  the  sum  of  twenty-five 
(§25)  dollars  per  day  for  every  day  such  report  shall  be  delayed  or  withheld  ; 
and  the  treasurer  of  the  state  may  maintain  action  in  his  name  of  office  to  re- 
cover such  penalty,  and  the  same  shall  be  paid  into  the  treasury  of  the  state 
for  the  benefit  of  the  state. 

Sec.  5. — That  it  shall  be  the  duty  of  the  state  treasurer,  once  in  each  year, 
or  as  often  as  he  may  deem  necessary,  at  such  times  as  he  may  select,  to  ex- 
amine the  books  and  verify  the  statement  of  each  association  governed  by 
this  act  doing  business  under  the  laws  of  this  state.  And  he  shall  make  an 
annual  report  to  the  governor,  which  shall  be  printed  as  other  reports  of  the 
treasurer,  giving  a  summary  of  the  reports  of  all  associations  governed  by 
this  act.  The  treasurer  or  examiners  appointed  by  him  shall  have  access  to, 
and  may  compel  the  production  of  all  books,  papers,  securities  and  moneys  of 
the  association  under  examination.  They  shall  have  power  to  administer 
oaths  and  examine  under  oath  the  officers  and  agents  of  such  association  as 
to  its  affairs.  And  whenever  it  shall  appear  to  the  treasurer  that  any  such 
association  is  impaired,  he  shall  instruct  the  secretary  to  call  a  meeting  of  its 
stockholders  and  lay  before  them  the  result  of  his  investigation.  After  pass- 
ing upon  the  report  of  the  treasurer,  the  stockholders  may  continue  business, 
if  they  so  decide,  but  in  that  event  there  shall  be  no  money  paid  to  withdraw- 
ing stockholders,  nor  will  die  association  be  allowed  to  issue  stock  except  a 
sufficient  amount  to  loan  the  money  as  it  accumulates,  until  said  impairment  is 
made  good.  And  if  it  appears  to  the  treasurer  that  the  association  is  not  con- 
ducting its  business  in  accordance  with  its  charter  and  by-laws,  is  being  mis- 
managed or  that  its  funds  have  been  misapplied,  he  shall  take  the  same 
course  as  above  ;  but  in  case  the  stockholders  decide  to  continue  business, 
the  association  shall  be  given  sixty  days  to  correct  its  irregularities.  And  in 
case  the  said  association  fails  to  correct  such  irregularities  in  the  conduct  of 
its  affairs,  and  to  comply  with  the  instructions  of  the  state  treasurer  in  this  re- 
gard, the  said  treasurer  may,  upon  the  advice  of  the  attorney  general,  take  such 
legal  proceedings  in  the  name  of  the  state  for  the  benefit  of  all  parties  in  in- 
terest as  may  be  needful  to  wind  up  its  affairs  ;  and  the  court  may,  in  its  dis- 
cretion, appoint  a  receiver  to  take  charge  of  its  assets.  In  case  of  such  pro- 
ceedings, the  said  association  shall  pay  all  costs. 

The  expenses  and  attorney  general's  fees  for  services  shall  be  allowed  and 
paid  out  of  the  assets  of  the  defaulting  compam'.  [The  following  was  added 
in  1897,  acts  1897,  p.  298.]  In  case  any  stockholder  or  stockholders  in  any 
association  governed  by  this  act,  shall  believe  or  have  cause  to  believe  that 
said  association  is  insolvent  or  is  conducting  its  business  contrary  to  law.  its 
charter  and  by-laws,  he  or  they  shall  file  with  the  state  treasurer  a  petition 
stating  the  facts  as  may  be  within  his  knowledge  touching  the  insolvency  or 
improper  and  unlawful  conduct  of  said  association,  and  asking  for  an  examin- 
ation by  said  treasurer  of  the  affairs  of  said  association,  and  such  stockholder 
or  stockholders  shall  not  begin  any  suit  or  proceedings  in  any  court  against 
such  association  for  the  purpose  of  winding  up  the  affairs  of  said  association 
or  the  appointment  of  a  receiver,  until  he  or  they  shall  have  filed  said  petition, 
and  the  treasurer  shall  have  had  a  reasonable  time  to  investigate  the  books 
and  affairs  of  said  association  and  make  a  report  thereon  ;  Provided,  that  the 
treasurer  shall  nut  be  required  to  make  such  an  examination  asked  until  said 
shareholder  or  shareholders  shall  have  first  filed  with  said  treasurer  a  bond 
to  be  approved  by  him,  conditioned  that  if  such  examination  shall  disclose 
that  such  association  is  solvent,  and  is  not  conducting  its  business  contrary  to 
law,  its  charter  and  by-laws,  that  such  shareholder  or  shareholders  will  pay 
CO  1  and  expenses  of  such  examination,  and  when  such  bond  has  been  filed 
by  said  shareholder  or  shareholders,  the  said  treasurer  shall  cause  an  exami- 
nation of  the  books,  assets,  and  affairs  of  said  association  complained  of  to  be 

L  In  case  such  examination  shall  disclose  that  said  association  is  in- 
solvent, or  that  its  affairs  are  conducted  in  violation  of  the  law,  or  its  charter 
and  by-laws,  the  state  trea  urer  shall  proceed  as  hereinbefore  directed  in  this 
section. 

SEC.  o. — All  officers  of  any  building  and  loan  association  governed  by 
this  .1'  :,  and  doing  busine     in  thi     itate,  who  handle  any  of  the  funds  of  such 

■11,  shall   give   sufficient    bond   tor    the    faithful    performance    of   his 

a    the  board  of  directors  may  require  ;  and  no  such  officer  shall 

1"-  deemed  qualified  to  enter  upon  thi  dutie    oi  his  office  until  his  bond  is  ap- 

th(   board  oi  directoi  ,  and  with  whom  such  bond  shall  be  tiled  ; 

Pt     Wed,  that  the  state  trea  urei  tnaj  require  oi  any  association,  at  any  time, 

icreasi  of  said  bond  or  additional  securities  thereto,  or  such  increase  of 


GENERAL   LEGISLATION.  883 

said  insurance  as  he  may  deem  necessary  for  the  protection  of  members. 
The  penalty  for  a  failure  of  any  association  to  file  and  maintain  the  bonds  or 
policy,  as  required  by  the  provisions  of  this  section,  shall  be  a  fine  of  one 
hundred  i$ too)  dollars  for  each  day  such  association  transacts  business  after 
such  bond  has  become  due  under  the  provisions  of  this  act  ;  said  bond  or 
policy  shall  be  held  in  trust  for  the  benefit  and  protection  of  the  members  of 
such  association,  and  shall  be  enforcible  by  any  member  whenever  cause  of 
action  shall  accrue.  The  fine  herein  provided  for  shall  be  recovered  from 
the  directors  of  such  association. 

Sec.  7. — All  building  and  loan  associations  hereafter  organized  under  the 
laws  of  this  state,  shall  confine  their  business  to  the  county  in  which  the 
main  or  principal  office  is  located,  until  such  association  has  accumulated 
twenty-five  thousand  ($25,000)  dollars  in  building  and  loan  or  other  securities  ; 
and  such  associations  shall,  before  doing  any  business  in  any  other  county  in 
this  state,  obtain  from  the  state  treasurer  a  certificate  showing  that  it  has  the 
amount  of  assets  required  by  this  section. 

Sec.  8. — Non-resident  building  and  loan  associations  having  not  less  than 
one  hundred  thousand  ($100,060)  dollars  in  assets  shall,  before  doing  any 
business  in  this  state,  obtain  a  license  from  the  state  treasurer  by  complying 
with  the  following  : 

First.  Such  association  shall  file  with  the  state  treasurer  a  certified  copy 
of  its  charter,  articles  of  incorporation  and  by-laws,  showing  its  mode  of 
business. 

Second.  File  a  detailed  report  of  its  actual  financial  condition  as  provided 
for  in  section  3  of  this  act. 

Third.  File  a  written  instrument,  properly  executed  under  the  seal  of  the 
association,  appointing  the  state  treasurer  its  agent  upon  whom  service  of 
process  may  be  had,  stipulating  and  agreeing  that  any  legal  process,  mesne 
or  final,  affecting  such  association  may  issue  against  it  from  any  county  in  the 
state  ;  and  when  served  upon  the  state  treasurer,  in  duplicate,  shall  have  the 
same  effect  as  personal  service  on  said  association.  The  state  treasurer  shall, 
however,  mail  a  copv  of  any  papers  served  upon  him,  postage  prepaid,  to  the 
home  office  of  such  association. 

Fourth.  Pay  the  state  treasurer  twenty-five  ($25)  dollars  as  fees  for  filing 
the  papers  mentioned  in  this  section.  For  each  license  and  renewal  thereof, 
the  sum  of  ten  ($10)  dollars. 

Sec.  q. — It  shall  be  the  duty  of  the  state  treasurer  to  examine  the  reports  and 
papers  of  any  such  association  applying  for  license  to  do  business,  and  if  he 
becomes  satisfied  that  the  applicant  is  solvent  and  is  being  lawfully  conducted, 
he  shall  issue  such  association  a  license  for  a  period  of  one  year,  and  renew 
the  same  from  time  to  time.  The  state  treasurer  shall,  whenever  he  may 
deem  it  necessary,  examine  into  the  affairs  of  any  foreign  association  doing 
business  in  this  state,  and  should  he  find,  on  examination,  that  such  associa- 
tion is  not  conducting  its  business  in  accordance  with  the  law,  or  that  the 
affairs  are  in  an  unsound  condition,  or  if  such  association  refuses  to  permit 
examination  to  be  made,  or  to  pay  the  examination  fee,  he  may  cancel  the 
authority  of  such  association  to  do  business  in  this  state,  and  cause  a  notice 
thereof  to  be  sent  to  the  home  office  of  the  association,  and  to  be  published  in 
at  least  one  daily  newspaper  of  this  state  once  a  week  for  four  consecutive 
weeks.  After  publication  of  such  notice,  it  shall  be  unlawful  for  any  agent  of 
said  association  to  receive  any  further  stock  deposit  from  members  residing 
in  this  state,  except  payments  on  stock  on  which  a  loan  has  been  made. 

Sec.  10. — Be  it  further  enacted,  That  no  officer,  director  or  agent  of  any 
foreign  building  and  loan  association  shall,  in  this  state,  solicit  subscriptions 
to  the  stock  of  such  association,  or  sell,  or  knowingly  cause  to  be  sold  or 
issued  to  a  resident  of  this  state,  any  stock  of  an  association  while  said  asso- 
ciation is  not  duly  licensed  as  herein  provided.  License  to  agents  of  such 
companies  or  associations  shall  be  issued  bv  the  treasurer  annually,  on  the 
first  of  January,  and  said  treasurer  is  authorized  to  collect  from  said  associa- 
tion a  license  fee  of  five  ($5)  dollars  for  each  travelling  agent.  Any  violation 
hereof  shall  be  deemed  a  misdemeanor,  and  upon  conviction  shall  be  punished 
by  a  fine  of  not  less  than  ten  ($10)  dollars  nor  more  than  fifty  $50  dollars  ; 
Provided,  that  the  license  issued  by  the  state  treasurer  to  such  associations  as 
comply  with  this  act,  by  filing  the  certified  copy  of  charter,  by-laws,  annual 
reports  and  certificate  making  the  state  treasurer  their  agent  for  the  service 
of  process,  as  herein  required,  shall  give  full  and  complete  authority  and 
power  to  enter  into  contracts  in  this  state,  and  no  other  requirements  shall  be 
made  except  as  provided  in  this  act. 

Sec.  11. — Be  itfurther  enacted,  That  the  treasurer  of  the  state  is  hereby  au- 


884  APPENDIX   IV. 

thorized  and  empowered  to  employ  agents  or  experts  to  examine  said  asso- 
ciations who  shall  be  subject  to  removal  at  any  time  by  the  state  treasurer. 
The  examiner  shall  receive  from  the  associations  for  the  purpose  of  meeting 
his  expenses  and  compensation,  annual  fees  as  follows  ;  Provided,  non- 
resident associations  shall  not  be  required  to  pay  such  annual  fees  except 
when  their  affairs  are  actually  examined  during  the  year,  to  wit : 

Associations  with  assets  of  not  exceeding  $25,000 25  00 

Associations  with  assets  of  more  than  $25,000  and  not  exceeding  $100,000.  50  00 
For  each  additional  $100,000  of    assets,  or  major  part  thereof,  up  to 

31,000,000 10  00 

For  each  additional   §100,000  of   assets,   or  major   part  thereof,  over 

$1,000,000 5  00 

Sec.  12. — Be  it  further  enacted,  That  any  and  all  parties  violating  any  of  the 
requirements  of  this  Act,  are  hereby  declared  guilty  of  a  misdemeanor,  and 
shall  be  subject  to  a  fine  of  twenty-five  ($25)  dollars  per  day  for  each  day's 
violation  thereof,  and  the  treasurer  of  the  state  may  maintain  action  in  his  name 
for  the  recovery  of  said  fine. 

Sec.  13. — Be  it  further  enacted,  That  when,  by  the  laws  of  any  other  state, 
territory  or  nation,  any  taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money, 
securities  or  other  obligations  or  prohibitions  are  imposed  on  building  and 
loan  associations  of  this  state  doing  business  in  such  other  state,  territory  or 
nation,  or  upon  their  agents  therein,  so  long  as  such  laws  continue  in  force, 
the  same  obligations  or  prohibitions  of  whatever  kind  shall  be  imposed  upon 
all  building  and  loan  associations  of  such  other  state,  territory  or  nation, 
doing  business  in  this  state,  and  upon  their  agents  here. 

Sec.  14. — Be  it  further  enacted.  That  all  non-resident  associations  that  have 
heretofore  complied  with  the  acts  hereby  repealed  shall  have  ninety  days 
from  and  after  the  passage  of  this  act  to  comply  with  the  provisions  of  same  ; 
Provided;  the  state  treasurer  may  in  his  discretion  extend  the  time,  not  to 
exceed  six  months,  as  to  any  particular  association. 

Chapter  95. 

Section  1.  *  *  *  sections  1092  to  2003  [general  provisions  relating  to 
foreign  corporations]  of  Milliken  and  Vertrees'  compilation  of  the  laws  of 
Tennessee,  be  so  amended  as  to  apply  to  corporations  chartered  under  the 
laws  of  other  states  known  as  "  building  and  loan  associations,"    *    *     * 

ACTS  OF  1893— Chapter  12. 

Section,  I. — Building  and  loan  associations  authorized  and  permitted  to  be 
incorporated  under  the  provisions  of  chapter  142  of  the  acts  of  1875  [sections 
1742  to  1757,  inclusive.  Code  of  1884],  and  chapter  267  of  the  acts  of  1889,  may 
be  invested  with  the  following  powers,  and  subject  to  the  following  duties  and 
restrictions,  viz. :  Said  association  may  issue  stock  in  different  series,  provided 
the  par  value  of  the  shares  shall  not  exceed  two  hundred  dollars,  and  provided 
no  person  shall  own  more  than  one  hundred  shares  of  stock  of  the  par  value 
of  two  hundred  dollars.  .Said  association  may  issue  instalment  stock,  to  be  paid 
for  in  periodical  sums,  and  prepaid  and  paid-up  stock,  upon  which  a  gross  sum 
shall  be  paid  in  advance  in  cash,  as  may  be  prescribed  by  the  by-laws,  and 
;  dividends  may  be  paid  on  the  said  stock,  authorized  to  be  issued,  out  of 
the  net  earnings,  as  the  by-laws  may  prescribe,  provided  such  dividends  shall 
not  exceed  the  per  cent  of  profits  earned.  Every  share  of  stock  shall  be  liable 
for  and  subjeel  to  a  lien  for  the  satisfaction  of  any  unpaid  instalments  and 
other  proper  charges,  such  as  lines,  premiums  and  interest  on  loans.  Any 
ho  lock  is  not  pledged  for  a  loan,  shall  be  entitled  to  with- 
draw ich  conditions  as  may  lie  prescribed  in  the  by-laws,  upon  thirty 
.vi  itten  notice.  The  hoard  of  directors  shall  have  the  (lower  to  loan  the 
fund  ol  the  ,1  ociation  to  its  stockholders,  either  in  open  meeting  or  by 
a<  lion  on  written  application  and  bids  at  a  rale  of  interest  not  in  conflict  with 
the  laws  ol  tin-  stale,  and  the  premium  may  be  payable  in  instalments  or 
othei  wi  ic  The  board  ol  directors  shall  have  the  right,  for  sufficient  reason, 
to  reject  any  bid  or  application,  but  such  action  shall  not  be  arbitrary  The 
board  of  di  I  ill  ha  1  the  power,  should  they  elect  to  do  so,  to  establish 
01  maintain  bj  ..1  agents  branch  offices  for  the  conduct  of  its 
il  .1  many  1  lai  es  a  may  be  desired. 
tin  .i'  t  hall  not  apply  to  any  existing  building  or  loan  association 
<•!  a    01  iation  1  organized  under  1  hapter  142,  acts  of  1875  [sections  1742  to  1757, 


GENERAL   LEGISLATION.  885 

inclusive,  Code  of  1884],  or  chapter  267,  acts  of  1889;  Provided,  however,  that 
any  association  heretofore  incorporated  and  organized  under  chapter  142  of 
the  acts  of  1875  [sections  1742  to  1757,  inclusive,  Code  of  1884],  or  chapter  267 
of  the  acts  of  1889,  may  avail  themselves  of  the  benefits  of  this  act,  and  obtain 
the  powers  herein  granted  in  the  manner  and  form  prescribed  in  section  [9 
of  chapter  163  of  the  acts  of  1883,  brought  into  Milhken  &  Vertrees'  compila- 
tion of  the  laws  of  Tennessee  by  section  1695  [providing  for  amendments  and 
change  of  name]. 

TEXAS. 

The  laws  of  this  state  contain  no  general  legislation  relating  especially  to 
building  and  loan  associations. 

UTAH. 

REVISED  STATUTES,  1898. 

Title  ii. — Corporations. 

General  Incorporation.— Chapter  I. 

Section  314. — Private  corporations  may  be  formed  in  the  manner  pre- 
scribed in  this  title,  for  any  purpose  for  which  individuals  may  lawfully 
associate.  The  number  of  incorporators  shall  not  be  less  than  live,  at  least 
one  of  whom  must  be  a  resident  of  this  state.     [C.  L.  §  2267*  ;  '96,  p.  29c;*.] 

Sec.  315. — The  incorporators  shall  enter  into  an  agreement  in  writing, 
signed  by  each  of  them  and  by  at  least  three  of  their  number  acknowledged 
before  the  county  clerk  or  any  notary  public  of  the  county  in  which  they  have 
established,  or  intend  to  establish,  their  principal  place  of  business,  stating  : 

1.  The  name  of  the  corporation. 

2.  The  precinct  or  city  where  it  is  organized. 

3.  The  names  of  the  incorporators  and  their  places  of  residence. 

4.  The  time  of  its  duration,  which  shall  not  in  any  case  be  less  than  three 
nor  more  than  fifty  years. 

5.  The  pursuit  or  business  agreed  upon,  specifying  it  in  general  terms. 

6.  The  place  of  its  general  business. 

7.  The  amount  of  stock  each  party  has  subscribed. 

8.  The  amount  of  each  share,  and  the  limit  of  capital  stock  agreed  upon. 

9.  The  number  and  kind  of  officers,  their  qualifications  and  term  of  office, 
and  the  time  and  manner  of  their  election,  removal,  and  resignation,  with 
the  names  of  the  officers  to  serve  until  the  first  general  election  ;  Provided, 
that  in  no  case  shall  the  number  of  directors  be  less  than  three  nor  more  than 
twenty-five. 

10.  How  many  of  the  entire  board  of  directors  shall  be  necessary  to  form  a 
quorum  and  be  authorized  to  transact  the  business  and  exercise  the  corporate 
powers  of  the  corporation  ;  Provided,  that  a  quorum  shall  not  be  less  than 
one-fourth  of  the  entire  number. 

11.  Whether  or  not  the  private  property  of  the  stockholders  shall  be  liable 
for  its  obligations. 

12.  Such  additional  clauses  as  the  incorporators  deem  necessary  for  con- 
ducting the  business  of  the  corporation  and  for  its  future  safety  and  welfare. 
[C.  L.  §§  2268*,  2272*,  2273*  ;  '96,  p.  299*.] 

Sec.  316. — To  the  agreement  prepared  in  accordance  with  the  provisions  of 
the  preceding  section,  there  shall  be  added  the  oath  or  affirmation  of  three 
or  more  of  the  incorporators  taken  before  any  officer  duly  authorized  to 
administer  an  oath,  to  the  effect  that  they  have  commenced,  or  it  is  bona  fide 
their  intention  to  commence  and  carry  on  the  business  mentioned  in  "the 
agreement,  and  that  the  affiants  verily  believe  that  each  party  to  the  agree- 
ment, has  paid  or  is  able  to  and  will  pay  the  amount  of  the  stock  subscribed 
for  by  him  ;  Provided,  that  said  acknowledgment  shall  not  be  made  until  at 
least  ten  per  cent,  of  the  stock  subscribed  by  each  stockholder  and  not  less 
than  ten  per  cent,  of  the  capital  stock  of  the  corporation  has  been  paid  in  ; 
Provided  further,  that  where  subscriptions  to  the  capital  stock  of  any  corpora- 
tion formed  under  the  provisions  of  this  chapter  shall  consist,  in  whole  or  in 
part,  of  property  necessary  to  the  pursuit  agreed  upon,  there  must  appear  in 
the  articles  of  incorporation  a  description  of  the  property  so  taken  with  a 
statement  of  the  fair  cash  value  thereof,  which  statement,  except  in  the  case 
of  corporations  organized  for  mining  or  irrigating  purposes,  shall  be  supple- 
mented by  the  affidavits  of  three  persons,  to  the  effect  that  they  are  acquainted 

57 


886  APPENDIX   IV. 

with  said  property  and  that  it  is  reasonably  worth  the  amount  in  cash  for 
which  it  was  accepted  by  the  corporation  ;  and  the  owners  of  such  property 
shall  be  deemed  to  have  subscribed  such  amount  to  the  capital  stock  of  such 
corporation  as  will  represent  the  fair  estimated  cash  value  of  so  much  of  such 
property,  or  of  such  interest  therein,  as  they  may  have  conveyed  to  such  cor- 
poration by  deed  actually  executed  and  delivered.  [C.  L.  §  2268*  ;  '96,  pp. 
299-300.] 

Sec.  317. — Before  the  first  or  any  other  officer  shall  enter  upon  the  duties- 
of  their  respective  offices,  they  shall  take  and  subscribe  an  oath  of  office,  that 
they  will  discharge  the  duties  of  such  office  to  the  best  of  their  judgment,  and 
that  they  will  not  do  nor  consent  to  the  doing  of  any  matter  or  thing  relating 
to  the  business  of  the  corporation  with  intent  to  defraud  any  stockholder  or 
creditor  or  the  public,  which  oaths  shall  be  filed  in  the  office  of  the  county 
clerk.     [C.  L.  §  2270*  ;  '96,  p.  301*.] 

Sec.  318. — The  agreement,  with  the  oath  or  affirmation,  shall,  within  ten 
days  from  its  due  execution,  be  deposited  with  the  county  clerk  of  the  county 
in  which  the  general  business  is  to  be  carried  on,  and  shall  be  by  him 
recorded  in  a  book  to  be  prepared  for  that  purpose  and  kept  in  his  office. 
[C.  L.  §  2269*  ;  '96,  p.  301*.] 

Sec.  319. — As  soon  as  the  agreement  and  oath  or  affirmation  and  oaths  of 
office  are  filed,  the  county  clerk  shall  issue,  under  his  seal,  a  certificate  to  the 
effect  that  the  agreement  and  oath  or  affirmation  and  oaths  of  office  have 
been  filed  in  his  office,  which  certificate,  together  with  a  copy  of  the  articles 
agreement  and  oath  or  affirmation,  must  be  filed  in  the  office  of  the  secretary 
of  state,  who  shall  issue  under  the  great  seal  of  the  state  a  certificate  that  a 
copy  of  the  articles  of  agreement  and  oath  or  affirmation,  containing  the 
required  statement  of  facts,  has  been  filed  in  his  office,  which  shall  be  suf- 
ficient to  constitute  the  association  a  body  corporate  with  succession  as  speci- 
fied in  the  agreement,  which  certificate,  or  a  certified  copy  of  the  same,  shall 
be  evidence  of  the  due  incorporation  of  the  corporation.  [C.  L.  §  2271*  ;  '96, 
p.  301*.] 

Sec.  320. — It  shall  be  the  duty  of  the  county  clerk  and  of  the  secretary  of 
state,  upon  payment  of  the  lawful  fee  therefor,  to  make  certified  copies  of 
corporation  papers  recorded  or  filed  in  their  respective  offices,  which  copies 
shall  be  prima  facie  evidence  of  the  facts  therein  stated.     [C.  L.  §  2283*;  '96, 

P-  305*-] 

Sec.  321. — Non-use  for  a  period  of  two  years  of  a  franchise  acquired  under 
the  provisions  of  this  title  shall  be  deemed  a  forfeiture  of  the  corporate  rights, 
privileges  and  franchises.     [C.  L.  §  2284*  ;  '96,  p.  305.] 

Powers. 

Section  322. — The  corporation  in  its  name  shall  have  power  to  make  alt 
contracts  necessary  and  proper  to  effect  its  purposes  and  conduct  its  author- 
ized business,  to  sue  and  be  sued,  to  have  a  seal,  which  it  may  alter  at  pleas- 
ure, to  buy,  use  and  sell,  or  dispose  of  personal  property,  to  buy,  use,  sell  or 
dispose  of  all  such  real  estate  as  may  be  necessary  for  its  general   business, 
and  Mich  as  shall  be  necessary  for  the  collection  of  its  debts,  or  judgments,  or 
decrees  in  its   favor,  and  to  disburse  out  of  profits  actually  earned  and  on 
hand  such  dividends  from  time  to  time  as  the  directors   may  deem  prudent. 
Il  may  make  all  such  by-laws,  rules    and  regulations,  not  inconsistent  with 
law  or  with  other  corporate  rights  and  vested  privileges,  as  may  be  necessary 
lo  carry  into  effect  the  object  of  the  association  ;  and  such  by-laws,  rules 
and  regulations  may  be  made  in  a  general   meeting  of  the  stockholders,  or 
board  "I  directors  subject  to  the  approval  of  the  stockholders.     [C.  L. 
.  2516"  ;   '</>.  p.  302*. 
.  323. — If  the  franchise  of  any  corporation  organized  under  this  chapter 
shall  expire  by  limitation  or  by  forfeiture,  the  corporation  may  nevertheless 
continue  for  the  purpose  of  winding  up  its  affairs.     [C.  L.  §§  2275*,  2287  ;  '96, 
■'  ■/  ■  I 

Ol'KICERS — DUTIES   AND   REMOVAL. 

The  corporate  powers  of  the  corporation  shall  be  exercised 

■    board  ol  direi  toi  ,  who  snail  be  stockholders  in  the  company,  and  at 

lea  t  one-third   ol  whom  shall  be  residents  of  this  state.    The  number  of 

director  named  in  the  agreement  of  incorporation  as  being  sufficient  to  form 

a  quorum  for  the  transaction  of  business  shall  constitute  a  board,  and  every 

.1   majority  oi  the  board  so  formed  shall  be  valid  as  a  corporate 

[  C.  L.  §  2272*  ;  '</>,  pp,  302.*] 


GENERAL   LEGISLATION.  887 

Sec.  325. — Officers  after  having  duly  qualified  may  continue  to  exercise  the 
duties  of  their  offices  until  their  successors  shall  be  duly  elected  or  appointed 
and  qualified,  unless  sooner  removed  in  the  manner  prescribed  by  the  articles 
of  incorporation  or  by-laws,  or.in  case  no  provision  be  made  therein  for  such 
removal,  according  to  the  provisions  of  this  chapter.  [C.  L.  §  2277*  ;  '96,  p. 
304*. 

Sec.  326. — If  from  any  cause  the  officers  shall  not  be  elected  at  the  time  pro- 
vided in  the  agreement  or  by-laws,  such  election  may  be  held  at  a  special 
meeting  of  the  stockholders  to  be  duly  called  at  any  time  by  the  directors,  or, 
upon  their  failure  to  call  such  a  meeting  for  a  period  of  three  months  after 
the  regular  time  of  such  election,  at  the  call  of  any  two  stockholders.  [C.  L. 
§  2278*  ;  '96,  p.  304. 

Sec.  327. — A  director  or  other  officer  may  be  removed  from  office  as  pro- 
vided in  the  agreement  or  by-laws,  or,  in  case  there  is  no  such  provision,  then 
by  a  vote  of  two-thirds  of  the  outstanding  capital  stock,  at  a  meeting  held  after 
previous  notice  of  the  time  and  place  and  of  the  intention  to  propose  such 
removal.  Snecial  meeting  of  the  stockholders  for  this  purpose  may  be  called 
by  the  president  or  by  a  majority  of  the  directors,  or  by  stockholders  holding 
at  least  one-half  of  the  shares  of  stock  outstanding.  Such  calls  must  be  in 
writing  and  addressed  to  the  secretary,  who  must  thereupon  give  notice  of 
the  time,  place,  and  object  of  the  meeting,  and  by  whose  order  it  is  called. 
If  the  secretary  refuses  to  give  the  notice,  or  if  there  is  no  secretary,  the  call 
may  be  addressed  directly  to  the  stockholders.  In  case  of  the  removal  of  a 
director  or  other  officer,  the  vacancy  may  be  filled  by  election  at  the  same 
meeting,  or  by  the  board  of  directors,  unless  otherwise  provided  in  the  articles 
or  by-laws.     [C.  L.  §  2285*  ;  '96,  p.  306*. 

Sec.  328. — It  shall  be  the  duty  of  the  corporation  to  keep  true  and  correct 
books  of  its  proceedings  and  business.     [C.  L.  §  2279  ;  '96,  p.  304. 

Sec.  329. — The  books  of  every  corporation  organized  under  the  laws  of  this 
state  must  be  so  kept  as  to  show  the  original  stockholders,  their  interests,  the 
amount  paid  on  their  shares,  and  all  transfers  thereof ;  all  books  of  any  cor- 
poration shall,  at  all  reasonable  hours,  be  subject  to  the  inspection  of  any  bona 
fide  stockholder  of  record. 

Sec.  330. — Stock  shall  be  deemed  personal  property,  and  the  delivery  of  a 
stock  certificate  of  a  corporation,  together  with  a  written  transfer  of  the  same 
signed  by  the  owner,  to  a  bona  fide  purchaser  or  pledgee  for  value,  shall  be 
deemed  a  sufficient  transfer  of  the  title  as  against  any  creditor  of  the  trans- 
ferror and  all  other  persons  whatsoever.  But  no  such  transfer  shall  affect  the 
right  of  the  corporation  to  treat  the  holder  of  record  as  the  holder  in  fact  for 
the  purpose  of  voting  and  of  receiving  dividends  until  such  transfer  is  made 
upon  the  books  of  the  corporation,  or  a  new  certificate  is  issued  to  the  person 
to  whom  it  has  been  transferred.     [C.  L.  §  2280*  ;  '96,  pp.  304-5. 

Sec.  331. — The  property  of  the  corporation  and  the  upaid  stock  shall  be 
liable  for  the  debts  of  the  corporation  ;  but  the  individual  property  of  any 
holder  or  full-paid  capital  stock  of  any  corporation  organized  since  March 
eighth,  eighteen  hundred  and  ninety-four, or  that  hereafter  maybe  organized, 
under  the  laws  of  this  state,  except  as  otherwise  expressly  provided  in  this 
title,  shall  not  be  liable  for  the  corporate  obligations,  nor  shall  assessments  be 
levied  on  such  stock  for  any  purpose  whatever,  except  to  such  extent  and  in 
such  manner  as  may  be  expressly  provided  in  the  articles  of  incorporation. 
[C.  L.  §$  2258*,  2286*,  2393*  ;  '94,  p.  119*,  '96  ;  pp.  299*,  306-7*. 

Sec.  332. — The  stockholders  of  any  corporation  may  regulate  the  mode  of 
making  subscriptions  to  its  capital  stock  and  of  calling  in  the  same  by  by-laws 
or  by  express  contract.     [C.  L.  §  2268*  ;  '96,  p.  300. 

Sec.  333. — The  corporation  shall  have  a  lien  on  the  amount  paid  in  and  the 
dividends  thereon  for  any  balance  due  for  the  stock  of  a  delinquent  stock- 
holder.    [C.  L.  §  2276*  ;  '96,  p.  300. 

Sec.  334. — Unless  required  by  the  agreement  or  by-laws,  no  notice  need  be 
given  of  annual  or  stated  meetings  of  the  stockholders.  Special  meetings 
shall  be  called  and  notice  thereof  given  in  such  manner  as  may  be  prescribed 
in  the  agreement  or  by-laws.  When  not  otherwise  specified  in  the  agree- 
ment or  by-laws,  special  meetings  of  the  stockholders  may  be  called  by  the 
president,  by  any  three  directors,  or  by  any  number  of  stockholders  owning 
not  less  than  one-third  of  the  capital  stock,  and  notice  thereof  shall  be  given 
by  personal  service  of  the  notice  upon  each  stockholder  at  least  five  days- 
before  the  clay  fixed  for  the  meeting,  or  by  advertisement  in  some  newspaper 
published  in  the  state,  having  general  circulation  in  the  county  in  which  the 
principal  place  of  bufiness  of  the  corporation  is  located.  If  publication  be 
made  in  a  daily  newspaper,  the  notice  shall  be  published  in  each  issue  of  the 


APPENDIX   IV. 

paper  for  a  period  of  two  weeks,  and  if  in  a  weekly  newspaper,  for  three  suc- 
cessive issues  next  before  the  day  of  meeting.     [C.  L.  §  2285*  ;  '96,  pp.  305-6. 

Sec.  335. — At  all  meetings  each  shareholder  shall  be  entitled  to  one  vote  for 
each  share  of  stock  which  he  or  she  may  have  in  his  or  her  own  right,  or  held 
by  him  or  her  in  trust  for  others,  and  such  votes  may  be  given  in  person  or 
by  an  authorized  agent,  or  by  proxy.     [C.  L,  §  2285*  ;  '96,  p.  306. 

Sec.  336. — The  articles  of  incorporation  or  by-laws  may  provide  what  pro- 
portion of  the  outstanding  capital  stock  shall  be  represented  at  a  stockholders' 
meeting  as  a  requisite  to  the  holding  of  the  same,  and  for  adjournment  from 
day  to  day  in  the  absence  of  a  sufficient  representation,  and  what  proportion 
of  the  stock  so  represented  shall  be  necessary  to  determine  any  question  or 
election  ;  but  in  the  absence  of  such  provisions,  a  lawful  meeting  may  beheld 
by  the  stock  represented  at  the  meeting,  whatever  its  amount,  and  every  ques- 
tion or  election  thereat  shall  be  decided  by  a  majority  of  the  votes  cast. 

Sec.  337. — Whenever  any  portion  of  the  capital  stock  of  a  corporation  is  held 
bv  the  corporation,  a  majority  of  the  remaining  shares  is  a  majority  of  the 
stock  for  all  purposes  of  election  or  voting  on  any  question  at  a  stockholders' 
meeting.     [C.  L.  §  2389*. 

Sec.  338. — The  articles  of  incorporation  of  any  corporation  now  existing  or 
that  hereafter  may  be  organized  under  the  laws  of  this  state  may  be  amended 
in  any  respect  conformable  to  the  provisions  of  this  chapter  by  a  vote  repre- 
senting at  least  two-thirds  of  the  outstanding  capital  stock  thereof  at  a  stock- 
holders' meeting  called  for  that  purpose,  as  hereinafter  prescribed  ;  Provided, 
that  the  original  purpose  of  the  corporation  shall  not  be  altered,  nor  shall  the 
capital  stock  be  diminished  to  an  amount  less  than  fifty  per  cent,  in  excess 
of  the  indebtedness  of  the  corporation  ;  And  provided  further,  that  the  liability 
of  the  holder  of  full-paid  capital  stock  for  assessments  or  for  the  indebtedness 
of  the  corporation  shall  not  be  changed  without  the  consent  of  all  the  stock- 
holders.    [C.  L.  §  2273*  ;  '94,  p.  119*  ;  '96,  pp.  302-3*. 

Sec.  339. — Notice  of  such  meeting  shall  be  given  by  the  president  or  secre- 
tary of  such  corporation  in  some  newspaper  printed  in  the  English  language 
and  having  a  general  circulation  in  the  county  where  the  corporation  has  its 
principal  place  of  business  in  this  state  for  at  least  twenty-one  days,  stating 
the  nature  of  the  proposed  change  or  amendment  and  the  time  and  place  of 
such  meeting.  Such  change  or  amendment,  when  adopted,  shall  be  signed 
by  the  president  and  secretary  of  such  corporation  and  be  filed  and  recorded 
in  the  manner  provided  for  the  filing  and  recording  of  original  articles.  The 
secretary  of  state  shall  issue  a  certificate  of  amendment,  which  shall  be  evi- 
dence of  the  facts  therein  stated.     [C.  L.  §  2273*  ;  '96,  p.  303*. 

Sec.  340. — Corporations  of  the  same  kind,  engaged  in  the  same  geueral  busi- 
ness in  the  same  vicinity,  existing,  or  that  hereafter  may  be  organized  under 
the  laws  of  this  state,  may  consolidate  upon  such  terms  and  conditions  con- 
formable to  law  as  shall  be  agreed  upon  by  a  vote  representing  at  least  two- 
thirds  of  the  oustanding  capital  stock  of  each  of  said  corporations,  at  a  special 
meeting  of  each  thereof,  upon  notice  stating  the  time,  place,  and  object  of 
such  meeting,  published  for  at  least  thirty  days  prior  thereto  in  a  newspaper 
having  general  circulation  within  the  county  where  such  corporation  has  its 
principal  place  of  business.  Such  consolidation  shall  be  evidenced  bv  a  cer- 
tificate under  the  corporate  seals  of  the  respective  corporations,  signed  by  the 
president  and  secretary  of  each,  briefly  reciting  the  act  or  acts  sought  to  be 
accomplished  and  describing  the  property  sought  to  be  conveyed  or  assigned, 
together  with  the  name  of  the  new  corporation,  with  such  other  provisions  as 
the  law  may  require  to  be  inserted  in  original  articles  of  incorporation,  and 
such  others,  being  conformable  to  law,  as  may  be  deemed  necessary  to  per- 
fect such  consolidation  ;  which  certificate  shall  be  Hied  and  recorded  in  the 
manner  provided  for  the  filing  and  recording  of  original  articles  of  incorpora- 
tion, and  a  copy  thereof,  duly  certified  by  the  county  clerk,  shall  be  filed  in 
the  office  of  die  secretary  of  state,  whose  certificate  shall  constitute  such  con- 
solidated corporations  a  new  corporation.     [C.  L.  §  2273*  ;  '96, p.  303*. 

Sec.  341. — Upon  the  consummation  of  such  consolidation,  all  the  rights, 
privileges,  and  franchises  of  each  of  said  consolidating  corporations,  and  all 
the  property,  real  and  personal, and  all  subscriptions  and  debts  due  on  what- 
ever account,  shall  be  deemed  fo  be  transferred  to  and  vested  in  such  new 
corporation  without  further  act  or  deed;  and  such  consolidation  shall  not 
•  tin-  1  onsolidating  corporations,  or  either  of  them,  or  die  stockholders, 
f  1  0111  any  liabilities,  nor  shall  it  extinguish  or  limit  any  franchise  or  right; 
1  il  .ill  ili-Ms,  liabilities,  and  duties  of  either  of  said  corporations  shall  thenee- 
1  h  atta<  li  to  in  ii  new  corporation,  and  be  enforcible  against  it  to  the  same 
extent  as  if  incurred  or  contracted  by  it. 


GENERAL   LEGISLATION.  889 

BUILDING  AND  LOAN  ASSOCIATIONS.— Chapter  IV. 

Section  392. — Building  and  loan  associations  organized  for  the  purpose  of 
raising  a  fund  by  the  collection  of  dues  or  stated  payments  from  its  members, 
to  be  loaned  among  its  members,  may  be  incorporated  under  the  provisions 
of  chapter  one  of  this  title  respecting  corporations  for  pecuniary  profit;  and 
all  the  rights,  privileges,  and  powers,  and  all  the  duties  and  obligations  of 
such  corporations  and  the  officers  and  stockholders  thereof  shall  be  as  pro- 
vided in  said  chapter,  except  as  in  this  chapter  otherwise  provided.  In  addi- 
tion to  the  other  facts  required  to  be  stated,  the  articles  of  incorporation  of 
such  companies  shall  state  the  terms  and  plan  of  becoming  and  continuing  a 
member,  and  of  withdrawal,  the  plans  of  making  loans,  distributing  profits, 
equalizing  losses,  providing  for  expenses,  and  of  providing  a  fund  with  which 
to  pay  losses,  and  the  maximum  compensation  of  officers.     ['90,  pp.  7-11*.] 

Sec.  393. — The  capital  named  in  the  articles  of  incorporation  shall  be  taken 
to  mean  the  authorized  capital,  and  the  association  may  commence  business 
when  five  per  cent,  thereof  is  subscribed  and  the  other  requirements  of  the 
law  have  been  complied  with. 

Sec  394. — Any  such  corporation  shall  have  power,  subject  to  the  terms  and 
conditions  contained  in  the  articles  of  incorporation  and  by-laws,  to  issue 
stock  to  its  members  ;  to  assess  and  collect  from  its  members  reasonable 
membership  fees,  dues,  premiums,  and  fines  ;  to  permit  its  members  to  with- 
draw any  or  all  of  their  stock  deposits  upon  equitable  terms  ;  to  hold  and 
convey  such  real  and  personal  property  as  shall  be  necessary  for  its  accom- 
modation and  the  transaction  of  its  business,  such  as  shall  be  mortgaged  in 
good  faith  by  way  of  security  for  debts  duly  contracted,  such  as  shall  be  i_<  n- 
veyed  to  it  in  satisfaction  of  debts  previously  contracted  in  the  course  of  its 
dealings,  such  as  it  shall  purchase  at  sales  under  judgments,  decrees  or  mort- 
gages held  by  it,  or  shall  purchase  to  secure  debts  due  to  it  ;  to  make  loans  to 
its  members  upon  ample  real  estate  security,  unincumbered  except  by  prior 
loans  from  the  association,  or  upon  the  stock  of  such  association  to  the  extent 
of  its  withdrawal  value  ;  to  make  annual  or  semi-annual  distributions  of  its 
earnings,  and  to  do  all  other  things  that  may  be  necessary  to  effect  its  purposes 
and  conduct  its  authorized  business. 

Sec  395. — The  treasurer  and  secretary,  before  entering  upon  their  duties, 
shall  give  good  and  sufficient  bonds  for  the  faithful  performance  of  the  same 
and  for  the  safekeeping  and  proper  application  of  all  money  or  property 
coming  into  their  hands,  and  the  same  shall  be  approved  by  the  board  of 
directors.  All  such  bonds  shall  be  increased  or  additional  sureties  required 
by  the  board  of  directors  when  the  same  becomes  necessary  to  protect  the  in- 
terests of  the  association  or  its  members,  but  no  director  shall  be  accepted  as 
a  surety  on  such  bonds,  and  the  directors  shall  be  individually  liable  for  loss 
to  the  association  or  caused  by  their  failure  to  comply  with  the  provisions  of 
this  section.     ['00,  p.  9*.] 

Sec  396. — A  borrower  may  repay  a  loan  at  any  time  upon  duly  complying 
with  the  provisions  of  the  charter  and  by-laws  in  relation  to  the  payment  of 
loans  ;  and  any  stockholder  wishing  to  withdraw  from  the  corporation  shall 
have  power  to  do  so  by  giving  thirty  days'  notice  of  his  intention  to  withdraw, 
when  he  shall  be  entitled  to  receive  the  amount  paid  in  by  him  and  such  in- 
terest thereon,  or  such  proportion  of  the  profits  thereon,  less  all  fines  and 
other  charges,  as  the  by-laws  may  determine  ;  Provided,  that  at  no  time  shall 
more  than  one-half  of  the  funds  of  the  treasury  of  the  corporation  be  appli- 
able  to  the  demands  of  withdrawing  stockholders  without  the  consent  of  the 
board  of  directors,  and  that  no  stockholder  shall  be  entitled  to  withdraw 
whose  stock  is  held  by  the  association  for  security.  Upon  the  death  of  a  stock- 
holder, his  legal  representative  shall  be  entitled  to  receive  the  full  amount 
paid  in  by  him  on  all  shares  not  borrowed  upon  or  pledged  to  the  association 
as  collateral  security  and  legal  interest  thereon  after  deducting  all  charges 
that  may  be  due  on  the  stock  ;  but  no  fines  shall  be  charged  to  a  deceased 
member's  account  from  and  after  his  decease,  unless  the  legal  representative 
of  such  decedent  assume  the  future  payment  of  the  dues.     ['90,  p.  9*.] 

Examination  of  building  and  loan  associations,  ij§  2441-2445. 

Sec.  397. — It  shall  be  unlawful  for  any  building  and  loan  association  not 
organized  under  the  laws  of  this  state,  to  transact  business  herein  unless  the 
company  shall  have  obtained  a  certificate  of  authority  from  the  secretary  of 
state,  and  shall  have  filed  with  the  secretary  of  state  a  certified  copy  of  its 
articles  of  incorporation  or  charter  and  by-laws,  together  with  a  statement 
subscribed  and  sworn  to  by  the  manager  or  by  an  officer  of  the  company, 
showing  : 


890  APPENDIX   IV. 

1.  The  amount  of  authorized  capital,  and  the  par  value  of  each  share. 

2.  The  number  of  shares  sold  during  the  year. 

3.  The  number  of  shares  cancelled  and  withdrawn  during  the  preceding 
year. 

4.  A  statement  of  receipts  and  disbursements  during  the  preceding  year. 

5.  Salaries  paid  each  of  its  officers. 

6.  A  statement  of  its  assets  and  liabilities  at  the  end  of  the  year,  and  the 
nature  thereof  in  general  terms. 

7.  Any  other  fact  which  the  secretary  of  state  may  require. 

Upon  receipt  of  such  statement,  the  secretary  of  state,  if  he  believes  that  the 
association  is  properly  managed,  that  its  financial  condition  is  satisfactory,  and 
that  its  business  is  conducted  upon  a  safe  and  reliable  plan,  shall  issue  a  cer- 
tificate of  authority  to  such  corporation. 

Sec.  398. — On  or  before  the  first  day  of  March  in  each  year,  every  building 
and  loan  association  doing  business  in  this  state,  whether  domestic  or  foreign, 
shall  cause  to  be  filed  in  the  office  of  the  secretary  of  state,  the  statement  re- 
quired in  the  next  preceding  section,  and  shall  cause  a  copy  thereof,  duly  cer- 
tified by  the  secretary  of  state,  to  be  published  at  least  four  times  in  some 
newspaper  published  in  this  state  and  having  a  general  circulation  therein, 
such  publication  to  be  completed  on  or  before  the  first  day  of  May,  and  proof 
thereof  filed  in  the  office  of  the  secretary  of  state. 

Sec.  399.—  If  any  domestic  building  and  loan  association  shall  refuse  to  sub- 
mit to  examination  by  the  bank  examiner,  the  secretary  of  state  shall  advise 
the  attorney  general,  who  shall  proceed  to  wind  up  its  affairs  ;  and  if  any 
foreign  association  refuse,  the  secretary  of  state  shall  revoke  its  certificate  of 
authority. 

Sec.  400. — When,  in  the  opinion  of  the  secretary  of  state,  any  such  corpora- 
tion is  conducting  its  business  illegally,  or  in  violation  of  its  articles  of  incor- 
poration or  by-laws,  or  is  practising  deception  upon  its  members  or  the  public, 
or  is  pursuing  a  plan  that  is  injurious  to  the  interests  of  such  members,  or  if  he 
is  satisfied  that  its  affairs  are  in  an  unsafe  condition,  he  shall  notify  its  direc- 
tors or  managers,  and  if  it  shall  not  immediately  amend  its  course  or  put  its 
affairs  upon  a  safe  basis,  he  shall  in  the  case  of  a  domestic  corporation  ad- 
vise the  attorney  general  thereof,  who  shall  take  the  necessary  steps  to  wind 
up  its  affairs,  and  in  the  case  of  a  foreign  corporation  he  shall  revoke  its  cer- 
tificate of  authority. 

Sec.  401. — Within  sixty  after  the  taking  effect  hereof,  each  building  and 
loan  association  doing  business  in  the  state  shall  file  with  the  secretary  of 
state  the  statement  hereinbefore  required,  and  each  such  foreign  association 
shall  file  a  copy  of  its  articles  and  by-laws  therewith,  and  shall  obtain  its  cer- 
tificate of  authority,  or  on  failure  or  refusal  to  do  so,  shall  forfeit  its  right  to  do 
business. 

Six.  402. — Any  officer  or  agent  of  any  building  and  loan  association  that 
shall  do  or  attempt  to  do  any  business  for  any  such  association  which  does  not 
hold  a  certificate  of  authority  therefor  as  in  this  chapter  provided,  or  which 
shall  fail  or  refuse  to  file  with  the  secretary  of  state  the  annual  statement 
herein  required,  shall  be  deemed  guilty  of  a  "misdemeanor  for  each  and  every 
offence. 

VERMONT. 

LAWS  1896,  p.  64. 

Sf.ctiov.  i.— -No  foreign  or  non-resident  building  and  loan  association  shall  do 
bu  inessin  this  state  until  it  shall  have  complied  with  the  following  provisions 
and  re<  eived  a  license  from  the  inspector  of  finance,  as  provided  in  this  act  : 
First.  It  shall  tile  with  the  inspector  of  finance  a  certified  copy  of  its 
cli.iiicr.  together  with  its  constitution  and  by-laws  showing  its  manner  of 
doing  business. 

Second.     H  shall  appoint  in  writing  the  inspector  or  finance  in  this  state  its 

true  and  lawful  attorney  for  the  service  of  process  upon  it,  and  upon  whom  a 

in  any  action  or  proceeding  against  it  may  be  served  with  the 

1 1  force  and  validity  as  if  served  on  it,  which  authority  shall  continue 

inforceas  long  as  any  liability  remains  outstanding  against  it  in  this  state, 

1  -.iid  poweroi  attorney  snail  bedeposited  in  the  office  of  the  inspector 

of  finance,  and  a  copj  ot  the  same  duly  certified  by  him  shall  be  received  in 

nee  in  all  court;  ot  ihi     tate  ;   and  service  upon  said  attorney  shall  be 

di  emed   uffi<  ienl  service  upon  the  principal. 


GENERAL   LEGISLATION.  891 

Third.  It  shall  file  with  the  inspector  of  finance  on  or  before  the  first  day 
of  February  and  August  in  each  year,  a  statement  of  its  business  standing  and 
financial  condition  on  the  last  day  of  December  and  June  next  preceding 
signed  and  sworn  to  by  its  president  and  secretary,  or  by  three  directors,  be- 
fore a  notary  public,  which  must  show  that  it  possessed  actual  paid  in,  unim- 
paired and  well  invested  assets  of  at  least  three  hundred  thousand  dollars,  and 
a  fully  paid  up  cash  guaranty  fund  of  twenty-five  thousand  dollars. 

Fourth.  It  shall  pay  the  inspector  of  finance,  for  the  purpose  of  paying  the 
expenses  of  filing  papers,  as  heretofore  provided,  and  for  compensation  for 
making  examinations,  annual  fees  as  follows  :  P'or  the  first  hundred  thousand 
dollars  or  less  of  assets,  a  fee  of  fifty  dollars,  and  for  each  additional  hundred 
thousand  dollars  of  assets  or  major  portion  thereof,  an  additional  fee  of  five 
dollars,  but  in  no  event  shall  such  compensation  exceed  one  hundred  dollars 
per  year  ;  and  such  association  shall  also  pay  the  actual  expenses  of  the  in- 
spector of  finance  while  making  such  examination. 

Fifth.  It  shall  deposit  with  the  treasurer  of  this  state  first  mortgage  secu- 
rities, to  be  approved  by  the  inspector  of  finance  to  the  amount  of  twenty-five 
thousand  dollars  ;  and  the  said  deposit  shall  be  held  in  trust  by  the  treasurer 
for  the  protection  and  indemnity  of  the  residents  of  this  state  with  whom 
such  association  or  corporation  have  done  or  may  transact  business.  It  shall 
also  file  with  the  inspector  of  finance,  a  bond  to  the  state  for  such  an  amount 
as  he  may  require,  not  more  than  ten  thousand  dollars  and  not  less  than  five 
hundred  dollars,  with  such  sureties  or  securities  as  he  may  approve,  condi- 
tioned for  the  making  of  all  returns  and  reports  required  by  this  act,  and  the 
payment  of  all  taxes  that  may  be  assessed  against  it,  and  in  all  things  to  com- 
ply with  the  laws  of  this  state. 

Sec.  2. — All  interests,  premiums  and  dues  which  may  accrue  on  mortgages- 
held  by  the  state  treasurer  as  provided  for  herein  may  be  collected  and  re- 
tained by  the  association  depositing  such  mortgages  so  long  as  such  asso- 
ciation remains  solvent  and  faithfully  performs  all  contracts  with  its  members; 
and  when  any  mortgage  shall  have  "been  fully  paid  to  said  corporation  the 
same  may  be  surrendered  to  it,  said  company  or  corporation  first  depositing 
with  the  treasurer  other  first  mortgage  securities  to  the  amount  of  those 
withdrawn,  the  same  having  been  approved  by  the  inspector  of  finance. 

Sec.  3. — It  shall  be  the  duty  of  the  inspector  of  finance  to  receive  and  file  the 
papers  herein  required,  and  thoroughly  to  examine  the  annual  reports  sub- 
mitted by  foreign  or  non-resident  building  and  loan  associations.  If  the  in- 
spector of  finance  becomes  satisfied,  after  an  examination,  that  an  association 
desiring  to  do  business  in  this  state  is  solvent  and  conducts  its  business  ac- 
cording to  law,  he  may  issue  a  license  to  such  association  until  the  first  day  of 
January  following ;  provided,  that  such  association  has  complied  with  the 
provisions  of  this  act  ;  but,  if  it  be  found  insolvent,  or  is  being  illegally  con- 
ducted, the  inspector  of  finance  shall  refuse  to  issue  the  license.  Should  the 
inspector  of  finance  refuse  to  grant  a  license  to  any  association  applying 
therefor  that  has  complied  with  the  provisions  of  this  act,  such  association 
may  appeal  to  the  court  of  chancery  for  the  county  of  Washington,  which 
shall  have  jurisdiction  of  the  premises. 

Sec.  4. — The  inspector  of  finance  by  himself  or  his  deputy  shall  make  an 
annual  examination  of  the  securities,  records,  books,  and  accounts  of  every 
foreign  or  non-resident  building  and  loan  association  doing  business  in  this 
state  and  file  a  report  of  such  examination  in  his  office.  If  it  shall  appear  to 
the  inspector  of  finance  that  any  association  licensed  to  do  business  in  the  stale 
has  violated  its  charter,  or  is  conducting  its  business  in  an  unsafe  or  unauthor- 
ized wav,  he  shall,  by  an  order  under  his  hand,  addressed  to  such  associa- 
tion, direct  a  discontinuance  of  such  legal  and  unsafe  practise  ;  and, 
whenever  it  shall  appear  to  the  inspector  of  finance  that  it  is  unsafe  or  inex- 
pedient for  such  association  to  continue  business  in  this  state,  he  may  suspend 
the  license  theretofore  granted  to  said  association,  and  may  apply  to  the  court 
of  chancery  in  anv  county  of  the  state  for  an  injunction  restraining  such 
association  from  doing  business  in  this  State;  and  such  court  shall  have 
power  according  to  the"~usual  course  of  proceedings  in  equity,  to  grant  or  re- 
fuse to  grant  said  injunction  ;  Provided  such  association  is  given  reasonable 
notice  of  such  proceedings. 

Sec.  5.— When  by  the  laws  of  anv  other  state,  territory  or  nation,  any  taxes, 
fines,  penalties,  licenses,  fees,  deposits  of  money  or  securities  or  obligations  or 
prohibitions  are  imposed  upon  building  and  loan  associations  of  this  state, 
doing  business  in  such  other  state,  territory  or  nation,  or  upon  their  agents 
therein,  so  long  as  such  laws  continue  in  force,  the  same  obligations  and  pro- 
hibitions of  whatever  kind  shall  be  imposed  on  builidng  and  loan  associations 


892  APPENDIX  IV. 

of  such  other  state,  territory  or  nation,  doing  business  in  this  state,  and  upon 
their  agents  here. 

Sec.  6. — All  such  foreign  or  non-resident  associations  doing  business  in  this 
state  at  the  time  of  the  passage  of  this  act  shall  comply  with  its  requirements 
within  sixty  days  from  the  date  when  it  goes  into  effect  ;  but  such  associations 
may  continue  to  do  business  in  this  state  until  the  inspector  of  finance  has 
made  the  examination  provided  for  in  this  act. 

Sec.  7.— All  acts  and  parts  of  acts  inconsistent  with  this  act  are  hereby 
repealed. 

Approved  November  24,  1896. 

ACTS  1894,  p.  9. 

Sec.  585. — The  term  "investment  company,"  as  used  in  this  chapter,  shall 
include  all  building  associations,  companies  or  corporations,  and  all  other 
companies  or  corporations  organized  under  the  laws  of  this  or  any  other  state 
or  territory,  for  the  purpose  of  negotiating  or  placing  loans  secured  upon 
property  without  this  state,  or  that  may  be  engaged  in  selling  choses  in 
action,  or  bonds  secured  by  mortgages  on  property,  or  by  pledges  of  such 
mortgages,  and  which  are  executed  by  individuals  or  issued  by  municipal  or 
other  corporations  without  this  state. 

Sec.  586. — A  person,  investment  company  or  corporation,  obtaining  money 
from  residents  or  corporations  in  this  state,  to  be  loaned  without  the  state,  or 
doing  business  in  this  state  by  selling  debenture  bonds,  mortgages  upon  real 
or  personal  estate,  choses  in  action,  or  securities  of  any  kind  upon  property 
without  this  state,  not  including  bills  of  exchange  having  less  than  twelve 
months  to  run,  shall  annually,  in  the  month  of  July,  make  returns  to  the  com- 
missioner of  state  taxes  of  the  amount  of  money  so  received,  and  the  amount 
of  bonds,  choses  in  action  or  securities  of  any  kind  as  aforesaid,  sold  to  parties 
or  corporations  within  this  state.  Said  returns  shall  be  for  the  period  of  one 
year  preceding  the  last  day  of  June  annually. 

Sec.  587. — A  tax  of  one  per  cent,  upon  the  aggregate  amount  of  all  moneys 
so  received  to  be  loaned  without  the  state,  and  upon  the  aggregate  amount  of 
bonds,  mortgages,  choses  in  action  and  securities  of  any  kind  negotiated  as 
aforesaid,  is  hereby  assessed  against  the  person,  investment  company  or 
corporation  receiving  such  money,  or  transacting  said  business.  Such  tax 
shall  be  paid  to  the  state  treasurer  within  thirty  days  from  the  time  of  making 
said  returns  and  shall  be  in  lieu  of  all  other  taxation  thereon  for  the  period  of 
one  year  only. 

Sec.  588. — A  person,  agent,  investment  company  or  corporation  may  omit 
payment  of  the  tax  provided  in  the  preceding  section  by  giving  the  name  and 

Eostoffice  address  of  the  person  or  corporation  from  whom  such  money  has 
een  received,  or  to  whom  such  bonds,  mortgages,  choses  in  action  or  securi- 
ties were  sold  and  the  amount  received  from  each  such  person  or  corporation, 
and  informing  the  commissioner  that  the  taxes  are  to  be  paid  by  the  purchaser. 
When  advantage  is  taken  of  this  provision,  the  commissioner  shall  assess 
thereon  a  tax  of  one  per  cent,  against  the  person  or  corporation  of  whom  such 
aj^ent,  person,  investment  company  or  corporation  received  such  money,  or 
to  whom  said  bonds,  mortgages,  choses  in  action  or  other  securities  were  sold. 
The  payment  of  said  tax  shall  exempt  such  agent,  person,  investment  company 
"i  1  orporation  from  all  other  taxes  thereon,  for  the  period  of  one  year  only. 
Said  commissioner  shall  notify  such  person  by  mail,  of  the  tax  so  assessed, 
immediately  after  such  assessment  is  made  and  the  same  shall  be  paid  to  the 
stale  treasurer  within  thirty  days  from  the  time  such  notice  is  issued.  If  the 
purchaser  puts  such  securities  or  investments  into  his  personal  list  for  taxation, 
and  is  assessed  and  pays  taxes  thereon  for  the  full  amount  in  the  town  where 
I  hi  i  I1.1  it  or  investor  resides,  the  commissioner  may,  with  the  concur- 
n  in  c  of  the  treasurer,  remit  payment  <>f  such  tax. 
Sec.  589. — A  person,  agent,  investment  company  or  corporation  who 
es  Ol  neglei  ts  to  comply  with  the  three  preceding  section  shall  be  fined 
nol  more  than  live  thousand  dollars  and  not  less  than  five  hundred  dollars. 
If  a  foreign  investment  company  or  corporation  so  neglects  or  refuses,  the 
hail  have  a  lien  on  ils  bonds,  filed  with  the  slate  treasurer  according  to 

law,  foi  any  fine  which  maybe  imposed  against  it.    The  provisions  of  this 

and  tin-  lour  preceding  sections  shall   not  apply  to  corporations   organized  in 

thai  pay  taxes  on  their  capital  stock,  premiums  or  deposits,  except 
where  the    ales  ol  such  securities  exceed  their  premiums,  deposits  or  capital 

hall  apply  to  such  excess. 


GENERAL   LEGISLATION.  893 

VIRGINIA. 

ACTS  1890,  p.  170. 

Section  i.— No  building  and  loan  association  or  company,  which  is  not  in- 
corporated under  the  laws  of  this  state,  shall  solicit  or  take  subscriptions  to 
its  stock,  loan  out  money,  purchase  or  sell  property,  or  carry  on  any  of  the 
transactions  pertaining  to  the  business  of  such  associations  and  companies 
within  this  state,  until  it  shall  have  complied  with  the  requirements  of  this 
act. 

Sec.  2. — Any  building  and  loan  association  not  chartered  by  the  laws  of 
this  state  shall  file  with  the  secretary  of  the  commonwealth  a  certified  copy 
of  the  charter  under  which  they  work  ;  also  satisfactory  evidence  that  they 
have  complied  with  the  laws  of  the  state  under  which  they  are  chartered. 

Sec.  3. — A  certificate  from  the  state  officer  designated  by  the  laws  of  the 
state  in  which  said  corporation  was  given  a  charter,  that  they  have  complied 
with  the  laws  of  said  state  as  to  the  amount  of  securities  required  to  be 
deposited  for  the  benefit  of  all  the  members  of  said  association,  the  same 
shall  be  accepted  as  sufficient  guaranty  for  the  members  of  the  association  in 
this  state. 

Skc.  4. — Every  such  association  or  company  shall  forward  to  the  treasurer 
of  this  state  all  reports  made  by  said  association  relating  to  their  assets  and 
liabilities,  properly  sworn  to  before  some  competent  officer  authorized  to  ad- 
minister oaths  in  said  commonwealth,  territory  or  country  ;  Provided,  that  any 
association  failing  to  make  at  least  an  annual  report,  as  required  in  this  section, 
shall  be  required  to  deposit,  within  sixty  days  from  the  date  named  by  the 
treasurer,  an  amount  of  securities  sufficient  to  secure  all  business  which  they 
have  done  in  this  state,  the  same  to  be  not  less  than  ten  thousand  dollars  nor 
more  than  fifty  thousand  dollars.  Said  securities  shall  be  bonds  or  notes,  se- 
cured by  deeds  of  trust  on  real  estate,  worth  at  least  twenty-five  per  centum 
more  than  the  money  advanced  thereon  to  members,  exclusive  of  premiums 
taken  by  such  companies  in  the  regular  course  of  business  in  this  or  any 
other  state,  the  value  of  such  real  estate  in  all  cases  to  be  determined  by  the 
officers  of  the  local  boards  of  said  association  ;  but  such  mortgages  or  deeds 
of  trust  to  be  taken  only  as  first  liens,  and  held  in  trust  as  aforesaid  until  all 
shares  of  such  association  held  by  citizens  of  this  state  shall  have  been  fully 
matured  and  paid  off  by  such  association,  and  its  contracts  and  obligations  to 
persons  and  members  residing  in  this  state  shall  have  been  fully  performed 
and  discharged.  As  fast  as  such  securities  held  by  the  state  treasurer  as  afore- 
said shall  mature,  according  to  the  agreement  with  members  of  said  associa- 
tion, said  association  shall  have  the  right  to  withdraw  them  from  said  deposit ; 
Provided,  that  at  the  time  of  such  withdrawal  they  deposit  other  like  securities 
of  equal  value  in  their  place. 

Sec.  5. — The  agent,  officer  or  employee  of  any  such  building  or  loan  asso- 
ciation or  company,  doing  business  in  this  state  without  complying  with  the 
provisions  of  this  act,  shall  be  deemed  guilty  of  a  misdemeanor,  and,  upon 
conviction,  shall  be  fined  in  a  sum  not  exceeding  five  hundred  dollars  in  the 
discretion  of  the  court. 

Sec.  6. — This  act  shall  take  effect  July  first,  eighteen  hundred  and  ninety. 

ACTS  1894,  p.  734. 

Section  i. — No  building  and  loan  association  or  company  shall  be  allowed 
to  conduct  any  business,  or  solicit  the  sale  of  stock,  or  offer  to  lend  money  in 
this  state,  without  having  first  obtained  a  license  therefor  by  payment  of  the 
tax  herein  specified,  nor  shall  any  person  act  as  an  agent  for  such  company, 
incorporated  in  this  or  any  other  state,  unless  the  company  he  represents  has 
obtained  a  license  in  accordance  with  this  act. 

Sec.  2. — The  specific  license  tax  upon  every  such  company  or  association 
for  the  privilege  of  doing  any  business  in  this  state  shall  be  fifty  dollars  ; 
Provided,  the  capital  of  such  company  actually  paid  in,  whether  from  paid-up 
stock  or  partially-paid  stock,  is  not  less  than  twenty-five  thousand  dollars  ;  if 
the  capital  paid  in  is  twenty-five  thousand  dollars,  and  not  more  than  fifty 
thousand  dollars,  the  tax  shall  be  seventy-five  dollars  ;  if  the  capital  paid  in  is 
not  less  than  fifty  thousand  dollars  nor  more  than  one  hundred  thousand  dol- 
lars, the  tax  shall  be  one  hundred  dollars  ;  if  the  capital  paid  in  is  not  less 
than  one  hundred  thousand  dollars,  nor  more  than  one  hundred  and  fifty 
thousand  dollars,  the  tax  shall  be  one  hundred  and  twentv-five  dollars  ;  if  the 
capital  paid  in  is  not  less  than  one  hundred  and  fifty  thousand  dollars,  nor 


894  APPENDIX   IV. 

more  than  two  hundred  thousand  dollars,  the  tax  shall  be  one  hundred  and 
fifty  dollars ;  if  the  capital  paid  in  is  not  less  than  two  hundred  thousand 
dollars,  nor  more  than  three  hundred  and  fifty  thousand  dollars,  the  tax  shall 
be  one  hundred  and  seventy-five  dollars  ;  if  the  capital  paid  in  is  four  hundred 
thousand  dollars,  the  tax  shall  be  two  hundred  and  fifty  dollars  ;  but  on  capital 
exceeding  four  hundred  thousand  dollars,  the  tax  shall  be  fifty  dollars  for  each 
additional  one  hundred  thousand  dollars  thereof ;  And,  provided,  that  as  to 
any  non-resident  building  company  or  association  doing  business  in  this  state, 
and  which  has  otherwise  complied  "with  the  laws  of  Virginia,  shall  pay  the 
license  tax  under  this  act  upon  the  capital  invested  by  such  company  in  this 
state.  It  shall  be  the  duty  of  each  association,  on  the  first  day  of  April  of  each 
year,  or  within  ten  days  thereafter,  to  make  a  report  in  writing  under  oath  of  its 
'chief  accounting  officer  or  agent  to  the  commissioner  of  revenue  for  the  district  in 
which  the  principal  office  or  agent  is  situated,  of  the  amount  of  the  capital  of  said 
association  as  provided  in  this  act.  Any  association  or  agent  doing  business  in 
this  state  without  having  first  obtained  a  license  therefor,  shall  pay  a  fine  of 
not  less  than  fifty  nor  more  than  five  hundred  dollars.  The  shares  of  any 
building  fund  company  which  has  been  assessed  with  and  has  paid  the  specific 
tax  provided  for  in  this  bill,  shall  not  be  taxable  in  the  hands  of  the  holder, 
nor  shall  any  additional  tax  be  imposed  upon  the  capital  of  the  said  companies. 
And  it  is  provided  that  no  city  or  corporation  shall  impose  a  greater  tax  than 
is  provided  by  this  bill,  which  tax  can  only  be  levied  where  the  principal  office 
of  the  company  is  located  ;  it  is  further  provided,  that  on  any  company  doing 
business  on  a  purely  mutual  plan,  and  whose  business  is  confined  solely  to  the 
citv  or  county  where  organized,  the  tax  shall  be  fifty  dollars. 

Sec.  3. — All  acts  or  parts  of  acts  inconsistent  with  this  act  are  hereby  re- 
pealed. 

Sec.  4. — This  act  shall  be  in  force  from  its  passage,  provided  that  associa- 
tions or  companies  now  doing  business  within  this  state  shall  have  until  April 
first,  eighteen  hundred  and  ninety-four,  to  comply  herewith. 

ACTS  1894,  p.  500. 

Section1  i. — Any  number  of  persons,  not  less  than  five,  may  hereafter  form 
a  building  and  loan  association  for  the  purpose  of  encouraging  industry,  fru- 
gality and  home  building  and  saving  among  its  members,  upon  being  incor- 
porated as  provided  in  section  eleven  hundred  and  forty-five,  Code  of  Virginia. 
Building  and  loan  associations  formed  under  this  chapter,  or  heretofore 
chartered  or  incorporated  under  said  section,  or  by  any  general  or  special  act, 
or  formed  or  incorporated  under  the  laws  of  any  other  state,  which  have 
complied  with  the  laws  of  this  state,  shall  have  the  right  to  lend  to  the  stock- 
holders or  to  other  persons  the  moneys  accumulated  from  time  to  time,  and 
the  right  to  purchase  land  or  erect  houses,  and  to  sell,  convey,  lease  or  mort- 
gage the  same  at  their  pleasure  to  their  stockholders  or  others  for  the  benefit 
of  their  stockholders.  Such  association  may  acquire,  hold,  convey  and  en- 
cumber all  or  any  property,  real  or  personal,  taken  by  them  as  security  or 
otherwise  acquired  by  them  in  the  due  course  of  business  ;  and  may  also 
secure  the  payment  of  loans  and  the  performance  of  the  conditions  upon 
which  loans  are  made,  and  the  payment  of  the  purchase  money  for  any  prop- 
erty sold  by  taking  personal  security,  or  by  a  mortgage  or  deed  of  trust  upon 
real  or  personal  property  and  by  a  transfer  and  pledge  of  its  stock.  Such 
associations  shall  have  the  power  to  establish  and  maintain,  by  their  officers 
and  agents,  branch  offices  lor  the  transaction  of  their  business  at  as  many 
desirable. 

SEi  .  2. — It  shall  be  lawful  for  every  such  association  or  company  to  fix  by 
its  by-laws  the  premiums  or  bonus  at  which  it  will  dispose  of  the  money  in 
its  treasury  to  its  stockholders,  and  award  or  lend  to  any  member  or  stock- 
holder the  value  of  any  shares  held  by  him,  less  such  premium  or  bonus,  and 
the  mode  of  making  the  disposal,  loan  or  award  shall  be  fixed  by  the 
by  laws,  and  to  charge  and  receive  said  premium  in  advance  or  in  instal- 
ments, or  in  default  of  application  for  said  money  by  stockholders,  it  shall  be 
lawful  for  bu(  ii  companies  or  associations  to  lend  the  same  to  other  persons  on 
such  term    .1    may  be  agreed  upon  and  in  such  manner  as  maybe  fixed  by 

laws. 
Sec.    I      Every  a    ociation  nuv  lew,  assess  and  collect  from  its  stockhold- 
:    men!      upon    evcrv     hare  ol    its    slock,  the  amount,  time  and 
man  im  hi  oi  the  s; i  to  be  fixed  by  the  by-laws,  and  the  said  stock 

may  i"'  paid  Ofl  ami  olio  I  a  thi  I''  1  IW  hall  due.  I  ;  and  iiliv  lew,  assess 
and  Collect  from  members  to  whom  loan-,  have  been  made  interest   upon    the 


GENERAL   LEGISLATION.  895 

par  value  of  the  shares  redeemed  ;  and  may  levy,  assess  and  collect  fines  for 
the  non-payment  of  dues  or  for  failure  to  comply  with  or  perform  any  other 
obligation  or  duty  to  the  association.  The  amount  of  the  respective  inns 
shall  be  fixed  by  the  by-laws,  and  they  shall  be  imposed  under  regulations  to 
be  made  by  the  by-laws. 

Sec  4. — A  borrower  from  such  associations  may  repay  the  loan  at  any  time  ; 
but  in  case  of  the  repayment  thereof  before  the  maturity  of  the  loan  the  bor- 
rower shall  pay  such  an  amount  for  the  privilege  as  may  have  been  agreed 
upon  or  is  provided  for  in  the  by-laws  ;  and  there  shall  be  refunded  to  such 
borrower,  in  case  the  premium  shall  have  been  deducted  in  advance,  such 
proportion  of  the  premium  bid  as  the  by-laws  may  determine.  Stockholders 
withdrawing  voluntarily  shall  receive  such  proportion  of  the  profits  of  the 
association  or  such  rate  of  interest  as  may  be  prescribed  by  the  by-laws. 

Sec.  5. — Every  such  association  shall  adopt  by-laws  for  its  government  and 
the  management  of  its  business  not  inconsistent  with  this  act. 

WASHINGTON. 

BALLINGER'S  ANNOTATED  STATUTES  AND  CODES  OF  1897. 
Volume  I.— General  Statutes. 

Sec.  4395. — Whenever  any  member  [number]  of  persons  not  less  than  ten 
desire  to  be  incorporated  as  a  building  and  loan  association  for  the  purpose 
of  accumulating  the  savings  and  funds  of  its  members  and  lending  them  only 
the  funds  so  accumlated,  they  shall  make  and  execute  a  written  declaration  to 
that  effect  in  the  form  now  provided  by  statute  for  the  execution  of  deeds 
of  real  estate,  to  entitle  the  same  to  record.  Said  declaration  shall  state  the 
name  of  such  association,  its  principal  place  of  business,  which  shall  be  within 
this  state,  the  limit  of  capital  to  be  accumulated,  the  time  of  its  duration,  the 
names  and  places  of  residence  of  such  persons,  and  that  it  is  organized  under 
this  chapter  for  the  purpose  herein  expressed.  When  so  executed  said 
declaration  shall  be  filed  and  recorded  in  the  office  of  the  secretary  of  state, 
whereupon  such  officer  shall  issue  a  copy  of  such  declaration  under  his  cer- 
tificate, in  proper  form,  setting  forth  the  time  and  place  of  filing  and  record- 
ing thereof  in  his  office,  which  declaration  and  certificate  shall  thereupon  be 
recorded  in  the  office  of  the  recorder  of  deeds  of  the  county  where  such  as- 
sociation is  located,  and  published  once  in  a  daily  or  weekly  newspaper, 
printed  and  published  and  of  general  circulation  in  said  county.  Upon  com- 
plying with  the  foregoing  requirement,  and  upon  filing  an  affidavit  of  proof 
of  such  publication  in  the  office  of  the  secretary  of  state,  the  persons  exe- 
cuting such  declaration,  their  associates  and  successors,  shall  become  a  cor- 
porate body. 

Sec.  4396. — The  name  shall  not  be  the  same  as,  nor  too  closely  resemble  that 
in  use  by  any  existing  corporation  established  under  the  laws  of  this  state, 
the  words  "  building  and  loan  association,"  or  "  savings  and  loan  associa- 
tion," shall  form  a  part  of  the  name,  and  no  corporation  not  organized  under 
this  chapter  shall  be  entitled  to  use  a  name  embodying  either  [of]  said  combi- 
nation [s]  of  words  ;  Provided,  that  associations  now  existing  may  continue 
their  present  names. 

Sec  4397. — Each  association  shall  adopt  by-laws  for  its  government,  and 
therein  describe  the  manner  in  which  its  business  shall  be  transacted,  which 
by-laws  shall  be  in  conformity  with  the  provisions  of  this  chapter  and  the 
laws  of  this  state,  and  at  all  times  be  open  to  the  inspection  of  the  state  auditor, 
and  the  members  of  the  association  at  its  home  office.  All  by-laws  shall  be  sub- 
ject to  the  approval  of  the  state  auditor  before  going  into  effect,  and  every  corpo- 
ration heretofore  organized  and  brought  under  the  provisions  of  this  chapter 
shall,  within  sixty  days  from  the  passage  hereof,  present  its  by-laws  to  said 
auditor  for  approval,  and  in  case  any  provision  in  such  by-laws  shall  be  contrary 
to  the  provisions  of  this  chapter  or  to  the  laws  of  this  state,  or  be  detrimental  to 
the  interests  of  the  members  of  such  organization,  or  against  public  policy,  he 
may,  under  the  advice  and  consent  of  the  attorney  general,  require  the  same 
to  be  stricken  out. 

Sec  4398. — For  every  loan  made,  a  note  non-negotiable  or  bond  secured  by 
first  mortgage  on  real  estate  shall  be  given,  which  security  shall  be  double 
the  value  of  the  loan,  and  satisfactory  to  the  directors,  and  shall  be  accom- 
panied by  a  transfer  and  pledge  of  the  shares  of  the  borrowers  to  the  associa- 
tion. The  shares  so  pledged  shall  be  held  by  the  corporation  as  collateral 
security  for  the  performance  of  the  conditions  of  said  note  or  bond  and  mort- 


896  APPENDIX   IV. 

gage  ;  Provided,  that  the  shares,  without  other  security,  may,  in  the  dis- 
cretion of  the  directors,  be  accepted  as  security  for  the  loans  for  an  amount 
not  exceeding  their  withdrawal  value  as  provided  by  this  chapter. 

Sec.  4399. — Any  such  association  may  purchase  at  any  sale,  public  or  private, 
any  real  estate  upon  which  it  may  have  a  mortgage,  judgment,  lien  or  other 
incumbrance,  or  in  which  it  may  have  any  interest,  and  may  sell,  convey, 
lease  or  mortgage  the  same  at  pleasure  to  any  person  or  persons,  but  shall 
not  otherwise  acquire  or  deal  in  real  estate  ;  Provided,  that  any  such  asso- 
ciation may  acquire  any  leasehold  interest  necessary  for  the  transaction  of 
its  business. 

Sec.  4400. — Every  building  and  loan  association  heretofore  or  hereafter  in- 
corporated under  the  laws  of  this  state,  and  governed  by  this  chapter,  shall 
deposit  and  keep  with  the  state  auditor,  or  with  a  duly  chartered  trust  company 
of  this  state,  approved  by  the  state  auditor,  in  trust  for  all  its  members  and 
creditors,  all  mortgage  or  other  securities  received  by  it  in  the  usual  course 
of  business.  When  deposited  with  a  trust  company,  such  company  shall 
certify  to  the  state  auditor  the  possession  of  such  securities,  and  the  same 
shall  not  be  surrendered  without  the  authority  or  sanction  of  the  state  audi- 
tor ;  Provided,  that  every  such  corporation  heretofore  organized  not  having 
or  owning  mortgage  or  other  securities  to  the  amount  of  twenty-five  thousand 
dollars  shall  deposit  with  the  state  auditor  additional  securities,  to  make,  with 
the  securities  so  owned  and  deposited,  equal  in  value  to  said  sum  of  twenty- 
five  thousand  dollars,  and  every  such  corporation  hereafter  organized  under 
this  chapter  shall  deposit  and  keep  with  the  state  auditor,  in  trust,  as  afore- 
said, securities  of  the  value  of  twenty-five  thousand  dollars  before  commencing 
to  do  business.  The  securities  mentioned  in  this  proviso  shall  consist  of  bonds 
or  treasury  notes  of  the  United  States  or  national  bank  stocks,  or  bonds  of  this 
state,  or  any  other  state  of  the  United  States,  or  of  any  solvent  city,  county,  or 
town  of  this  state,  or  any  other  state  of  the  United  States,  having  legal  author- 
ity to  issue  the  same,  and  such  securities  may  be  withdrawn,  from  time  to 
time,  when  mortgage  securities  of  corresponding  value  shall  be  deposited,  as 
provided  in  this  chapter,  or  when  other  securities  of  like  character  are  substi- 
tuted therefor  ;  and  it  shall  be  the  duty  of  the  state  auditor,  from  time  to  time, 
to  examine  said  associations,  to  ascertain  whether  all  its  securities  are  depos- 
ited as  required  by  this  chapter  ;  Provided,  that  whenever  required  by  laws 
of  any  other  state,  territory,  or  nation  all  securities  taken  in  such  state'by  any 
association  organized  under  the  laws  of  this  state,  and  subject  to  the  pro- 
visions of  this  chapter,  may  be  deposited  with  some  officer  authorized 
to  receive  the  same  in  such  state  under  the  laws  thereof,  for  the  bene- 
fit of  its  members  and  creditors  ;  but  in  every  such  case  a  certificate 
of  such  deposit,  showing  the  amount  and  character  of  such  deposit,  shall 
be  filed  with  the  auditor  of  this  state,  and  renewed  annually  together  with  a 
statement,  verified  by  the  affidavit  of  some  officer  of  such  association  who 
has  knowledge  of  the  facts,  showing  all  of  the  securities  taken  by  such  asso- 
ciation in  such  state  at  the  time  of  the  filing  of  such  certificate  ;  and  in  case 
any  securities  taken  in  any  such  state  are  not  deposited  there,  then  the  same 
shall  be  deposited  here,  as   required  by  this  chapter. 

Skc.  4401.— All  interest,  and  dividends,  and  premiums,  which  may  accrue 
on  securities  held  by  the  state  auditor,  or  such  trust  company  as  provided  for 
herein,  and  all  dues  or  monthly  payments  which  may  become  payable  on 
stock  pledged  as  security  for  loans,  the  mortgages  for  which  are  so  deposited 
in  accordance  with  the  provisions  of  this  chapter,  may  be  collected  and  re- 
tained by  the  association  depositing  such  securities  or  mortgages,  so  long  as 
n  iation  remains  solvent,  and  faithfully  performs  all  contracts  with 
its  members,  and  when  any  mortgage  shall  have  been  fully  paid  to  said  cor- 
1  ime  may  be  surrendered  by  said  state  auditor,  or  under  his  or- 
-  filing  with  him  a  certificate  01  the  auditor  of  the  county  where  the 
real  estate  is  situated,  to  the  effect  that  the  satisfaction  of  such  mortgage 
In  .  been  filed  for  record,  <>r  in  case  no  mortgage  was  taken,  then  the 
ivit  of  the  secretary  or  treasurer  of  said  corporation  showing  judgment 
Any  mortgage  upon  which  default  has  been  made  may  be  surrendered  as 
1,  upon  tiling  with  the  state  auditor  an  affidavit  sworn  to  by  thepresi- 
111  l  secretary  of  the  association  owning  the  same,  stating  that  such 
mortgage  is  in  default,  and  that  it  is  withdrawn  tor  the  purpose  of  foreclosure. 

Se»  .  140Z  -No  building  or  loan  association  organized  under  the  laws  of  any 

e,  territory  01  nation  shall  do  business  in  this  state  unless  such  as- 

h  ill  ha  !     <■'  urities  of  the  value  of  one  hundred  thousand  dollars, 

and  ot  the  1  harai  ter  mentioned  in  this  chapter,  on  deposit  in  trust  for  all  its 

.'cis  and  creditors  with  some  responsible  trust  company,  duly  incorpo- 


GENERAL   LEGISLATION.  897 

rated  under  the  laws  of  such  state  or  territory  in  the  United  States,  or  with 
some  authorized  officer  of  this  or  some  other  state  of  the  United  States  ;  Pro- 
vided, that  foreign  companies  now  doing  business  in  this  state  shall  have 
until  August  first,  A.  D.  eighteen  hundred  and  ninety,  to  deposit  the  last  one- 
half  of  the  required  one  hundred  thousand  dollars.  Certificate  oi  suchdi 
shall  be  made  to  the  auditor  of  this  state,  certifying  the  possession  oi  such 
securities,  which  shall  not  thereafter  be  surrendered  without  the  authority  or 
consent  of  the  auditor  or  other  authorized  officer  of  the  state  or  territory  in 
which  said  company  is  incorporated  ;  And  provided  further,  that  all  such 
foreign  companies  shall  make  a  deposit  of  their  mortgages  and  other  securi- 
ties taken  in  this  state,  in  the  same  manner  and  amount,  and  for  the  sam 
fmrpose,  as  provided  for  home  companies  in  section  sixteen  hundred  and 
our  of  this  volume  of  general  statutes. 

Si;c.  4403. — Every  building  and  loan  association  organized  under  the  laws 
of  any  other  state,  territory  or  nation  shall,  before  commencing  to  do  business 
in  this  state, — 

1.  File  with  the  state  auditor  of  this  state  a  duly  authenticated  copy  of  its 
charter  or  articles  of  incorporation  ; 

2.  File  with  the  state  auditor  of  this  state  the  certificate  of  the  authorized 
officer  of  another  state  showing  that  securities  of  the  value  of  one  hundred 
thousand  dollars  are  on  deposit  with  such  state  officer  or  duly  incorporated 
trust  company,  in  trust  for  all  the  members  and  creditors  of  such  building 
and  loan  association  ; 

3.  File  with  the  auditor  of  this  state  a  duly  authenticated  copy  of  a  resolu- 
tion adopted  by  the  board  of  directors  of  such  association,  stipulating  and 
agreeing  that  if  any  legal  process  affecting  such  association  be  served  on  such 
examiner,  and  a  copy  thereof  be  mailed,  postage  prepaid,  by  the  party  pro- 
curing the  issue  of  the  same,  or  his  attorney,  to  said  association,  addressed  to 
its  home  office,  then  such  service  and  mailing  of  such  process  shall  have  the 
same  effect  as  personal  service  on  said  association  in  this  state,  and  also  an 
agreement  that  said  association  will  not  remove  any  action  commenced  in 
any  state  court  of  this  state  against  the  same  to  the  United  States  court,  and 
will  pay  every  judgment  that  may  be  taken  against  it  upon  any  such  action 
within  sixty  days  after  the  final  judgment  shall  have  been  entered  ; 

4.  Pay  to  the  state  auditor  twenty-five  dollars  as  fees  for  filing  the  papers 
mentioned  in  this  section. 

Sec.  4404. — When  process  against  or  affecting  any  foreign  building  and 
loan  association  is  served  on  the  state  auditor,  the  same  shall  be  by  duplicate 
copies,  one  of  which  shall  be  filed  in  the  office  of  the  state  auditor,  and  the 
other  by  him  immediately  mailed,  postage  prepaid,  to  the  home  office  of  said 
association. 

Sec.  4405. — The  word  "  process,"  in  this  chapter,  shall  include  any  writ,  dec- 
laration, summons,  or  order  whereby  any  action,  writ  or  proceedings  shall 
be  commenced,  or  which  shall  be  issued  in  or  upon  any  action,  suit  or  pro- 
ceeding authorized  by  law  in  this  state. 

Sec.  4406. — Services  of  process,  according  to  a  stipulation  provided  in  sec- 
tion sixteen  hundred  and  seven  of  this  volume  of  general  statutes,  shall  be 
sufficient  personal  service  on  the  association  filing  such  stipulation. 

Sec.  4407. — When,  by  the  laws  of  any  other  state,  territory  or  nation,  any 
taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money  or  securities,  or  other 
obligations  or  prohibitions,  are  imposed  on  building  and  loan  associations  of 
this  state,  doing  business  in  such  other  state,  territory,  or  nation,  or  upon  their 
agents  therein,  so  long  as  such  laws  continue  in  force,  the  same  obligations 
and  prohibitions,  of  whatever  kind,  shall  be  imposed  upon  all  building  and 
loan  associations  of  such  other  state,  territory  or  nation  doing  business  in 
this  state,  and  upon  their  agents  here. 

Sec.  4408. — Any  building  and  loan  association  organized  under  the  laws  of 
any  other  state  or  territory  that  shall  remove  any  action  that  shall  be  com- 
menced against  it  in  a  court  of  this  state  to  the  United  States  court,  or  that 
shall  fail  to  pay  any  judgment  rendered  against  it  upon  a  suit  in  any  court  of 
the  state  within  sixty  days  after  the  rendering  of  final  judgment  in  such  case, 
or  that  shall  fail  to  make  yearly  statement  to  the  state  auditor,  as  hereafter 
mentioned,  or  statements  of  the  amount  and  value  of  its  stock  held  in  this 
state,  as  hereafter  required,  or  to  pay  the  fees  of  the  state  auditor  as  provided 
in  this  chapter,  or  to  do  any  other  act  required  in  this  chapter  to  be  done  and 
performed,  shall,  upon  failure  or  violation  of  the  provisions  of  this  chapter, 
have  no  right  or  authority  to  do  or  transact  any  further  business  within  the 
limits  of  this  state,  and  the  state  auditor  shall  thereupon  cause  notice  of  the 
termination  of  such  authority  to  do  business  to  be  mailed  to  such  corporation 


898  APPENDIX   IV. 

and  to  be  published  in  some  newspaper  of  general  circulation  at  the  capital 
of  the  state,  and  shall  communicate  the  facts  to  the  attorney  general  of  this 
state,  who  shall  institute  such  proceedings  in  the  matter  as  the  case  may 
require  ;  Provided,  any  such  corporation  may  be  again  authorized  to  com- 
mence business  in  this  state  upon  such  terms  as  the  state  auditor  may  deem 
just  and  proper,  and  upon  full  compliance  with  the  provisions  of  this  chapter. 

Sec.  4409. — All  building  and  loan  associations  hereafter  incorporated  in  this 
state  shall  have  an  authorized  capital  of  two  million  dollars  at  the  time  of  the 
incorporation. 

Sec.  4410. — Any  building  and  loan  association  heretofore  or  hereafter  incor- 
porated under  the  laws  of  this  state  may  at  any  time  increase  the  amount  of 
its  capital  stock,  or  amend  its  articles  of  incorporation  in  any  other  respect, 
by  a  vote  of  at  least  three-fourths  of  its  board  of  directors  ;  Provided,  that  no 
such  increase  shall  be  made  unless  three-fourths  of  the  capital  stock  pre- 
viously authorized  has  actually  been  issued,  and  the  amount  of  increase  made 
at  any  one  time  shall  not  exceed  the  amount  issued  previous  to  the  time  of 
such  increase. 

Sec.  441 1. — Whenever  any  building  and  loan  association  increases  its  capital 
stock,  or  otherwise  amends  its  articles  of  incorporation,  as  provided  in  this 
chapter,  a  copy  of  the  resolutions  of  the  board  of  directors  making  such  in- 
crease or  other  amendment,  duly  verified  by  oath  of  the  president  and  secre- 
tary of  such  association,  shall  be  filed  in  the  office  of  the  auditor  of  the  county 
in  which  the  home  office  of  said  association  is  located,  and  in  the  office  of  the 
secretary  1  >f  state,  and  be  published  four  successive  times  in  the  same  daily  or 
weekly  newspaper  published  at  the  capital  of  the  state,  or  in  the  county  where 
the  association  has  its  home  office.  Proof  of  such  publication  shall  be  filed 
in  [the]  office  of  the  secretary  of  state. 

Sec.  4412.— On  or  before  the  first  day  of  September  in  each  year  every 
building  and  loan  association  doing  business  in  this  state  shall  deposit  with 
the  state  auditor  a  report  of  its  affairs  and  operations  for  the  year  ending  on 
the  thirtieth  day  of  June  immediately  preceding.  Such  report  shall  be  veri- 
fied under  oath  bv  the  president  and  secretary,  or  by  three  directors  of  the 
association,  and  shall  contain  answers  to  the  following  questions  : — 

1.  The  amount  of  authorized  capital,  and  the  par  value  of  each  share  of 
stock  ; 

2.  The  number  of  shares  sold  during  the  year  ; 

3.  The  number  of  shares  cancelled  and  withdrawn  during  the  year; 

4.  Number  of  shares  in  force  at  the  end  of  the  year  ; 

5.  A  detailed  statement  of  receipts  and  disbursements  during  the  year  ; 

6.  A  detailed  statement  of  the  assets  and  liabilities  at  the  end  of  the  year, 
and  shall  pav  to  the  state  auditor  a  fee  of  twenty-five  dollars  on  filing  such 
report.  If  any  such  association  shall  fail  to  furnish  to  the  auditor  of  the  state 
any  report  required  by  this  chapter,  at  the  time  so  required,  it  shall  forfeit  the 
sum  of  twenty-five  dollars  per  day  for  every  day  such  report  shall  be  delayed 
or  withheld  ;  and  the  auditor  may  maintain  an  action  in  his  name  of  office  to 

er  such  penalty,  and  the  same  shall  be  paid  into  the  treasury  of  the  state 
and  applied  to  I  lie  expenses  of  the  department  of  said  auditor.  After  receiving 
such  report,  the  auditor,  if  satisfied  that  such  corporation  has  complied  with 
all  the  provisions  of  this  chapter,  and  is  entitled  to  do  business  in  this  state, 
he  shall  issue  his  certificate  slating  the  compliance  with  such  provisions,  and 
that  [such]  corporation  isentitled  to  do  business  in  this  slate,  which  certificate 
shall  be  in  force  for  the  period  of  one  year,  unless  sooner  rescinded,  as  pro- 
vided in  this  chapter.  Such  certificate  shall  also  be  issued  to  any  foreign  cor- 
poration authorized  to  do  business  in  this  state  after  complying  with  the  con- 
ditions t,f  section  sixteen  hundred  and  seven  of  this  volume  of  general  statutes, 
and    hall  be  in  force  until  the  time  herein  required  for  such  annual  report. 

Sec.  4413.— II  shall  be  the  duty  of  such  state  auditor,  at  least  once  in  each 

and   as  often   as  he  may  deem  necessary,  to  assume  and  exercise  over 

every  building  a  sociation  incorporated  under  the  laws  of  this  state,  its  busi- 

offii  eis,  directors,  and  employees,  all  the  power  and  authority  conferred 

upon  him  over  banks  and  othei   moneyed  (  orporations  under  the  laws  of  this 

Provided,  he  shall  not  have  the  power  to  suspend  the  operation  of  any 

•    cent  in  the  manner  provided  in  the  next  succeeding  section. 

Si  1  .  441 l-    1 1  it  shall  appear  to  the  said  state  auditor,  from  any  examination 

made  by  him,  or  from  any  report  of  any  examination  made  by  him,  orfrom 

tnnual  report  at  ore  aid,  thai  said  «  orporation  is  violating  its  charter  or  the 

1  thai  it  is  conducting  business  in  any  unsafe,  unauthorized  or  dishonest 

manner,  he  Bhall,  by  an  order  under  his  hand  and  seal  of  office,  addressed  to 


GENERAL   LEGISLATION.  899 

such  corporation,  direct  conformity  with  the  requirements  of  its  charter  and 
of  the  law  ;  and  whenever  such  corporation  shall  refuse  or  neglect  to  make 
such  report  or  account  as  may  be  lawfully  required,  or  to  comply  with  such 
order  as  aforesaid,  or  whenever  it  shall  appear  to  the  said  auditor  that  it  is  un- 
safe or  inexpedient  for  any  such  corporation  to  continue  to  transact  business,  he 
shall  communicate  the  facts  to  the  attorney  general,  who  shall  thereupon  be 
authorized  to  institute  such  proceedings  against  any  such  corporations  as  are 
now  or  may  hereafter  be  provided  by  law  in  the  case  of  insolvent  corpora- 
tions, or  such  other  proceedings  as  the  occasion  may  require.  And  if  such 
corporation  shall  have  been  organized  under  the  laws  oi  any  other  slate  or 
territory,  the  said  attorney  general  shall,  upon  receiving  such  communication, 
if  in  his  judgment  the  facts  in  the  case  are  sufficient  to  warrant  such  action, 
give  notice  to  such  corporation  that  it  is  no  longer  authorized  to  d<  i  business 
in  this  state,  by  depositing  such  notice  in  the  postoffice,  properly  sealed  and 
stamped,  addressed  to  the  said  corporation  at  its  principal  office  in  the  state 
where  incorporated,  and  thereupon  said  corporation  shall  cease  to  have  any 
right  in  this  state,  and  said  notice  may  be  published  in  the  manner  as  provided 
in  section  sixteen  hundred  and  twelve  of  this  volume  of  general  statutes. 

Sec.  4415. — All  officers  of  any  building  and  loan  association  governed  by 
this  chapter  and  doing  business  in  this  state,  who  sign  or  indorse  check-,  or 
handle  any  of  the  funds  of  such  association,  shall  give  bonds  or  fidelity  in- 
surance for  the  faithful  performance  of  their  duties  as  the  board  of  directors 
may  require,  and  no  such  officer  shall  be  deemed  qualified  to  enter  upon  the 
duties  of  his  office  until  his  bond  is  approved  by  the  board  of  directors  and 
the  state  auditor,  with  whom  such  bonds  shall  be  tiled  ;  Provided,  that  the 
state  auditor  may  require  of  any  association,  at  any  time,  such  increase  of  said 
bond  or  additional  sureties  thereto,  or  such  increase  of  said  insurance,  as  he 
may  deem  necessary  for  the  protection  of  the  members.  The  penalty  for  a 
failure  of  any  association  to  rile  and  maintain  the  bonds  and  policy  as  required 
by  the  provisions  of  this  section  shall  be  a  hue  of  one  hundred  dollars  for  each 
day  such  association  transacts  business  after  such  bonds  have  become  due 
under  the  provisions  of  this,  chapter.  Said  bonds  or  policy  shall  be  held  in 
trust  for  the  benefit  and  protection  of  the  members  of  such  association,  and 
shall  be  en  forcible  by  any  member  whenever  cause  of  action  shall  accrue 
thereon. 

Sec.  4416. — The  name  "  building  and  loan  association,"  as  used  in  this 
chapter,  shall  include  all  corporations,  societies,  organizations  and  associa- 
tions doing  a  saving  and  loan  or  investment  business  on  the  building  society 
plan,  whether  neutral  or  otherwise,  and  whether  issuing  certificates  of  stock 
which  mature  at  a  time  fixed  in  advance  or  not. 

Sec.  4417. — Any  officer,  director  or  agent,  or  [of]  any  foreign  building  and 
loan  association,  or  any  other  person  whomsoever  who  shall,  in  this  state, 
solicit  subscriptions  to  the  stock  of  such  association,  or  who  shall  sell  or  issue, 
or  knowingly  cause  to  be  sold  or  issued,  to  a  resident  of  this  state  any  stock 
of  such  association  while  such  association  shall  not  have  had  the  certificate  of 
the  state  auditor  authorizing  it  to  do  business  in  this  state,  as  herein  prescribed, 
or  has  not  deposited,  as  required  by  this  chapter,  securities  of  the  value  and 
at  the  times  herein  prescribed,  or  before  said  association  has  complied  with  all 
the  provisions  of  this  chapter,  or  when  said  association  shall  have  been  notified 
and  required  to  discontinue  business  in  this  state,  as  hereinbefore  provided, 
shall  be  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be 
punished  by  a  fine  of  not  less  than  one  hundred  dollars  nor  more  than  five 
hundred  dollars,  or  bv  imprisonment  of  not  less  than  ten  clays  nor  more  than 
six  months,  or  both  such  fine  and  imprisonment,  in  the  discretion  of  the  court. 

Sec.  4418. — Any  officer,  director  or  agent  of  any  building  and  loan  associa- 
tion incorporated  under  the  laws  of  this  state,  or  any  other  person  whatever, 
who  shall  sell  or  issue,  or  knowingly  cause  to  be  sold  or  issued,  to  any  person 
not  a  resident  of  the  county  in  which  the  home  office  of  said  association  is 
located,  or  in  the  counties  immediately  adjacent  thereto,  any  stock  of 
said  association  while  said  association  does  not  have  on  deposit  with 
the  state  auditor,  as  required  by  this  chapter,  securities  of  the  value  and 
at  the  time  herein  prescribed,  or  while  such  association  shall  not  have  the 
certificate  of  the  public  examiner,  authorizing  it  to  do  business  as  herein 
prescribed,  shall  be  guilty  of  a  misdemeanor,  and  upon  conviction  thereof 
shall  be  punished  by  a  fine  of  not  less  than  one  hundred  dollars  and  not  more 
than  five  hundred  dollars,  or  bv  imprisonment  of  not  less  than  ten  days  nor 
more  than  six  months,  or  both  such  fine  and  imprisonment,  in  the  discretion 
of  the  court. 

Sec.  4419.— Any  premiums  taken  for  loans  made  by  any  association  governed 


900  APPENDIX   IV. 

by  this  chapter  shall  not  be  considered  or  treated  as  interest,  nor  render  such 
association  amenable  to  the  laws  relating  to  usury. 

Sec.  4420. — Every  such  association  heretofore  organized  under  the  laws  of 
this  state,  or  incorporated  under  this  chapter,  is  hereby  prohibited  from  here- 
after creating  or  issuing  any  preferred  or  non-contributing  stock  ;  but  this 
section  shall  not  prevent  the  issue  of  different  series  of  stock. 

Sec.  44-1. — Any  shareholder  whose  stock  has  not  been  declared  forfeited 
in  such  association,  and  whose  share  or  shares  are  not  pledged  upon  a  loan, 
may  withdraw  such  share  or  shares  from  the  association  at  any  time  after  one 
year,  by  giving  at  least  sixty  days'  notice  in  writing  to  the  secretary  of  his  in- 
tention to  do  so.  Upon  receipt  of  such  notice,  the  same  may  be  considered  a 
withdrawal  by  such  person,  and  the  association  may,  within  sixty  days, 
dispose  of  said  stock,  and  the  members  shall  assign  them  for  that  purpose. 
At  the  end  of  said  sixty  clays  the  association  shall  pay  to  the  members  so  sur- 
rendering as  follows  :  If  said  stock  is  more  than  two  years  old,  all  amounts 
paid  in  by  such  members  upon  such  stock,  except  the  sums  paid  as  member- 
ship fees  and  fines,  and  the  amount  set  apart  unon  such  shares  by  said  associa- 
tion as  an  expense  fund,  which  expense  fund,  however  shall  not  exceed  the 
amount  fixed  in  this  chapter  ;  if  said  stock  is  more  than  two  years  old,  the 
member,  upon  such  surrender,  shall  receive,  in  addition  to  the  amount  above 
specified,  at  least  three-fourths  of  all  profits  standing  to  the  credit  of  such 
shares  ;  Provided,  that  not  more  than  one-half  of  the  monthly  instalments 
received  by  such  association  for  any  month  shall  be  used  to  pay  with- 
drawals without  consent  of  the  board  of  directors. 

Sec.  4422. — Whenever  any  such  association  shall  declare  any  of  its  stock 
forfeited  for  non-compliance  of  the  holder  with  any  of  its  laws  or  regulations, 
the  said  stock  shall,  it  one  year  old,  be  sold  by  said  association  at  a  monthly 
meeting  thereof  to  the  highest  bidder,  and  it  is  made  the  duty  of  such  associa- 
tion, at  any  such  sale,  to  bid  in  the  stock  so  offered  at  its  then  withdrawal  value, 
and  thereupon  said  stock  shall  be  cancelled  ;  but,  if  a  higher  bid  is  received, 
the  person  making  the  highest  bid  shall  have  such  stock  assigned  to  him,  and 
upon  such  sale,  said  association  shall  pay  to  the  member  so  forfeiting  his  stock 
the  withdrawal  value  thereof  as  fixed  in  the  next  preceding  section  of  this 
chapter,  less  all  fines  and  arrearages  against  him. 

Sec.  4423. — Upon  the  death  of  a  stockholder  in  any  such  association,  except 
in  cases  where  the  stock  matures  at  a  fixed  and  definite  time  as  aforesaid,  his 
heirs  or  personal  representatives  shall,  upon  giving  sixty  days'  notice  to  the 
association,  receive  from  such  association  the  then  withdrawal  value  of  his 
shares,  agreeable  to  the  provisions  of  section  sixteen  hundred  and  twenty-five 
of  this  volume  of  general  statutes. 

Sec.  4424. — Every  such  association  shall  provide  in  its  by-laws  in  what 
manner  applications  and  bids  for  loans  shall  be  received  and  who  shall  be  en- 
titled to  loans  thereunder  ;  such  bids  shall  be  opened  at  stated  times,  and  all 
the  money  in  the  loan  funds  shall  be  loaned  upon  such  bids  ;  Providing,  that 
the  securities  shall  be  in  the  amount  and  of  character  stated  in  this  chapter, 
and  the  amount  bid  shall  not  be  less  than  the  rate  for  any  legal  indebtedness 
under  the  laws  of  this  stale,  the  object  of  this  section  being  to  prevent  such 
association  from  retaining  in  its  loan  fund  any  moneys  actually  bid  for,  for  the 
purpose  of  securing  belter  bids  or  inducing  the  bidders  to  raise  their  bids,  and 
to  compel  said  ass<  iciations  to  loan  their  funds  to  the  highest  and  best  bidders 
therefor;  Provided,  that  the  provisions  of  this  section  relating  to  bidding  for 
loans  shall  not  apply  to  associations  which  fix  the  rate  of  interest  and  premium 
annually,  by  resolution  of  the  board  of  directors,  at  a  rate  which  will  keep  the 
money  oi  such  association  at  all  times  safely  invested,  and  in  which  the  system 
ot  bidding  is  not  allowed. 

Si  1  .  442C — No  association  governed  by  this  chapter  shall  set  apart  as  an  ex- 
pense  fund,  exclu  ive  "i  admission  fee  ,  to  exceed  one  dollar  peryearupon 
1  oi  1  tock,  or  assess  any  fines  for  non-payment  of  monthly  instal- 
ments, 01  otherwise,  in  excess  ol  ten  cents  per  share  for  the  first  month  that 
line  hall  be  in  arrears,  and  fifteen  cents  per  share  per  month  for  every 
month 

Si  1  .    H''1      \"1    more  than  three   of  the  officers  of   any  such  association 

incorporated  under  the  laws  of  this  state  shall  be  members  oi   Hie  board  of 

m-Ii ation  ;  Provided,  1l1.1t   no  change  shall  be  required 

under  this  se<  lion  until  the  next  annual  meeting  of  such  association. 

.  ,  .       Ml  "    organized  in  this  state  and  doing  business  in 

in    othei    late,  a    building  and  loan  associations,  shall  comply  with 

and  to  all  the  provisions  ol  this  act  within  sixty  days  after  its  passage, 

ball  be  entitled  to  .ill  il    privileges  and  benefits  thereof  without  reincor- 


GENERAL   LEGISLATION.  901 

porating  ;  Provided,  that  all  such  companies  or  associations,  organized  in  the 
state  prior  to  the  passage  of  the  act  of  which  this  act  is  amendatory,  shall  only 
be  required  to  deposit  all  their  securities  in  the  manner  provided  by  the  act  of 
which  this  actis  amendatory,  but  shall  not  be  required  to  depo-it  any  other 
or  further  securities  than  are  provided  by  this  section  as  hereby  amended. 

SEC.  44-^- — This  chapter  shall  not  apply  to  any  association  organized  under 
the  laws  of  this  state  winch  confines  its  loaning  and  business  0]  erations  wholly 
to  its  county  and  the  [counties]  adjacent  and  adjoining  thereto  \Provided,  that 
any  such  association  heretofore  incorporated  which  desires  tohereaftei  confine 
its'business  to  adjacent  counties,  as  aforesaid,  may  hie  w  ith  the  state  auditor  a 
statement  to  that  effect,  and  also  containing  the  names  of  those  holding,  and  the 
amount  held  by  them,  of  the  stock  of  said  association  outside  such  counties, 
and  so  long  as  such  association  thereafter  confines  its  -ales  oi  stock  within  the 
limits  aforesaid  it  shall  not  be  subject  to  the  provision)  sj  hereof,  and  any  sales 
of  stock  outside  the  limits  of  said  counties  made  after  filing  all  such  state- 
ment[s]  by  any  officer,  director  or  agent  of  any  such  association,  shall  sub- 
ject such  person  to  all  the  penalties  prescribed  in  section  sixteen  hundred  and 
twenty-two  of  this  volume  of  general  statutes  ;  Provided  further,  that  nothing 
in  this  section  shall  be  so  construed  [as]  to  prevent  the  bona  fide  sale  or  trans- 
fer oi  the  individual  stock  of  any  member  of  such  association. 

SEC.  4421;.— Every  such  association  shall  be  assessed  for  and  pay  taxes  upon 
its  office  furniture  and  fixtures  and  all  real  estate  acquired  in  the  course  of  its 
business,  and  every  stockholder  in  such  association  shall  be  assessed  and  pay 
taxes  upon  the  share[s]  held  by  him  therein,  the  value  of  which  said  shares 
for  the  purpose  of  taxation  shall  be  fixed  at  the  withdrawal  value  thereof,  as 
provided  in  section  sixteen  hundred  and  twenty-live  of  this  volume  of  general 
statutes,  except  in  case  of  such  associations  the  stock  of  which  heretofore  or 
hereafter  issued  shall  mature  at  a  fixed  time,  and  the  value  of  the  shares  in  any 
such  association  of  all  stocks  so  issued  as  aforesaid  for  the  purpose  of  taxation 
shall  be  fixed  upon  the  basis  of  the  aggregate  amount  paid  in  by  a  member, 
together  with  interest  at  the  rate  of  six  per  cent,  per  annum,  computed  on  an- 
nual risks. 

Sec.  4430. — It  shall  be  the  duty  of  the  secretary  of  every  such  association  in- 
corporated under  the  laws  of  this  state  to  make  out  and  transmit  to  the  auditor 
of  every  county  in  this  state  in  which  said  association  shall  have  shareholders, 
on  the  first  day  of  May  in  each  year,  a  statement  containing  the  names  of  every 
person  holding  stock"  in  such  association  in  such  county,  and  the  amount  and 
value  of  the  respective  shares  of  such  stock  at  such  date,  upon  the  basis  oi  its 
value  as  fixed  in  this  chapter,  and  any  failure  to  comply  with  the  provisions  of 
this  section  by  any  such  association  shall  be  deemed  sufficient  cause  for  j  ro- 
ceeding  under  this  chapter  for  forfeiture  of  the  charter  of  the  association  so  of- 
fending. The  books  and  papers  of  every  such  association  shall  also  be  open 
at  all  convenient  times  for  inspection  by  any  assessor  desiring  to  make  examin- 
ation thereof  for  purposes  of  taxation  ;  Provided  that  no  report  shall  be  required 
under  this  section  upon  stock  pledged  as  collateral  security  for  a  loan,  so  long 
as  the  amount  of  such  loan  exceeds  the  withdrawal  value  of  such  stock  as  fixed 
in  this  act  and,  when  it  shall  exceed  such  value,  then  only  as  to  such  excess. 

Sec  443T. — It  shall  be  the  duty  of  every  such  association  not  incorporated 
under  the'laws  of  this  state  to  make  and  forward  to  the  public  examiner,  upon 
the  first  dav  of  May  in  each  year,  a  statement  containing  the  names  and  the 
withdrawal  value  of  all  its  stock  held  and  owned  by  residents  of  this  state,  to- 
gether with  the  place  of  residence  of  every  such  stockholder,  except  those 
having  loans  as  provided  in  the  foregoing  section,  and  it  shall  be  the  duty  oi 
the  said  state  auditor  to  make  out  and  forward  to  the  county  auditor  of  the 
proper  counties  a  statement  of  the  stock  held  by  them  ;  and  it  shall  be  the  duty 
of  tlie  said  county  auditor,  upon  receiving  the  statement  provided  for  in  this 
and  the  foregoing  sections,  to  furnish  the  assessors  of  each  township  in  his 
county  having  such  stockholders  with  the  names  of  such  stockholders,  and 
the  value  of  their  stock,  as  given  in  such  statements,  for  the  purpose  of  assess- 
ment. 

Sec.  4432.— The  state  auditor  shall  receive  and  retain  all  the  fees  mentioned 
in  this  chapter,  and  the  same  shall  be  in  lieu  of  any  allowance  of  clerk  hire 
made  necessary  by  the  extra  labor  required  by  the  provisions  of  this  chapter. 

Sec.  4433.— At  leasf  thirty  days  prior  to  any  annual  or  special  meeting  of  any 
such  association,  a  notice,  stating  the  time  and  place  of  such  meetings,  shall 
be  deposited  in  the  postoffice  at  the  headquarters  of  such  association,  directed 
to  each  member  at  his  address  as  the  same  appears  at  the  time  on  the  books 
of  the  association  ;  and  when  so  deposited,  postage  prepaid,  shall  be  deemed 
a  legal  and  sufficient  notice  of  any  such  meeting  ;  and  there  shall  be  attached 
53 


902  APPENDIX   IV. 

to  and  accompany  such  notice  any  proposed  amendment  or  amendments  to 
the  articles  of  association,  or  by-laws  of  such  association  and  a  statement  of  any 
officers  to  be  elected  at  such  meeting,  any  member  of  such  association  entitled 
to  vote  in  person  or  by  proxy. 

WEST  VIRGINIA. 

CODE  OF  1891,  THIRD  EDITION.— Chapter  54. 

Section  2. — Such  companies  [joint  stock  companies]  may  be  incorporated 
for  the  following  purposes  :  *  *  *  3.  For  establishing  *  *  *  building 
and  loan  associations,  and  transacting  the  business  properly  pertaining 
thereto.    *    *    * 

Sec.  2y — Any  number  of  persons,  not  less  than  nine,  may  form  a  building 
and  loan  association  for  the  purpose  of  encouraging  industry,  frugality  and 
home  building,  and  saving  among  its  members.  Building  and  loan  associa- 
tions formed  under  this  chapter  shall  have  the  right  and  power  of  loaning  to 
its  stockholders  thereof,  the  moneys  accumulated  from  time  to  time,  as  well  as 
the  right  and  power  to  purchase  land  or  erect  houses,  and  to  sell,  convey, 
lease  or  mortgage  the  same  at  their  pleasure  to  their  stockholders,  or  others 
for  the  benefit  of  their  stockholders.  Such  associations  may  acquire,  hold, 
convey  and  encumber  all  such  property,  real  and  personal,  as  may  be  taken 
as  security,  or  may  be  otherwise  transferred  to  it  in  the  due  course  of  its 
business,  and  may  secure  the  payment  of  loans  and  the  performance  of  the 
other  conditions  upon  which  loans  are  to  be  made,  or  the  payment  of  the 
purchase  money  for  any  property  sold,  by  taking  personal  security,  or  by  a 
mi  ntgage  or  deed  of  trust  upon  real  or  personal  property,  or  by  a  transfer  or 
pledge  of  its  stock. 

Sec.  26. — Every  such  association  shall  have  the  power  to  provide  by  its  by- 
laws for  selling  to  the  stockholders,  who  shall  bid  the  highest  premium  there- 
for, the  money  in  the  treasury,  or  in  default  of  bidders  at  or  above  a  minimum 
premium,  may  award  to  a  member  the  value  of  any  shares  held  by  him  less 
such  minimum  premium  ;  the  minimum  premium,  and  the  mode  of  making 
the  award  to  be  fixed  by  the  by-laws.  Or  such  association  may  charge  and 
receive  the  premium  bid  by  a  stockholder  for  the  priority  of  rights  to  such 
loans,  in  periodical  instalments  ;  but  the  by-laws  of  every  association  shall  set 
forth  whether  the  premium  bid  for  the  prior  right  to  a  loan  shall  be  deducted 
therefrom  in  advance,  or  be  paid  in  periodical  instalments.  But  whether  the 
premium  be  deducted  from  the  loan,  or  paid  in  periodical  instalments,  the 
transaction  shall  not  be  deemed  usurious,  although  any  and  all  the  dues,  fines, 
premium  and  interest,  shall  exceed  the  legal  rate  of  interest  on  the  amount  of 
money  received  by  the  stockholders. 

SEC.  27.  —  Every  such  association  may  levy,  assess  and  collect  from  its  stock- 
holders, periodical  dues  upon  every  share  of  its  slock;  the  amount  of  such 
dues  to  be  fixed  by  the  by-laws;  but  no  periodical  payment  to  exceed  two 
dollars  upon  each  share  ;  and  said  slmk  may  be  paid  off  and  retired  as  the  by- 
laws shall  direct  ;  and  may  lew,  assess  and  colled  from  members  to  whom 
loans  have  been  made  interest  upon  the  par  value  of  the  shares  so  loaned; 
and  may  levy,  assess  and  collect  lines  for  the  non-paymenl  of  periodical  dues, 
or  for  failure  to  comply  with  or  perform  any  other  obligation  or  duty  to  the 
1  iation.  The  amount  of  the  respective  fines  shall  be  fixed  bythe  by-laws, 
and  they  shall  be  imposed  under  regulations  to  be  made  by  the  by-laws  ;  but 
such  lines  shall  be  uniform,  and  where  they  are  imposed  for  default  in  the 
oi  dues,  shall  be  in  proportion  to  the  amount  of  the  dues  for  the 
vhich    they  are  imposed  ;  but  110  members  shall  be  fined  more 

than  once  fi  >r  the  same  default. 

Sec  28.— A  borrower  from  such  association  may  repay  the  loan  at  anytime; 

and  in  case  of  the  repayment  thereof  before  the  maturity  of  the  shares  pledged 

for  said  loan,  there  shall  be  refunded  to  such  borrower,  in  case  the  premium 

shad  n  deducted  in  advance,  such  proportions  of  the  premium  hid,  as 

the  1  nay  determine  ;  but  the  borrower  shall  receive  the  withdrawing 

value  of  th  Iged  for  said  loan,  and  the  shares  shall  revert  back  to 

ation.    Stockholders  withdrawing  voluntarily  shall  receive  such 

n    ol  the  profits  of  the  asso<  iation,  01    u<  h  rate  of  interest  as  maybe 

1  by  the  by-law  -     In  ca  e  oi  default  oi  a  borrower  to  pay  dues, 

mi' :  nium,  foi  the  period  oi   three  months,  payment  of  (he  same, 

ther  with  the  lull  principal  oi  the  loan,  may  be  enforced  by  proceedings 

ii      .i'  1  ording  CO  law  ;  and  the  money  so  received  shall    be  paid 
h(    trea   ury  of  the  association;  and  il    the   moneys   so  recovered   shall 


GENERAL   LEGISLATION.  903 

exceed  the  amount  it  would  have  required  to  repay  the  loan  under  the  fust 
part  of  this  section,  together  with  all  the  expenses  incurred  by  the  association, 
such  excess  shall  be  paid  to  such  borrower. 

SEC  20. — Every  such  association  shall  adopt  by-laws,  which  shall  embrace 
all  the  provisions  of  the  lour  proceeding  [  preceding  J  sections,  and  such 
further  provisions  for  its  government  and  the  management  of  its  business,  not 
inconsistent  with  these  sections,  as  it  may  deem  proper. 

WISCONSIN. 

ACT  1807,  p.  953. 

Section  I. — A  corporation  for  the  purpose  of  raising  money  to  be  loaned 
among  its  members  shall  be  known  in  this  act  as  a  "  budding  and  loan  "  asso- 
ciation ;  if  organized  under  the  laws  of  this  state,  as  a  local  association  ;  if 
under  the  laws  of  any  other  state  or  territory,  as  a  foreign  association.  The 
words  "  building  and  loan  association  "  shall  form  part  of  the  name  of  every 
such  local  association  hereafter  organized,  and  no  corporation  not  organized 
under  this  act  shall  be  entitled  to  use  a  name  embodying  said  words,  except 
that  corporations  now  existing  may  continue  their  present  names. 

Sec.  2. — Such  local  association  may  be  organized  and  conducted  under  the 
general  laws  of  Wisconsin  relating  to  corporations,  except  as  otherwise  pro- 
vided in  this  act  ;  but  the  articles  of  incorporation,  amendments  thereof  and 
all  papers  in  relation  thereto,  required  by  said  laws  to  be  tiled  with  the 
secretary  of  state,  shall  be  instead  tiled  with  the  bank  examiner,  who  shall 
have  power  to  issue  the  charter  or  certificate  of  incorporation  ;  but  such  cer- 
tificate shall  not  issue  until  a  verified  copy  of  the  by-laws  adopted  by  the  asso- 
ciation shall  be  filed  with  said  bank  examiner,  and  not  until  the  articles  and 
by-laws  shall  have  been  examined  by  the  attorney  general  and  approved,  by 
him  as  conforming  to  the  requirements  of  this  act.  And  no  such  local  asso- 
ciation shall,  until  such  certificate  be  duly  issued,  have  legal  existence  ;  and 
only  such  by-laws  and  alterations  and  amendments  thereof  as  shall  have  been 
filed  and  approved  as  herein  provided,  shall  be  deemed  operative.  The  fees 
for  said  certificate  shall  be  ten  dollars,  for  filing  amendments  to  the  articles 
of  incorporation  five  dollars,  which  said  fees  shall  be  paid  to  the  bank 
examiner,  and  all  fees  received  from  such  associations  shall  be  paid  into  the 
state  treasury. 

Sec.  3. — Such  local  associations  shall  have  power  : 

1.  To  issue  stock  to  members;  to  assess  and  collect  from  members  fees, 
dues,  fines  and  other  charges,  and  interest  and  premiums,  and  the  same  shall 
not  be  held  to  be  usurious  ;  to  permit  or  force  members  to  withdraw  all  or 
part  of  their  stock  ;  to  make  loans  to  members  ;  all  upon  such  terms  and  con- 
ditions as  may  be  provided  in  the  by-laws. 

2.  To  borrow  money  for  temporary  imposes  not  inconsistent  with  the 
objects  of  the  association,  and  issue  its'  evidences  of  indebtedness  or  paid-up 
stock  therefor,  but  for  no  longer  term  than  one  year,  and  not  exceeding,  in 
the  aggregate  amount,  one-fifth  of  the  assets  on  hand. 

3.  The  only  real  estate  which  it  shall  be  lawful  for  any  local  association  to 
acquire,  by  purchase  or  otherwise,  shall  be  such  as  it  may  be  necessary  to 
buy  or  take  in  the  protection  or  enforcement  of  its  securities,  and  the  collec- 
tion of  any  claims  or  debts  due  to  it,  and  such  real  estate  shall  be  sold  within 
teu  years  from  acquiring  title  thereto. 

4.  To  delegate  authority  to  its  directors  to  alter  or  amend  the  by-laws  of  the 
association,  under  such  restrictions  and  limitations  as  it  may  deem  proper. 

5.  All  such  powers  as  are  necessary  and  proper  to  enable  such  local  associa- 
tion to  carrv  out  the  purposes  of  its  organization. 

Sec.  4. — The  capital  stock  of  any  such  corporation  shall  not  exceed  five 
million  dollars  in  the  aggregate,  and  may  be  issued  in  one  or  more  successive 
series,  and  in  such  amount  as  the  directors,  in  the  absence  of  a  provision  in 
the  by-laws,  may  determine  ;  but  no  single  series  shall  exceed  in  amount  the 
sum  of  five  hundred  thousand  dollars,  nor  one-tenth  of  the  aggregate  capital 
stock.  The  said  capital  stock  shall  be  divided  into  shares  of  not  less  than 
twenty-five  nor  more  than  two  hundred  dollars  each,  payable  in  periodical 
instalments,  called  dues,  not  exceeding  two  dollars  each  per  share.  No  paid- 
up  stock  shall  be  issued  except  as  provided  in  section  9,  hereof. 

Sec.  5.— All  shares  withdrawn,  forfeited,  retired,  matured  and  surrendered, 
shall  be  cancelled  and  become  the  property  of  the  association  and  in  lieu  of 
the  same  new  shares  may  be  issued  in  any  subsequent  series.     Unpaid  in- 


904  APPENDIX  IV. 

stalments  and  other  charges  upon  shares  shall  be  a  lien  thereon,  enforcible 
as  in  the  by-laws  prescribed.  Payment  of  dues  or  interest  may  be  made  in 
advance,  but  no  interest  shall  be  allowed  therefor  at  a  greater  rate  than  six 
per  cent,  per  annum,  nor  for  a  longer  period  than  one  year. 

Sec.  6. — The  shares  of  a  member  who  continues  in  arrears  for  dues,  in- 
terest or  premiums  more  than  six  months,  shall,  at  the  option  of  the  directors, 
be  declared  forfeited,  and  the  withdrawal  value  of  the  shares  at  the  time  of 
the  first  default  shall  be  ascertained  and  all  fines  and  other  charges  shall  be 
deducted  therefrom.  If  said  member  is  not  a  borrower  he  shall  be  entitled 
to  receive  said  balance  on  thirty  days'  notice,  without  interest  ;  if  he  is  a  bor- 
rower then  said  balance  shall  be  applied  as  a  payment  upon  his  loan.  All 
shares  so  forfeited  shall  cease  to  participate  in  any  profits  of  the  association 
accruing  after  the  last  adjustment  and  valuation  of  said  -hares  before  said 
default,  but  shall  revert  to  the  association  freed  from  all  interest  claim  or 
demand  on  the  part  of  such  defaulting  member,  or  any  person  claiming  under 
him. 

Sec.  7. — A  member  may  withdraw  his  unpledged  shares  at  any  time  by 
giving  thirty  days  written  notice  of  such  intention,  and  shall  then  be  entitled 
to  receive  the  amount  of  dues  paid  in  by  him  and  such  proportion  of  the 
profits  as  the  by-laws  may  prescribe,  less  all  fines  and  other  charges,  and  in 
the  order  of  his  respective  turn  of  presenting  such  notice  ;  but  at  no  time  shall 
more  than  one-half  of  the  funds  in  the  treasury  be  applicable  to  the  demands 
of  withdrawing  members  without  the  consent  of  the  directors. 

Sec.  8. — Upon  the  death  of  a  member  his  legal  representatives  shall  be 
entitled  to  receive,  sixty  days  from  the  date  of  said  death,  the  full  amount  of 
dues  paid  in  by  him  and  legal  interest  thereon,  first  deducting  all  charges 
that  may  be  due  on  the  stock  ;  Provided,  that  in  case  of  shares  }  ledged  for  a 
1  >an,  this  section  shall  not  apply  unless  the  said  loan  be  fully  repaid  within 
the  aforesaid  sixty  days.  No  fine  shall  be  charged  to  a  deceased  member's 
account  after  his  decease,  unless  his  legal  representatives  shall  have  assumed 
future  payments  on  such  shares. 

Sec.  9.— When  the  stock  in  any  series  shall  have  reached  its  matured  value 
payment  of  dues  thereon  shall  cease,  and  all  borrowers  in  such  series  shall 
be  entitled  to  have  their  securities  returned  to  them  and  cancelled.  The 
holder  of  unpledged  shares  in  such  series  shall  be  paid  out  of  the  funds  of 
the  association,  the  matured  value  thereof,  or  receive  paid  up  stock  therefor, 
and,  in  either  case,  with  such  rate  of  interest  as  shall  be  determined  by  the 
by-laws  from  the  time  the  directors  shall  declare  such  series  to  have  matured 
:  paid.  And  when  such  maturity  is  reached  between  the  dates  of  adjust- 
ment Hi  profits  the  holders  of  all  the  shares  in  such  series  shall,  in  addition  to 
the  value  thereof,  be  entitled  to  interest  at  such  rate  as  may  be  fixed  by  the 
by-laws  for  all  full  months  from  the  date  of  the  preceding  adjustment.  Pro- 
-.  ided.  that  at  no  time  shall  more  than  one-half  of  the  monthly  receipts  of  the 
association  be  applicable  to  the  payment  of  matured  shares  without  consent 
of  the  directors.  But  the  directors  may,  at  anytime  before  maturity,  retire 
unpledged  shares  by  enforcing  the  withdrawal  of  the  same,  as  prescribed  in 
the  by-laws  and  articles  of  incorporation. 

SEC.  10. — At  slated  meetings,  the  money  in  the  treasury  shall  be  offered  for 
loan  in  open  meeting,  and  the  member  who  shall  bid  the  highest  premium 
for  the  preference  or  priority  of  the  loan  shall  be  entitled  to  a  loan  lor  the  full 
amounl  of  each  share  of  stock  held  by  him  with  interest  at  such  rate  as  may 
lie  fixed  by  the  by-laws.    The   premium  bid  mav  be  a  certain  sum  or  per- 
centage on  the  loan  to  be  deducted   in  advance   from   the  loan,  or  mav  be  by 
cal  payments  during  the  existence  of  the  loan,  as  the  bylaws 
;  Provided,  that  the  offer  in  open  meeting  mav  be  dispensed 
1  when  the  by-laws  prescribe  a  fixed  rate  of  interest  and  premium,  or  a 
bidding. 

Sec.  11. — Forevery  loan  made  a  non-negotiable  note,  or  bond,  secured  by 

morl  1  oil.    tate  situated  in  the  county  where  such  association  is 

1  11  ated,  and  unin<  umbered  ex<  ej  1  by  prior  loans  oi  such  association,  shall  be 

give-  inied  by  a  transfei  01  pledge  to  the  association  oi  the  shares 

ed  u     «  j   Pi  mded,  thai  any  association  heretofore  organized  may 

make  loan    upi :al  estate  situated  outside  of  the  county  where  such  a    1 

m  i    located,  if  authorized  thereto  by  its  articles  of  incorporation  or  by- 

Sui  1 1  mortgage     hall  have    priority  Over   all    liens    upon  I  he  mortgaged 

tnd  thi   buildings  and  improvements  thereon,  which  shall  be  filed 

cording  of  such  mortgage.    The  directors  mav.  in  their 

di     ense  with  said  mortgage  when  the  withdrawal  value  oi   the 

■ . .-.  ■  d  upon  ■  hall  exi  eed  the  amounl  borrowed  and  interest  there- 


GENERAL   LEGISLATION.  905 

mi  for  six  months.  If  the  borrower  neglect  to  offer  security  satisfactory  to 
the  directors  within  the  time  prescribed  by  the  by-laws  his  right  to  loan 
shall  be  forfeite  1,  and  he  shall  be  charged  with  one  month's  interest  and 
premium  at  the  rate  bid  by  him,  together  with  any  expense  incurred,  and  the 
money  may  be  reloaned  at  any  subsequent  meeting. 

SEC.  12. — A  borrower  may  repay  his  loan  at  any  time.  He  shall  be  charged 
with  the  full  amount  of  the  original  loan  together  with  interest,  premium  and 
hues  in  arrears  ;  he  shall  be  given  credit  lor  the  withdrawal  value  of  his 
shares,  pledged  and  transferred  as  security,  and  in  cases  where  the  premium 
was  deducted  from  the  loan  in  advance  with  such  proportion  of  the  premium 
so  deducted  as  the  part  of  the  term  unexpired  bears  to  the  whole  term  of  the 
loan,  f'he  balance  shall  be  received  by  the  association  in  full  satisfaction 
and  discharge  of  said  loan,  and  the  shares  thus  credited  shall  be  cancelled 
and  revert  back  to  the  association.  All  settlements  made  at  periods  interven- 
ing between  stated  meetings  of  directors  shall  be  made  as  of  the  date  of  the 
stated  meeting  next  succeeding  such  settlement.  A  borrower  may,  at  his  op- 
tion, repay  his  loan  without  claiming  credit  for  said  shares,  whereupon  said 
shares  shall  be  retransferred  to  him  freed  from  all  claim,  by  reason  of  said 
loan.  Partial  payments  of  loans  may  be  made  in  a  sum  equal  to  the  par 
value  of  one  share,  or  any  multiple  thereof,  and  for  each  such  sum  one  share 
of  stock  shall  be  released  from  pledge. 

Sec.  [3. — Whenever  a  borrower  shall  be  six  months  in  arrears  in  the  pay- 
ment of  his  dues,  or  interest,  or  premium,  his  whole  loan  shall  become  due 
and  payable,  without  deduction  of  any  premium  paid  ;  his  pledged  shares 
may  be  declared  forfeited  and  their  withdrawal  value,  at  the  time  of  the  hist 
default,  applied  as  a  payment  on  the  loan  ;  the  balance,  with  interest  and 
premium,  lines  and  other  charges  thereon,  from  the  time  of  the  first  default, 
may  be  enforced  by  proceedings  on  his  security  according  to  law.  When 
the  amount  thus  collected  exceeds  the  amount  due,  the  excess  shall  be  re- 
turned to  the  defaulting  borrower  ;  the  money  received  shall  be  re-loaned  at 
any  subsequent  meeting. 

Sec.  14. — Any  person  of  full  age  and  sound  mind  may  become  a  member 
of  such  association  in  such  manner  as  may  be  prescribed  in  the  by-laws  ;  but 
no  person  shall  become  the  owner  of  more  than  one  hundred  shares.  Shares 
may  be  issued  to  minors  above  the  age  of  fourteen  years,  who  shall  then  bo 
subject  to  the  same  duties  and  liabilities  as  adult  members,  and  such  shares  in 
the  discretion  of  the  directors  may  be  withdrawn  by  such  minor,  or  its  parent 
or  guardian,  but  in  either  case  the  payment  made  on  such  withdrawal  shall 
be  valid,  as  well  as  in  relation  to  payment  on  shares  forfeited,  retired  or 
matured.  Minors  under  fourteen  may  hold  by  trustee  or  guardian.  The  by- 
laws may  limit  the  number  of  votes  each  member  may  be  entitled  to, and  may 
prohibit  voting  by  proxy. 

Sec.  15. — The  real  estate  owned  by  such  local  association  shall  be  assessed 
for  taxation  in  the  same  manner  as  provided  in  case  of  other  corporations,  but 
the  shares  of  capital  stock  issued  by,  and  the  mortgages  and  other  personal 
estate  held  by  such  association  shall  not  be  liable  to  taxation,  except  as  provided 
in  this  act.  The  shares  held  by  a  member  of  a  local  association  shall  be  exempt 
from  levy  and  sale  on  execution  or  attachment  to  the  amount  of  one  thousand 
dollars  in  such  shares  at  the  withdrawal  value  thereof,  provided  that  such  ex- 
emption shall  not  apply  to  any  person  who  shall  have  a  homestead  exempt 
under  the  general  laws  of  this  state. 

Sec.  16. — All  expenses  of  such  association  unless  otherwise  provided  in  the 
by-laws  shall  be  paid  out  of  the  earnings  annually,  and  so  much  of  the  earn- 
ings as  shall  be  necessary  shall  be  set  aside  each  year  for  that  purpose.  A 
portion  of  the  earnings  on  being  determined  by  the  directors,  shall  also  be  re- 
served annually,  or  semi-annually,  for  the  payment  of  contingent  losses  ;  but 
in  all  permanent  or  perpetual  associations  at  least  five  per  cent,  of  the  net 
earnings  shall  be  set  aside  each  year  for  such  fund  until  it  reaches  at  least  five 
per  cent,  of  the  outstanding  loans.  All  losses  shall  be  paid  out  of  such  fund 
until  the  sum  is  exhausted,  and  whenever  said  fund  falls  below  live  per  cent, 
of  the  loans  aforesaid,  it  shall  be  replenished  by  annual  appropriations,  of  at 
least  five  per  cent,  of  the  earnings,  as  hereinbefore  provided,  until  it  again 
reaches  said  amount.  The  residue  of  such  earnings  shall  be  transferred  as  a 
dividend,  to  the  credit  of  all  members  in  such  proportion,  and  payable  at  such 
times,  and  in  such  manner  as  the  articles  and  by-laws  may  provide.  All  shares, 
at  their  maturity,  shall  be  entitled  to  receive  such  share  of  said  reserve  fund 
as  the  directors  may  determine  in  addition  to  the  amount  mentioned  in  section 
9,  hereof. 

Sec.  17. — The  by-laws  of  such  local  association  must  specify  :    The  manner 


906  APPENDIX   IV. 

in  which  persons  may  become  and  cease  to  be  members  and  the  number  of 
shares  a  member  may  own  and  hold  ;  the  terms  on  which  certificates  for 
shares  are  to  be  issued,  the  form  thereof  and  the  fees  therefor  ;  the  number  of 
shares  a  member  may  transfer,  and  the  manner  and  condition  of  transfer,  ami 
fees  therefor  ;  the  manner  of  renewing  lost  or  destroyed  certificates,  and  lees 
therefor  ;  whether  interest  shall  be  allowed  on  dues  paid  in  advance,  and  if  so, 
at  what  rate  ;  how  shares  in  default  may  be  forfeited  and  disposed  of ;  how 
snares  may  be  withdrawn,  the  fees  to  be  charged  therefor,  and  the  proportion 
of  the  profits  payable  on  such  withdrawal  ;  the  regulations  as  to  retiring 
shares,  and  the  amount  to  be  paid  to  holders  thereof;  the  amount,  time  and 
manner  of  paying  dues,  interest,  premiums,  fees  and  other  charges  ;  the  method 
and  manner  of  bidding  for  loans,  and  the  terms  and  conditions  upon  which 
loans  may  be  obtained,  paid  and  cancelled  ;  provisions  for  the  custody  and 
handling  of  securities,  and  the  banking  and  checking  of  funds  ;  when  and  how 
meetings  shall  be  called  and  held,  and  what  shall  constitute  a  quorum  ;  the 
number  of  votes  members  may  cast  and  whether  voting  by  proxy  be  permitted  ; 
the  election  and  removal  of  officers,  the  filling  of  vacancies,  defining  duties 
and  providing  remuneration  ;  the  fines  on  non-payment  of  any  sum  due,  or 
for  other  defaults  or  violations  of  the  rules  and  such  other  rules  and  regulations 
not  inconsistent  with  law  or  the  articles  of  incorporations,  as  the  business  of 
the  association  may  require. 

Sec.  iS. — All  corporations  formed  under  this  or  any  other  law,  or  authorized 
to  transact  in  this  state  a  business  similar  to  that  authorized  to  be  done  by 
this  act,  shall  be  under  the  control  and  supervision  of  the  bank  examiner. 
Every  such  corporation  shall,  annually,  at  the  end  of  its  fiscal  year,  make_  a 
full  and  detailed  report  of  its  business  done  the  preceding  year  and  of  _  its 
condition  at  the  close  thereof,  in  such  form  and  containing  such  information 
as  said  examiner  may  prescribe,  and  shall  file  with  him  a  true  and  verified 
copy  thereof  within  thirty  days  thereafter  ;  accompanying  the  same  shall  be 
an  affidavit  of  the  secretary  of  said  corporation  showing  that  a  true  copy  of 
said  report  has  been  delivered  or  mailed  to  each  member  of  said  corporation. 
If  any  such  corporation  fail  or  refuse  to  furnish  the  report  herein  required,  it 
shall  forfeit  the  sum  of  ten  dollars  per  day  for  each  and  every  clay  such  report 
shall  be  withheld,  and  said  examiner  may  maintain  an  action  in  the  name  of 
the  state  to  recover  such  penalty,  and  the  same  shall  be  paid  into  the  state 
treasury. 

Sec.  19. — Once  every  two  years  the  said  examiner  shall  make,  or  cause  to 
be  made,  an  examination  into  the  affairs  of  all  such  corporations,  and  for  that 

Eurpose  he  shall  have  full  access  to,  and  may  compel   the  production  of,  all 
ooks,  .  -ccurities,  moneys,  etc.,  of  the  corporation,  and  have  the  power 

to  administer  oaths  to,  and  examine  the  officers  and  agents  of  the  corpora- 
tions as  to  ils  affairs,  and  to  punish  for  contempt.  Special  examinations  shall 
be  made  upon  written  request  of  five  or  more  members  of  any  such  corpora- 
tion, they  guaranteeing  the  expense  of  the  same;  otherwise,  the  actual  and 
necessary  expenses  of  such  examinations  shall  be  paid  out  of  the  state  treas- 
ury. Any  such  corporation  refusing  to  submit  loan  examination  duly  or- 
dered or  requested,  shall  have  its  charter  revoked. 

SEC.  20. — Should  the  examiner,  upon  examination,  find  any  such  corporation 

ng  it--  business  in  whole  or  in  part  contrary  to  law,  or  failing  to  cqm- 

tne  law,  he  shall  so  notify  the  board  of  directors  of  such  corporation 

in  writing,  and  if,  after  thirty  days,  such  illegal  practices  or  failure  continue, 

the  facts  to  the  attorney  general,  who  shall  cause  proper  pro- 

to  be  instituted  to  revoke  the  charter  of  such  corporation.     Should 

on  examination,  that  the  affairs  of  any  such  corporation  are  in  an 

1  and  that  the  interests  of  the  public  demand  the  dissolution 

0  ition,  and  the  winding  up  of  its  business,  he  shall  so  report  to 
eneral,  who  shall  institute  the  proper   proceedings   for  that 

i      On  .  ;   before  [une  1,  [897,  every  mutual  building  and  loan   cor- 
1  ]  and  heretofore  incorporated  under  the  laws  of  this  state 

ii:  tile  m  the  office  of  the  bank  examine]  a  1 ,  of  its 

and  of  its  by-laws  in  force  at  the  time  of  the  passage 
and  publicati .1  thi    act,  the  force  and  effeel  oi  which  said  articles  and  by- 
ill  nol  be  affected  nor  invalidated  by  this  act  ;  but  alter  said  last  men- 
tioned dale  no  ami  ndmenl  to  said  articles,  nor  to  said  by-laws,  shall  be  valid, 
1   pro     da    mi  section  2,  ol  this  act  provided. 

1  ol   incorporation  or  the  by-laws  may  provide  for  the 

•  I 1    thi    associatii  in,  and  in  case  1  'I  dissolution 

the  ■  nay,  bj   majoritj  1      authorized  to   sell  and  transfer  its 


GENERAL   LEGISLATION.  907 

mortgage  securities  and  other  property  to  another  corporation,  person  or  per- 
sons subject  always  to  the  vested  and  accrued  rights  of  the  mortgagors. 

Sec.  23. — Said  examiner  shall  annually,  at  the  earliest  practicable  dale  after 
the  reports  are  received,  make  a  report  to  the  governor  of  the  general  con- 
duct and  condition  of  all  building  and  loan  associations  doing  business  in  this 
stale,  including  the  information  contained  in  such  reports,  arranged  in  tabular 
form,  together  with  such  suggestions  as  he  may  deem  expedient.  He'  shall 
also  report  the  names  and  compensations  of  employees  and  other  expenses 
in  relation  to  such  association,  the  whole  amount  of  the  income  and  the 
sources  whence  derived.  One  thousand  copies  of  said  report  shall  be  printed  ; 
each  local  association  shall  be  entitled  to  three  copies,  the  remainder  to  be  for 
general  distribution. 

Sec.  24. — No  foreign  building  and  loan  association  of  any  kind,  and  no 
foreign  association  or  corporation  representing  itself  to  be  a  "building  and 
loan  association,"  or  doing  business  on  the  building  society  plan,  and  no  asso- 
ciation or  corporation  organized  under  the  laws  of  any  other  state  or  territory 
and  doing  business  in  the  manner  provided  for  mutual  loan  and  building 
corporations  by  this  charter,  or  upon  any  similar  instalment  plan,  shall  issue 
its  shares,  receive  moneys  or  transact  any  business  in  this  slate  unless  such 
association  shall  have  and  keep  on  deposit  with  the  state  treasurer  of  Wiscon- 
sin, in  trust,  for  the  benefit  and  security  of  all  its  members  in  this  slate,  one 
hundred  thousand  dollars  to  be  held  in  trust  as  aforesaid,  until  all  shares  of 
such  association,  held  by  residents  of  this  state,  shall  have  been  fully  re- 
deemed and  paid  off  by  such  association,  and  until  its  contracts  and  obliga- 
tions to  persons  and  members  residing  in  this  state  shall  have  been  fully  per- 
formed and  discharged  ;  the  securities  comprising  such  deposit  shall  first  be 
approved  by  the  bank  examiner  under  the  same  laws  and  regulations  govern- 
ing the  approval  of  securities  of  insurance  corporations  ;  and  upon  such 
deposit,  the  state  treasurer  shall  issue  a  certificate  for  such  deposit,  and  there- 
upon the  bank  examiner  may  issue  his  certificate  of  authority  to  said  associa- 
tion to  transact  business  in  this  state. 

Sec.  25. — The  deposit  to  be  made  with  the  state  treasurer  by  any  foreign 
building  and  loan  association  may  consist  of  bonds  or  treasury  notes  of  the 
United  States,  or  bonds  of  this  state,  or  any  other  state  of  the  'United  States, 
or  any  city,  town  or  county  of  this  state,  or  any  other  state  of  the  United 
States  having  legal  authority  to  issue  the  same,  or  mortgages,  being  first  liens 
on  real  estate  located  in  this  state.  All  dividends  and"  interest  which  may 
accrue  on  securities  held  by  the  stale  treasurer  as  provided  for  herein,  and  all 
dues  or  monthly  payments  which  become  payable  on  stock  pledged  as  security 
for  loans,  the  mortgages  for  which  are  on  deposit  with  the  state  treasurer,  in 
accordance  with  the  provisions  of  this  act,  may  be  collected  and  retained  by 
the  association  depositing  such  securities  or  mortgages,  so  long  as  such  asso- 
ciation remains  solvent  and  faithfully  performs  ad'eontracts  with  its  members. 
Any  securities  on  deposit  as  provided  herein,  if  approved  by  the  bank  ex- 
aminer, may  from  time  to  time  be  withdrawn  if  others  of  equal  value  and  of 
the  character  named  in  this  section  are  substituted  therefor.  If  any  securities, 
as  provided  in  this  act,  shall  depreciate  in  value  for  any  cause,  new7  securities 
must  be  added,  so  that  the  deposit  may  at  all  times  be  kept  good  and  of  the 
value  of  one  hundred  thousand  dollars,  and  it  shall  be  the  duty  of  the  hank 
examiner  to  revoke  the  certificate  of  authority  of  any  such  association  when- 
ever there  exists  an  impairment  of  such  deposit  for  a  period  of  more  than 
thirty  days,  after  due  notice,  by  the  bank  examiner. 

Sec.  26. — No  foreign  building  and  loan  association  shall  do  business  in  this 
state  without  having  first  paid  the  fees  prescribed  in  this  act,  and  obtained 
from  the  state  treasurer  of  Wisconsin  a  certificate  that  the  deposit  required 
by  this  act  has  been  made,  and  from  the  bank  examiner  of  this  state  a  cer- 
tificate <>f  authority  or  license,  authorizing  said  association  to  do  business  in 
Wisconsin,  stating  that  such  association  has  complied  with  all  the  provisions 
of  this  chapter,  and  such  certificate  shall  be  in  force  one  year,  unless  sooner 
revoked,  and  shall  be  renewed  from  year  to  year,  and  unless  so  renewed  and 
continued  in  force  such  association  shall  in  it  do  business  in  this  state. 

S ice.  27. — Every  foreign  building  and  loan  association  before  commencing 
to  do  business  in  this  state  shall  : 

1.  File  with  the  bank  examiner  a  duly  authenticated  copy  of  its  charter  or 
articles  of  incorporation,  and  by-laws,  copy  of  the  certificates  or  shares  issued, 
together  with  a  copy  of  all  printed  matter  issued  by  the  associatii  >n 

2.  Kile  with  the  bank  examiner  of  this  state  a  certificate  of  the  proper  state 
officer  having  charge  and  supervision  of  such  associations  in  the  state  in 
which  incorporated,  certifying  that  such  association  is  duly  and  legally  incor- 


008  APPENDIX   IV. 

porated  and  authorized  to  transact  business,  and  that  similar  associations 
incorporated  under  the  laws  of  this  state  are  permitted  and  licensed  to  trans- 
act business  in  such  state. 

S.  Pay  to  the  bank  examiner  twenty-five  dollars  for  filing  the  papers  men- 
tioned in  this  section.  The  bank  examiner,  before  granting  a  license  to  any 
such  corporation,  organized  or  incorporated  under  the  laws  of  any  other 
state  of  the  United  States  or  foreign  government,  shall  require  that  every  such 
o  >rporation  shall  first  file  in  writing  an  appointment  of  the  bank  examiner,  or 
his  successor  in  office,  as  the  attorney  upon  whom  any  summons,  notice  or 
process  of  any  court  of  this  state  may  be  served,  and  stipulate  that  any  service 
of  any  such  "summons,  notice  or  proceedings  upon  such  attorney,  in  any 
action  brought  upon  any  cause  of  action  arising  out  of  any  business  or  trans- 
action in  this  state,  shall  be  accepted  irrevocably  as  a  valid  service  upon  such 
corporation,  and  copies  of  said  appointment  certified  by  the  bank  examiner 
shall  be  deemed  sufficient  evidence  of  his  authority  to  accept  service  as  the 
attorney  on  behalf  of  any  such  corporation.  Each  such  corporation  shall 
agree  in  such  appointment  of  attorney  that  the  license  granted  by  the  bank 
examiner  shall  cease  and  be  revoked  in  case  such  corporation  shall  remove  or 
make  application  to  remove  into  any  court  of  the  United  States,  any  action  or 
proceeding  commenced  in  any  court  of  this  state,  upon  a  claim  o"r  cause  of 
action  arising  out  of  any  business  or  transaction  done  in  this  state,  and  it  shall 
be  the  imperative  duty  of  the  bank  examiner  to  revoke  any  and  every  author- 
itv,  license  or  certifiate  granted  to  any  such  corporation,  violating  the  pro- 
visions of  this  section,  and  no  such  coi"poration  shall  have  its  license  or  cer- 
tificate of  authority  renewed  for  three  years  after  such  revocation,  and  shall 
agree  that  in  the  event  of  revocation  of  license  such  appointment  of  the  bank 
examiner  shall  continue  for  the  purpose  of  serving  process  for  beginning 
actions  upon  anv  certificate  of  stock  or  liability  incurred  or  contracted  in  this 
state,  while  it  transacted  business  therein,  so  long  as  any  liability  shall  exist. 
When  legal  process  against  any  such  corporation  is  served  upon  the  bank 
examiner' he  shall  immediately  notify  the  corporation  of  such  service  by  letter, 
and  enclose  copy  of  the  process  served  on  him,  to  said  corporation,  or  to  any 
person  designated  by  the  officers  in  writing.  The  plaintiff,  for  each  process 
rved,  shall  pay  to  the  bank  examiner,  at  the  time  of  such  service,  a  fee  of 
two  dollars,  which  shall  be  recovered  by  the  plaintiff  as  a  part  of  the  taxable 
if  he  prevails  in  the  suit.  The  bank  examiner  shall  keep  a  record  of  all 
processes  served  on  him,  which  record  shall  show  the  day  and  hour  when 
such  service  was  so  made,  and  all  the  fees  received  by  the  bank  examiner  at 
the  time  of  serving  such  process,  shall  be  paid  into  the  state  treasury. 

SEC.  28. — When'  by  the  laws  of  any  other  state,  territory,  or  nation,  any 
taxes,  fines,  penalties,  licenses,  fee  deposits,  or  moneys  or  securities  or  other 
obligations  or  prohibitions  are  imposed  on  building  and  loan  associations  of 
this  state  doing  business  in  such  other  state,  territory  or  nation,  or  upon  their 
agents  therein,  so  long  as  such  laws  continue  in  force,  the  same  obligations 
and  prohibitions  of  whatever  kind,  shall  be  imposed  upon  all  building  and 
loan  associations  of  such  other  territory  or  nation  doing  business  in  this  state 
and  upon  their  agents  here. 

Sec.  20. — The  name  "  building  and  loan  association  "  as  used  in  this  act, 
shall  include  all  incorporations,  societies,  or  organization  or  association  doing 
a  saving  and  loan  or  investment  business  on  (he  building  society  plan,  whether 
mutual  or  otherwise,  and  whether  issuing  certificates  of  stock  or  bonds,  or  any 
other  evidence  of  indebtedness  which  mature  at  a  time  fixed  in  advance  or 
m  'i. 

Si;c.  30. — The  bank   examiner  before  granting  a   license  shall  examine  or 

examined  every  foreign  building  and  loan  association  applyingfor 

permis  ion  to  transacl  bu  >iness  in  this  state,  and  every  such  association  shall 

Cay  the    ame  fees,  and     hill  make  such  annual  repori  as  required  of  local 
11  ■■  and  loan  associations,  comply  with  all  laws  applicable  to  such  local 
1     m  ,  and    hall  be  subject  to  the  same  penalties. 
si      i]      No  person  shall  act  as  the  agenl  or  representative  of  any  foreign 
building  or  loan  ass.u  iation,  until  after  lie  shall,  at  the  request  oi  such  .issue,  ia- 
tion,  ured  from  the  hank-  examiner  a  license  reciting  the  fact  that 

ition  is  authorized  and   licensed  to  transact  business  in  this  stale 
and  has  complied  with  all  lawful  requirements.    The  fee  for  such  license 
be  I'-ii  dollai     and  the  license  shall  continue  in  force,  unless  sooner 
ml  1    aminer  during  and  until  theclose  of  the  fiscal  yeai  of 
th  ■  a    ioi  iation. 

[|    hall  be  unlawful  for  any  person  to  act  as  the  agenl  for  anv  un- 
authi  and  loan  . 1   iociation  in  this  state,  or  to  sell  or  dispose  of 


GENERAL   LEGISLATION.  909 

any  shares,  certificates,  bonds  or  other  evidences  of  indebtedness  of,  or  for 
any  such  authorized  association  and  nol  licensed  to  transact  business  in  this 
stale,  and  any  person  acting  for  any  such  unauthorized  association,  or  in 

manner  aiding  in  the  transaction  of  the  business  of  such  association  in  this 
state,  shall  lie  guilty  of  a  misdemeanor  and  be  punished  by  a  line  or  not  less 
than  one  hundred  dollars  nor  more  than  five  hundred  dollars  tor  each  offence, 
and  every  person  convicted  of  such  offence  shall  be  personally  liable  foi 
sum  or  sums  received  by  him  for  or  on  behalf  of  such  unauthorized  associa- 
tion. 

SEC.  33. — Anv  foreign  building  and  loan  association  having  made  the  de- 
posit of  securities  with  the  state  treasurer  required  by  this  act  and  desiring 
to  withdraw  such  securities,  or  any  portion  of  them,  without  depositing 
securities  of  like  character  and  amount,  or  desiring  to  disci  ml  inue  its  bti  i 
or  withdraw  from  the  state,  may  do  so  by  complying  with  the  following 
conditions  and  requirements:  Such  association  shall  tile  with  the  bank 
examiner  a  statement  reciting  the  reasons  lor  desiring  to  withdraw  such 
securities,  and  the  amount  of  securities  to  be  withdrawn,  and  the  bank  ex- 
aminer shall  thereupon  examine  such  association  and  determine  the  amount 
of  the  liabilities  on  account  of  all  agreements  or  contracts  outstanding  with 
residents  of  this  state,  and  if  he  shall  be  convinced  that  the  interests  of  such 
residents  of  this  state  will  not  be  injured  or  jeopardized  by  such  withdrawal, 
he  shall  cause  to  be  published  in  three  newspapers  in  this  state  for  a  period 
of  three  weeks  at  the  expense  of  the  association,  the  request  of  such  associa- 
tion for  the  withdrawal  of  such  securities,  and  if  no  objection  is  filed  by  any 
resident  of  this  state,  holding  any  share,  certificate  bond  or  other  evidence^  of 
indebtedness  of,  or  against  such  association,  within  one  week  after  the  last 
date  of  the  publication  of  such  request,  the  bank  examiner  shall  issue  a  cer- 
tificate certifying  to  the  state  treasurer  the  amount  of  liabilities,  if  any,  exist- 
ing in  this  state,  and  the  amount  of  securities  such  association  shall  be  per- 
mitted to  withdraw,  and  upon  filing  a  receipt  for  such  amount,  the  association 
shall  be  permitted  to  withdraw  the  same  ;  Provided,  however,  that  under  all 
circumstances  there  shall  remain  at  all  times  a  sufficient  deposit  to  protect 
the  members  or  residents  of  this  state  holding  shares,  certificates,  bonds  or 
other  evidences  of  indebtedness  of,  or  against  such  association,  and  that  such 
deposit  shall  decrease  only  as  the  liabilities  of  such  association  decrease  on 
account  of  such  members  or  residents  of  this  state. 

Sec.  34. — Any  service  of  summons  in  any  action  against  any  foreign  build- 
ing and  loan  association  not  authorized  to  transact  business  in  this  state  may 
be  served,  and  such  service  held  to  be  valid  upon  the  association  if  served 
upon  any  person  who  shall  solicit  on  behalf  of  any  such  association,  or  who 
transmits  an  application  for  membership,  or  a  share,  certificate,  bond  or  other 
evidences  of  indebtedness  to  or  from  any  such  foreign  building  and  loan  as- 
sociation, or  in  any  manner  aids  or  assists  in  doing  either,  or  in  transacting 
any  business  for  such  association,  ot  on  any  person  who  advertises  to  do  any 
such  thing. 

Sec.  35. — It  shall  be  the  duty  of  the  bank  examiner,  upon  evidence  furnished 
to  him  that  any  foreign  building  and  loan  association,  not  authorized  to  trans- 
act business  in  this  state,  has  failed  or  refused  to  pay  any  final  judgment 
rendered  against  it  in  any  court  of  this  state,  to  appear  before  the  bank  exam- 
iner, or  other  proper  officer  of  the  state  in  which  such  association  is  incorpo- 
rated or  principal  office  is  located,  with  a  complaint  and  petition  for  the  ap- 
pointment of  a  receiver,  and  to  take  such  steps  as  may  be  necessary  to 
secure  the  appointment  of  a  receiver.  Allnecessary  expenses  incurred  by  the 
bank  examiner  in  carrying  out  the  provisions  of  this  section  shall  be  certified 
to  the  secretary  of  state  as  actually  necessary  in  the  discharge  of  his  duty, 
whereupon  it  shall  be  the  duty  of  the  secretary  of  state  to  draw  his  warrant 
upon  the  state  treasurer  for  the  same,  to  be  paid  out  of  the  general  fund. 

Sec.  36. — This  act  being  intended  as  a  revision  of,  and  substitute  for  chap- 
ter 93,  of  the  annotated  statutes,  and  of  chapter  525,  laws  of  1889,  and  of  chapter 
469,  laws  of  1891,  the  said  chapter  93,  of  the  annotated  statutes,  and  all  acts 
amendatory  thereof  and  supplementary  thereto,  and  chapter  525,  laws  of  1 
and  chapter  469,  laws  of  i89i,are  hereby  repealed. 

Sec,  37. — This  act  shall  take  effect  and  be  in  force  from  and  after  its  pas- 
sage and  publication. 

Approved  April  27,  1887. 

ACTS  1897,  p.  940. 

Sec.  1. — Any  foreign  building  and  loan  association  which  is  actually  and  in 
good  faith  winding  up  its  business  and  has  entirely  ceased  to  issue  or  sell  its 


910  APPENDIX   IV. 

stock,  shall  not  be  required  to  renew  or  replace  securities  so  withdrawn  in  the 
usual  course  of  its  business  from  time  to  time,  but  shall  be  required  to  keep  on 
deposit  with  the  state  treasurer  sufficient  mortgages  or  other  satisfactory 
securities  to  secure  the  payment  by  it  of  all  its  obligations  to  citizens  of  this 
state  ;  proof  of  its  condition  and  of  the  value  of  its  deposits  shall  be  made  from 
time  to  time  to  the  state  treasurer,  whenever  required.  And  whenever  any 
such  association  has  fully  discharged  all  its  obligations  to  the  citizens  of  this 
state,  proof  may  be  made  of  such  state  of  facts  by  the  oaths  of  its  president 
and  secretarv,  and  thereupon,  on  the  approval  by  the  attorney  general,  the 
treasurer  shall  release  and  return  to  such  association  all  securities  remaining 
in  his  hands. 

Sec.  2. — This  act  shall  take  effect  and  be  in  force  from  and  after  its  passage 
and  publication. 

Approved  April  27,  1897. 

WYOMING. 

ACTS  1897,  p.  138. 

Section  i. — Any  number  of  persons  not  less  than  seven,  may  associate 
themselves  together  for  the  purpose  of  forming  a  corporation  to  accumulate 
the  savings  of  its  members  and  loan  the  same  at  stated  times,  by  complying 
with  the  general  laws  of  this  state  relating  to  the  creation  and  regulation  of 
corporations,  and  shall  thereupon  become  a  body  politic  and  corporate,  and 
shall  be  invested  with  all  the  powers  granted  by  this  act  and  all  other  laws  of 
this  slate  relating  to  corporations  generally,  and  shall  be  subject  to  all  the 
liabilities  and  restrictions  upon  such  corporations,  except  as  herein  otherwise 
provided. 

Sec.  2. — The  capital  stock  named  in  the  articles  of  incorporation  of  any  such 
association,  shall  be  deemed  to  refer  to  the  authorized  capital  thereof.  At 
least  rive  per  cent,  of  the  authorized  capital  shall  be  subscribed  before  any 
such  association  shall  commence  to  do  business.  The  par  value  of  each  share 
shall  not  exceed  two  hundred  dollars,  and  unless  otherwise  provided  in  the 
by-laws,  shall  be  paid  in  by  the  stockholders  in  regular,  equal,  periodical  pay- 
in  jnts,  at  such  times  and  in  such  amounts  as  shall  be  specified  in  the  by-laws. 
Such  payments  shall  be  called  dues,  and  at  or  before  a  time  to  be  stated  in  the 
by-laws,  each  stockholder  shall  pay  to  the  treasurer  of  the  association,  upon 
each  share  of  stock  held  by  him,  a  certain  amount  of  dues  to  be  specified  in 
the  by-laws,  and  shall  thereafter  continue  to  pay  such  dues  at  such  stated 
times  until  the  stock  upon  which  such  payments  are  made  shall  mature,  or  is 
withdrawn,  cancelled  or  forfeited.  Each"  stockholder  shall  be  entitled  to  a 
certificate  of  stock  for  the  number  of  shares  subscribed  by  him  at  any  time 
after  he  has  paid  his  first  instalment  of  clues  thereon.  Unpledged  stock  shall 
be  subject  to  a  lien  for  the  payment  of  delinquent  dues,  fines  and  other  charges 
inclined  thereon  under  the  provisions  of  the  by-laws,  and  the  by-laws  may 
provide  for  the  manner  of  enforcing  such  lien,  and  also  the  manner  of  enforc- 
ing a  lien  on  stock  pledged  to  the  association  as  security  for  a  loan.  Such 
slock  may  be  issued  in  series  at  such  times  and  in  such  amounts  as  the 
trustees  may  by  resolution  or  otherwise  determine.  It  the  by-laws  so  pro- 
vide,  lull  not  otherwise,  prepaid  and  paid  up  stock  may  be  issued,  upon  which 
a  gross  sum  shall  be  paid  in  advance  in  cash  and  cash  dividends  may  be  paid 
on  su<  h  slock  out  of  any  earnings,  as  the  by-laws  may  provide,  but  such  divi- 
dends shall  in  no  case  "exceed  the  per  cent,  of  profits  earned.  At  anytime 
a  series  of  stock  is  three  years  old,  anv  holder  of  unpledged  stock  in  any 
such  series  shall  have  the  right  to  withdraw  from  such  association  by  giving 
the  trustees  thirty  days' notice  in  writing  of  his  intention  so  to  do,  and  he 
shall  thereupon  be  entitled  to  receive  from  the  association  the  lull  amount 
paid  in  by  him.  and  such  interest  thereon,  or  such  proportion  of  the  profits,  as 
tin-  by  laws  shall  provide,  less  all  claims  and  other  charges  ;  at  no  liinc.how- 
ihall  more  than  One-half  of  the    funds   in   the   treasury  of  the  association 

be  applicable  to  the  demands  of  withdrawing  members  without  the  consent 

oi  tru  tees.    No  stockholder  shall  be  entitled  to  withdraw  whose 

-I  as  security.     Incase  of  the  death  of  any  member  holding 

unpledg(  'I     l'"  I:,  his  legal  representatives  shall   be  entitled  to  receive  the  lull 

amounfpaid  in  by  such   membei    less  all  lines  and  other  charges  thereon, 

thei   with  interest  on  the   balance   at    the   rate  of  six  per  cent,  per  annum 

eragi   time  thai   the  money  has  been  paid  to  the  association.    No 

fin<  1    hall   bi    charged  to  any  deceased  member's  accounl   unless  the  legal 

ati  .< a  oi    in  li  dei  edenl  assume  the  future  payments  on  stock.    New 

toi  I.  may  be  is  sued  in  lieu  of  shares  withdrawn  as  aforesaid.     The 


GENERAL   LEGISLATION.  911 

trustees  may,  in  their  discretion,  and  pursuant  to  the  by-laws,  retire  the  un- 
pledged shares  of  any  scries,  and  enforce  their  withdrawal  at  any  time  after 
three  years  from  the  date  of  issue.  The  members  whose  shares  are  to  be 
retired,  shall  be  determined  by  lot,  under  such  regulations  as  the  trustees  may 
prescribe.  The  withdrawal  value  of  shares  so  retired,  shall  be  the  amount  of 
of  dues  paid  thereon,  together  with  the  profits  apportioned  to  such  shares 
according  to  the  last  apportionment  of  profits,  less  all  tines  and  other  charges 
and  a  proportionate  part  of  any  unadjusted  loss. 

SEC.  3. — Members  who  make  default  in  the  payment  of  their  dues,  interest 
or  premiums  shall  be  subject  to  a  hue  of  not  exceeding  ten  per  cent  on  the 
total  amount  of  their  delinquincy  ;  Provided,  however,  that  the  total  amount 
of  delinquency  shall  not  include  any  other  fines. 

Sec.  4. — The  moneys  paid  to  the  association  shall  be  disposed  of  at  each 
stated  meeting  of  the  trustees  in  the  following  manner  : 

1.  In  payment  of  any  expenses,  including  moneys  advanced  by  the  associa- 
tion for  insurance,  taxes  or  other  assessments  on  property  mortgaged  to  the 
association. 

2.  In  payment  of  the  balance  due  on  account  of  any  loans  previously  made 
by  the  association. 

3.  In  payment  of  matured  stock. 

4.  In  payment  of  stock  withdrawn. 

5.  And  the  balance,  if  more  than  the  par  value  of  one  share,  shall  be  offered 
tor  loan  by  the  secretary  in  open  meeting,  and  the  stockholder  who  shall 
bid  the  highest  premium  for  the  right  of  precedence,  shall  be  entitled  to 
receive  a  loan  of  not  more  than  the  par  value  of  each  share  for  every  share  of 
stock  held  by  him,  but  a  stockholder  may  borrow  such  fractional  part  of  the 
par  value  of  a  share,  as  the  by-laws  may  provide.  In  case  the  borrower  shall 
neglect  to  offer  security  before  the  next  stated  meeting,  or  shall  offer  security 
that  is  not  approved  by  the  trustees,  he  shall  be  charged  with  one  month's 
interest,  the  same  as  if  he  had  obtained  his  loan,  together  with  any  expenses 
incurred,  and  the  loss  in  premium,  if  any,  on  resale,  and  the  money  shall  be 
resold  at  the  next  stated  meeting.  If  there  be  no  bidders,  the  money  on  hand 
may  be  awarded  by  lot  to  the  holders  of  unpledged  stock  in  such  manner  as 
the  by-laws  shall  provide,  and  in  case  the  by-laws  so  provide,  but  not  other- 
wise, loans  may  be  made  to  others  than  members  of  the  association  at  not 
less  than  the  legal  rate  of  interest,  to  be  paid  monthly  at  the  same  time  and 
place  as  interest  on  other  loans  is  paid  by  members  of  the  association.  Such 
loans  to  non-members  may  be  made  in  any  sum  not  to  exceed  five  hundred 
dollars  to  any  one  person,  company  or  corporation.  In  case  real  estate 
security  be  offered  for  such  loans  to  non-members,  it  shall  be  worth  at  least 
double  the  amount  of  the  loan.  No  bonds  or  other  personal  property  shall  be 
accepted  as  security  for  loans  made  to  members  or  others  without  the  anani- 
mous  consent  of  the  trustees,  provided  that  the  stock  of  any  such  association 
may  be  accepted  at  all  times  as  ample  security  to  the  extent  of  the  withdrawal 
value  thereof.  In  case  of  the  non-payment  of  any  instalment  of  dues,  interest, 
premiums,  fines,  insurance,  taxes  or  other  sum  due  from  the  borrower  to  the 
association  for  the  space  of  six  months,  the  whole  sum  loaned,  together  with 
the  unpaid  premium  bid  thereon,  if  any,  and  all  interest,  hues,  insurance, 
taxes  and  dues  on  stock  pledged  for  such  loan,  shall  be  due  and  payable  forth- 
with and  may  be  collected  at  once,  and  any  stock  pledged  or  any  mortgage  or 
deed  of  trust  given  to  secure  the  payment  thereof,  maybe  enforced  according 
to  the  terms  of  the  contract. 

Sec.  5. — Any  borrowing  member  who  is  not  in  arrears  shall  be  entitled  to 
immediate  release  of  his  deed  of  trust  or  other  securities  given  to  the  associa- 
tion to  secure  a  loan,  when  he  shall  deposit  with  the  treasurer  the  full  amount 
of  the  loan  secured  thereby,  less  the  unearned  premium  for  the  unexpired 
term  of  the  series  in  which  such  loan  was  made;  Provide  d,  such  premium 
was  paid  in  advance,  and  thereupon  his  stock  shall  be  returned  to  him  and 
shall  be  subject  to  withdrawal  the  same  as  other  unpledged  stock. 

Sec.  6. — Any  deed  of  trust  given  to  any  such  association  to  secure  any 
indebtedness  thereto,  may  be  released  by  the  trustee  named  therein  or  by  his 
successor  in  trust,  at  any  time  after  payment  of  such  indebtedness,  by  an  entry 
on  the  margin  of  the  page  or  pages  u'^on  which  such  deed  of  trust  is  or  may 
be  recorded,  duly  signed  by  such  trustee  or  his  successor  in  trust,  and  wit- 
nessed by  the  countv  clerk  or  his  deputy.  Such  entry  may  be  in  the  follow- 
ing form,  to  wit  :  "  By  request  of  the  (here  insert  the  name  of  the  association), 
I  hereby  acknowledge  satisfaction  in  full  of  the  debt  secured  by  this  deed  of 
trust,  and  hereby  release,  cancel  and  discharge  the  same,  and  I  do  hereby 
convey  and  quit  "claim  under  the  grantors   named  therein,  all  the  right,  title 


912  APPENDIX   IV. 

and  interest  which  I  acquired  in  and  to  the  property  therein  described,  under 
and  by  virtue  of  this  deed  of  trust. 

Trustee,  (or  successor 

in  trust). 

Witness  : 


County  Clerk  (or  deputy  county  clerk)." 

Any  such  deed  of  trust  may  also  be  released  in  any  other  manner  authorized 
by  the  laws  of  this  state  for  the  release  of  deeds  of  trust. 

Sec.  7. — Whenever  any  member  shall  become  delinquent  for  six  months  on 
any  instalment  of  dues  upon  unpledged  stock,  the  secretary  of  the  association 
shall  give  him  notice  thereof  in  writing,  stating  the  amount  of  such  delin- 
quency, and  that  he  is  required  to  pay  the  same  on  or  before  the  next  stated 
meeting  of  the  trustees,  and  that  in  default  thereof  his  stock  shall  be  declared 
forfeited.  Such  notice  shall  be  mailed  to  the  delinquent  member  at  his  last 
known  postoffice  address,  at  least  twenty  days  prior  to  the  time  for  holding 
the  stated  meeting  therein  referred  to,  and  in  case  he  fails  to  pay  within  the 
time  specified  in  such  notice,  the  trustees  shall  declare  his  stock  to  be  for- 
feited, and  the  defaulting  member  shall  thereupon  be  entitled  to  withdraw 
from  the  association  the  paid-up  value  of  such  stock  without  interest,  less  all 
fines  and  other  charges  thereon,  at  any  time  within  one  year  thereafter,  and  if 
not  called  for  within  that  time,  the  amount  due  thereon  shall  be  forfeited  to 
the  association. 

Sec.  8. — When  the  stock  in  any  series  shall  have  reached  its  maturity,  the 
payment  of  dues  thereon  shall  cease,  and  all  of  the  stockholders  in  such  series 
who  have  obtained  loans  from  the  association  shall  be  entitled  to  have  their 
securities  returned,  and  the  mortgage  or  deed  of  trust  given  by  them  to  secure 
such  loan  shall  be  released,  cancelled  and  discharged,  and  the  holders  of 
unpledged  stock  in  such  series  shall  be  paid  out  of  the  funds  of  the  association 
the  mature  value  thereof,  together  with  such  a  rate  of  interest  thereon  as  shall 
be  determined  upon  by  the  trustees  from  the  time  such  share  shall  have 
matured  until  paid  ;  but  at  no  time  shall  more  than  one-half  of  the  receipts  of 
the  association  be  applicable  to  the  payment  of  matured  shares  without  the 
consent  of  the  trustees.  The  order  of  payment  of  matured  shares  shall  be 
provided  for  in  the  by-laws,  and  if  not  so  provided  shall  be  determined  by 
lot. 

Sec.  9. — All  persons,  companies  and  corporations  holding  stock  in  any  such 
corporation,  shall  be  considered  members  thereof  uutil  such  stock  is  duly 
transferred  upon  the  books  of  the  association  or  is  cancelled,  forfeited  or 
withdrawn,  and  shall  be  subject  to  all  the  laws,  rules  and  regulations  thereof. 
Minors  may  become  stockholders  in  any  such  association  the  same  as  adults, 
and  such  minor  stockholders  shall  be  subject  to  thesameduties  and  liabilities 
as  respects  their  stock,  as  adult  members.  Any  receipt,  release,  acquittance 
or  discharge  given  to  the  association  by  any  such  minor,  shall  be  binding 
upon  the  minor  to  the  same  extent  as  if  such  minor  were  of  full  age.  It  shall 
also  be  lawful  for  any  copartnership,  company  or  corporation  created  under 
the  laws  of  this  state,  to  hold  stock  in  any  building  and  loan  association  on  the 
ame  terms  as  individuals. 

Si  (  .  10. — Any  such  association  shall  be  subject  to  visitation  and  examination 
at  all  times  by  the  state  examiner  upon  the  application  of  three  or  more 
members  thereof.  If  it  shall  appear  to  said  examiner  from  tin-  report  of  any 
i.orfrom  any  examination  made  by  him,  that  such  association  is 
violating  any  ol  the  provisions  of  this  act,  or  is  conducting  its  business  in  an 
mi  .lie  or  unauthorized  manner,  he  shall,  by  an  order  under  his  hand  addressed 
to  tin-  president  of  such  association,  direct  the  continuance  of  such  illegal  and 
unsa  e,  and  whenever  such   association    shall   neglect  or   refuse  to 

1  .r   shall   fail   to  make   reports   as    required,  the   said 

iall  thei    upon  communicate  such  facts  to  the  attorney-general  ol 

Hie  state,  who  shall  thereupon  institute  such  proceedings  as  the  nature  of  the 

1  equire. 

SEC.  II.     'Ill      name  "building  and   loan   association,"  as  used   in   this  act 

1  iclude  al  organizations  and  associations  doing 

indloanin  1    tmentbusim      on  the  building  and  loan  plan,  whether 

mill  and  whether  issuing  certificates  ol  stock  that  mature  at  a 

time  m  advam  e  or  not. 

i        b    '  i  v.     oi  every  building  and   loan  association  hereafter 
ized    hall  s]  ei  ify  : 
1.  Th(    tim<     and  place  for   holding  the   annual  meeting  of   the  stockholders 


GENERAL   LEGISLATION.  913 

at  which  the  board  of  trustees  shall  be  elected,  the  manner  of  giving  notice  of 
such  meetings  and  how  special  meetings  of  the  stockholders  may  be  called 
and  the  qualifications  of  voters  at  all  such  meetings. 

2.  The  time  and  place  for  holding  the  states  meetings  of  the  trustees  and 
how  special  meetings  of  the  trustees  may  be  called. 

3.  The  manner  in  which  vacancies  in  the  board  of  trustees  may  be  filled. 

4.  The  officers  of  the  board  of  trustees  ;  the  duties  of  each  officer,  and  the 
amount  of  his  compensation  if  any,  and  when  payable. 

5.  The  form  of  bonds  which  shall  be  given  by  the  treasurer  and  secretary 
of  such  association,  and  the  place  where  the  same  shall  be  deposited  for  safe- 
keeping. 

6.  The  law  relating  to  the  membership  of  such  association,  as  hereinbefore 
set  forth  in  section  9  of  this  act,  and  the  amount  of  the  initiation  or  entrance 
fee,  if  any. 

7.  The  terms  on  which  instalment  stock  will  be  issued  in  the  different 
series,  and  how  the  different  series  shall  be  designated. 

8.  The  terms,  if  any,  upon  which  prepaid  and  paid-up  stock  will  be  issued, 
and  all  necessary  rules  and  regulations  in  relation  to  the  disposition  and 
management  of  such  stock  and  the  income  therefrom. 

9.  The  different  forms  of  certificates  of  stock  to  be  issued  in  such  associa- 
tion. 

10.  The  manner  in  which  certificates  of  stock  may  be  transferred,  and  the 
fee  to  be  charged  therefor. 

11.  The  conditions  upon  which  duplicate  certificates  of  stock  may  be  issued 
in  lieu  of  certificates  supposed  to  be  lost  or  destroyed,  and  the  fee  to  be  paid 
therefor. 

12.  The  amount  of  the  periodical  payments  to  be  made  on  each  share  of 
stock,  and  the  time  and  place  for  making  such  payments. 

13.  The  minimum  premium  and  rate  of  interest  to  be  charged  on  all  loans, 
and  the  time  and  place,  for  the  payment  thereof,  and  all  other  terms  and  con- 
ditions on  which  loans  may  be  obtained,  and  the  kind  and  nature  of  the 
securities  to  be  taken  for  such  loans,  and  by  whom  all  expenses  incident 
thereto  shall  be  paid. 

14.  The  amount  of  fines  to  be  charged  in  case  default  be  made  in  the  pay- 
ment of  dues,  interest  or  premiums. 

15.  The  times  and  manner  in  which  profits  and  loans  shall  be  apportioned 
among  the  different  series. 

16.  The  manner  of  awarding  loans  when  there  are  no  bidders. 

17.  The  terms  and  conditions  if  any,  upon  which  loans  may  be  made  to 
others  than  members  of  the  association. 

18.  The  terms  and  conditions  upon  which  loans  may  be  repaid  to  the 
association. 

19.  The  terms  and  conditions  upon  which  stockholders  may  withdraw  from 
the  association,  and  the  fees  to  be  charged  therefor. 

20.  The  terms  and  conditions  upon  which  holders  of  unpledged  stock  may 
be  forced  to  withdraw  from  the  association. 

21.  The  manner  of  enforcing  liens  upon  unpledged  stock  to  secure  the  pay- 
ment of  delinquent  dues,  fines  and  other  charges  against  delinquent  members, 
and  how  shares  in  default  may  be  forfeited  and  disposed  of. 

22.  The  manner  of  enforcing  liens  on  stock  pledged  to  the  association  as 
security  for  loans,  in  case  default  be  made  in  the  payment  of  dues  and  interest 
thereon. 

23.  Provisions  for  banking  and  checking  the  funds  of  the  association. 

24.  Provisions  concerning  the  reporting  and  custody  of  the  securities  be- 
longing to  the  association. 

25.  The  manner  in  which  amendments  may  be  made  to  the  by-laws. 

26.  The  order  of  business  at  all  meetings  of  the  board  of  trustees  and  stock- 
holders of  the  association. 

27.  Such  other  rules  and  regulations  as  may  be  deemed  necessary  and  ex- 
pedient for  the  proper  management  of  the  business  affairs  of  such  association, 
provided  the  same  be  not  inconsistent  with  the  certificate  of  incorporation  of 
such  association,  the  provisions  of  this  act,  or  the  laws  of  this  state. 

Sec.  13. — The  secretary  of  every  such  association  shall  submit  to  the  stock- 
holders at  their  annual  meeting  a  report  showing  the  condition  of  the  associa- 
tion at  the  close  of  business  on  the  last  day  of  the  preceding  fiscal  year. 
Such  report  shall  also  specify  : 

1.  The  amount  of  authorized  capital. 

2.  The  amount  of  capital  subscribed. 

3.  The  amount  of  bills  receivable. 


914  APPENDIX   IV. 

4.  The  par  value  of  each  share. 

5    The  cash  paid-up  value  of  each  share,  in  each  series. 

6.  The  actual  or  book  value  of  each  share,  in  each  series. 

7.  The  number  of  shares  withdrawn  of  each  series,  and  the  amount  so 
withdrawn. 

8.  The  number  of  shares  retired  from  each  series,  and  the  amount  so 
retired. 

9.  The  total  number  of  shares  remaining  in  each  series. 

10.  A  statement  of  all  receipts  and  disbursements  during  the  year,  show- 
ing the  amounts  received  for  dues,  interest,  fines,  premiums  and  from 
other  sources ;  the  amount  loaned  on  real  estate  security  ;  the  amount 
loaned  on  stock  security  ;  the  amount  paid  withdrawing  members  ;  the 
amount  paid  on  account  of  shares  retired  ;  the  amounts  advanced  for  insur- 
ance, taxes,  and  other  assessments  on  real  estate  mortgaged  to  the  associa- 
tion ;  and  the  amount  of  cash  on  hand. 

11.  A  statement  of  .assets  and  liabilities  showing  the  condition  of  the  asso- 
ciation at  the  close  of  business  on  the  last  day  of  such  fiscal  year,  specifying 
the  amount  of  bills  receivable,  the  value  of  real  estate,  and  other  property  be- 
longing to  the  association,  the  amount  due  from  delinquents,  the  cash  on 
hand,  the  total  amount  of  dues  paid  to  the  association  on  shares  in  force  in 
each  series,  the  amount  of  overdrafts  or  bills  payable,  the  amount  of  unearned 
premiums,  and  the  amount  of  the  net  earnings  in  each  series. 

12.  A  statement  of  such  other  matters  as  ma}'  be  of  interest  to  the  members 
of  the  association,  or  concerning  which  they  should  be  advised  and  a  summary 
of  such  report  duly  verified  by  the  affidavit  of  the  secretary  shall  be  mailed  by 
him  to  the  state  examiner  within  ten  davs  after  such  annual  meeting. 

Sec.  14. — Chapter  29  of  the  session  laws  of  Wyoming,  for  1890,  relating  to 
mutual  loan  and  building  associations  approved  March  7th,  1890,  and  all  acts 
and  parts  of  acts  inconsistent  with  the  provisions  of  this  act  are  hereby  re- 
pealed so  far  as  the  same  relate  to  the  formation,  regulation  and  conduct  of 
building  and  loan  associations  ;  Provided,  lioivcvcr,  that  all  rights  acquired 
and  any  and  all  acts  performed  in  pursuance  of  the  provisions  of  any  act  so 
repealed,  and  hereby  saved  from  the  effects  of  such  repeal,  and  all  building 
and  loan  associations  doing  business  under  said  acts  or  any  of  them,  may  com- 
plete their  term  of  existence  under  such  acts,  or  may  proceed  under  the  pro- 
visions of  this  act,  and  shall  be  entitled  to  all  the  privileges,  immunities,  fran- 
chises and  powers  conferred  by  this  act,  upon  accepting  the  same  by  a 
unanimous  vote  of  its  board  of  trustees  at  any  regular  meeting  thereof,  and 
filing  with  the  secretary  of  state  a  certificate  signed  by  its  president  and 
see  retary,  showing  such  acceptance,  and  thereafter  such  association  so  accept- 
ing shall  be  deemed  to  have  been  duly  incorporated  at  and  from  the  date  of 
its  certificate  of  incorporation,  and  a  certified  copy  of  such  acceptance,  under 
the  hand  of  the  secretary  of  state,  shall  be  deemed  prima  facie  evidence  of 
such  acceptance. 

In  force  March  7,  1897. 

ACTS  1895,  P.  235. 

Skction  1. — Upon  request  in  writing  of  any  number  of  shareholders,  repre- 
senting one  thousand  shares  of  any  building  and  loan  association,  the  state 
examiner  shall  have  authority  to  examine  (he  affairs  of  said  company  or  asso- 
ciation and  the  treasury  thereof  ;  and  if  upon  any  such  examination,  the  same 
shall  be  found  to  be  either  insolvent  or  unable  to  produce  upon  demand  the 
moneyand  securities  which  should  of  aright  be  in  the  custody,  control  and 
1  ion  of  said  association,  or  in  the  treasury  thereof,  without  incumbrance 

or    hypothecation;    said  examiner  shall    assume  temporary  control  of  said 
iation   or  the  treasury  thereof,  as  the  circumstances    shall   seem  to  re- 
quire, and  incase  the  responsibility  or  defalcation  lies  with  the  association 
itself,  or  its  management,  a  receiver  may  be  appointed  to  take  charge  of  said 
pany,  upon  an  application  therefor  by  any  stockholder,  lo  whom,  when 
d,  the  examiner,  if  in  charge,  shall  deliver  all  the  booksaud  effects  of 
iation  which  shall  have  conic  into  his  hands.     If  upon  the  report  of 
howing  the  unsatisfactory  condition  of  said  company,  no  ap- 
ttion  for  a  receiver  shall  he  made  by  any  stockholder  within  ten  davs 
ei    1  he  examiner  si  1,1 11  return  all  the  books  and  effects  of  said  associa- 
tion having  come  into  his  hand  ,  to  the  <  ifficers  thereof. 


INDEX. 


References  are  to  Sections. 

ABANDONMENT. 

Plan  of  association,  390,  391,  396,  p.  446,  note. 

ABSTRACT  OF  TITLE. 

Cost  of,  not  usurious,  260. 

ACQUIESCENCE. 

Directors',  effect,  105. 

ACTUARY. 

Duties,  88. 

ADMINISTRATOR. 

May  continue  membership,  88. 
Vote  may  cast,  51. 

ADMISSIONS. 

Presidents',  effect,  65. 

ADVANCES. 

Loans,  see. 

AGENT. 

Authority  in  securing  subscriptions,  153,  p.  153,  note  8. 
Delegating  power  to,  105. 
Directors  may  be,  p.  94,  note  6. 
Fraud,  company  not  liable  for,  153. 

ALABAMA. 

Loans  not  usurious,  243. 

Statute  concerning  building  associations,  p.  665. 

AMOUNT  DUE. 

Appointment  of  receiver,  p.  174,  note  4. 
Loans,  see. 


ARBITRATION. 

By-laws  providing  for,  139. 


915 


916  INDEX. 

ARKANSAS. 

Loans,  when  not  usurious,  243. 

Statute  concerning  building  associations,  p.  671. 

ARITHMETICAL  PROGRESSION. 
Fines  in  order  of,  210. 

ARTICLES  OF  ASSOCIATION. 
Amending.  26. 
Constitute  charter,  20. 
Duplicates  of,  executing,  27. 
Failure  to  record,  p.  26,  note  6  ;  p.  27,  note  1. 
Signing,  estoppel  to  deny,  44. 
Subscribing  to  secure  loan,  276. 

ASSETS. 

Available,  defined,  379. 

Converted  into  cash  for  distribution,  p.  444,  note  6. 

Distribution  uf,  396. 

how  made,  396. 
Marshalling,  293  to  297. 

liens,  notice  as  to,  297. 
Mortgages,  not  for  withdrawals,  291. 

when  not,  388. 
What  are,  388. 

ASSIGNMENT. 

Of  a  mortgage,  290. 

Power  to  make  a  general  assignment,  385,  408. 

ASSUMPSIT. 

Remainder  due  on  a  mortgage,  309. 

Suit  for  withdrawal  amount,  p.  338,  note  6. 

ATTACHMENT. 

Stock  may  be,  173,  p.  345,  note. 

ATTORNEY. 

A -cut  of  society,  is  p.  85,  note  7. 

Authority,  87. 

Directors  may  rely  upon  his  legal  advice,  110. 

Employment,  86,  87. 

Powers,  87. 

Suit  may  appear  in,  85. 

AVAILABI.E   ASSETS. 
I),  dned,  379. 

BANKING. 

Forfeit  franchise  of  association,  392. 
Powers  of,  association  does  not  have,  29. 
Whal  is  mm!,  p.  131,  note  ;  i».  422,  noted. 


INDEX.  917 

BANKRUPTCY. 

Interest  ceases  when  intervenes,  p.  239,  note  1. 
Law  of  1898  does  not  apply  to  society,  409. 
Premium,  effect  upon,  235. 

BENEFITS. 

To  be  derived  from  association,  6. 

BIDS. 

Premiums,  see. 

BILL  OF  EXCHANGE. 

Acceptance  binds  society,  p.  281,  note  1. 

Does  not  bind  society,  p.  75,  note  4 ;  p.  415,  note  2  ;  p.  421,  note. 

BONUS. 

Dividends  sometimes  so  called,  181. 
Premiums,  see. 

BOOKS. 

Foreign  society's,  inspecting,  46. 

Inspecting,  general  law  applies  to,  p.  49,  note. 

Mandamus  to  secure  inspection,  46. 

Right  to  inspect,  46. 

Secretary  keeps,  75. 

BORROWER. 

Assigning  stock,  170. 

Defined,  p.  8,  note  1. 

Equality  on  with  non-borrowers,  p.  445,  note  1. 

Estoppel  to  deny  membership,  p.  254,  note  1 

Liable  for  losses  of  society.  355,  356. 

on  his  note  for  society's  losses,  360. 
Loans,  see. 

Member  may  become,  by  act  of  borrowing,  p.  33,  note. 
Mortgagor  cannot  dispute  his  membership,  p.  33,  note. 
Preferring,  over  withdrawing  members,  317. 
Usury  may  set  up,  258. 

who  may  insist  upon,  269. 
Value  of  his  stock  as  applied  to  his  debt,  174. 

BORROWING  MONEY  BY  SOCIETY. 

American  cases  as  to  right  to  borrow,  375. 

Bill  of  exchange,  accepting,  p.  75,  note  4 ;  p.  281,  note  1 ;  p.  415, 

note  2  ;  p.  421,  note. 
Deposits,  receiving,  376. 
Director  may,  when,  106. 

may  loan  to  society,  108. 
English  cases  previous  to  1874,  372. 

statute  of  1874,  372. 
Members  not  liable  for,  374. 
Overdrafts  of  bank  account,  376. 

59 


918  INDEX. 

BORROWING  MONEY  BY  SOCIETY.— Continued. 
Personal  liability  of  director,  373. 
Rights  of  loaner  in  distribution  of  assets,  377. 
Rules  of  society  must  authorize,  368. 

cannot  exceed  limit  fixed  by,  371. 

limit  fixing,  369. 
Subrogation  when  loan  illegal,  370. 

BOWKETT  SOCIETIES. 
Defined,  11. 
Starr-Bowkett  societies  defined,  12. 

BUILDING  AND  LOAN  ASSOCIATIONS. 
Dayton  plan,  12  a. 
Defined,  3,  p.  11,  note  1. 
Discussion  of  plans,  469. 
Earliest,  1,  2.  p.  472. 
Favorably  received  by  courts,  4. 
General  powers,  399. 
General  scope  and  methods,  5. 
Methods  of  business,  13. 
Repository  of  supreme  power,  47. 

BUSINESS. 

Where  transacted,  48. 

BY-LAWS. 

Adopting,  126,  127. 
Amending,  131,  132. 

how  done,  134. 

notice  as  to,  133. 

who  makes.  134. 
American,  examples  of,  pp.  664  to  672. 
Arbitration,  as  to,  139. 
Common  law  must  conform  to,  129. 
Conflicting  with  contract,  124,  note. 
Conform  to  charter,  must,  128. 
Constitution  must  follow,  129. 
Const  ruing,  124. 
Contract  for  members.  119. 
<  '"tit  r,,ll-, I  by  charter,  406. 
Courts  cannot  change,  p.  133,  note  3. 
Declaring  invalid,  142. 
Defined,  115. 
Elections,  as  to,  90,  144. 
English,  examples  of,  pp.  541. 
Equally,  tnusj  operate,  130. 
Extorl  ionate  are  void,  135. 

Fines,  may  ant  horize,    I  I".  203. 
certainly  a  ;  t<>,  1  II. 
axed  by,  204. 


INDEX.  919 


BY-LAWS.— Continued. 

Forfeiture  under,  140. 

Formalities  in  enactment,  121. 

Interpretation,  124. 

Judicial  notice  of,  not  taken,  125. 

Knowledge  of,  members  presumed  to  know,  120. 

Law  for  members,  118. 

Lien  upon  stock  may  create,  156. 

Mortgage,  a  part  of,  287. 

Oppressive,  void,  135. 

Power  to  adopt,  126. 

Premium,  effect  of  requiring,  231. 

Proof  of,  125. 

Proxy,  may  authorize,  51. 

Releasing  shareholder  from,  effect  of,  137. 

Regulation,  is  not,  117. 

Resolution,  differs  from,  116. 

Restricting  right  to  sue,  138. 

Retroactive,  invalid,  123. 

Rule,  is  not,  1 17. 

Signed  by  members,  not  necessary,  132. 

Statute  must  follow,  129. 

Stock  transfer,  regulated  by,  159. 

Transfer  of  stock,  rule  for,  136,  159. 

Unreasonable,  cannot  be,  135. 

Vested  rights  cannot  disturb,  131. 

Void  in  part,  143. 

Voting,  regulated  by,  51. 

Waiver  of,  122. 

When  part  of  incorporating  act,  p.  22,  note  1. 

Who  adopt,  127, 

Withdrawals,  competition  requiring,  void,  317. 

CALIFORNIA. 

Statutes  concerning  building  associations,  p.  671. 

CANADA. 

Loans  not  usurious,  255. 

CANDIDATE. 

Effect  of  voting  for  himself,  52. 

CAPITAL  STOCK. 
Stock,  see. 

CERTIFICATE  OF  STOCK. 

Evidence  of  membership,  45. 

Forged,  effect  of  making  transfer  of,  77. 

Stock,  see. 

Surrender  on  withdrawal,  p.  337,  note  3. 

Unnecessary,  33. 


920  INDEX. 

CHARTER. 

Board  of  directors  cannot  change,  106. 
By-laws  must  conform  to,  128. 
Constitutionality  of  special  law,  16. 

of  amendments,  17. 
Denned,  20. 

Legislature  may  grant.  14. 
Restraining  violation  of,  p.  35,  note. 
Special  act  of  legislature,  14. 

amending,  17. 

validity  of,  16. 

what  sufficient,  15. 

CHINA. 

Had  earliest  building  associations,  1. 

CHOSES  IN  ACTION. 

Shares  of  stock  are,  145. 

COLORADO. 

Statute  concerning  building  associations,  679. 

COMITY. 

Principles  of,  applied,  p.  35,  note  1. 

COMMON  LAW. 

By-law  must  conform  to,  129. 

COMPROMISE. 

Corporation  may  make,  350. 
Treasurer  cannot  make,  82. 

CONNECTICUT. 

Laws,  when  usurious,  254. 

Statutes  concerning  building  associations,  683. 

CONSTITUTION. 

By-laws  must  conform  to,  129. 

CONSTITUTIONALITY. 

Banking  powers,  as  to,  29. 

General  law  as  to  building  associations,  19. 

Special  charter,  16,  17. 

CONTRACT. 

By-laws  is  with  member,  119. 

contravening  contract  of  loan,  p.  120,  note. 
Directors,  interest  in,  100,  107.  108. 
Error  of  judgment  not  sufficient  for  relief  from,  106. 
I  [ow  officers  execute,  63. 
Power  of  president  to  make,  57,  60. 
President  executing  for  third  person,  59. 

for  himself,  59. 
Secretary,  power  to  make,  75. 
Treasurer's  power  to  make,  81. 


INDEX.  921 

CORPORATION. 

Abandoning  corporate  existence,  391. 

De  facto  and  irregular,  30. 

Estoppel  to  deny  existence,  31. 

Incorporation,  see. 

Member  of  a  building  association  may  become,  40. 

COSTS. 

Redemption  of  mortgage,  343. 

COURTS. 

By-laws,  cannot  make  for  association,  p.  133,  note  3. 
Right  to  office  testing,  90. 
View  associations  with  favor,  4. 

•CREDITORS. 

First  paid,  363. 

Members,  when  not,  p.  37,  noteS. 

Preferred  stockholders,  postponed  to,  149. 

Withdrawing  stockholders  is  not,  see  337,  note  2. 

CUSTOM. 

Enlarging  powers  of  president,  62. 

DAMAGES 

Refusing  to  transfer  stock,  163. 

DAYTON  PLAN. 

Described,  12  a. 

DECLARATION. 

Directors',  not  binding,  94. 

President's,  effect,  65. 

Secretary's,  not  binding,  p.  320,  note  3. 

DECREE. 

On  foreclosure,  305. 
Stands  as  security,  306. 

DEED. 

Authority  to  execute,  what  is,  105. 
Resolutions  authorizing,  94. 

DE  FACTO  CORPORATION. 
Validity  of,  30. 

DE  FACTO  OFFICE. 

Validity  of  acts,  93. 

DEFENCES. 

No  funds  to  pay  withdrawals,  318. 
Withdrawals,  insolvency,  fear  of,  323. 
suit  for,  322. 


922  INDEX. 

DEFINITIONS. 
Bonus,  181. 

Building  and  loan  associations,  3,  p.  11,  note  1. 
Dues,  185. 
Fines,  199. 
Premium,  222. 

DELAWARE. 

Statutes  concerning  building  associations,  686. 

DEMAND. 

Transfer  of  stock,  161. 

DEPOSITOR. 

Member  of  association  may,  42. 

DEPOSITS. 

Note  given  for  not  negotiable,  p.  422,  note  3. 
Postponing  depositor's  right  of  action,  379. 
Power  of  society  to  receive,  376. 
President,  changing  place  of,  58. 
Statute  of  limitations  as  to,  p.  425,  note  1. 

DIRECTOR. 

Acceptance  of  office,  proof  of,  92. 

Accidental  meetings,  102. 

Acquiescence  by,  effect,  105. 

Advice  of  attorney,  may  rely  upon,  110. 

Agent  of  corporations  may  be,  p.  94,  note  6. 

Assess  stock,  106. 

Bankrupt,  a,  may  be,  92. 

Borrowing  money,  106. 

binding  members  for,  374. 
liable  for.  473. 
By-laws,  may  adopt,  127. 
Capital  stock,  increasing,  106. 

reducing,  106. 
Charter,  cannot  change,  106. 
Contracting  with  corporation,  may,  100,  108. 

when  set  aside,  106. 
De  facto  officers,  93. 

validity  of  acts  of,  93. 
Delegating  power,  cannot,  105. 
hut  ies,  generally,  107. 
Election  of,  90. 

Errors  of  judgment,  not  Liable  for.  109,  110. 
r    ential  to  corporal  ion.  .so. 
Exp<  lling  one  of  i  heir  own  numbers,  p.  96,  note  7. 
Exl  ra  sen  ices,  pay  for,  1 18. 
Failure  to  elect,  effect,  89. 
Fraudulenl  representations,  liability  for,  112. 


INDEX.  923 


DIRECTOR.— Con  tinned. 

Giving  away  assets,  106. 
How  act,  94. 

Individual  members'  powers,  95. 
Insolvency,  effect,  385. 
Interest  in  contracts,  107. 
Liability  for  acts,  109,  110. 

for  losses,  111.  112. 
Majority  rules,  97. 
Meetings,  accidental,  102. 

calling,  104. 

extra-territorial,  103. 

must  be  regular,  104. 

notice  of,  104. 
Negligence,  liable  for,  109,  110. 
Number,  97. 
Powers  of,  generally,  106. 

limit,  106. 
President  is  a  director,  101. 
Presumptions  concerning  acts,  98. 
Proxy,  voting  by,  cannot,  96. 
Quo  warranto  to  test  right  to  office,  90. 
Quorum,  97. 

power  of,  97. 
Ratification  of  illegal  act,  99. 
Resignations,  92. 

Right  of  payment  may  be  postponed,  364. 
Right  to  vote,  91. 
Salary,  113. 

Security  from  coi'porations,  may  take,  108. 
Statute  of  limitations  as  a  defence,  111. 
Suit  by,  for  private  purposes,  106,  107. 

against  member  for  loss,  p.  112,  note  2. 
Term  of  office,  89. 
Time  of  election,  90. 
Vacancies  in  office  of,  how  filled,  90. 
Voting  for  himself,  52. 

DISCOUNTING. 

Premium  is  not,  p.  228,  note  1. 

DISTRICT  OF  COLUMBIA. 

Loans  in  not  usurious,  248. 

Statutes  concerning  building  associations,  687. 

DIVIDENDS. 

Earnings  applied  to,  181. 

value  of,  p.  193,  note  1. 
Stock,  see. 


024  INDEX. 

DRAFT. 

Accepting,  p.  415,  note  3  ;  p.  421,  note. 

DUES. 

Application  of  payments,  198. 

Assumpsit  for,  189. 

Defined,  185. 

Duty  of  member  to  pay,  186. 

Estoppel  on  receipt  after  foreclosure,  175. 

Forfeiture  of  stock  for  non-payment,  193. 

Insolvency  of  associations,  p.  203,  note  1 ;  p.  447,  note. 

Interest  upon,  on  withdrawing,  325 ;  p.  340,  note  1. 

Liability  for,  when  begins,  188. 

purchaser  of  premises,  195. 

when  ceases,  194. 
Lien  on  stock  for,  192. 
Mortgage  covers,  191,  288. 
Notice  concerning  payments  due,  189. 
Number  of  shares  a  member  is  liable  on,  196. 
Payments,  application  of,  169. 

how  made,  187. 

on  stock,  not  on  loans,  168. 

place  of,  p.  198,  note  2. 

proof  of,  197. 

when  made,  187. 
Premium  not  treated  as,  p.  232,  note  1. 
Refusal  of,  access  to  books,  p.  198,  note  2. 
Secret  agreement  with  promoters  concerning,  p.  202,  note  1. 
Secretary  cannot  receive,  when,  75. 
Suit,  effect  on  payments,  190. 
Suspension  of  society,  394. 
Unincorporated  association,  406. 
Usurious  interest  not  applied  to,  p.  258,  note. 
Usury,  rule  to  as,  p.  258,  note. 

EARNINGS. 

Dividends  declared  out  of,  181. 
Premium  is  note,  225. 
Value  on  distribution,  p.  193,  note  1. 
What  includes,  225. 

EARLY  BUILDING  AND  LOAN  ASSOCIATIONS. 
A  merican,  2. 
I  Chinese,  1. 
English,  2. 

Met  hods,  5. 

ELECTIONS. 

Adjournment  .  L9. 

tnbling  fco  bold,  49. 


INDEX.  925 

ELECTIONS.— Continued. 

By-laws  to  regulate,  90,  144. 

Directors  of,  90. 

How  conducted,  52. 

Ineligible  person,  vote  for  last,  52. 

Inspector,  who  may  be,  52. 

Mandamus  to  secure,  49. 

Meetings,  see. 

Notice  concerning,  49. 

Place  of  holding,  49. 

President  of,  55, 

Proxy  may  cast  vote,  51. 

Quorum  for,  50. 

Right  to  vote  for  directors,  91. 

Time  of.  90. 

Voting  at.  how  determined.  51. 

pledgor,  by,  51. 

who  may  cast,  51. 
"When  may  bs  held,  49. 

ENTRANCE  FEE. 

Not  credited  on  loss,  p.  179,  note. 

ESTATE. 

Liable  for  society's  loss,  862. 

ESTOPPEL. 

Acquiesence  in  improper  conduct  of  society.  395. 

Borrower,  to  deny  membership,  p.  254,  note  1. 

Borrowing  money,  p.  320,  note  1. 

Contracting  party  to   dispute  validity  of   incorporation,  p.  25, 

note  5. 
Corporate  existence,  31. 

Dh'ector  not  estopped  as  a  stockholder,  p.  97,  note  1. 
Dues  received  after  foreclosure  of  mortgage,  175. 
Foreign  borrower,  bound  by  contract  with,  p.  35,  note  1. 
Member  estopped  to  deny  membership,  33.  44. 
Money  received  by  secretary,  as  to,  p.  75,  note  3. 

depositing,  p.  75,  note  4. 
Mortgagor  to  deny  membership,  p.  33,  note. 
Name,  contract  made  in  wrong  one,  p.  30,  note  4. 
Proxy  acquiesing  in  decision  as  to  his  right  to  vote,  p.  56,  note  7. 
Society  estopped  to  deny  membership,  43. 
Ultra  Vires  contract,  p.  314,  note. 

EVIDENCE. 

Acceptance  of  office,  92. 

Act  of  board  of  directors,  presumption  as  to,  98. 

as  to  place  of  meeting,  p.  98. 
Burden  on  borrower,  when,  p.  284,  note  1. 


926  INDEX. 

EVIDENCE.— Continued. 

By-laws  must  be  proved,  125. 
Declarations  of  president,  65. 

of  directors.  94. 
Foreclosure  of  mortgage,  30-4. 
Loss  of  pass-book,  183. 
Membership,  how  proven,  45. 
Payments,  proof  of,  197. 
President,  official  character,  56. 
Presumptions,  see. 

as  to  president's  powers,  p.  66,  note  8. 
Proof  of  president's  power  to  act,  61. 

EXECUTION. 

Judgment,  see. 

Stock  levied  upon  with,  173. 

Withdrawing  member,  right  to,  327. 

EXECUTOR. 

May  continue  membership,  38. 
Vote  may  cast,  51. 

EXPENSE  FUND. 

Credit  for  on  withdrawal,  405. 
Maintaining,  405. 

EXPULSION. 

Board  of  directors  cannot  expel  a  member,  p.  96,  note  7. 

FEES. 

Receiver  entitled  to  for  transfers,  p.  191,  note  2. 
Transfer  of  stock,  180. 

FINKS. 

Additional  for  continued  neglect,  209. 

A  i mt  of,  207. 

Arithmetical  progression  in,  210. 
By-laws  may  authorize,  203,  204. 
certainty  as  to,  ill. 
may  prescribe,  140. 
lien,  217. 
( lertain,  musl  be,  205. 

<  lharter  may  aul  borize,  203. 

( lolled  ion  of,  bow  made,  220. 

<  londonal  ion  of,  219. 

<  'iiiniil.-it  Lve,  cannot  be,  209,  210. 
Denned,  L99. 

Enforcemenl .  202. 

i:  toppel,  221. 

Qlegal,  reduces  debl .  216. 


INDEX.  927 


FINES.— Continued. 

Insolvency,  eHert  upon,  221.  p.  4-47,  note. 
Interest,  for  non-payment,  211. 

on,  not  allowed,  212. 
Lien  on  stock,  when,  218. 
Married  women  liable  for,  214. 
Members  only  liable  for,  208. 
Mortgage  covers,  215,  288. 
Number  of,  205. 

Penalties,  not  regarded  as,  201. 
Personal  obligation  is,  215. 
Plan  of  association,  as  to,  200. 
Premium  on.  213. 

not  treated  as.  p.  232,  note!. 
Reasonable,  must  be,  200. 
Receiver  collecting.  221. 
Remission  of,  219. 
Second,  not  allowed,  p.  217,  note  1. 
Statute  may  authorize,  203. 
Usurious,  when,  210,  note  4. 
Who  liable  for,  208. 

FLORIDA. 

Statute  concerning  building  associations,  689. 

FORECLOSURE. 

Lien  upon  stock,  p.  161,  note  1. 
Mortgage,  see. 

FOREIGN  ASSOCIATION. 
Banks,  inspecting,  46. 

Comity,  governed  by  principle  of,  p.  35,  note  1. 
Mortgages,  held  by.  312. 
North  Carolina,  law  as  to,  32. 
Taxing,  382. 
Withdrawing  from,  331. 

FORFEITURES. 

After  death  of  member,  38. 
Infant's  stock,  35. 

FORMS. 

Plans,  see. 

FRANCHISE. 

Abandoning.  391. 
Forfeiting,  392. 

FRAUD. 

Association  bound  by  secretary's,  p.  255,  note  2. 
Promoter's,  p.  154,  note. 


028  INDEX. 

FRAUD.— Continued. 

Representations  of  association,  302. 

Secretary's  act.  association  liable  for,  p.  75,  note  4  ;  p.  255,  note  2. 

Subscription  to  stock  secured  by,  153. 

effect  of,  153. 

revocation  of,  153. 

waiver  of,  153. 

FRAUDULENT  REPRESENTATIONS. 

Association  bound  by  directors',  112. 

FUNDS. 

Distributing,  396. 

GEORGIA. 

Loans  not  usurious  in,  246. 

Statute  concerning  building  association,  690. 

GIFT. 

Director  cannot.give  away  assets,  106. 

HEIRS. 

Members  in  rigbt  of  ancestor,  39. 

HISTORY. 

American  associations,  2. 
Chinese  associations,  1. 
English  2,  p.  472. 
Methods  of  associations,  5. 

HOMES. 

Building  for,  401. 
Purchasing  land  for,  401. 

HOME  OFFICE. 

Where  may  be,  25. 

IDAHO. 

Statute  concerning  building  association,  695. 

ILLINOIS. 

Loans  not  usurious,  245. 

Statutes  concerning  building  associations,  708. 

INCORPORATION. 

Amendments  to  charter,  17,  26. 

By  art  ides  of  association,   19. 

( lourts  may  incorporate,  L9. 

Defect  i  vr  incorporation  cured,  p.  27,  note  2. 

Exceeding  stal  ute,  23. 

Irregular  and  defective  corporations,  30. 

Legislature  may  authorize,  I  I. 


INDEX.  929 

INCORPOR  ATION.— Cont  inued. 
Name,  wrong  one  used,  28. 

cannol  be  disputed,  p.  30,  note  4. 
Party  contending  with  cannot  set  up  illegality  of,  p.  25,  note  5. 
Recording  articles  of  association,  27. 
Special  charter,  by,  15. 

validity  of,  16. 

what  sufficient,  15. 
Specifying  powers  of,  24. 

Substantial  compliance  with  statute  required,  22. 
When  complete,  21. 

failure  to  record  charter,  p.  26,  note  6  ;  p.  27,  note  1. 

INDIANA. 

Loans  not  usurious.  253. 

Statutes  concerning  building  association,  704. 

INFANT. 

Director  liable  for  selling  stock  to,  when,  112. 

Disaffirming  membership,  35. 

Forfeiting  stock,  35. 

Lessee  liable  for.  361. 

Member  of  association  may  become,  35. 

Ratifying  subscription,  35. 

INJUNCTION. 

Increase  of  stock,  to  prevent,  p.  156,  note  1. 
Illegal  act  at  corporate  meeting  prevented  by,  51. 

INSOLVENCY. 

Abandonment  of  plan,  association,  301. 
Defence  to  suit  by  withdrawal  member,  322. 
Dissolution  does  not  work,  385. 

by  agreement,  390. 
Dissolves  contract  between  members,  p.  446,  note. 
Dues,  payment  after  insolvency  sets  in.  394,  p.  203,  note  1. 
Effect  upon  association,  385.  p.  391,  note  1. 
Fines,  effect  upon,  221. 

Liability  for  losses  after  notice  of  withdrawal  given,  352. 
Mortgages,  effect  upon,  397. 

not  assets  when  testing  insolvency,  388. 
Receiver  on  maturity  of  shares,  386. 

who  may  demand,  386. 
What  amounts  to,  385. 

Winding  up.  if  so.  how  done.  p.   1  (6,  note. 
Wiping  out  deficiency  in  assets,  p.  432,  note  3. 
Withdrawals,  effect  upon.  :;•.»:;.  329,  p.  433,  note. 

INSURANCE. 

Contract  with  secretary  as  to.  7.1. 
Mortgage  may  cover,  298,  note  1. 


930  INDEX. 

INTEREST. 

Amount  association  may  charge,  261. 

due  on  loan,  263. 
Appointment  of  receiver  does  not  stop,  394. 
Bankruptcy,  effect  upon,  p.  239,  note  1. 
Ceases,  when,  262. 
Compound,  operations  of,  p.  477. 
During  suit,  268. 
Fine  for  non-payment,  211. 

on,  not  allowed,  212. 
Mortgage  overs,  288. 
Preferred  stock,  on,  326. 
Premium  is  not,  224,  p.  228,  note  1. 

upon,  226. 
Rebate  of,  184. 
Ultra  Vires,  is  not,  261. 
Validity  of  statute  as  to,  281. 
Winding  up,  allowed,  when,  325. 
Withdrawals,  on  sums  paid  in,  325,  p.  340,  note  1. 

INTERPRETATION. 

Bydaws,  how  made,  124. 

INVESTOR. 

Denned,  p.  8,  note  1. 

IOWA. 

Statutes  concerning  building  associations,  713. 


JUDGMENT. 

Confessing,  president  may,  60. 
Insolvency  of  society,  effect,  p.  351,  note. 
On  foreclosure,  305. 
Stands  as  security.  306. 
Treasurer  cannot  confess,  83. 

JUDICIAL  NOTICE. 

Bydaws  not  taken  notice  of,  125. 

KANSAS. 

Loans  not  usurious,  242. 

Statutes  concerning  building  associations,  719. 

KK.NTUCKY. 

Loans  usurious,  when,  '-'51. 

Statutes  concerning  building  associations  720. 

KIM). 

Plans,  see. 


INDEX.  Jtol 

LACHES. 

Acquiescence,  see. 

Usuiy,  right  to  defend  against,  p.  266,  note  1. 

LAWS. 

Of  the  states  concerning  building  associations,  p.  664. 

LEGISLATURE. 

Must  authorize  incorporation  of  association,  14. 
Special  charter,  may  grant,  15. 
validity  of,  16. 
What  sufficient,  15. 

LEVY. 

Stock  seized  by  execution,  173. 

LEX  LOCI. 

Loan  governs,  280. 

LIEN. 

Association's,  upon  shares  of  stock,  156. 
By-laws  may  give,  upon  stock,  156. 
Dues  on  stock  are,  192. 
Effect  upon  rights  of  owner,  157. 
Fines,  on  stock,  may  be,  218. 
Foreclosure  on  stock  effect,  p.  202,  note  1. 
Marshalling  liens,  293. 

LIQUIDATION. 

Dissolution,  see. 
Winding  up,  see. 

LOANS. 

Administrator  carrying  out,  38. 

Advance,  what  is,  236. 

Amount  due  on  loan,  p.  185,  note. 

Canadian  rule,  265. 

English  rule,  267. 

Georgia  rule,  266. 

Ohio  rule,  264. 

shareholder  can  obtain,  289. 
Borrowing  money,  see. 
Cancelling,  237. 

Charges  incident  to  not  usurious,  260. 
Commission  to  secure,  260. 
Compelling,  p.  236,  note  2  ;  p.  243,  note  4. 
Defaulting  member,  to,  277. 
Due,  when,  238. 
Dues,  application  to,  169,  198. 

when  not  applied  to,  168,  169. 
Election  to  mature,  p.  243,  note  3. 
Entrance  fee  not  applied  to,  p.  179.  note  2. 


932  INDEX. 

LOAXS. — Continued. 
Interest,  see. 

during  suit,  268. 

rebate,  184. 
Kinds  of  members  who  may  make,  236. 
Lex  loci  governs,  280. 
Maturityof  stock,  effect,  182. 
Member,  becoming,  to  secure,  41. 
Non-members,  to,  273. 
Object  of,  272,  p.  33,  note. 
Oppressive,  borrower  not  relieved  from.  279. 
Presumption  as  to  usury,  250. 
Purchasing  notes,  275. 

Relationship  of  borrower  to  association,  239,  240. 
Remedies  to  recover,  298. 
Returning,  237. 
Security,  kind  may  take,  269,  271. 

more  than  one,  274. 
Set  off  against,  of  dues,  168,  169. 

stock  assigned,  170. 

stranger's  rights,  171. 
Stoaight  loan,  270. 

Subscribing  articles  of  association  to  obtain,  276. 
Tender  of  amount  due,  effect,  292. 
Usurious  contract  as  to,  effect,  257. 

is  not,  241,  242. 

who  may  defend  as  against,  258. 
Value  of  stock  applied  to,  174. 
Vaiying  contract  of,  278. 
Withdrawals  take  precedence  of,  318. 

LOSSES. 

Advance  shareholder's  liability.  357. 

All  stockholders  liable,  p.  307,  note  2. 

Amended  rules  imposing,  359. 

Borrower  Liable  on  his  note  for.  360. 

Borrowers  equally  Liable  with  oon-borrowers,  355,  356. 

Compromise  and  release  of  member,  350. 

Contribution  to,  amount,  349. 

Creditors  first  paid,  363. 

Director  may  he  Liable  lor,  111. 

po  fcponing  hie  righl  to  payment,  364. 
Estate's  Liability  for.  362. 
Evading  Liability  by  transfer  of  stock,  351. 
Insolvency  after  notice  of  withdrawal  given,  352. 
Married  woman's  Liability  lor.  361. 
Member  Liable  for  who  ha    wi1  hdrawn,  358. 

preferred .  35 ' . 
Minors'  Liability    for,  361. 


ijsdex.  933 


LOSSES.— Continued. 

Mortgage  covers,  300. 

Order,  no  priority  of,  p.  375,  note  1. 

Paid-up  slock  liable  for,  357. 

Preferred  shareholders  liable  for,  338. 

Preference,  officers  cannot  secure,  p.  375,  note  1. 

Subrogation  of  advanced  shareholders,  365. 

Withdrawals,  effect  upon,  322. 

LOUISIANA. 

Loans  of,  not  usurious,  243. 

Statutes  concerning  building  associations,  724. 

MAINE. 

Statutes  concerning  building  associations,  726; 

MANDAMUS. 

Books,  to  secure  inspection  of,  46. 
Election  to  compel,  49. 
Transfer  of  stock,  to  secure,  161. 

MARRIED  WOMEN. 

Fines,  liable  for,  214. 
Liability  for  loans,  361. 
May  become  members,  36. 

status  of  husband,  37. 
May  sign  instrument  for  dissolution,  p.  40,  note  4. 

MARYLAND. 

Loans  not  usurious,  242. 

Statute  concerning  building  associations,  732. 

MASSACHUSETTS. 

Loans  not  usurious,  242. 

Statute  concerning  building  associations,  746. 

MATURED  SHARES. 
Payment,  330. 
Suit  to  enforce  payment  of,  330. 

MECHANIC'S  LIEN. 

Society  cannot  secure,  402. 

MEETINGS. 

Called,  50. 

Notice  for,  necessary,  50. 

held  without,  50. 
Place  of  holding,  48. 
Right  to  vote  in,  51. 

MEMBERS. 

Acquisition  of  membership,  33. 
Books  of  association  may  inspect,  46. 
Borrower  may  become,  p.  33,  note. 


934  i^dex. 

MEMBERS.— Continued. 

Borrowed  money,  not  liable  for,  374. 
By-laws  bind,  118,  119. 

amending,  134. 

presumed  to  know,  120. 

rules  of  an  American  association,  p.  653. 

rules  of  an  English  society,  p.  541. 

signing,  132. 
Ceasing  to  be  a  member,  when  he  does,  320. 
Certificate  of  membership,  not  necessary,  33. 
Corporation,  may  be  a  member,  40,  p.  91,  note  4. 
Depositor,  as  a  member,  42. 
Different  relations  to  society,  348. 
Directors  elect,  90. 
Elections,  see. 

Estoppel,  to  deny  membership,  44,  p.  254,  note. 
Evidence  of  membership,  45. 
Foreclosure  of  mortgage  does  not  release,  307. 
Forfeiture  of  stock,  effect,  193. 
Heirs  may  become,  39. 
Infants  may  be,  35. 
Kinds  of  memberships,  236. 
Liable  for  fines.  208. 
Married  woman  may  become,  36. 

status  of  husband,  37. 
Meetings,  when  held,  48. 
Non-resident  may  vote,  51. 
Object  in  joining  any  society,  41,  p.  33,  note. 
Partners,  members  are,  p.  38,  vote  1  ;  p.  207,  note  1. 
Personal  representative  continuing  membership,  38. 
Pledging  shares,  effect  upon  membership,  166. 
Proxy  may  give,  51. 
Release  of  by  secretary  void,  75. 
Right  to  vote,  51. 
Shares,  see. 

Signing  articles  of  association,  33,  276. 
Society  estopped  to  deny  membership,  43. 
Status  after  notice  of  withdrawal  given,  319,  320. 
Stock,  see. 

Subscription  to  secure  loan,  41,  p.  33,  note. 
Supreme  power,  has,  47. 
Vol  in;.',  righl  I",  91 . 

number  "f  votes  may  cast,  53. 
without  ceri  ificate,  33. 
Who  i    :i  member.  :::'..  p.  37,  note  5. 
Who  may  acquu-e  membership,  34. 

METHOD  •  0 

Remark  .  cone  'rning,  18  p.  462. 


INDEX.  .  935 

MICHIGAN. 

i .dans  not  usurious,  '-'  18. 

Statute  concerning  building  associations,  p.  711. 

MINNESOTA. 

Loans  not-  usurious.  'J  15. 

Statute  concerning  building  associations,  p.  707. 

MINOR. 

Infant,  see. 

MISSISSIPPI. 

Loans  not  usurious.  'J  is. 

Statutes  concerning  building  associations,  700. 

MISSOURI. 

Loans  not  usurious,  '354. 

Statutes  concerning  building  associations,  p.  7';;). 

MONTANA. 

Statute  concerning  building  associations,  p.  770. 

MORTGAGES. 

Abandonment  of  plan  of  association,  effect  upon,  301. 
Advancing  money  to  pay  off  prior  mortgage,  p.  452,  note. 
Appointment  of  receivers,  effect  upon,  397. 
Assets,  are  not,  when,  294,  388. 
Assignment  of,  290. 
Attorney,  power  to  cancel,  87. 
By-laws  a  part  of  mortgage,  287. 
Cancelling,  310. 

revocation  of  when  improperly  made.  311. 
Chattel,  taking  to  secure  loan,  p.  291.  note  3. 
Decree  on  foreclosure  of  mortgage,  305. 

stands  as  secui'ity,  306. 
Deeds  secure  payment  of,  191,  288. 

application  of  to,  169. 

when  not  applied  to,  168,  169. 
Evidence  on  foreclosure,  304. 
Fines,  secures,  when,  15. 
First  or  second,  taking,  284. 
Foreclosure  of,  299. 

defence  to,  300. 
Foreign  associations,  312. 
Fraud,  effect  upon,  302. 
Insurance  may  cover,  p.  298,  note  1. 
Interest  covers,  288. 
Loans,  see. 

Laws,  members  liable  for,  under,  360. 
Marshalling  assets.  293. 
Power  to  take.  282. 


936  INDEX. 

MORTGAGES.— Continued. 

Premium  covers,  288,  p.  235,  note  4. 

Reformation  of,  286. 

Remedies  on,  298. 

Right  of  purchase  under,  308. 

Sale  on  decree,  3C5. 

Security,  kind  may  be  taken,  283. 

power  to  take,  282. 
Set  off  on  foreclosure,  303. 

Stock,  effect  upon  of  foreclosure  of  mortgage,  175. 
Subrogation  to,  p.  293,  note  1. 
Taking  in  foreign  state,  48. 
Taxes  may  secure,  p.  596,  note  3. 
Taxing,  380. 

Unincorporated  association  taking,  406. 
Validity  of,  285. 
What  it  secures,  288. 

NAME. 

"  National"  use  of  not  unlawful,  p.  30,  note  4. 

Necessary  to  a  corporation,  28. 

When  cannot  be  disputed,  p.  30,  note  4. 

NEBRASKA. 

Loans  not  usurious,  249. 

Statutes  concerning  building  associations,  p.  784. 

NEGLIGENCE. 

Directors  liable  for,  109,  110. 

NEVADA. 

Statutes  concerning  building  associations,  p.  789. 

NEW  BRUNSWICK. 

Loans  not  usurious.  254. 

NEW  EAMPSHIRE. 

i .      ns  not  usurious.  2  I  I. 

Statutes  concerning  building  associations,  p.  793. 

NEW  JERSEY. 

Loans  nol  usurious.  2  1 1. 

Statutes  concerning  building  associations,  p.  799. 

NEW  MEXICO. 

Stat  utes  concerning  building  associations,  p.  805. 

NEW  Y<) 

Loans  nol  usurious.  246. 

Statutes  concerning  building  associations,  p 

NON  INT. 

Voting  al  tings,  51. 


i^dex.  937 

NORTH  CAROLINA. 

Loans  usurious,  when,  250. 

Statutes  concerning  building  associations,  p.  883. 

NORTH  DAKOTA. 

statutes  concerning  building  associations,  p.  848. 

NOTE. 

President  may  execute,  60. 

NOTICE. 

Changing  by-laws,  133. 

Directors'  meeting,  of,  104. 

Directors'  power  to  make  contract,  p.  93,  note  4. 

Election  of  officers,   lit. 

President  served  with  for  corporation,  66. 

Secretary  to,  binds  corporation,  76. 

Waiver,  as  to  form  of,  p.  329,  note. 

Waiver  by  member,  316. 

Withdrawal,  cancelling,  316. 

liability  for  losses  after  given,  352. 

OFFICE. 

V.  nere  may  be  located,  25. 

OFFICER. 

Preference  cannot  secure,  p,  375,  note  1; 
Usual,  what  are,  54. 

OHIO. 

Loans,  when  usurious,  254. 

Rule  as  to  amount  due,  264. 

Statutes  concerning  building  associations,  p.  840. 

OHIO  PLAN. 

Of  building  associations.  12  a. 
OKLAHOMA. 

Statutes  concerning  building  societies,  p.  845. 

OREGON. 

Statutes  concerning  building  associations,  p.  850. 

PAID-UP  STOCK. 
Defined,  10. 
Liable  for  losses,  357. 

PARTNERS. 

Members  are,  p.  38,  note  1  ;  p.  142,  note  1  ;  p.  207,  note  1. 

PASS-BOOK. 

Loss  of,  effect,  183. 

Tendering  back  on  withdrawal,  p.  324,  note  1. 

PAYMENTS. 

Applying  to  loan,  109. 


938  INDEX. 

PENNSYLVANIA. 

Loans  not  usurious,  252,  254. 

Statutes  concerning  building  associations,  p.  855. 

PERMANENT  BUILDING  ASSOCIATIONS. 
Defined,  9, 

PLAGE  OF  BUSINESS. 
Where  may  be,  25. 

PLANS. 

Bowkett  societies,  11. 

Dayton  plan,  12  a. 

Distributing  profits,  pp.  623  to  648. 

Early  Englisb,  5. 

Modern,  5 

Original  charged,  366. 

Permanent  society,  9. 

Premiums,  pp.  601  to  629. 

Serial  society,  9. 

Starr-Bo  wkett,  12. 

Terminating  society,  7. 

Withdrawal  plans,  pp.  648  to  663. 

PLEDGED  STOCK. 

Withdrawing,  328,  p.  337,  note  2. 

PLEDGEE. 

Right  to  vote  stock  pledged,  51,  91. 

PLEDGOR. 

Right  to  vote  stock  pledged,  51,  91. 

POWER  OF  ATTORNEY. 

Stock  transferred  on  forged  power,  164. 
liability  as  to,  165. 

PREFERRED  STOCK, 
[nteresl  on,  326. 

PREFERENCE. 

Withdrawing  member,  as  to  losses,  329,  354,  p.  351,  note  1. 

PREMIUM. 

Adding  1"  amount  loaned,  227. 

Bankruptcy  does  not  prevent  collecting,  2:>.r>. 

Bills,  iiiiiiiiiuiiiis.  229. 

uprising,   '  0 
( lhange  us  to  in  bj  -laws,  effect,  231. 
Collecting  after  maturity  of  loan. 
Deducting  from  sum  loane  I, 

Define.!,  222. 


INDEX. 

PREMIUM.— Continued. 

I  discounting  is  not,  p.  228,  note  1. 
Dues  are  not,  p.  232,  note  1. 
Earnings  are  not,  225. 

Ei ncs  are  not,  i>.  232,  note  I. 

for  non-payment  of,  213. 
Interest  is  not.  224,  i>.  228,  notel. 

upon,  226. 
Minimum  bids,  fixing,  229. 
Mortgage  covers,  288,  |».  235,  note  A. 
Number  allowed. 
Plans  for,  differ,  223. 

various,  in  appendix,  pp.  601  to  629. 
Pleading  usury,  as  to  p.  228,  note  1. 
Return  of.  upon  withdrawal,  234. 
Usury  is  not,  p.  237,  note. 
Usurious,  credited  on  loan,  p.  232,  note  1. 

PREPAID  STOCK. 
Defined,  10. 

PRESIDENT. 

Acting  for  himself,  59. 

Acting  in  manifest  violation  of  duty,  58. 

Admissions  as  evidence,  65. 

Agent  for  third  person,  59. 

Attorney,  may  employ,  86. 

Custom  enlarging  powers,  62. 

Deposit  of  funds,  changing  place  of,  58. 

Director  acts  as,  101. 

Duties  of,  other  officers  performing,  64. 

Election  of,  55. 

Implied  powers,  60. 

theories  concerning,  60. 
Liability  for  acts  of,  67. 
-  Loaning  to  irresponsible  person,  liability  of,  58. 
Note,  may  execute,  60. 
Notice  to,  as  affecting  corporation,  66. 
Official  character,  proving,  56. 
Power  to  bind  association,  57. 

theories  as  to,  60. 
Presumption  as  to.  55. 
Proof  of  power  to  act,  61. 
Salary,  68. 
Usage  enlarging  his  powers,  62. 

PRESUMPTIONS. 

Appearance  in  suit  by  attorney,  as  to,  85. 

Director's  act,  as  to,  98. 

President's  power  to  act,  p.  66,  note  8. 


!>:]<> 


940  INDEX. 

1SUMPTI0NS.— Continued. 

iretary's  power  to  act,  74,  p.  66,  note  8. 
Vice-president's  act,  as  to,  69. 

PROFITS. 

Apportioning  in  serial  association,  395. 
Plans  for  distributing,  pp.  623  to  648. 

PROMISSORY  NOTE. 

Deposit  note  not  negotiable,  p.  422,  note  3. 
President  may  execute  for  corporation,  60. 

PROMOTER. 

Fraud  of,  p.  316,  note  1. 

Fraudulent  representations  binding,  p.  154,  note. 

Secret  agreement  with,  p.  202,  note  1. 

PROXY. 

Acquiescence  in  decision  of  his  right  to  vote,  52. 
Director  cannot  use,  96. 
Voting  by,  51,  91. 

PURCHASER. 

Rights  on  purchase  at  mortgage  sale,  308. 

QUORUM. 

Directors  of,  what  is,  97. 

powers,  97. 
Election,  to  hold,  49. 
Electors  of,  necessary,  90. 

QUO  WARRANTO. 

Election  of  directoi's,  to  test,  90. 

RATIFICATION. 

Directors'  illegal  act  of,  99,  106. 

REAL  ESTATE. 

Building  houses  upon,  for  members,  413. 
Desirability  of  purchasing,  413. 
Freehold  societies  in  England,  413. 
I  jeases  of,  power  to  execute,  413. 
I  ■«•  .  er  bo  hold,  413. 

Purchasing  on  decree  of  foreclosure,  413. 
Rules  of  society  must  authorize,  413. 
Selling.  U3. 
Texa    rule,  413. 

RECEIVER. 

V.bandonmen1  of  corporate  existence.  391. 

A  mo nni  due  on  loans,  p.  171,  note  I. 

\  ppoinl  menl  of,  termii  ;   ty,  "'••!. 


[NDEX.  '.ill 


RECEIVER.— Continued. 
By  .1  .  390. 

in  olvency',  rigb.1  to  because  of,  386. 
Mai  urity  of  shares, 
Mo  upon,  of  appointment,  397. 

RECORDING. 

Articles  of  asso  nation,  SI,  27. 

failui-e  to  record,  p.  26,  note  6  ;  p.  27,  note  1. 

RECORDS. 

Secretary  keeps,  73. 

REDEMPTION. 

American  scheme,  338. 
Costs  of  action  for,  343. 
Discouraged,  339. 
English  cases,  334. 
Equitable  scheme  for,  337. 
Losses,  provisions  for,  342. 
Permanent  society  in,  333,  340. 
Premium  charged  with  interest,  341. 
Property  released,  335. 
Right  to  a  valuable  one,  332. 
Rules  concerning,  336. 
Terminating  society  in,  333. 

REGULATION. 

A  by-law  is  not,  117. 

REMEDY. 

To  recover  amount  of  loan,  298. 

RETROACTIVE. 

By-laws  cannot  be,  123,  131. 

RESIGNATIONS. 
Directors',  92. 

RESOLUTION. 

A  by-law  is  not,  116. 

RHODE  ISLAND. 

Statutes  concerning  building  associations,  p.  863. 

RULE. 

A  by-law  is  not,  117. 

SALARIES. 

Attorney's,  86,  87. 
Directors'.  113. 
President's,  68. 
Secretary's,  79. 


942  INDEX. 

SALE. 

Effect  on  debt,  309. 
Membership  does  not  terminate,  307. 
On  decree  of  foreclosure,  305. 
Remainder  due  on  loan,  309. 

SEAL. 

Secretary  keeps,  72. 

Use  of,  when  necessary,  403. 

SECRETARY. 

Bill  of  exchange,  cannot  accept,  p.  75,  note  4. 
Declaration  of  not  binding,  p,  320,  note  3. 
Dues,  when  cannot  receive,  p.  73,  note  12. 
Fraud  of  association  liable  for,  p.  75,  note  4  ;  p.  255,  note  2. 
Fraudulent  representations  to  bind  association,  p.  59,  note. 
Liability  on  bond,  78. 
for  records,  73. 
Medium  of  communication,  74. 
Money,  power  to  receive,  75. 
Notice  to,  when  binds  society,  76. 
Power  to  bind  society,  75. 
President  may  serve  as,  p.  68,  note  5. 
Presumption  as  to  acts,  74. 
Records,  keeps,  73. 
Release  of  stockholder  by,  void,  75. 
Salary,  79. 
Seal  keeps,  72. 
Status,  70. 
Term  of  office,  71. 
Transfers  stock,  77. 

SECURITY. 

Kind  association  may  take,  269,  271,  283. 

Mortgage,  see. 

Persona]  security  may  take,  p.  292,  note  3. 

Power  to  take,  282. 

1,'i't  urned,  when,  182. 

Several  may  take,  274. 

Surety,  see. 

SERIAL    \SSOCIATION. 

\  pporl  ionmenl  of  profits  in,  385. 

Defined,  s. 

SET-OFF. 

Debt  due  from  withdrawing  member,  p.  342,  note. 

Dues  (in  stock,  against  Loan,  His,  169. 

Foreclosure,  on,  308. 

Si<><-k  assigned,  no. 

Stranger  cannd  mm  pel  application  of  dues,  171. 


[ndex.  943 

SHARES. 

( !erl  ificate,  lost,  1<>:!. 

Entrance  fee  nol  applied  to  debt,  179,  note  2. 

Extinguishment   by  assignment,  p.   175,  note  1 ;  p.  186,  note ;  p. 

is?,  note  1. 
Stock,  see. 
Transfer  of  stock  pledged  for  debt,  p.  178,  note  4. 

SOLICITOR. 

Attorney,  see. 

SOUTH  CAROLINA. 

Loans  usurious,  when,  250. 

Statutes  concerning  building  associations,  p.  869. 

SOUTH  DAKOTA. 

Statutes  concerning  building  associations,  p.  872. 

STARR-BO WKETT  SOCIETIES. 
Described,  12. 

STATUTE. 

By-laws  cannot  contravene,  129. 

Charter,  see. 

Incorporation,  see. 

Of  the  several  states,  p.  676. 

STATUTE  OF  LIMITATIONS. 

Depositors  right  of  action,  p.  425,  note  1. 
Director  may  plead  in  suit  against  himself,  111. 

STOCK. 

Acquisition,  151. 

Advance  payment  upon,  147. 

All  must  be  subscribed  for,  152. 

waiver  of,  152. 
Assessment  upon,  how  made,  106. 
Attaching,  173. 

Borrower  having  assigned,  170. 
Building  association's  is  peculiar,  146. 
By-laws  may  regulate  transfer  of,  136. 
Cancelling  without  consent  of  owner.  177. 

decree  in  foreclosure,  p.  189,  note  2. 
Certificate  and  force,  158. 

by-law  as  to  transfer  of.  159. 

proceedings  to  secure,  161,  p.  165,  note  4. 

suit  to  compel  transfer,  160. 

transfer  of,  159. 
Damages  for  refusing  to  make  transfer,  162. 
Defined.  145. 
Demand  for  transfer.  161. 


94-1  INDEX. 

STOCK.— Continued. 

Dividends  on,  181. 

declaring,  181. 

how  computed,  p.  191,  note  3. 
Dues,  see. 

Extinguishment  through  error,  p.  194,  note  1. 
Fee  for  transfer,  180. 

Foreclosure  of  mortgage,  effect  upon,  175. 
Forfeiture,  176. 

for  non-payment  of  dues,  193. 

notice  of,  176. 

waiver  of,  176. 
Forged  power  of  attorney,  165. 
Fraud  in  obtaining  subscription  for,  153. 
Increasing,  154. 

by  board  of  directors,  106. 

serial  association  in,  154. 
Infant,  failing  to  pay  dues,  35. 
Ledger,  as  evidence  of  transfer,  159. 
Levy  upon,  173. 
Lien  of  association  upon,  156. 

effect  upon  rights  of  owners,  157. 

for  dues,  192. 
Matures  when,  182. 

Number  of  shares  member  may  hold,  179,  196. 
Paid-up  shares,  10. 
Payments  upon,  enforcing,  167. 

application  of  dues,  169. 

dues  not  applied  to  loans,  168. 
Personal  property  arc,  145. 
Pledged  shares,  106. 

substituted,  p.  175,  note  1. 
Preferred,  149,  150. 

statute  must  authorize,  149,  150. 
Prepaid.  10.  I  18. 

Purchase  l>y  association  of  its  own,  178. 
Re-assignment,  p.  391,  notel. 

when.  ]>.  375,  note  1. 
Reduction  by  board  of  directors,  105. 
Secretary  transfers  on  books,  77. 
Serial,  1  16. 

St  i  compel  application  to  loan,  171. 

Subscripl  ion  Cor,  151. 
Surety's  righl  to,  172. 
Taxing,  381. 
Transfer  of,  155. 

■  din--  liability  for  losses,  by,  351. 

evidence  of,  159. 
fee  for  making,  180. 


INDEX.  945 

STOCK.— Continued. 

on  forged  power  of  attorney,  164. 

rights  of  transfers,  155. 

suit  to  compel,  161. 

when  not  allowed,  179. 
Trover  for  conversion,  161. 
Value  when  applied  to  debt,  174. 

STOCK-BOOK. 

Evidence  as  to  membership,  45. 

STOCKHOLDER. 

Denned,  p.  38,  note  1. 
^Members,  see. 
Stock,  see. 

STRANGER. 

Applying  stock  of  member  to  payment  of  debt,  171. 

SUBROGATION. 

Advanced  shareholder  on  paying  losses,  365. 
Loan  to  society  illegal,  subrogation  as  to,  370. 
Taking  up  prior  mortgage,  p.  293,  note  1. 

SUBSCRIPTION. 

Effect  of  fraud  upon,  153. 

For  stock,  151. 

Member,  see. 

Necessary  that  all  stock  be  taken,  151. 

Stock,  see. 

SUITS. 

After  society  has  reached  its  limit,  389. 
Amendment  of  complaint  as  to  name,  404. 
Assumpsit  for  withdrawal,  amount  due,  p.  338,  note6. 
Averments  as  to  incorporation,  404. 
By-law  restricting  right  to  bring,  138. 
Certificate  of  stock,  to  obtain,  Hi  I. 
Depositor,  postponing  Lis  right  of  action,  379. 
Director  cannot  bring  for  his  own  purpose,  106,  107. 
Dues,  assumpsit  to  recover.  189. 

effect  on  payment,  190. 
Extinguishment  of  stuck  erroneously,  p.  194,  note  1. 
Fines  enforced  by,  202. 
Foreclosure  oi  mortgages,  299. 

defences.  300. 
Interest  does  not  stop,  268. 
Matured  stock,  suit  concerning,  330. 
Member  may  sue  directors  for  losses,  112. 
Payments  upon  stock,  enforcing.  167. 
Power  to  bring.  404. 


946  INDEX. 

SUITS.— Continued. 

Remedies  to  recover  amount  of  loans,  298. 
Transfer  of  stock,  to  compel,  161. 
Treasurer  may  bring,  83. 
"Winding  up  society,  to,  383. 
Withdrawing  members,  319,  322. 

SURETY. 

Right  to  stock  pledged,  172. 

SURVEYOR. 

Duties,  88. 

TAXES. 

Covenant  in  mortgage  to  pay,  384. 
Exemptions,  383. 
Foreign  building  association,  382. 
Mortgages,  380. 

may  cover,  p.  296,  note  3. 
Stock,  381. 
War  revenue,  410,  411,  412. 

TENDER. 

Amount  due,  effect,  292. 

On  withdrawal,  p.  337,  note  3. 

Pass-book  on  withdrawal,  p.  324,  note  1. 

TENNESSEE. 

Loans,  not  usurious.  242. 

Statute  concerning  building  associations,  p.  878. 

TERMINATING  SOCIETY. 

Denned,  7. 

TEXAS. 

Loans  usurious,  when,  251. 

Statutes  concerning  building  associations,  885. 

THEORY  OF  BUILDING  ASSOCIATIONS. 
I  discussion  of,  p.  469. 

TREASURER. 

attorney  may  employ,  86. 
Compromise,  cannot  make,  82. 
Duties,  80. 
Electors,    0 

Judgment,  cannol  confess,  83. 
Liability  on  bond,  84. 
Power  to  coni  racl .  sl . 
Suit  may  bring,  88. 


INDEX.  947 


IROVER. 

Conversion  of  stock,  i'or,  161. 

TRUSTEES. 

Nature  of  office,  114. 

ULTRA  VIRES. 

Charge  of  interest  is  not,  261. 
Director's  power,  106. 

liability  for  acts  of,  110. 
Estoppel  to  set  up,  p.  314,  note. 
Illegal  vote  restrained,  51. 

UNINCORPORATED  ASSOCIATION. 
Partnerships,  are,  406. 
Subsequent  incorporation,  406. 

USAGE. 

Enlarging  powers  <  if  president,  62. 

USURY. 

Borrower  recovering  back  usurious  interest,  259. 

Charges  incident  to  loans  is  not,  260. 

Commission  to  secure  loan,  260. 

Effect  on  loan,  2.">7. 

Fines  do  not  make,  p.  210.  note  4. 

General  laws  apply  to,  p.  257,  note  1. 

Interest  see. 

Loans,  when  not,  241.  242. 

Pleading,  as  to,  p.  228,  note  1. 

Premium,  is  not,  p.  237.  note. 

Retroactive  statute,  effect,  p.  289,  note  1. 

Rule  as  to,  in  Alabama,  243. 

Arkansas,  243. 

California. 

Canada.  255. 

Connecticut,  254. 

District  of  Columbia,  'JIT. 

England,  240,  241. 

Illinois,  245. 

Indiana,  253. 

Iowa.  25 !. 

Kentucky.  251. 

Louisina,243. 

Maryland,  242. 

Massachusetts,  248. 

Michigan,  248. 

Minnesota,  248. 

Mississippi,  2  18. 

Missouri,  254. 


9 18  INDEX. 

Nebraska,  249. 

New  Brunswick,  255. 

New  Hampshire,  244. 

New  Jersey,  244. 

New  York,  246. 

North  Carolina,  250. 

Pennsylvania.  252. 

South  Carolina,  250. 

Tennessee,  242. 

Texas,  251. 

Virginia,  247. 

West  Virginia,  254. 
Validity  of  statute,  as  to,  281. 
Who  may  defend  against,  258. 

UTAH. 

Statute  concerning  building  associations,  p.  885. 

VERMONT. 

Statute  concerning  building  associations,  p.  890. 

VALUE. 

Stock  of,  174. 

rule  as  to,  p.  184,  note  1. 

VESTED  RIGHT. 

On  withdrawal  notice  given,  320. 

VICE-PRESIDENT. 

Nature  of  office,  69. 
Presumption  as  to,  69. 

VIRGINIA. 

Loans  not  usurious,  247. 

Statutes  concerning  building  associations,  p.  893. 

VOTINC 

Executor  may  cast,  51. 
Members  without  certificates  may,  33. 
Number  of  votes  member  may  cast,  53. 
Right  t<>  east .  51. 

hew  determined,  51 ,  52. 

WAIVER. 

laws  cannot   be  waiveil.  122. 

Notice  of  withdrawal  may  be  waived,  316. 
Of  form,  waived,  p.  829,  note. 

WAR  REVEN1   E. 

Application  to  building  associal  ions,  110,  411,  412. 


INDEX.  949 

WASHINGTON. 

Statute  concerning  building  associations,  p.  895, 

WEST  VIRGINIA. 

Loans  not  usurious,  254. 

Statute  concerning  building  associations,  p.  902. 

WILL. 

May  authorize  carrying  out  stock,  38. 

WINDING  UP. 

Apportioning  profits  in  serial  association,  395. 
By  agreement,  390. 
Distributing  assets.  396. 

how  made,  396. 
Insolvency  changes  relation  of  members,  p.  446,  note. 
Interest  allowed,  when,  325. 
Limit  of  charter  reached,  389. 
Suit  to  wind  up,  393. 

WISCONSIN. 

Statute  concerning  building  associations,  p.  993. 

WITHDRAWALS. 

Amount  to  be  withdrawn,  323,  324. 

Assets,  what  members  entitled  to,  396. 

Assumpsit  for  amount  due.  p.  338,  note  6. 

By-law  cannot  change  right  of.  131. 

Competition  for,  by-law  requiring  void,  317. 

Date  for  estimating  value  of  shares,  p.  342,  note  1. 

Effectof,  321. 

Execution  to  enforce  collection,  327. 

Expense  fund,  credit  for,  405. 

Foreign  associations.  331. 

Insolvency  a  defence  to  suit  for,  322,  3'29. 

fear  of  no  defence  to  suit  for,  323. 
Interest  on  amount  paid  in,  325  ;  p.  340,  note  1. 
Lack  of  funds,  effect,  319. 
Liability  of  members  withdrawing  for  cause,  353. 

preferences  as  to,  354. 
Loans,  preferring  to  withdrawals,  318. 
Matured  stock.  330. 

payment,  330. 

suit  to  enforce  payment,  330. 
Mortgages  not  ass  :ts  for  purposes  of,  291. 
No  funds  to  pay,  effect.  318. 
Notice  oi  ry,  :!lo. 

cancelling,  .'!!<>. 

how  given,  315. 
Order  in  which  paid,  :>17. 
Pass-book,  tendering,  p.  324,  note  1. 


950  INDEX. 

WITHDRAWALS.— Continued. 

Paymeut  of  amount  due,  326. 
Plans  for,  pp.  648  to  663. 
Pledged  stock,  328  ;  p.  337,  note  2. 
Postponing,  318,  p.  330,  note  5. 
Preferences,  317. 

not  allowed,  329  ;  p.  351,  note  1. 
Premium,  returning,  234. 
Pirating  funds,  321. 
Right  to  determine,  313  ;  p.  353,  note  2. 

cannot  be  restricted,  313,  314. 
Status  of  member  giving  notice,  319,  320. 
Suit  for  money  due  on,  319,  322. 
Surrender  of  certificate,  p.  337,  note  3. 
Transferring  right  to  withdraw,  319,  320. 
Vested  right  to  payment,  320. 
Waiver  of  right  to  withdraw,  320. 


LAW  LIBRARY 

UNIVERSITY  OF  CALIFORNIA 

LOS  ANGELES 


